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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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if an administrative receiver has made a preferential payment

Resolved Question:

if an administrative receiver has made a preferential payment to a party who subsequently refuses to repay the money are one or both parties guilty of fraud?
Submitted: 2 years ago.
Category: Law
Expert:  Ash replied 2 years ago.
Alex Watts :

Hello my name is ***** ***** I will help you with this.

Alex Watts :

On what basis is the repayment being sought please?

Customer:

Hi Alex,

Customer:

Admin Receiver made payment of disputed funds to third party even though they were aware other creditors were seeking to challenge this payment. The payment has prevented the now appointed liquidator from having funds to investigate the legitimacy of the payment and indeed aspects of the Admin Receivers conduct. Thus disadvantaging the company and its other creditors.

Alex Watts :

Is it fraud. Fraud 3 things, either false representation, failing to disclose information or abuse of position

Alex Watts :

The only possible one which is abuse of position which is:

Alex Watts :

(a)occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person,


(b)dishonestly abuses that position, and


(c)intends, by means of the abuse of that position—


(i)to make a gain for himself or another, or


(ii)to cause loss to another or to expose another to a risk of loss.

Alex Watts :

The problem is here, you have to show dishonesty. I don't think you can show that.

Alex Watts :

Dishonest means that it is dishonest by the standards of a reasonable person and the person knew it was dishonest

Alex Watts :

Here I think it was made in good faith - so no, I do not think it is fraud.

Alex Watts :

I am sorry if this is not the answer you want and certainly not the one I want to give you, but I have a duty to be honest

Alex Watts :

Can I clarify anything for you about this today please?

Customer:

We asked the Admin Receiver to provide 5 days notice before paying away the money so we could seek an injunction if needed to prevent it. They sat on it for over a month and then paid it without giving notice. The Admin Receiver took fees out of the money before transferring it, so did achieve a gain for himself and the third party and caused the Company to suffer loss of funds to meet the cost of liquidation.

Alex Watts :

Ok - that is still not fraud. Negligence I think, but not fraud. The difficulty is showing dishonesty

Customer:

ok thanks.

Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience: Solicitor with 5+ years experience
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