Gilgandra Marketing Co-Operative Limited v Australian Commodity & Merchandise Pty Ltd & Ors

Supreme Court of NSW|2010-11-01|Before: Slattery J

Judgment 1HIS HONOUR: Between early February and mid-March 2010 Gilgandra Marketing Co-Operative Limited ("Gilgandra") made ten contracts to sell wheat to Australian Commodity and Marketing Pty Limited ("Commodity"). Each contract consisted of a sale note attaching standard terms and is described in these reasons as a "GM contract". Gilgandra shipped wheat under these GM contracts. The wheat moved from rail terminals in Warren and Narrabri to the Port Botany container terminal. From there it was shipped from Australia to Bangladesh. The wheat now stands in containers under the control of the carriers near Chittagong Harbour, in the People's Republic of Bangladesh. 2Commodities has not paid Gilgandra the full purchase price of this wheat. Commodities acknowledges that it is in breach of the payment obligations under these contracts. It admits in its defence that it owes the plaintiff, Gilgandra approximately $2.5 million, although in final submissions it contested that any amount is now due. Gilgandra claims that a larger sum is owed. The difference as to the amount owed arises from a disagreement about the applicable rate per tonne for the volume of wheat sold. 3On the last day of the trial, which was fixed for final oral submissions, the evidence being complete, an administrator was appointed to Commodities. He consented to the continuance of the proceedings. These reasons conclude that the contract sum is now due and payable by Commodities and that Gilgandra has a right to possession of the wheat. 4Gilgandra claims that it is entitled to possession of the wheat: because it has retained title; because it may exercise rights of stoppage in transitu; and because it has an equitable lien for the unpaid purchase price. Commodities disputed Gilgandra's claim to possession. On 23 July 2010 Ball J granted an interlocutory injunction restraining Commodities from dealing with the wheat in Chittagong. Brereton J expedited the proceedings on 10 September 2010 and listed them before me for hearing for 3 days commencing on 1 November 2010. The wheat is at risk of deterioration whilst in container storage at Chittagong.

Gilgandra sells wheat to Commodities 5Gilgandra and Commodities made their first group of GM contracts for the sale of the wheat on 1 February 2010. The contracts incorporated the standard Trade Rules of the National Agricultural Commodity Marketing Association Inc ("NACMA"). NACMA's standard trade rules ("the NACMA terms") relevantly include provision for payment, for the passing of title and for arbitration of disputes. The agreements provided for the sale of wheat by container. Mr Peter Horton for Gilgandra negotiated these contracts with Mr Mohammed Alam for Commodities. 6Gilgandra delivered the wheat under each of these contracts to Auscott Limited for packing and conveyance. Auscott delivered the wheat on Gilgandra's behalf to three carriers Mediterranean Shipping Co ("MSC"), Nippon Yusen Kasai Line ("NYK"), and Malaysian International Shipping Corporation ("MISC"). These carriers transported the wheat on various vessels to Chittagong in February, March and April 2010. By 30 April 2010 Gilgandra had issued all its invoices for payment of the wheat. 7The NACMA terms incorporated in all the GM contracts included the following relevant provisions as to conveyance, delivery and passing of title:- "CONVEYANCE AND DELIVERY INSTRUCTIONS: Unless otherwise agreed, the Seller shall have the right of conveyance. OWNERSHIP AND PASSING OF TITLE: Unless otherwise specified by contractual agreement. Title to goods as well as risk of loss and/or damage shall remain with the Seller until the goods have been conveyed to the buyer at the designated point of conveyance." 8Gilgandra alleges it issued invoices totalling $3,619,983.84 in respect of the transhipment of wheat under these contracts of which Commodities has paid $702,307.00, leaving on the plaintiff's case an amount of $2,917,676.84 outstanding. 9Gilgandra originally contended that in early June 2010 it agreed to consolidate the original contracts into a series of four contracts which were subject to Grain Trade of Australia Limited ("GTA") standard terms, in substitution for the NACMA terms. This change was said to be in consideration for Commodities agreeing to pay additional administration and financial fees. But Gilgandra withdrew this claim before trial. The NACMA terms provide for the passing of title and risk upon conveyance to "the designated point of conveyance". The GTA standard terms of conditions differently provided for risk to pass to the buyer when the goods left possession of the seller but that title did not pass until payment in full had been received by the seller. 10All the wheat under the contracts has been delivered for shipment. Auscott arranged for it to be shipped. It was carried by rail from Warren and Narrabri to Sydney and then by sea from Sydney to Chittagong. Detailed aspects of these arrangements are considered later in these reasons. Some wheat has been released to Commodities in Bangladesh subject to this Court's jurisdiction. But most still remains in containers at Chittagong. The three shipping lines MSC, MISC and NYK still hold the original bills of lading for those containers. 11In April 2010 Commodities provided Gilgandra with two cheques totalling $600,000 which were dishonoured on presentation. On 27 May 2010 Commodities made its last payment of $170,000 for part of the wheat shipment. 12Gilgandra claims: the unpaid balance of the purchase price; and, a right to take possession of the wheat. Gilgandra argues that it is entitled to possessory relief as an unpaid seller from which title has not passed and as the holder of an equitable lien. Gilgandra also argues that it was entitled to exercise a right of stoppage in transitu under Sale of Goods Act 1923 s 46 as an unpaid seller of goods in the course of transit because Commodities had become insolvent. Commodities says Gilgandra is not entitled to this relief.

