Queensland Quarry Group Pty Ltd (in liq) & Anor v Cosgrove

[2019] QCA 220

Queensland Court of Appeal

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Interrogate

Catchwords

1. Corporations
2. › Winding up
3. › Voidable transactions
4. › Unfair preferences
5. › Defence under s 588FG(2)
6. › Whether creditor had no reasonable grounds for suspecting insolvency
7. › Onus on creditor to prove negative
8. › Cumulative assessment of objective indicators
9. › Corporations Act 2001 (Cth), ss 588FF(1), 588FG(2)
1. Corporations
2. › Winding up
3. › Voidable transactions
4. › Unfair preferences
5. › Defence under s 588FG(2)(b)
6. › Distinction between subjective and objective tests
7. › Whether statutory demand and winding up application create insurmountable obstacle to defence
8. › Corporations Act 2001 (Cth), s 588FG(2)(b)(i), (ii)
1. Appeal and New Trial
2. › Appeal
3. › Interference with discretion of court below
4. › Whether trial judge made error of law in applying s 588FG(2) defence
5. › Whether substantial injustice
6. › District Court of Queensland Act 1967 (Qld), s 118(3)

Quick Take

A creditor who has issued a statutory demand and filed a winding up application faces an extremely difficult task in establishing the s 588FG(2) defence, particularly where the creditor also had knowledge of unpaid third-party creditors and the debtor's repeated contractual defaults. The creditor's subjective beliefs about the debtor's business activity cannot overcome objective indicators of insolvency unless those beliefs are also objectively reasonable. Where insolvency remains as one rational hypothesis for the debtor's failure to pay debts, the creditor has not discharged the onus under s 588FG(2)(b)(ii).