HARRIS SCARFE LTD (ADMINISTRATORS APPOINTED) (RECEIVERS & MANAGERS APPOINTED) (ACN 007 870 886)

Companies - Administration - Receivers appointed - Goods supplied under retention of title clause - Whether leave required to take or continue proceedings against receivers

Companies - Receivers and managers appointed - Retention of title clause - Undertaking by receivers to hold proceeds of sales of goods in separate account - Refusal to comply with supplier's demand for payment of purchase price or return of goods - Whether action for conversion lies against receivers - Action on receivers' undertaking

Tort - Conversion - Goods held by company receivers - Retention of title clause - Whether supplier of goods has right to immediate possession - Section 440C Corporations Law

Australian Mutual Provident Society v GEO Myers & Co Ltd [1931] HCA 31; (1931) 47 CLR 65

Caxton Publishing Co v Sutherland Publishing Co [1939] AC 178

Osborne Computer Corporation Pty Ltd v Riddell (1995) 13 ACLC 1210

1 ROBERTS-SMITH J: This is an application by chamber summons filed by the plaintiff for summary judgment against the second defendants pursuant to O 14 r 1 of the Rules of the Supreme Court.

2 The action was commenced by a generally indorsed writ of summons filed 18 April 2001 in which the plaintiff claimed against the first and second defendants final injunctions restraining them from using or otherwise dealing with goods identified in a schedule to the writ and an order for delivery up of such goods, or alternatively damages (including punitive damages) for conversion.

3 On the same date the plaintiff filed a chamber summons seeking leave to commence the action against the first defendant and interlocutory injunctions. The plaintiff also filed the usual undertaking as to damages.

4 The applications came before Wheeler J on 23 April 2001 and were stood over sine die. They were subsequently re-listed before me on 24 July 2001.

5 In the meantime the plaintiff had filed an amended writ of summons on 21 June 2001. By its statement of claim the plaintiff asserted:

"1. The Plaintiff is and, at all material times, was:

1.1 a company duly incorporated pursuant to the laws of Western Australia; and

1.2 a manufacturer, importer and distributor of childrenswear.

2. The First Defendant is and, at all material times, was:

2.1 a company duly incorporated pursuant to the laws of Western Australia; and

2.2 a company which trades as 'Harris Scarfe' and carries on the business of a retail shop which sells, inter alia, childrenswear.

3. The Second Defendants were appointed as Receivers and Managers of the First Defendant and associated companies ('the Harris Scarfe Group of Companies') on 6 April 2001 and continue to act as Receivers and Managers of the Harris Scarfe Group of Companies.

4. Between August 1998 and March 2001:

4.1 on various dates the First Defendant, by employees, placed oral and/or written purchase orders with the Plaintiff for the Plaintiff to supply items of childrenswear to the First Defendant;

4.2 on various dates between August 1998 and March 2001, pursuant to the First Defendant's purchase orders, the Plaintiff supplied to the First Defendant the goods ordered by the First Defendant;

4.3 on various dates between August 1998 and March 2001, the Plaintiff (by its agents) delivered the goods to the First Defendant and the First Defendant (by employees or agents) acknowledged receipt of the goods by signing and returning the proof of delivery notes to the Plaintiff's agents (the 'Contracts').

5. On various dates between August 1998 and March 2001, by written invoices, the Plaintiff requested payment for the goods supplied to the First Defendant pursuant to the Contracts (the 'Invoices'). The goods indicated in the Invoices are the goods supplied by the Plaintiff to the First Defendant pursuant to the Contracts ('the 'Goods').

Particulars of Goods

See Attached Schedule A

6. The terms and conditions of the Contracts were written on the back of the Invoices forwarded to the First Defendant on various dates (the 'Terms and Conditions'). Relevant Terms and Conditions were that:

6.1 the First Defendant would not be entitled to cancel the whole or part of any purchase orders for any period longer than 8 weeks after the written purchase order;

6.2 the goods shall be deemed to have been delivered by the Plaintiff and received by the First Defendant on the date noted in the proof of delivery note signed by the First Defendant or the First Defendant's employee or agent;

6.3 all invoices are due and payable in full on the last banking day of the month following the date of invoice;

6.4 title to the goods passes to the First Defendant when the First Defendant pays the full purchase price indicated in the invoice;

6.5 until title to the goods passes, the First Defendant must not encumber or otherwise charge the goods, the First Defendant possesses the goods as bailee only and the First Defendant acknowledges that the Plaintiff is entitled to maintain an action for the proceeds of sale of any of the goods by the First Defendant;

6.6 if the First Defendant does not pay the full purchase price when due, the Plaintiff may enter the premises where the goods are situated and repossess them, the First Defendant must deliver up the goods to the Plaintiff or the Plaintiff's agent and the First Defendant indemnifies the Plaintiff against any claim, damage, liability, cost, expense or payment which the Plaintiff suffers, incurs or becomes liable for in respect of the Plaintiff's exercise of its rights of recovery; and

6.7 the Terms and Conditions shall be construed and operate in accordance with the laws in force in the State of Western Australia which shall govern the Contract between the parties and the parties irrevocably submit to the exclusive jurisdiction of the Courts of Western Australia.

7. On various dates, and in or about the beginning of each month between September 1998 and April 2001, the Plaintiff sent to the First Defendant a statement of the First Defendant's account which indicated all invoices which remained unpaid (either in full or in part) at that time.

8. In breach of the Contracts, the First Defendant:

8.1 had not paid in full for the Goods supplied pursuant to the Contracts by the last banking day of the month following the date of the Invoices;

8.2 has refused or failed to deliver up the unsold portion of the Goods to the Plaintiff.

9. By reason of the First Defendant's breach of the Contracts the Plaintiff has suffered loss and damage.

Particulars of Loss and Damage

The total sum of the Invoices between August 1998 and March 2001 which have not been paid in full or in part being $350,763.58.

10. The Second Defendants have, since their appointment as Receivers and Managers of the First Defendant on 6 April 2001, had in their possession unsold portion of the Goods supplied by the Plaintiff to the First Defendant pursuant to the Contracts.

11. By a facsimile dated 6 April 2001 from the Plaintiff's agent (Tottle Christensen) to the Second Defendants, the Plaintiff:

11.1 notified the Second Defendants that the First Defendant owed the Plaintiff $350,763.58 pursuant to the Contracts;

11.2 notified the Second Defendants that the Plaintiff retained title to the unsold portion of the Goods in the Second Defendants' possession; and

11.3 demanded that the Second Defendant immediately deliver up the unsold portion of the Goods in the Second Defendants' possession; and

12. By a facsimile dated 9 April 2001 from the Plaintiff by its agent (Tottle Christensen) to the Second Defendants, the Plaintiff made a second demand for the Second Defendants to deliver up the unsold portion of the Goods in the Second Defendants' possession.

