Assessment of the Evidence
129As I have noted, the evidence adduced by the Controllers as to the scaffolding in Rildean's possession at various times was incomplete, although the difficulties were perhaps not primarily of the Controllers' own making. As his Honour found (at [39], [45] and [75]), Rildean's records did not accurately record the scaffolding in its possession, the ownership of scaffolding it hired from suppliers or the items of scaffolding it hired to others for use on particular building sites. Moreover, his Honour found (at [34]) that Rildean did not store separately items of scaffolding hired to it by different suppliers such as RMD and TJF. The photographic evidence confirmed Mr Campbell's unchallenged evidence that Rildean simply stored particular types of scaffolding on pallets regardless of the identity of the owner or the colouring of the scaffolding.
130The evidentiary problems were, however, compounded by the gaps in the evidence adduced from Mr Baker and Mr Campbell. As I have noted, both were no doubt hampered by the paucity of Rildean's records and the lapse of time before they prepared their affidavits, the first of which was not sworn until July 2007, five years after the relevant events. Even so, they might have been expected to give more detailed evidence than they did as to the practices adopted by Rildean during the period in which RMD hired equipment and during which (as was common ground) some scaffolding was returned by Rildean to RMD. Their evidence was largely confined to generalities, although Mr Campbell attempted to compile a statistical schedule from the available documentation.
131Mr Baker said in his affidavit that " if Rildean had more scaffolding than it needed it would return excess scaffolding to RMD ". He also said that:
"When and if Rildean returned scaffolding that it had hired from entities such as RMD and Girraween Scaffolding and Plant Hire Pty Ltd, it would return the same quality, quantity and types of scaffolding that it had hired from RMD.
The effect of this mixing of scaffolding is that Rildean would often return from hire equipment that had been supplied to it from a different supplier to that which Rildean returned it to."
132Mr Baker did not direct attention to whether and to what extent Rildean had excess scaffolding on hand during the period of nine months or so in which RMD hired the Goods to Rildean. Similarly, he did not direct attention to the quantities of RMD's scaffolding that might have been returned to other suppliers as part of Rildean's policy of classifying scaffolding by type rather than by ownership. Mr Baker's only comment was that "[s]caffolding was returned all the time ".
133Mr Campbell also gave evidence that did not descend to specifics. His evidence established (as the primary Judge accepted) that, in general, he was unable to ascertain which company owned scaffolding in Rildean's possession. Although he participated in preparing the schedule discussed by the primary Judge, he did not attempt to quantify the amount of scaffolding returned to suppliers in general, or to RMD in particular, during the relevant period.
134The primary Judge's evident dissatisfaction with the Controllers' evidence was understandable. Nonetheless, despite the deficiencies, the evidence before his Honour made it very difficult to conclude that RMD had discharged its burden of proving that all but an insignificant portion of the Goods remained in Rildean's possession on the date of the Controllers' appointment.
135Mr Campbell said the following in his affidavit of 8 December 2008:
"When I determined that there was excessive stock sitting in the yard, I would take steps to have that amount of excessive scaffolding returned to companies from which Rildean had hired scaffolding. In this regard I directed Mr Clive Walker, Rildean's Yard Manager, to return scaffolding to the particular third party hirer (such as TJF or RMD). I did not direct Mr Walker to return a particular third party hirer's scaffolding because to my mind it was impossible to determine which scaffolding actually belonged to that entity. I would observe Mr Walker arranging for trucks to be loaded with scaffolding, that was mixed in colour, for delivery to the Third Party hirer, or to be picked up by the Third Party hirer."
This evidence was not challenged in cross-examination.
136Mr Campbell was employed by Rildean only from November 2001 until the Controllers were appointed (thereafter he was employed by a different company controlled by Mr Baker). He therefore must have been speaking of his practice during the period of his employment by Rildean. While he did not attempt to quantify the amount of excess scaffolding returned to owners, his unchallenged evidence established that Rildean returned a number of truckloads of scaffolding to suppliers. Further, his evidence was that the scaffolding was returned without regard to its true ownership, but by reference to the kinds of equipment that had been hired to Rildean by the particular supplier.