The Witnesses 13There were four witnesses called to give oral evidence in the case. Gilgandra called Mr Warwick Moppett, its present chairman and Mr Peter Horton its former grain trader. Commodities' principal, Mr Alam gave evidence as did a former intermediary between Gilgandra and Commodities, a Mr Ron McConnell. Each of these witnesses made quite different impressions on the Court.

Mr Warwick Moppett 14Mr Moppett became a director of Gilgandra in October 2009 and chairman in November 2009. In his role as chairman he oversees the policy and direction of Gilgandra and acts as the main point of contact between its board and Mr Horton. 15Mr Moppett was plainly competent and dedicated to the best interests of Gilgandra and its farmer members. He took over as chairman of Gilgandra with its established trading systems, just before Mr Horton was about to make his first contract on behalf of Gilgandra with Commodities early in 2010. The issue of Commodities' non payment arose in April 2010. Mr Horton drew the non payment problem to Mr Moppett's attention, who dealt with it somewhat in the role of an executive chairman. 16As soon as the problem of Commodities' non-payment was drawn to his attention Mr Moppett was closely involved in attempting to solve the issue. He acquainted himself with the facts through Mr Horton. He opened up and continued negotiations with Mr Alam. Ultimately he initiated the decision to commence these proceedings. 17Mr Moppett is a man of obvious competence, intelligence and reliability whose version of all the conversations and events in which he was involved I wholly accept. His recollection was more precise than that of Mr Horton. Where Mr Moppett and Mr Alam differ I generally prefer Mr Moppett's recollection. Although he has spent all of his adult life as a farmer Mr Moppett has taken on wider responsibilities as a local community leader. He was a Councillor and Mayor of Gilgandra Shire from 2004 as well as more recently becoming chairman of Gilgandra. His working experience is in a family owned farming business operating in the Gilgandra and Coonable Shires. But as part of that business he has also gained experience in dealing in commodities including wool, meat, cereals, livestock and wheat. This experience has helped form an astute businessman.

Mr Horton 18Gilgandra employed Mr Horton as a grain trader in February 2009. He also performed day-to-day management and supervision in Gilgandra's office, which employs approximately 5 staff. Like Mr Moppett, Mr Horton came from a farming background. He appeared generally familiar with the commercial dealings in which he was involved. But he was markedly less sophisticated in business than Mr Alam. 19Mr Horton was generally a reliable witness. He demonstrated that reliability by candidly conceding operating errors within Gilgandra's contracting systems that occurred under his management. One of these was the failure of Gilgandra's staff to obtain signed copies of grain contacts with Commodities. That failure led to the dispute between the parties about the exact rate per tonne for H2 and APH wheat. Mr Horton conceded that Gilgandra's high number of wheat and other commodity contracts made his following up of contract paperwork with contract counterparties very difficult. In the courtroom he was ready to concede error and thereby provided one of the reasons that I judged him to be generally reliable. Except in a limited number of areas I regard his evidence as more reliable than that of Mr Alam.

Mr McConnell 20Mr McConnell was the first witness for Commodities. His evidence was generally dependable although it was limited to what happened in relation to the first four GM contracts in which he had some involvement. He disclaimed any involvement in negotiating the longer term relationship between Gilgandra and Commodities for the balance of the contracts after he dropped out of the picture. He should be accepted as to this. His evidence is of limited value to the wider issues in the proceedings.

Mr Alam 21Mr Alam was a sophisticated man of trade. He was keenly aware of the comparative price of commodities, of the terms on which he was trading and the customs of the export trade. He had a firm grasp of the detail of each of the contracts he negotiated with Gilgandra. At the time of these contracts he had almost 20 years experience in exporting commodities from Australia, principally to Pakistan and Bangladesh where he has business contacts. 22But Mr Alam was also a witness acutely aware of what was likely to be in his own self-interest. Commodities is a one man operation. He is that one man. He controlled and directed everything which the company did. He demonstrated an easy familiarity with all Commodities' dealings with Gilgandra. He professed an excellent memory of all his conversations with Mr Horton and Mr Moppett. I have little doubt that he was well aware of every contract related communication with Gilgandra. 23Despite Mr Alam's sophistication and despite his regular professions of trust and honesty, both in the courtroom and to Mr Moppett and to Mr Horton, his evidence was marred by regular episodes of obstinate refusal to recognise obvious truths. Several such episodes occurred during his cross-examination. There was sufficient number of them that they diminished Mr Alam's overall credibility. I was not confident that when tension existed between his own self interest and the true facts that the Court would receive a crisp and accurate account of the true facts. I formed the view that his evidence was markedly distorted by self interest.