13. Despite the demand pleaded in paragraphs 11 and 12 herein, the Second Defendants have unlawfully refused and/or failed to deliver up the unsold portion of the Goods in the Second Defendant's possession.

14. By reason of the Second Defendants' unlawful refusal and/or failure to deliver up the unsold portion of the Goods, the Plaintiff has suffered loss and damage."

6 By the statement of claim the plaintiff claimed final injunctions restraining the first and second defendants from using or dealing with the unsold portion of the goods, an order for delivery up of the unsold portion of the goods, or alternatively damages (including punitive damages) for conversion of the unsold portion of them.

7 On 27 June 2001 the second defendants ("the receivers") filed a memorandum of conditional appearance.

9 By its chamber summons filed 29 June 2001 the plaintiff seeks orders that:

"1. Judgment be entered against the second defendants;

2. The second defendants pay to the plaintiff forthwith the sums paid into a bank account entitled 'Harris Scarfe - Barrymores Sales' pursuant to the second defendants' undertaking dated 23 April 2001;

3. The second defendants deliver up forthwith to the plaintiff the unsold portion of the Goods (as defined in the Statement of Claim);

4. Alternatively to the order sought in Item 3, the second defendants pay to the plaintiff the value of the unsold portion of the goods to be assessed and damages for their detention to be assessed;

and that the second defendants pay the plaintiff's costs of the action."

10 The plaintiff's applications are supported by two affidavits of Colin Chen Mitchell sworn 18 April 2001 and 28 June 2001 respectively, each running to almost 90 pages.

11 The receivers rely upon an affidavit of Martin David Lewis sworn 19 July 2001.

12 The plaintiff is a manufacturer, importer and distributor of childrenswear.

13 The first defendant ("Harris Scarfe") is a company which carries on business as a retail shop selling a wide range of goods including childrenswear supplied by the plaintiff.

14 On 3 April 2001 Messrs Michael Dwyer and Lindsay Maxted of KPMG were appointed by the directors as voluntary administrators of Harris Scarfe and associated companies ("the Harris Scarfe Group"). On 6 April 2001 under a mortgage debenture to the Australia and New Zealand Banking Group Ltd ("the ANZ Bank") dated 16 August 1994, the second defendants were appointed receivers and managers of the Harris Scarfe Group.

15 Mitchell is Barrymores' company secretary and financial controller. In his affidavit dated 18 April 2001, he deposes that Harris Scarfe employees placed orders with Barrymores for the supply of items of childrenswear to Harris Scarfe and that the ordered items were delivered on various dates between August 1998 and March 2001. The goods were delivered by Barrymores' agent Multigroup Distribution Services Pty Ltd trading as Star Track Express ("Star Track") and on receipt of delivery of the goods, the standard practice was for Harris Scarfe to acknowledge receipt by the signing and returning "proof of delivery" notes to Barrymores.

16 Barrymores requested payment for the goods by invoices of various dates. Copies of these were exhibited to the affidavit.

17 Mitchell asserts that Barrymores has not to date been paid for any of the goods. I take this to mean any of the goods the subject of the invoices exhibited.

18 On the back of the Barrymores invoices are printed terms and conditions. Mitchell asserts that these have been incorporated into all previous contracts for the supply of childrenswear between Barrymores and Harris Scarfe. The terms and conditions contain a reservation of title ("ROT") clause as follows:

3.1 Title to the Goods passes to you when you pay the full purchase price in accordance with clause 1.

3.2 Until title to the Goods passes to you under clause 3.1 and without prejudice to any of our rights, you must not encumber or otherwise charge the Goods, you possess the goods as bailee only and you acknowledge that we are entitled to maintain an action for the proceeds of sale of any of the Goods by you.

3.3 If you do not pay the full purchase price when due, we may enter the premises where the Goods are situated at (sic) and repossess them, you must deliver up the Goods to us or our agent if so directed by us and you indemnify us against any claim, damages, liability, cost, expense or payment which we suffer, incur or become liable for in respect of the exercise of our rights under this clause.

3.4 Notwithstanding the foregoing, you may sell the goods to a third party in the ordinary course of business."

19 On 6 April 2001 when Mitchell became aware that receivers and managers had been appointed, he instructed Barrymores' solicitors to write to them. They did so by facsimile letter sent the same day. The letter advised that Barrymores had supplied to Harris Scarfe goods on which there was then a total amount still owing of $350,763.58. Statements detailing the amounts outstanding were attached. The solicitors claimed that the moneys were currently due and payable. They also attached a copy of the terms and conditions of sale of goods and drew the receivers' attention particularly to cl 3 which the solicitors described as a "classic 'all moneys' clause'" and asserted that the title to the goods supplied did not pass until all moneys due and outstanding to Barrymores were paid. They claimed that in relation to the stock supplied and as detailed in the documentation attached, title had never passed. They then wrote:

"My client hereby demands that you forthwith hand up possession to all the goods in your company's possession (now in your possession by reason of your appointment). Should you fail to do so, then you will be personally liable for conversion."

20 On 9 April 2001 Barrymores received a circular to creditors and suppliers of Harris Scarfe from the receivers dated 6 April 2001. This was a circular to retention of title claimants. It advised of the administration and the appointment of the receivers and managers and acknowledged receipt of correspondence from the recipient concerning an ROT claim against goods in the possession of Harris Scarfe at the date of the administrators' appointment.

21 In the circular the second defendants ("the receivers") advised that they were currently working to effect as efficiently and effectively as possible a sale of the Harris Scarfe business which would necessarily involve the sale of its stock holdings and may include goods in respect of which the recipient asserted an ROT claim. They advised that a stock report had been compiled and it was their intention to review all ROT claims as quickly as possible. They further advised that while the recipient had not yet established to their satisfaction that it had retained title in goods held by Harris Scarfe as at the date of the administrators' appointment, they proposed nonetheless to make arrangements, in the event of sale of those goods, to ensure that the claimant's position was taken into account.

"(a) Harris Scarfe may, during the receivership, sell goods subject to ROT;

(b) If any ROT supplier is able to establish a valid ROT claim either to the second defendant's satisfaction or that of a court they would pay out of Harris Scarfe's assets the invoice value of the goods sold during the receivership and found to be the subject of a valid ROT claim, or arrange for the return of the stock if not required for trading;

(c) At all times during the receivership the second defendants would maintain Harris Scarfe's assets at a level which would ensure that payment in full of all valid ROT claims could be made. To the extent necessary they would assert an equitable lien over Harris Scarfe's assets to ensure that valid claims were paid;

(d) The arrangements would remain in place until further agreement between the parties or a contrary order of the court."

