Background
David Mark Hodgson and Andrew Hewitt, the joint and several liquidators of ACN 009 068 473 Pty Ltd, sued the Commissioner of Taxation and sought declarations concerning payments the company made to the Commissioner between 10 May and 21 October 2022. They alleged the payments were unfair preferences, insolvent transactions and voidable transactions under ss 588FA, 588FC and 588FE of the Corporations Act 2001 (Cth).
The liquidators sought recovery of $3,828,635 under s 588FF(1)(a). The liquidators and Commissioner later signed proposed consent orders. The company’s directors, who were joined as defendants because of the potential indemnity consequences under s 588FGA, also consented to the proposed orders personally or through representatives.
The Court’s Holding
Justice Vandongen held that the Court could act on an admission made through signed consent orders when determining whether transactions were voidable for the purpose of s 588FF(1). The Court rejected the concern that consent orders could not support the required satisfaction, relying on authority supporting orders founded on admissions.
Given the way the liquidators had pleaded their claim, the Commissioner’s consent was an admission that the scheduled payments were voidable under s 588FE. The Court was therefore satisfied that each transaction was voidable and made the agreed orders.
The Commissioner was ordered to pay the company $4.2 million within 42 days: $3,828,635 under s 588FF(1)(a), $200,000 interest and $171,365 costs. The balance of the liquidators’ claim was dismissed.
Key Takeaways
- A court may make a s 588FF recovery order based on an admission embodied in signed consent orders.
- The Commissioner admitted that the scheduled payments were voidable transactions under s 588FE.
- Directors potentially liable to indemnify the Commissioner under s 588FGA had consented to the orders.
Why It Matters
The decision confirms a practical route for resolving preference-recovery litigation: properly particularised allegations and a respondent’s consent may provide the admission needed for the Court to exercise its statutory power under s 588FF.
It also highlights the significance of joining and obtaining consent from directors where a recovery order may trigger their statutory indemnity obligation to the recipient of the voidable payments.