The Issues and the Structure of these Reasons 24These reasons first deal with some uncontested facts about the GM contracts and then make findings on contested issues under the following headings. The parties have generally adopted this structure for their submissions addressing the contract claim first and then the possessory claims. (a) The Breach of Contract Claim (b) The Retention of Title Claim (c) The Sale of Goods Act Claim (d) The Equitable Lien Claim

Some Facts Not in Dispute 25The course of the evidence and the submissions of the parties showed that many primary facts were not in dispute. A short account of them is given here. 26Gilgandra contracted in writing with Commodities to supply wheat in the GM contracts starting 1 February 2010 and ending 12 March 2010. The table below sets out contract numbers, dates, and tonnages together with the plaintiff's claimed price per tonne for each of those 10 GM contracts. Contact Number Contract Date Contract Tonnage (+/- 5% Seller's Option) Contract Price (AUD$ per tonne) GM 6364 1 February 2010 600 tonnes 290.00 GM 6365 1 February 2010 1,000 tonnes 290.00 GM 6372 1 February 2010 800 tonnes 290.00 GM 6358 8 February 2010 175 tonnes 290.00 GM 6359 8 February 2010 500 tonnes 290.00 GM 6381 24 February 2010 1,000 tonnes 300.00 GM 6391 26 February 2010 5,000 tonnes 310.00 GM 6407 1 March 2010 350 tonnes 310.00 GM 6429 1 March 2010 200 tonnes 300.00 GM 6419 12 March 2010 3,240 tonnes 310.00 Total Tonnage (+/- 5 % Seller's Option) 12,865 tonnes

27These contracts incorporated the NACMA terms. A sale contract confirmation document was issued in respect of these contracts in a format generated by the "Grain Trader system". Despite the issue of the Sales Contract Confirmation statement under a competing system Gilgandra's supply of wheat to Commodities is governed by the GM contracts, which incorporate the NACMA standard terms and conditions. 28Auscott packed the goods for Gilgandra. On 5 February 2010, shortly after the first few contracts had been signed, Gilgandra made a Packing Agreement with Auscott under which Auscott agreed to provide storage, handling and packing services for Gilgandra's wheat at agreed rates payable by Gilgandra. Auscott's evidence was that it understood that the Packing Agreement was to assist in the performance of what its witness, Mr Spellson described as "DCT contracts" made between Gilgandra and Commodities. 29Commodities on sold part of the wheat on 20 April 2010. Commodities entered sales contracts with two Bangladesh buyers. Commodities sold 2,000 metric tonnes of high protein wheat to M/S Jesi Enterprise and 5,000 metric tonnes of high protein wheat to M/S MV. Abu Sayed on that date. 30Commodities arranged for carriage of the wheat to the Port of Chittagong in Bangladesh. It did this for some shipments through the freight forwarder, Excalibur Logistics Pty Limited and in respect of other shipments, directly with the shipping lines MSC, NYK and MISC that carried the wheat. The shipping lines issued booking confirmations for the proposed cargo either to Excalibur or Commodities, depending on which one had made the booking. The shipping lines' booking confirmation verified all shipping details including the numbers of containers, the destination and the date of proposed delivery. 31Excalibur or Commodities generally sent the booking confirmations from the shipping lines to Auscott. These booking confirmations assisted Auscott to execute its packing services which included: collecting the empty containers railed by the shipping lines; receiving grain into Auscott's store to meet the proposed shipping schedule; packing the wheat into containers; arranging the necessary export documents for the wheat; and, transporting the containers back to the Port of Botany container terminal to meet the booked vessels' scheduled departure date. When Auscott completed its work it forwarded documents confirming the packing details of the wheat forwarded. 32Gilgandra used the documents it received from Auscott to invoice Commodities. It is not necessary in these reasons to list each one of the invoices by date and amount. But between 7 February 2010 and 28 April 2010 Gilgandra issued 21 invoices to Commodities totalling $4,600,280.51. Of that total invoiced amount Commodities has paid Gilgandra $1,682,504.57. Allowing for a slight discrepancy in the calculations, Gilgandra claims the balance of $2,917,676.84 from Commodities. 33The expected course of delivery under these contracts did not proceed smoothly. By May 2010 Commodities was not meeting Gilgandra's expectations of payment of Gilgandra's invoices. Mr Moppett became closely involved in pursuing Mr Alam for payment in the period May-June 2010. Gilgandra was not satisfied that it could secure payment and commenced these proceedings on 15 July 2010. 34On 23 July 2010 Ball J made interlocutory orders in the proceedings. A summary of the principal procedural steps in the interlocutory proceedings before Ball J appears in my first judgment: Gilgandra Marketing Co-Operative Limited v Australian Commodities & Marketing Pty Ltd & Anor [2010] NSWSC 1209. 35On 23 July 2010 Ball J granted an injunction until further order that Commodities by itself and by its servants, agents, officers and employees be restrained from dealing with, selling, encumbering, endorsing any bill of lading, issuing delivery orders or delivering the cargo, containers, bills of lading described in schedule 1 to those orders. 36Schedule 1 to Ball J's orders covered 190 containers exported on 5 ships, the first of which left Sydney on 18 April 2010 and the last of which arrived in Chittagong on May 2010. The containers affected by Ball J's orders and now being held at the Port of Chittagong are identified in the following schedule. Boat Name Bill of Lading No. of Containers Departure Date (Sydney) Arrival Date (Chittagong) MSC London MSCUSY792976 40 18 April 2010 17 May 2010 MSC Maya MSCUSY795979 40 27 April 2010 29 May 2010 MISC Melbourne MISCSYD000014912 30 17 April 2010 9 May 2010 MISC Northern Divinity MISCSYD000015169 40 26 April 2010 24 May 2010 NYK Windarra NYKS4000646860 40 29 April 2010 21 May 2010