23 By facsimile message dated 17 April 2001 Barrymores' solicitors notified the receivers that the arrangements proposed were not acceptable to Barrymores and if it was an offer, it was rejected.

24 Finally, in his affidavit of 18 April 2001, Mitchell deposes that a large proportion of the goods are part of Barrymores' winter range of childrenswear for 2001 and that if they are returned to Barrymores, the goods could easily be resupplied to other retail shops.

25 In his affidavit of 28 June 2001, and as required by O 14 r 2(1) Mitchell deposes to his belief that the second defendants have no defence to the claim. He also refers, inter alia, to a bundle of correspondence exhibited to his affidavit, being correspondence between the solicitors for the parties between 24 April and 22 June 2001, relating principally to Barrymores' application for summary judgment.

26 It is significant to note an undertaking given by the receivers on 23 April 2001 in the following terms:

"The Receivers hereby undertake to Barrymores Pty Ltd (ACN 009 263 076) ('Barrymores'):

1. On the 17th day of each calendar month, commencing on 17 May 2001, the Receivers shall pay into a bank account entitled 'Harris Scarfe - Barrymores sales' ('the account') the lesser of:

1.1 the aggregate retail price of all Barrymores goods sold during each period:

1.1.1 commencing on the 3rd day of the calendar month preceding the calendar month of the payment; and

1.1.2 ending on the 2nd day of the calendar month in which the payment is to be paid; or

1.2 the amount necessary to bring the balance of the account to the amount of $350,763.58.

For the avoidance of doubt, the first period in respect of which the Receivers are obliged to make a payment to the account is the period commencing 3rd April 2001 and ending 2nd May 2001.

2. For the purpose of the preceding clause, the 'aggregate retail price of goods sold during the period' shall be that amount determined by the print out entitled 'Value of Goods sold by supplier SKU number' for goods supplied by Barrymores for the period from the Harris Scarfe Merman inventory system.

3. The Receivers shall be the sole signatories to the account.

4. The Receivers shall not pay out any sums from the account except with the consent of Barrymores or as ordered by the Supreme Court of South Australia or Supreme Court of Western Australia.

5. If the Receivers and Barrymores agree or the Supreme Court finds that Barrymores remained the owner of stock held by Harris Scarfe Limited as at 3 April 2001 Barrymores shall be paid from the account the value of the stock owned by Barrymores. The basis of determining the value of the stock shall be that agreed between the Receivers and Barrymores or determined by the Supreme Court."

27 From the correspondence it appears there was some disputation about whether or not the action itself had been "adjourned" on 23 April 2001 or whether that consent "adjournment" had only been of the application for an interlocutory injunction and default judgment. Barrymores' solicitors maintained it was only the latter.

28 In a letter to Barrymores' solicitors dated 21 June 2001, the Adelaide solicitors for the second defendants, Messrs Fisher Jeffries, indicated that the second defendants understood that like all retention of title claimants, Barrymores was keen to have its claim resolved as soon as possible. They advised that the receivers also wished to resolve the claim but had to act responsibly. They suggested that if Barrymores could postpone further action for a short time the matter would be more likely to be resolved appropriately without unnecessary cost. Having then responded to some queries previously raised by Barrymores' solicitors, Fisher Jeffries continued:

"Our clients have not completed their investigation of your client's claim but expect to do so very shortly but probably not by 23 June 2001. The wording of the clause on the reverse of your client's statement appears to give rise to a valid claim. However, our clients have had to investigate other circumstances, such as whether that clause was excluded by other communications. Our clients have also had to investigate the levels of stock and debt. Those tasks are substantial.

We note your various observations about the time it has taken our clients to investigate your client's claim. Our clients have over 280 retention of title claims to investigate. They are investigating each claim in as efficient a manner as is practicable. Your client is protected by the undertaking that is in place. Your client has advanced no reason why your client's claim should be given special treatment."

29 They foreshadowed that if the matter was brought back before the court they expected to be instructed to apply to have it transferred to South Australia.

30 By facsimile letter dated 22 June 2001, Barrymores' solicitor took issue with a number of the points raised by Fisher Jeffries and concluded by advising that they had written to the court requesting Barrymores' application to be re-listed and that they intended to file an application for judgment.

31 Martin David Lewis is a chartered accountant and member of the firm Ferrier Hodgson of which the second defendants are principals. In his affidavit sworn 19 July 2001, he deposes that the receivers are operating the Harris Scarfe business with a view to sale of the whole, or a substantial part of it, as a going concern. An essential part of operating the business is managing its stock. This work is being carried out by the receivers; the tasks of the administrators are in addition to that. Lewis has been assigned by the receivers to lead the team dealing with issues relating to the stock of Harris Scarfe. At the date of the receiver's appointment, Harris Scarfe's business comprised 35 department stores operating in all States in Australia. The head office, then with 230 employees, is situated in central Adelaide in an office building next to Harris Scarfe's largest store. The office operates from three floors of the building. The receivers have recently announced the closure of six of the department stores and a reduction of head office staff by 50.

32 Harris Scarfe has over 1000 suppliers. Of those suppliers, 301 have lodged claims with the receivers based on ROT clauses. The investigation of each claim (ie those confined to ROT claimants) requires a very significant amount of work by the receiver's staff. The high volume of stock ordered and received by Harris Scarfe has magnified the size of that task.

33 In his affidavit, Lewis describes the administrative and logistic considerations which make the task of dealing with the claims difficult and time-consuming.

34 To 19 July 2001, the receivers had resolved 50 of the 301 ROT claims by agreement.

35 Pursuant to the undertaking the receivers have paid amounts to the separate bank account, the balance of which stood at $265,575.01.

36 Lewis asserts that to that date only two suppliers had commenced proceedings (both in the Supreme Court of South Australia) in respect of ROT claims. In neither had summary judgment been sought, nor is there an injunction on foot.

37 Barrymores' application for an interlocutory injunction was not pursued at the hearing before me and it is accordingly not necessary for me to refer to those parts of Lewis' affidavit going to that issue. So far as the application for summary judgment is concerned, Lewis deposes that the receivers will rely on three grounds of defence. The first is that Barrymores has not discharged its onus of proving that there was stock on hand supplied by it as at the date of appointment of the receivers and that stock was supplied pursuant to specific invoices that have not been paid. As to that, he asserts that in his affidavits, Mitchell does not describe how Barrymores can determine by inspection of stock supplied to Harris Scarfe, whether it was supplied pursuant to a paid or an unpaid invoice. It was not Barrymores' practice to record individual serial numbers of individual items of stock on the invoices; they do record Barrymores' style numbers but those numbers could appear on both paid and unpaid invoices.

