Shephard v Steel Building Products (Central) Limited  NZHC 189 is a recent decision of Associate Judge Abbott which applied the "running account" test introduced into New Zealand's voidable transaction regime in 2007. The test treats a series of transactions as a single transaction for the purpose of determining whether a creditor has received a preference, so long as the transactions form an integral part of a continuing business relationship.
Steel Building Products (trading as Metalcraft) manufactured and installed roofing products. Metalcraft engaged Hightower Roofing Ltd (in liquidation) as a roofing contractor to provide installation services to Metalcraft's. Hightower also acquired roofing products off Metalcraft.
From time to time, Metalcraft and Hightower would do a reconciliation of the amounts owed to the other, setting off the price of roofing services provided against the purchases Hightower had made from Metalcraft.
The day before Hightower was put into liquidation, it made a $12,500 payment to Metalcraft which the liquidators sought to set aside. The Court held that when applying the "running account" test, liquidators cannot pick the peak point of indebtedness from which to start the analysis. The full period of the trading relationship must be considered with regard being given to the context and purpose of payments made. In this case, only the last payment of $12,500 was set aside on the basis it was made at a time when the nature of the relationship had changed and the continuing business relationship had come to an end.
Metalcraft had no defence under section 296 because a reasonable creditor would have suspected insolvency and it had not provided 'new' value or altered its position in reliance after payment was received.
See court decision here.