37A number of containers transported on two other ships, the Alexa and the Carina, had been released by Commodities before the injunction was granted. They are not included within the terms of the injunction. Gilgandra gave the usual undertaking as to damages upon the grant of this injunction. 38As a result of the injunction the contractual documentation has remained as it was on 23 July 2010. The bills of lading for the containers of wheat described in the table remain in draft with the three carriers. 39This is the broad picture of the course of dealings between Gilgandra and Commodities. Greater insight into the process of storage and shipment of the wheat is gained by studying an individual shipment as an example. Commodities has conveniently identified one shipment sent on the MSC London that illustrates the process, commencing with the buyer in Bangladesh obtaining a Bangladesh Government Import permit.

A Sample Shipment 40The process starts with the issue of an import permit in Bangladesh. On 8 February 2010 the Bangladesh Ministry of Agriculture issued an Import Permit in favour of Abu Sayed. Commodities sends a copy of the Import Permit to Auscott by facsimile. 41By late March the empty containers for this shipment are available. On 22, 24 and 30 March 2010 empty container inspection records are signed. On 24 March 2010 declarations of inspection for empty containers are made. The containers are sent to the railhead in anticipation of loading. 42Then the containers are packed and prepared. On 24, 25 and 30 March 2010 Auscott packed the containers with wheat and issued a packing report to Gilgandra. Between 25 March 2010 and 1 April 2010 the containers of wheat are fumigated and Fumigation Certificates signed on 1 April 2010. 43At the conclusion of the packing process Gilgandra issues a tax invoice to Commodities. The invoice issued on 30 March 2010. 44Export arrangements are then set in train. On 1 April 2010 Auscott gives Notice of Intention to Export Prescribed Goods in the required statutory form to the Australian Department of Agriculture, Fisheries and Forestry. The same day the Department grants an export permit. 45Commercial export arrangements then begin. On 1 April 2010 the National Australia Bank's advised of a letter of credit issued by Pubali Bank in Chittagong on account of Abu Sayed. 46Auscott completes its work and issues a tax invoice to Gilgandra on 7 April 2010 for packing and fumigation of the wheat. 47On or about 15 April 2010 the shipping company MSC prepares a draft bill of lading naming Commodities as the shipper, the consignee to the order of Pubali Bank Limited and the party to be notified as Abu Sayed. The draft bill of lading refers to the letter of credit of 1 April 2010. 48On or about 15 April 2010 the MSC London departs Sydney with the wheat. A few days later on 20 April 2010 Abu Sayed sends a purchase contract to Commodities for 5,000 metric tonnes of wheat. 49On or about 17 May 2010 the MSC London arrives at Chittagong and discharges the wheat from the vessel. On 23 July 2010 MSC issues a tax invoice to Commodities for freight charges. All the shipping lines' freight charges are unpaid and are the subject of the cross claims in the proceedings.