38 The second ground of defence which it is said would be relied upon, is that Barrymores has no action in conversion because it has not now, and has not at any time since the appointment of the voluntary administrators, had an immediate right to possession of stock supplied by it in Harris Scarfe's possession by reason of the operation of s 440C and s 440D of the Corporations Law.

39 The third defence to be relied upon is that Barrymores has advanced no evidence that its ROT clause was accepted by Harris Scarfe. Further, by reason of the terms of purchase orders issued by Harris Scarfe and a suppliers' guide circulated to its suppliers, the terms of trade upon which Barrymores seeks to rely have not been accepted by Harris Scarfe. A copy of the suppliers guide is exhibited to Lewis' affidavit as "MDL 2". That is entitled "Authorised Cross-Dock Supplier Information (PPG) Policy and Procedure Guide". I shall refer to it as the Suppliers' Guide. Clause 1 states that:

"These are the standard Trading Terms and Conditions of Harris Scarfe Limited, which cannot be varied."

40 Clause 3 is headed "Commercial Trading Terms" and contains the following paragraph:

"This document sets out the terms on which you supply Harris Scarfe Limited with merchandise. By accepting one purchase order from Harris Scarfe Limited, you agree to the terms in this document in respect of each purchase order Harris Scarfe Limited gives you in the future - until Harris Scarfe Limited advises you of a change in the terms of purchase."

41 However, there is nothing in the Suppliers' Guide which says anything about the passing of title to goods supplied to Harris Scarfe.

"Now shown to me marked 'MDL 3' is a copy of the mailing list of the first defendant recording that the suppliers guide was sent to the plaintiff."

43 MDL 3 is a list of names, companies and addresses. The entry presumably relevant for present purposes is "Mr John Barrymore, Managing Director, Barrymores Pty Ltd, 82 Thompson Road, North Fremantle, WA 6159". The list is simply a list - there is no narrative nor explanation and no indication of its purpose.

44 At the outset of the hearing on the chamber summons, Mr Christensen for the plaintiff, indicated the plaintiff was prepared to accept the undertaking given by the second defendants and in light of that would not be pursuing the application for an interlocutory injunction. It is therefore unnecessary for me to consider that further.

45 I should also note that I was informed by counsel that although they were served with the writ, the application for injunction and the application for leave, together with the supporting affidavits, the administrators have not been served with the application for summary judgment documents.

46 There is a preliminary issue whether or not the plaintiff needs leave to proceed in this action. The receivers contend that leave is required under s 440D of the Corporations Law; Barrymores argues that it is not obliged to obtain leave to proceed because it is not seeking orders against the first defendant, but if leave is required it should be granted.

47 Section 440D appears in Division 6 of Part 5.3A of the Corporations Law. The division contains provisions for the protection of a company's property during administration. Sections 440C and 440D are in similar vein:

"440C: During the administration of a company, the owner or lessor of property that is used or occupied by, or is in the possession of, the company cannot take possession of the property or otherwise recover it, except:

(a) with the administrator's written consent; or

(b) with the leave of the Court.

440D(1) During the administration of a company, a proceeding in a court against the company or in relation to any of its property cannot be begun or proceeded with, except:

(a) with the administrator's written consent; or

(b) with the leave of the Court and in accordance with such terms (if any) as the Court imposes."

48 It is submitted by Mr Robson on behalf of the receivers, that it would undermine the clear purpose of s 440D if Barrymores could circumvent the requirement of leave by clothing what is in fact an attack on the trading stock of the company at administration as an attack on the company's receivers. He points to s 435A which states that the purpose of Part 5.3A of the Corporations Law is to "maximise the chances of the company, or as much as possible of its business, continuing in existence" and contends that construing s 440D to allow Barrymores to attack the receivers without leave of the court would be inconsistent with that stated purpose. He argues that Barrymores' application, if granted, would breach the prohibition both in respect of "proceedings against the company" and proceedings "in relation to the property of" the company. In respect of the first it is put that the receivers are the agents of Harris Scarfe and that to the extent they control property in Harris Scarfe's possession, they act only as agents; thus an injunction restraining the agents of Harris Scarfe from taking certain steps would be an injunction preventing Harris Scarfe itself from taking those steps. In respect of the second limb, it is argued first that the stock schedule put forward by Barrymores says nothing as to the mechanism by which stock supplied pursuant to unpaid invoices can be distinguished from stock supplied pursuant to paid invoices and so if an injunction in the terms sought by Barrymores were granted, it would have the effect of injuncting the receivers from dealing in stock of the same styles as listed in the schedule, even though Harris Scarfe or the receivers had already paid for that stock. If stock has been paid for, then title has passed and the stock is "the property of" the company within the meaning of s 440D. The second contention here is that the definition of "property" in s 9 of the Corporations Law, (the dictionary section) is so wide as to include even property the subject of an ROT claim.

49 The point above about identification of stock can be dealt with by the observation that the plaintiff's claim relates to all of its goods on hand by Harris Scarfe as at the date of appointment of the administrator and that according to Mitchell's affidavit, none of the goods then still on hand have been paid for - and in any event (if the plaintiff's argument about the effect of the ROT clause is correct) title to none of the goods still on hand has passed even though some payments(s) may have been made.

"'property' means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action;"

51 In support of his contention that leave should be refused under s 440D, Mr Robson submits that the receivers are operating the Harris Scarfe business with a view to a sale of the whole, or substantial part of it, as a going concern. He points out that the company cannot continue to trade if it does not have stock to sell and to the extent that Barrymores seeks relief, that would prevent Harris Scarfe continuing to sell its stock, that would be directly contrary to the principal object of Part 5.3A of the Corporations Law.

52 He submits that Part 5.3A envisages that creditors' claims will be dealt with in accordance with the scheme laid down in that Part, not by creditors unilaterally taking action. He argues that the plain purpose is that the limited resources of a company in administration are not to be diverted by litigation at the instance of a creditor, from the principal goal of maximising the chances of the company's business continuing in existence. In the present case the receivers have already allocated substantial resources to resolving ROT claims and Barrymores has put forward no material why its position is special such that its claim should be determined by this Court rather than in the usual course.

53 The final submission made by counsel for the receivers in this regard is that if leave is granted, it ought to be on condition that the proceedings be transferred to the Supreme Court of South Australia which is the court presently dealing with the only two other proceedings thus far instituted.

54 For his part, Mr Christensen submits that leave in the present proceedings is not required because the orders are sought not against the administrator but against the receivers - and they can be liable in conversion. He distinguishes between the administration of the company on the one hand and the actions of the receivers who are realising company assets for the benefits of the debenture holder, the ANZ Bank, on the other.

55 The question whether or not leave is required here, turns on whether the proceedings are against the company or are in relation to any of its property.