137Mr Dutton, a sales representative employed by RMD between 1998 and 2005, gave evidence as to RMD's practice concerning scaffolding returned by Rildean. As I have noted, it was common ground that 2,460 items of scaffolding belonging to RMD had been returned by Rildean to RMD during the relevant period. Mr Dutton's unchallenged evidence was that if Rildean delivered to RMD items of scaffolding that did not belong to RMD, those items would not be accepted. RMD would then notify Rildean that Rildean should collect the items erroneously returned. If Rildean did not do so, RMD would return them on the next occasion its own truck went to Rildean's premises.
138Mr Dutton's evidence is consistent with that of Mr Campbell. He acknowledged that Rildean's practice was to return to a supplier scaffolding of the same kind the supplier had hired to Rildean, but which did not necessarily belong to supplier. Mr Dutton did not explain precisely how RMD ascertained that the scaffolding it accepted actually belonged to it. An available inference is that RMD accepted only scaffolding which retained its distinctive colours and had not been painted over.
139In any event, Mr Dutton's evidence strengthens the inference that during the relevant period Rildean returned to RMD scaffolding that did not belong to RMD. If Rildean took that course in relation to RMD, having regard to the evidence of Mr Campbell or Mr Baker the inference is readily available that Rildean took the same course with other suppliers. That being so, the probabilities are that significant quantities of RMD's scaffolding were " returned " to other suppliers during the relevant period.
140This conclusion is supported by the inability of RMD's representatives to identify any but a small proportion (totaling 1,091 items) of its scaffolding in Rildean's possession after the date of the Controllers' appointment. It will be recalled that the meeting of 23 July 2002 at Rildean's yard resulted in only 1,058 items being returned to RMD, while the meeting of 25 October 2002 resulted in the return of another 33.
141It is true that scaffolding in RMD's distinctive colours was often overpainted and that some scaffolding was scattered at sites other than Rildean's yard (some of which were visited by Mr Dutton). But RMD's inability to identify more than about four per cent of the Goods, when it had a powerful incentive to do so, strongly suggest that significant quantities of its scaffolding were no longer in Rildean's possession or control after the date of the Controllers' appointment.
142While the statistical evidence was incomplete, it too reinforces the conclusion that a substantial proportion of the Goods were no longer in Rildean's possession at the date of appointment. The schedule prepared by Mr Campbell showed that Rildean had acquired 418,543 items of scaffolding by way of hire or purchase over a period that his Honour described (at [66]) as " quite a number of years ". This information was based on computer records maintained by Rildean, supported by invoices and other documentation. The cross-examination of Mr Campbell and Mr Baker cast no doubt on the figure as an historical record of Rildean's " stock purchases ". In any event, his Honour appeared to accept the figure as broadly accurate, pointing out (at [67]) that business records had been provided to Mr Austin in support of the claims of prior deliveries of scaffolding to Rildean.
143The O'Mara report listed a total of about 154,000 items on hand at Rildean's yard and at some 38 sites to which Rildean had delivered scaffolding. The primary Judge pointed out (at [42]) that O'Mara had not gained access to all sites at which scaffolding hired by Rildean was located, but the O'Mara report itself records that the list included all sources found to be " active ", except for one (a prison) to which access was not granted.
144It is no doubt correct that the O'Mara report, as the primary Judge said (at [71]), must be taken as an incomplete record of all the scaffolding Rildean had out on hire. As his Honour noted, the number of sites to which Rildean sent scaffolding could have been anywhere between 51 and 62. In addition, Rildean's (unreliable) computer records of scaffolding hired out did not match the results of the O'Mara stocktake. Nonetheless, the evidence as a whole makes it very unlikely that the total number of items in Rildean's possession or control on the date of appointment exceeded, say, 200,000 to 250,000. Mr Inatey did not appear to dispute in oral argument on the appeal that this was a fair estimate of the upper range of scaffolding on hand.