The GM Contracts 50Gilgandra generated the form of the GM contracts in a standard template printed on its own letterhead and addressed to Commodities at its Riverwood premises, for the attention of Mr Alam. There are a number of variations between individual contracts. But the first contract (GM6364 dated 1 February 2010) shows the template structure well. It is set out below:- "Contract of SALE No. GM6364 Contract Date: 01 Feb 10" To: AUSTRALIAN COMMODITY & MERCHANDISE PTY LTD SUIT 113 315-317 BELMORE ROAD RIVERWOOD NSW 2210 Attention: THANKS MOHOMED Fax No: 02-95-331-189 Your Ref No: Agent/Ref No: I confirm having sold to you the under mentioned goods, in sound merchantable condition subject to the terms and conditions hereunder as attached to this document. COMMODITY: Wheat- A Aust Hard #2 SEASON: 2009/2010 STANDARDS: As per GTA specifications currently in force. CONTRACT TONNAGE: 600 Tonnes +/-5.0% Seller's option PACKING: In Bulk PRICE/BASIS: AUD$290.00 per Tonne Sydney DCT DELIVERY PERIOD: 01 Feb 10 to 28 Feb 10 PAYMENT: 14 days from bill of lading date The price stipulated is exclusive of GST, and as such, the seller may, subject to issuing a valid tax invoice, recover from the buyer an additional amount on account of GST at the prevailing rate. WEIGHTS: Final over seller's certified weighbridge SELLER: For and on behalf of BUYER: For and on Gilgandra Marketing Co-Operative behalf of AUSTRALIAN COMMODITY & MERCHANDISE _______________________ _________________ Peter Horton (I have authority to bind the corporation) Dated in Gilgandra 01 Feb 2010 " 51In all the GM contracts the "season", the "standards", the "contract tonnage" and "packing" are described in identical terms to invoice GM6364 set out here. But the "commodity" has a variety of descriptions through the GM contracts, "Wheat - A Aust Hard # 2", "Wheat Siloh Bags Aust Hard # 2", "Wheat Pool l/s Hard #2", "Wheat Non Pool Multigrade Varietal" and "Wheat Non Pool Aust Prime Hard". The precise reasons for these different descriptions is not clear in the evidence. The "Delivery Period" is always given within a date range. The periods in the contracts commence no earlier than 1 February 2010 and conclude no later than 30 March 2010. 52The description of "Price/Basis" and "Payment" are of some importance. The "Price/Basis" is always in a AUD$ per tonne and ranges between $290 and $310. The "Basis" is always "Sydney DCT". DCT refers to the Sydney "Delivery Container Terminal" at Port Botany. In the other GM contracts "Payment" is recorded either the way it is in GM6364 as "14 days from bill of lading date" or alternatively "30 days from end of week of delivery". 53The GM contracts were the subject of contract confirmations generated by the Grain Trader System. These Sales Contract Confirmations are intended to replicate the summary terms of the GM contracts. But they contain more detail in a slightly different template structure. A convenient summary is set out below:- "(a) Commodity/Grade & Price are variously described as 'H2' and 'APH1' (Commodity/Grade) and Price is $300 (for H2) and $310 (for APH1); (b) Payment terms are 14 days from Bill of Lading; (c) Insurance is described as 'Buyer's Care to Delivery'; (d) Delivery period is in a date range and in various periods commencing on 1 February 2010 and concluding on 30 April 2010; (e) Delivery is 'DCT'; (f) Delivery Location is 'Sydney'." 54It was the GM contracts rather than these confirmations that were passed between the parties for signature. It is the terms of each of the GM contracts that record the agreements reached between the parties.

(a) The Breach of Contract Claim 55There are two contract issues in the proceedings. The first is whether Commodities agreed at any stage to pay more than $280 per tonne for any of the wheat exported. The second issue is whether the contract sum is now due and payable. Once these issues are determined the possessory claims can be addressed.