56 Mr Christensen says the proceedings are not against Harris Scarfe (nor the administrators) but against the receivers. I do not accept that submission. The amended statement of claim seeks relief against the company in administration as the first defendant and against the receivers as second defendants. The receivers' objection to jurisdiction was taken at the outset and is the basis of their conditional appearance. Wheeler J declined to adjourn the proceedings on 23 April 2001 because the question whether they could have been properly instituted without leave had not been resolved. That is why her Honour ordered simply that the proceedings be re-listed. Mr Christensen's submission that by this application for summary judgment, the plaintiff seeks orders only against the receivers is no answer to the leave point. The proceedings (ie the action) are in terms brought against the company in liquidation as well as the receivers and as an administrator has been appointed, they are within the terms of s 440D for that reason.

57 The receivers also contend the case falls within the second limb of s 440D, namely that the goods are the property of Harris Scarfe for the purposes of s 440D, notwithstanding the ROT clause. They rely on J & B Records Ltd v Brashs (1995) 36 NSWLR 172 and Roder Zelt-Und Hallenkonstruktionen GMBH v Rosedown Park Pty Ltd [1995] FCA 1221; (1995) 17 ACSR 153. Both of those cases primarily concerned deeds of company arrangement.

58 In J & B Records Ltd v Brashs, Hodgson J was required to determine whether or not the plaintiffs needed leave pursuant to s 444E of the Corporations Law to pursue the proceedings. They were proceedings against a company and its joint administrators. The administrators had been appointed under a Deed of Company Arrangement. Certain goods had been ordered by, and delivered to, the company by the plaintiffs prior to the appointment of the administrators. The goods were supplied subject to certain contractual conditions, including that the goods would remain the property of the plaintiffs until sold. After their appointment the administrators undertook personally to pay to the plaintiffs the cost price of any goods sold by them during the course of their administration if it be found that they were subject to a valid ROT claim. The plaintiffs claimed that the administrators had acted in breach of that undertaking. Section 444E of the Corporations Law provides that until a Deed of Company Arrangement terminates, a person bound by it cannot, inter alia, begin or proceed with a proceeding against the company or in relation to any of its property without leave of the court. Section 444E(4) defined "property" for the purposes of that provision as including "property used or occupied by, or in the possession of" the company.

59 The first question was whether a supplier of goods under an ROT clause to a company that was later placed under administration and then executed a Deed of Company Arrangement, required leave to begin or proceed with an action under s 444E(3). The plaintiff (which had supplied the goods) argued that leave was unnecessary as it was the owner of them. As to that, Hodgson J said (181):

"... I have come to the view that s 444D(2) and (3) do not have the effect of removing the requirement for secured creditors and owners or lessors to obtain the leave of the court under s 444E(3) in respect of court proceedings to enforce their rights as secured creditors or owners or lessors, where those persons are creditors with claims arising on or before the day specified in the deed, and where these claims are associated with the security or property.

There is some force in the submission ... that this would have the result of setting up a scheme which, to some extent, would encourage self-help and resort to extra-curial enforcement or recovery procedures, which is somewhat contrary to the trend of legislation and judicial decisions in recent times. However, I think the preferable view is that those three sections were intended to set up something of a code relating to court proceedings in relation to matters concerning claims arising on or before the day specified in the deed; so that the court which is overseeing the administration of the deed will have general control of such proceedings, either by way of applications for leave under s 444E, or applications for orders limiting actions by owners or secured creditors under s 444F. In deciding whether to give leave under s 444E to a secured creditor or owner, and if so on what conditions, a court will have regard to the circumstance that under s 444F a secured creditor or owner will be restrained from extra-curial action only if the court is satisfied their interests will be adequately protected."

60 His Honour was there recognising a presumption that leave would be granted to a secured creditor or owner unless their interests would otherwise be adequately protected under the deed.

61 As to the second matter argued, his Honour held that the plaintiffs' claim based on the undertaking given by the administrators was not a claim arising on or before the day specified in the deed - the giving of the undertaking was an entirely new and substantive action which gave rise to a new cause of action and a new claim. His Honour further held that the claim was substantially not one against the company itself, but against the administrators, and for that reason also, leave was not required under s 444E. However, his Honour went on to say (182):

"There is, however, some force in Mr McDougall's submission that the termination of this claim against the administrators will, it would seem, require a determination concerning property of the company within s 444E(3) in relation to which the plaintiffs were creditors ... It seems to me that even if the plaintiffs do not seek any relief against the company, it may still be possible to say that these are proceedings brought against the company relating to claims arising on or before the day specified in the deed, which are also in relation to the property of the company."

62 Hodgson J suggested that one possible solution would be to require the plaintiffs to amend so as to exclude the company from the proceedings and intimated he would be minded to take that course subject to an undertaking from the plaintiffs that apart from those proceedings, they would not seek to pursue the company otherwise than as unsecured creditors. His Honour concluded (183):

"... At present my view is that the appropriate course is to require such an undertaking from the plaintiffs, and on that basis, remove the company as a defendant. When that is done, it seems to me that there is no obstacle to the plaintiffs continuing these proceedings against the administrators on the basis of their undertaking."

63 That case was followed in Roder. There Roder had agreed to sell goods to Rosedown Park Pty Ltd ("Rosedown") with payments to be made in instalments after delivery. It ultimately became a matter of dispute whether the contract provided that title to the goods be retained by Roder until the purchase price was paid in full. The goods were delivered but payments fell into arrears. Subsequently the second respondent (Eustace) was appointed administrator of Rosedown. Roder claimed possession of the goods but the claim was rejected. Roder then commenced proceedings claiming possession, leave to proceed under s 440C and other orders. Leave was granted and the proceedings were stood over for trial. Rosedown's creditors later resolved that Rosedown enter into a Deed of Company Arrangement and that was done. At trial, von Doussa J, having set out (at 172) the passage I have quoted above from J & B Records Ltd v Brashs Pty Ltd expressed his agreement with those conclusions and then turned to the facts of the case before him. His Honour noted that the essential rights which Roder was seeking to enforce were its rights as owner of the goods, which rights existed before the appointment of the administrator. He went on to say:

"For the purposes of s 444E(3) , insofar as remedies are now sought against Rosedown (eg for declaratory relief, delivery up and damages for wrongful detention) this action is obviously a 'proceeding against the company'. Insofar as additional or other relief is sought against Mr Eustace this action is one 'in relation to any of its property': see s 444E(4). So a precondition to the pursuit of this action is leave under s 444E(3)."

64 The first point to note is that the definition of "property" for the purposes of s 444E is much wider than the definition in s 9 of the Corporations Law which applies to s 440D.