145Furthermore, as Mr Ashhurst pointed out, there were very great disparities between the number of items recorded by Rildean on particular sites and the results of the O'Mara stocktake. For example, on one site in Manly, Rildean's records acquired by the Controllers showed that 2628 items had been delivered to that site, yet the O'Mara stocktake recorded only 254 items on site. Rildean's records were undoubtedly inaccurate. Nonetheless, the great disparities between those records and the O'Mara stocktake tend to confirm that substantial quantities of scaffolding were lost, for a variety of reasons, from the sites to which the scaffolding had been delivered.
146The primary Judge discounted the apparent disparity between the number of items of scaffolding recorded as having been acquired by Rildean and the number of items found in its possession after the date of appointment. His Honour did so on the ground that there was no evidence as to how many of the items acquired by Rildean were on hand on the date of appointment. In particular, there was no evidence as to disposals by sale or as to losses of scaffolding by reason of theft, damage or misplacement.
147It was not suggested at trial or on appeal that Rildean had sold any significant quantities of equipment. Mr Baker, however, did give evidence that in his experience a large proportion of equipment hired out by Rildean was lost, stolen or returned with no docket. It is a clearly available inference from the evidence, and one that should be drawn, that a very substantial proportion of the scaffolding obtained by Rildean over a period of several years had been lost, stolen or " returned " to suppliers other than the true owners.
148The primary Judge thought that the fact that RMD had been supplying Rildean with equipment for only about nine months prior to the date of appointment militated against a finding that a significant proportion of scaffolding had been lost, stolen or " returned " to other suppliers. But the undisputed evidence was that scaffolding stayed on a building site for between 12 and 20 weeks on average, before being returned to Rildean (subject to losses). While the period undoubtedly could vary from site to site, a period of nine months was ample for the Goods to be subject to a similar rate of attrition as other scaffolding in Rildean's possession or control. Of course the proportion likely to have been lost or " returned " to other suppliers over a nine month period would have been less than the proportion lost or " returned " over a longer period. But the evidence to which I have referred strongly suggests that by the date of the Controller's appointment, Rildean no longer had in its possession a significant proportion of the Goods RMD had supplied to it.
149The primary Judge considered that the claims to scaffolding made by suppliers other than RMD were of little significance because the claims had not been substantiated by documentary evidence. Even if that were so, it is hardly likely that a number of suppliers would claim to have supplied Rildean with large quantities of scaffolding if all their claims lacked any basis. In any event, it is not correct that the only evidence before the primary Judge was that of the bare claims made by the various suppliers. Mr Austin's " expert appraisal " of 25 November 2002, noted that he had requested and received " comprehensive lists " from the majority of suppliers of the scaffolding supplied by them to Rildean. He also accepted that most of the scaffolding in Rildean's yard or at the sites was rightfully owned by the various suppliers. This provided the basis for his recommendation that the scaffolding be sold and the proceeds divided in proportion to the quantity of each category of items owned by the claimants. Mr Austin's appraisal provides evidence supporting the conclusion that the claims made by most of the suppliers were soundly based.
150I should add that I have not overlooked Mr Dutton's evidence that he had visited six sites nominated by Mr Baker as locations for the Goods, and that he had seen scaffolding belonging to RMD at those sites. In cross-examination, however, Mr Dutton acknowledged that he had been unable to gain access to the sites. His Honour accepted that Mr Dutton had seen some scaffolding in RMD's colours at the sites, but that it was difficult to determine whether the scaffolding he saw at a distance did in fact belong to RMD. Mr Dutton's evidence is of little assistance to RMD.
151RMD also placed some reliance on a statement by Mr Baker in one of his affidavits that to his knowledge the equipment hired by Rildean had not been returned by Rildean at the date of the Controllers' appointment. This statement, however, was made with reference to scaffolding provided by four named suppliers. While Mr Baker was not cross-examined on this statement, he was also not cross-examined on apparently inconsistent statements, notably that scaffolding was " returned all the time " and that excess scaffolding would be returned to suppliers without regard to ownership of specific items. Mr Baker's qualified statement can be given little weight having regard to the other evidence to which I have referred.