The Rate Per Tonne 56Gilgandra claims the rate per tonne for each of the contracts set out above varied between $290 per tonne and $310 per tonne. Higher protein wheat of the H2 and APH varieties commands a price at the higher end of this range. The precise rate per tonne Gilgandra claims for each contract is set out in the contract table earlier in these reasons. Commodities contests Gilgandra's claim and advances a case that Commodities never agreed to pay any more than $280 per tonne under any of the contracts. I find in this section that the rate per tonne agreed between the parties was as set out in the written form in each of the numbered GM contracts. I draw this inference because of my preference of Mr Horton's evidence on the issue over Mr Alam, because of the documents passing between the parties at the time and because the parties' behaviour at and after the time of contract. 57First, I prefer Mr Horton's account that he agreed with Mr Alam to sell for H2 wheat for $300 and APH1/2 wheat for $310. He deposes to this in a conversation he had with Mr Alam on the afternoon of 15 February 2010. I accept his evidence that Mr Alam dropped him at Sydney airport that day and that he then flew to Narrabri and telephoned Mr Alam and had a conversation to the following effect: Horton: "Hello Mohammed, Peter Horton speaking. Just wanting to confirm the price of this grain with you again. Please confirm that we are good for $300 for H2 and $310 for APH1/2." Alam: "Yes, that's correct, but try and buy it cheaper if you can." Horton: "Sorry, but the market in Dubbo is paying that money already." 58Mr Horton had a second conversation with Mr Alam on the same day about the same subject. In this conversation he confirmed the size of the largest order of high protein wheat the subject of any consignment between the parties in the following terms: Horton: "Hello Mohammed, it's Peter Horton again. I'm just speaking to confirm a purchase of wheat for 7,000 tonne at $310 per tonne, high protein. Can you confirm that you want that amount?" Alam: "Yes, Peter, I confirm, it's great to do business." 59These prices were important to Mr Horton. Gilgandra was acting on behalf of a number of growers. I accept that he took the trouble to telephone again a few days later on 18 February 2010 and had another conversation to the same effect:- Horton: "Hi Mohammed, just touching base to let you know that all is going well. The price of grain is still at $300 per tonne for H2 and $310 for APH1/2". Alam: "Yes, yes. Peter, that is OK. I will let you know when things change." Horton: "Good, just checking." 60Mr Horton apologised for "just checking" at the end of this conversation. He was new to the job. He wanted to get this substantial contract right. He did check the price with Mr Alam. 61These conversations explain why the price in the contract table set out above jumps from $290 per tonne up until 8 February 2010 to $300 per tonne and $310 per tonne from 24 February 2010. Higher protein wheat was being sold at these agreed higher prices. 62Mr Alam had great difficulty in dealing with Mr Horton's version of the 18 February 2010 conversation. He did not dispute it in his affidavit. Counsel for Gilgandra confronted him with that omission. The question and his answer repay examination (Transcript page 165):- "Q. Mr Alam, on 18 February Mr Horton telephoned you, and you had a conversation where Mr Horton said to you: "Mohammed, just touching base to let you know that all is going well, the price of grain is still 300 per tonne for H2 and $310 for APH 1/2." To which you replied, Mr Alam: "Yes, yes, Peter, that is okay, I'll let you know when things change." You have not in your affidavit disputed that conversation, have you? A. No, that's not, because conversation could be anything. He can say anything and I can say so many things. So of course we say things." 63Mr Alam's answer to this question had an air of the surreal. His answer was as it reads. It demonstrates in my view Mr Alam's own outlook, that evidence given by witnesses in Court simply amounts to saying what suits self interest. It was not an answer to the question. I infer that Mr Alam had no answer to the question. 64Multiple opportunities were available for Mr Alam to complain about what he now asserts was the incorrect price for the H2 and APH wheat between 24 February 2010, when he first received the written form of contracts, and 15 July 2010, when the proceedings were commenced. Mr Alam did not complain to Mr Horton about higher rates per tonne on the invoices, when they met at the airport on 24 March 2010. Nor did he complain when he was given the consolidated "S" series contracts by Mr Moppett in early June 2010. The "S" series contracts claim the higher price. Rather, he told Mr Moppett, without further comment, that he would send the "S" contracts back. Nor did Mr Alam dispute Mr Horton's emails of 7 and 17 June 2010 in which Mr Horton had calculated Commodities' indebtedness on the basis of the higher rates per tonne. 65In answer to the suggestion that he had failed to dispute rates of $300 and $310 per tonne Mr Alam came up with a conversation with Mr Horton in which he (Mr Alam) said he complained about the incorrect price on the invoices and Mr Horton said that he would give Commodities a credit for any overpayment. In a demonstration of forensic astuteness Commodities' counsel did not put this conversation to Mr Horton in cross-examination. It is highly improbable. Why would Mr Horton keep issuing contracts and invoices with the wrong price in them and then issue a credit note? It would be far easier to simply correct the invoices. There is no evidence either that Mr Alam asked for the credit note that he had been promised. I do not accept this explanation from Mr Alam. This conversation about credit notes did not occur. The contract prices were as set out in the contract table above for each contract.