65 It can at once be acknowledged that one of the purposes of Part 5.3A of the Corporations Law is to maximise the chances of a company, or as much as possible of its business, continuing in existence. That is expressly stated in s 435A. But the fact that allowing Barrymores to attack the receivers without leave of the court would be inconsistent with that purpose seems to me of no moment if the present proceedings do not fall within the terms of s 440D. On the other hand, if the terms of the section are ambiguous, then they must be construed in such a way as would best promote the purpose or object of the legislation (s 18 Interpretation Act 1984 (WA)).

66 It is the case that by cl 9.2 of the mortgage debenture (annexure "CCM6" to Mitchell's affidavit sworn 18 April 2001) the receivers are appointed agent of the mortgagor. There was a similar debt provision before the High Court in Sheahan v Carrier Air Conditioning Pty Ltd & Ors (1997) 189 CLR 407. The circumstances of that case are quite distinguishable from the present. There the second respondent had been appointed receiver of TOC Pty Ltd by the ANZ Bank under a mortgage debenture. The appellant was later appointed liquidator of TOC. Between the date of the appointment of the receiver and the date of appointment of the appellant, the former arranged for three payments to be made from TOC to two of its trade creditors. The payments were made from the receiver's bank account. The liquidator sought to recover the payments. In the High Court one issue for determination was whether the payments made were to be characterised as being made by the receiver or by TOC. The receiver contended that the payments were made by him pursuant to a personal obligation or in satisfaction of a personal liability. The majority (Dawson, Gaudron and Gummow JJ) agreed that was so.

67 It is apparent from the reasoning of the majority in Sheahan (particularly at 329) that in the exercise of his functions and powers under a debenture, a receiver will not necessarily always be acting as agent of the company. In Sheahan he was not, because the payments were from the receiver's bank account established in compliance with s 421(1) of the Corporations Law and the provisions of the debenture. They were properly characterised as payments made by the receiver, even though, because they were used to pay creditors of the company, they had a significant impact upon substantive legal relationships between the company and its creditors. An agency created by a debenture provision such as this has special characteristics, the true nature of which the majority said (329) is indicated in a passage from the judgment of Sir Raymond Evershed MR in Re B Johnson & Co (Builders) [1955] Ch 634.

"[A] person appointed as receiver and manager is concerned, not for the benefit of the company but for the benefit of the mortgagee bank, to realise the security; that is the whole purpose of his appointment; and the powers which are conferred upon him, and which I have to some extent recited, are ... really ancillary to the main purpose of the appointment, which is the realisation by the mortgagee of the security."

68 So the question here becomes whether in dealing with the goods supplied by Barrymores, the receivers are, or would be, acting as the agent of Harris Scarfe, so that it could be said an injunction preventing them doing so would in effect be an injunction against the company.

69 On the reasoning in Sheahan I think there must be an affirmative answer to that question. The goods the subject of these proceedings were not supplied to the receivers as part of any activity of theirs to continue the operations of the company for the purpose of generating income or realising assets for the benefit of the ANZ Bank. These are goods supplied to Harris Scarfe before the appointment of the administrators. Insofar as the receivers were to sell or otherwise deal with or have to account for the proceeds of the sale of the goods, they would be acting as the agents of Harris Scarfe, albeit for the benefit of the ANZ Bank. Limited though that agency may be, it is precisely in relation to it that the orders the plaintiff seeks would operate. In that regard - and to that limited extent - an injunction or any other order requiring the receivers to deliver the unsold goods to the plaintiff would be, in effect, an order against Harris Scarfe and certainly by its effect be within the scope of s 440D.

70 Whether or not the goods are the property of Harris Scarfe within the meaning of s 9 of the Corporations Law is another question. As I have noted, that is not as wide as the definition of "property" in s 444E(4) of the Corporations Law considered in Roder. Even so, Mr Christensen allowed (t 60) that "clearly" Harris Scarfe has an equity of redemption in the goods. In my opinion that is sufficient to bring the goods within the description "... any ... equitable ... interest" in s 9 and accordingly the proceedings (ie the application for summary judgment against the receivers) is one in relation to property of the company within the meaning of s 440D and the plaintiff requires leave to proceed with it for this reason also.

71 There is arguably a degree of tension between the law's protection of the interests of secured creditors on the one hand and its purpose reflected in s 435A of the Corporations Law of seeking to either maximise the chances of a company under administration continuing in business or alternatively administering it in a way that results in a better return for (all) the company's creditors and members than would result from an immediate winding up.

72 My own view is that there is no such tension. The law strives for certainty and clarity. That is why secured creditors have priority over those who have no security. That is why I share the view of Hodgson J in J & B Records v Brashs that there is a presumption of leave in favour of a secured creditor where the creditor's interests would not otherwise be adequately protected under (in that case) a deed of company arrangement or (in this case) management by the receivers.

73 I accept the position is different where the company is solely under administration and Part 5.3A applies. I accept the force of Mr Robson's submissions in those circumstances. It may be expected that where an administrator is seeking to continue to trade the company and maximise the chance of keeping it in business, an application under s 440D to bring or continue proceedings against the company would rarely be granted (Foxcroft v The Ink Group Pty Ltd (1994) 125 ALR 677). Receivership for the benefit of a particular creditor is a different proposition.

74 Approaching the present matter in that way, I would grant leave to the plaintiff to proceed in this action and I see no reason to impose conditions on that grant of leave other than that the action be discontinued as against the first defendant. The receivers' undertaking contemplates determination of the ROT issue either by agreement between Barrymores and the receivers or by a Supreme Court. The evidence gives no cause for optimism that agreement could be reached between the parties in the foreseeable future. There is every likelihood Barrymores would ultimately have to seek a court determination in any event. That could be a long way down the track. In my opinion Barrymores should be permitted to have the issue determined in these proceedings. Nor am I persuaded there is any strong reason why the proceedings should be transferred to the Supreme Court of South Australia.

The application for summary judgment against the second defendants

75 On an application for summary judgment the plaintiff has the burden of persuading the court that the claim is good, that there is no defence to it so that leave to defend should not be granted and that judgment should be given for the plaintiff (Cordinup Resorts Pty Ltd v Terana Holdings Pty Ltd (1997) 143 FLR 18, 23). The power to order summary judgment should be exercised with great care and should never be exercised unless it is clear there is no real question to be tried (Fancourt v Mercantile Credits Ltd[1983] HCA 25; (1983) 154 CLR 87, 99). Summary judgment will not be ordered if there is real uncertainty without full argument or further investigation of the facts as to the plaintiff's right to judgment (Australian Can Co Pty Ltd v Levin & Co Pty Ltd [1947] VicLawRp 47; [1947] VLR 332, 335).

76 If the facts established are inconclusive, it is not possible to say there is no question to be tried and there should therefore be leave to defend (Fancourt, supra). However the procedure is not confined to cases which are immediately plain and obvious and the fact that a transaction is complex does not disentitle the plaintiff to relief in a clear case (Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62, 91) and extensive argument may be necessary to demonstrate there is no question which ought to be tried (Australian Can Co, supra, 334).

77 Actions should not be disposed of summarily when the facts are in dispute (White v Johnston (1886) 8 ALT 53) or when there is a conflict of affidavits (Evans v Bartlam [1937] AC 473, 489). The court should proceed on the basis the defendant's version of the facts will ultimately be accepted at trial (Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, 608). However, as Seaman points out ("Civil Procedure - Western Australia", Hon Paul Seaman, Butterworths, [14.3.3]) the court is not bound to accept uncritically every statement in an affidavit as raising a dispute of fact calling for further investigation, however equivocal, lacking in precision or inconsistent with undisputed contemporary documents (citing Eng Mee Yong v Letchumanan s/o Velayutham [1980] AC 331, 341).

78 Leave to defend will not be given where the defendant does no more than assert that they ought to be given the opportunity by discovery and cross-examination to see if there is a possible defence (Moscow Narodny Bank Ltd v Mosbert Finance (Aust) Pty Ltd [1976] WAR 109, 116).

79 In the end, the question is whether the defendant has a bona fide defence. To demonstrate that, the defendant's affidavit must condescend to particulars, stating clearly and precisely what the defence is and what facts are relied upon as supporting it. Bare allegations unsupported by material facts will not be sufficient (Moscow Narodny Bank, supra, 113). It will be sufficient, though, to show by material facts that there is an arguable defence.

80 On the material before me there is no dispute that the goods were supplied to Harris Scarfe by Barrymores. Each delivery was effected by a Harris Scarfe representative signing and returning a "proof of delivery" note. Barrymores requested payment for the goods by invoices of various dates. The reverse of each invoice bore the heading "Barrymores Pty Ltd. - Terms and Conditions of Sale" under which were printed 15 clauses ("Barrymores' terms and conditions"). The document commences with the words:

"Barrymores Pty Ltd shall only supply goods ('Goods') to you on the following terms and conditions unless we notify you, in writing, to vary these terms and conditions."

81 Clause 1 is headed "Payment", and subclause 1.1 reads:

"All invoices are due and payable in full on the last banking day of the month following the date of invoice."

82 I have already set out above the terms of cl 3 "Reservation of Title". Clauses 14 and 15 read:

"14 No variation or waiver to these Terms and Conditions shall be binding on us unless acknowledged by us in writing.

15. These Terms and Conditions shall be construed and operate in accordance with the laws in force in the State of Western Australia which shall govern the contract between the parties. The parties irrevocably submit to the exclusive jurisdiction of the Courts of that State."

83 Mitchell deposes that Barrymores' terms and conditions were incorporated into all relevant contracts for the supply of childrenswear between Barrymores and Harris Scarfe.

84 It is not in dispute that on 9 April 2001 Barrymores demanded delivery up of the goods still in Harris Scarfe's possession.

85 I shall deal first with the second defendants' submission that Barrymores has not discharged its onus of proving that there was stock on hand supplied by it as at the date of appointment of the receivers and that stock was supplied pursuant to specific invoices that have not been paid.

86 Mitchell does depose to the fact that the goods were supplied and that none of them have been paid for. The goods are specified in the invoices marked "exhibit A" to his affidavit sworn 18 April 2001 (they were not physically before me because of their bulk, but as counsel had agreed it was unnecessary to produce them nothing presently turns on that). The individual invoices and amounts claimed are listed in Barrymores' statements of account to Harris Scarfe at annexure "CCM4" of the affidavit.

87 To his affidavit filed 29 June 2001 Mitchell exhibits copies of the relevant Harris Scarfe purchase orders for the goods ("Exhibit 1") and Proof of Delivery notes obtained from Star Track Express ("Exhibit 2"). He also annexes copies of Star Track Express computer print-out of deliveries of Barrymores' goods to Harris Scarfe for the period 24 November 2001 (sic: 2000) to 14 March 2001 ("CCM2").

88 The second defendants make no positive assertion that they would seek to raise any defence that there was no Barrymores' stock on hand as at the date of their appointment, nor that the goods (or any of them) had been paid for. Indeed, Lewis' evidence that $265,575.01 has been paid into the receivers' account established pursuant to their undertaking to Barrymores, is a clear acknowledgment to the contrary.

89 That brings me to the meaning and effect of the ROT clause (I will assume for the moment the ROT clause was an operative contractual term; the receivers' contention that it was not is one with which I will deal separately below).

90 Mr Christensen's submission is that the ROT clause is an "all monies" clause. Mr Robson submits it relates only to the goods supplied under a particular invoice which remains unpaid. The point is one of construction.

91 ROT (or "Romalpa") clauses have become a feature in commercial contracts for the sale of goods since the decision of the English Court of Appeal in Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] WLR 676. As Gageler (Stephen Gageler "Retention of Title Clauses" (1989) Vol 2 Journal of Contract Law, p 34) explains, such clauses rely on two basic mechanisms: they seek to reserve property in goods in the seller until payment; and (often) seek expressly to create in the seller proprietary rights over assets into which the goods might be transferred or with which they might be mixed. The present clause concerns itself only with the former purpose. It expressly creates a bailment of the goods until payment of "the full purchase price in accordance with cl 1".

92 The word "Goods" is not defined in Barrymores' terms and conditions. Whether it refers only to those goods the subject of the particular unpaid invoice, or to all goods the subject of all due but unpaid invoices in one way make no difference in the context of this case - on either construction title to goods not paid for would not have passed. And the plaintiff's case is that none of the goods the subject of its claim have been paid for. That overcomes the submission on behalf of the receivers that Barrymores does not describe how goods can be identified as having been supplied under a paid invoice or an unpaid invoice. In these circumstances it is unnecessary for me to determine whether the ROT clause has any more extended operation - and in particular whether it would comprehend all goods supplied by Barrymores and still in Harris Scarfe's possession including those on invoices which had been paid (see Armour v Thyssen Edelstahlwerte AG [1991] 2 AC 339; Puma Australia Pty Ltd v Sportsmans Australia Ltd [1994] 2 Qd R 149 and Chattis Nominees v Norman Ross Homeworks (1992) 28 NSWLR 338).

93 The next contention advanced on behalf of the receivers is that the plaintiff has no action against them in conversion because at no time since the appointment of the administrators has it had an immediate right to possession of stock supplied by it and in Harris Scarfe's possession, by reason of s 440C and 440D of the Corporations Law. These sections were included in amendments made to the Corporations Law by No 210 of 1992 which came into operation on 23 June 1993.