Moneys Due and Payable on the Contract 66In final submissions Commodities attempted to contend that no money was owing under the contract. It did so by relying upon the GM contracts which provided that "[Commodities] would pay for the wheat 14 days from the bill of lading date". This paragraph of the Amended Statement of Claim was denied in Commodities' Defence. Commodities pleaded in answer that "the time for payment in relation to wheat purchased from the plaintiff was to be 6-8 weeks after the date the wheat was shipped from the container terminal at Botany (NSW)": paragraph 10 of the Defence. This Defence, based on conversations between Mr Alam and Mr Horton and Mr McConnell in February 2010, is an admission that money was due 6-8 weeks after shipment events, which events indisputably have occurred. 67In substance in final submissions, Commodities sought to withdraw the admission in its Defence. Commodities submitted at the end of the hearing that no money was due under the contract. This submission was made putting to one side the admission in the Defence. This is not something which the defendant, Commodities, can do without leave. Commodities' final submission amounts to an attempt to withdraw the admission in the pleading but without the leave of the Court. Leave is necessary: cf Uniform Civil Procedure Rules, r 17.2 and Nominal Defendant v Gabriel [2007] NSWCA 52; (2007) 71 NSWLR 150. As leave has not been sought Commodities will continue to be treated as admitting that the obligation to pay under all the contracts accrued 8 weeks after the date of shipment from Port Botany. Gilgandra may calculate interest on this basis. The precise date of shipment for each vessel is a matter of record and should be able to be agreed between the parties. If it cannot be agreed I will determine it with interest issues. 68Based on Commodities' Defence that the payment term was 6-8 weeks after the date the wheat was shipped from the container terminal at Port Botany, the last shipment of wheat can be identified as that on the "Northern Divinity" on or about 28 April 2010. The last moneys were due approximately 8 weeks later on 28 June 2010. I would however be prepared to allow the interest on the plaintiff's claim based upon calculation of 8 weeks after the departure date of each vessel carrying each group of containers. 69A result of leave having not been sought on this issue, the trial was conducted on the basis that the admission was on foot. It was not until final submissions occurred that it became clear to the Court and the plaintiff that the admission was sought to be withdrawn. Granting leave at this point in the trial is likely to cause prejudice to Gilgandra. 70Even if leave had been granted the argument would have failed. I accept the plaintiff's argument that when the GM series contracts say "14 days from bill of lading date" that can only mean in the context the issuing of a "draft" bill of lading by the relevant shipping line in relation to the wheat the subject of the particular GM series contract. It is difficult to see what else that could mean, as the bill of lading was not issued pursuant to the contracts themselves but by the third party shipping lines. 71Commodities does concede in respect of two contracts, namely GM 6307 and GM 6365, that the moneys are due in accordance with their slightly different payment terms, "30 days from end of week of delivery". In respect of those two contracts Commodities' concession seems to be based on its contention that delivery occurred at Port Botany. I find later in these reasons that Gilgandra, by its agent, accepted varied instructions for delivery at Chittagong. To that extent Commodities' concession does not address the result reached by these reasons. The appropriate inference based on the Defence is that monies on all contracts were due 8 weeks after shipment from Port Botany.

(b) The Retention of Title Claim 72Gilgandra submits that title in the wheat has not passed under the NACMA terms. The NACMA terms provide that "Title to goods... shall remain with the Seller until the goods have been conveyed to the Buyer at the designated point of conveyance". Gilgandra submits that the wheat has not "been conveyed to the buyer at the designated point of conveyance". Its submission is that Chittagong is the "designated point of conveyance" and that the wheat has not been "conveyed to the buyer" there because Commodities has not taken actual delivery of the wheat and cannot do so until it receives the original bills of lading from the shipping lines. 73The claim for retention of title under the NACMA terms fails. All the GM contracts provide under the description "Price/Basis" a rate per tonne "Sydney DCT". The "designated point of conveyance" in the NACMA title clause is identified in the GM contract as the only point of destination the "Sydney DCT" at Port Botany. I agree with Commodities' submission that when Gilgandra's wheat reached the Sydney DCT at various times between February and April 2010 title to the wheat passed to Commodities, as the wheat had then reached the designated point of conveyance in the contract. Commodities held that title before the wheat was exported to Bangladesh. 74The arrangements between the agents for the parties, Excalibur and Auscott, could not vary the terms of the contract between Gilgandra and Commodities as to the passing of property. But the passing of property at this point is not inconsistent with the preservation of Gilgandra's right of stoppage in transitu, a right which I find in the next section of these reasons subsisted beyond loading at Port Botany. 75Gilgandra takes issue with the "designated point of conveyance" being the Sydney DCT. Gilgandra contends instead that the contractual designated point of conveyance is Chittagong, Bangladesh. But in my view the form of all the GM contracts is quite clear on its face and not varied by any other arrangements made between the parties themselves. The consequence of my rejection of this argument is that title passed under the NACMA terms upon delivery of the wheat to the Sydney DCT at various times between February and April 2010. Gilgandra passed title in the wheat to Commodities before the Court granted the interlocutory injunction in July 2010. The retention of title claim fails. But that does not mean that the Sale of Goods Act claim fails.