94 These statutory provisions aside, there is no doubt that a receiver who deals with property beyond his authority may be held liable in conversion (In re Goldberg; ex parte Silverstone (No 2) [1912] 1 KB 384). A receiver is not able to sell goods which the company has brought under a contract providing for retention of title by the vendor until they have been paid for in full ("Ford's Principles of Corporations Law", Butterworths, 8th ed, [25.120] and [27.380]). Where a receiver refuses to deliver up goods the subject of a valid ROT clause the receiver will be liable to the owner in conversion (Roder, supra; Osborne Computer Corporation, supra) and exemplary damages may be awarded (see Berna Collier "Liquidators, Romalpa Clauses and Conversion of Goods: Robert A Conaghan (NZ) Ltd v A W Russell" (1995 3 Insolvency Law Journal, 85).

95 Conversion involves dealing with goods in a manner repugnant to the immediate right to possession of the person who has the property or the special property in them (Penfolds Wines Pty Ltd v Elliott [1946] HCA 46; (1946) 74 CLR 204, 229; Wertheim v Cheel [1885] VicLawRp 24; (1885) 11 VLR 107). The plaintiff must therefore show an immediate right to possession at the time of the act of conversion. A right to possession is a legally enforceable right to have actual possession ("Halsbury's Laws of Australia", Vol 19, [315 - 175]). Where the right to immediate possession has been suspended, as by a bailment, the bailor will not have an action in conversion (Glen v Abbott [1880] VicLawRp 188; (1880) 6 VLR (L) 483). More than one right to possess may exist in respect of a particular item; thus, the right to possess conferred by actual possession is subject to that of one who can show a better right (Halsbury_, supra_). Here the receivers have a right to possess the goods as against all the world - including Barrymores, unless and until Barrymores obtain the administrators' written consent or leave of the court under s 440C of the Corporations Law. It is only on either of those eventualities that Barrymores would have a legally enforceable right to immediate possession. At the time of the alleged conversion, Barrymores had neither the necessary written consent nor the leave of the court; an action in conversion does therefore not lie against the receivers.

96 I turn to the second defendants' submission that Barrymores has put forward no evidence that its ROT clause was accepted by Harris Scarfe and their assertion (at par 18.3 of Lewis' affidavit) that the terms of trade upon which Barrymores seeks to rely were not accepted by Harris Scarfe. The latter is said to be evidenced by the purchase orders issued by Harris Scarfe and the Suppliers' Guide. I have already pointed out that the Suppliers' Guide says nothing about the passing of title in goods supplied to Harris Scarfe. Nor does it contain any provision inconsistent with the position in that regard asserted by the plaintiff. The purchase orders ("exhibit 1" to Mitchell's affidavit sworn 28 June 2001) were not before me by agreement between counsel. I assume they would have been if they were capable of demonstrating Barrymores' terms and conditions had not been accepted by Harris Scarfe, particularly in light of Mr Christensen's submission (plaintiff's submissions dated 23 July 2001, [8.1]) that they do not in any way refer to or vary the contracts regarding retention of title.

97 The plaintiff contends its ROT clause has been incorporated by implied consent in the contracts for supply of its goods to Harris Scarfe by a long course of dealing between them and, there having been no objection to nor written variation of such clause.

98 Contractual terms may be inferred from the business relationship of parties if the course of their dealings raises the reasonable expectation that terms imposed on previous occasions will form part of the contract on a subsequent occasion. For that to be done four requirements need to be satisfied:

(1) the terms previously used must be identifiable (usually by reference to contractual documents);

(2) those previous occasions must be sufficiently numerous and frequent;

(3) the conduct must be consistent enough to constitute a regular course of dealing;

(4) which raises the reasonable expectation that the same terms should be included in the subsequent contract.

(D W Greig & J L R Davis "The Law of Contract", Law Book Company Ltd, 1987, p 575).

99 The term relied upon by the plaintiff here is readily identifiable, is contained in what purports to be a contractual document expressed as "Terms and Conditions" cast so as to apply to all future similar dealings and on the evidence was used in respect of every supply of goods by the plaintiff to Harris Scarfe between August 1998 and March 2001. I consider the situation is analogous to that in Henry Kendall & Sons v William Lillico & Sons Ltd [1968] UKHL 3; [1969] 2 AC 31 of which Lord Guest said (at 105) that the buyer Association:

"... by continuing to conduct their business with Grimsdale on the basis of the sold notes which contained the relevant condition and by not objecting to the condition, must be taken to have assented to the incorporation of these terms in the contract."

100 Furthermore, as to whether a plaintiff has to show subjective acceptance or consent on the part of the defendant, Lord Pearce said (at 113) that the:

"... court's task is to decide what each party to an alleged contract would reasonably conclude from such utterances, writings or conduct of the other. The question, therefore, is not what (the Association) themselves thought or knew about the matter but what they should be taken as representing to Grimsdale about it or leading Grimsdale to believe."

101 All the evidence in the present case points to the incorporation of Barrymore's terms and conditions (including the ROT clause) in the contracts for the supply by Barrymores of its goods to Harris Scarfe. The receivers have failed to put forward any material which would go to a bona fide defence or raise a question to be tried on this issue.

102 The plaintiff puts its case for summary judgment on the alternative basis that the receivers' undertaking constituted an agreement by them to create a trust by which they hold the proceeds of the sale of Barrymores' goods on trust for Barrymores. In my opinion this case is made out (see Chattis Nominees, supra; cf Sheahan v Hertz (1995) 16 ACSR 765, 768 per King CJ) and the second defendants raise nothing against it. The undertaking supersedes the retention of title clause, at least in respect of goods actually sold, and places a fiduciary obligation upon the receivers to account for the proceeds as if they were trustees (Puma Australia Pty Ltd v Sportsman's Australia Limited (No 2) [1994] 2 Qd R 159). The plaintiff is entitled to the proportion of the proceeds representing the aggregate amount owed to it and/or return of the unsold portion of the goods. As the amount presently held in the receivers' account pursuant to the undertaking is less than the amount owing to Barrymores, Barrymores is entitled to the return of the unsold goods and I would give leave under s 440C accordingly.

103 For the reasons set out above, I am satisfied the plaintiff has demonstrated that it has a good claim against the second defendants and that they have no defence to it. Accordingly:

1. I would grant leave pursuant to s 440D of the Corporations Law to the plaintiff to bring and continue these proceedings against the receivers on the plaintiff's undertaking to discontinue as against the first defendant and not thereafter seek to recover from it otherwise than as an unsecured creditor;

2. I would grant leave pursuant to s 440C of the Corporations Law for the plaintiff to recover goods supplied by it to Harris Scarfe and which remain unsold; and

3. The plaintiff should have an order for summary judgment against the second defendants in respect of its claim based on the second defendants' undertaking dated 23 April 2001.