(c) The Sale of Goods Act Claim 76Gilgandra claims that it has a right of stoppage in transitu. Gilgandra submits that the transit of the wheat, which commenced at Warren and Narrabri was to end at Chittagong, Bangladesh not Port Botany by reason of directions that the purchaser, Commodities gave to the vendor Gilgandra through their respective agents, Excalibur and Auscott. Commodities says that the contract provides for the transit to come to an end at Port Botany and that thereafter Commodities gave directions to the carriers for the wheat to be exported to Chittagong on what amounts to a fresh transit. The central issue for determination on the Sale of Goods Act claim is the question of when the transit came to an end. There are other less contentious issues on this claim that I will deal with first. 77The provisions of the Sale of Goods Act define what Gilgandra must show in order to establish that it has a right of stoppage in transitu. 78The right of stoppage in transitu together with the vendors co-ordinate right of resale are identified in Sale of Goods Act, s 42(1)(b) and (c), which provide:- "(1) Subject to the provisions of this Act and of any statute in that behalf, notwithstanding that the property in the goods may have passed to the buyer, the unpaid seller of goods as such has by implication of law: (a) a lien on the goods for the price while the seller is in possession of them, (b) in case of the insolvency of the buyer a right of stopping the goods in transitu after the seller has parted with the possession of them, (c) a right of resale as limited by this Act." 79The scope and elements of the right of stoppage in transitu are defined in Sale of Goods Act, s 46, which provides:- "Subject to the provisions of this Act, when the buyer of goods becomes insolvent, the unpaid seller who has parted with the possession of the goods has the right of stopping them in transitu, that is to say, the seller may resume possession of the goods as long as they are in course of transit, and may retain them until payment or tender of the price." 80Insolvency is defined in Sale of Goods Act, s 5(3), which provides:- "(3) A person is deemed to be insolvent within the meaning of this Act who either has ceased to pay his or her debts in the ordinary course of business or cannot pay his or her debts as they become due, whether the person has committed an act of bankruptcy or not." 81The issue of duration of the transit is the point of contention in these proceedings. Sale of Goods Act, s 47(1), (2), and (3) provide relevant rules defining transit:- "(1) Goods are deemed to be in course of transit from the time when they are delivered to a carrier by land or water or other bailee for the purpose of transmission to the buyer until the buyer or the buyer's agent in that behalf takes delivery of them from the carrier or other bailee. (2) If the buyer or the buyer's agent in that behalf obtains delivery of the goods before their arrival at the appointed destination, the transit is at an end. (3) If after the arrival of the goods at the appointed destination the carrier or other bailee acknowledges to the buyer or the buyer's agent that the carrier or other bailee holds the goods on the buyer's behalf and continues in possession of them as bailee for the buyer or the buyer's agent, the transit is at an end, and it is immaterial that a further destination for the goods may have been indicated by the buyer." 82Defining the terminus of a transit for the purposes of the exercise of claimed rights of stoppage in transitu is not an uncommon issue in sale of goods litigation. A classic statement of the applicable principles is that of Lord Esher MR in Bethell v Clark (1888) 20 QBD 615, at 617 where his Lordship said: "Where the transit is a transit which has been caused either by the terms of the contract or by the directions of the purchaser to the vendor, the right of stoppage in transitu exists. But, if the goods are not in the hands of the carrier by reason either of the terms of the contract or of the directions of the purchaser to the vendor, but are in transitu afterwards in consequence of fresh directions given by the purchaser for a new transit, then such transit is no part of the original transit and the right to stop is gone. So also, if the purchaser gives orders as to their destination to a new carrier, the original transit is at an end when they have reached that place, and any further transit is a fresh and independent transit." 83This passage was considered or applied in F.W. Kennedy & Co v F. Leyland & Co Ltd (1923) 16 Ll. L. Rep 398, Kemp v Ismay Imrie & Co (1909) 100 LT 996 and Reddall v Union Castle Mail Steamship Co (1914) 84 L.J.K.B. 360. 84The key question debated in these proceedings is whether the transit in question, which commenced at Warren and Narrabri, extended beyond Port Botany to Chittagong, because that part of the claimed transit, in Lord Esher's words, "has been caused...by the directions of the purchaser to the vendor" such that the right of stoppage in transitu still exists. 85Several of the elements of Gilgandra's Sale of Goods Act claim are not controversial. Gilgandra is an "unpaid seller". My findings above in relation to moneys due and payable under the contract are that the price of the wheat is due to Gilgandra and had not been paid. Commodities is insolvent within the meaning of Sale of Goods Act s 5(3) as it has ceased to pay its debts as they became due and in the ordinary course of business. It has ceased to pay the debts due under the GM contracts. Mr Alam's many assurances in May and June 2010 to Mr Moppett of imminent payment and Mr Moppett's delay in taking action as a result are sufficient for the Court to infer that Commodities was unable to pay its debts in the ordinary course of business. This inference is assisted by my acceptance of Mr Moppett's evidence that he had difficulties during this period in contacting Mr Alam to discuss Commodities making payment. This leads then to the issue of when the transit ended. 86In my view, for the reasons which follow, the wheat was in the hands of each of the carriers between the Port of Botany and Chittagong by reasons of the directions of the purchaser Commodities to the vendor Gilgandra. Commodities gave those directions by its agent Excalibur. Gilgandra received those directions by its agent Auscott. Consistent with this conclusion there is no evidence of fresh directions being given by Commodities to the carriers for a new transit from Port of Botany to Chittagong. By reason of the directions given from Excalibur to Auscott the issuing of fresh directions for a new transit should not readily be inferred. Whilst the terms of the contract may explain the goods being in the hands of the carrier whilst they were travelling from Narrabri and Warren to Port Botany, it is the directions of the purchaser, Commodities, to the vendor, Gilgandra, that explains the wheat's continuation in the hands of the carrier without the need to infer fresh instructions for a new transit. 87Commodities' contention is that each of the three carriers came into possession of the wheat by reason of contracts and directions as between Commodities, its freight forwarder Excalibur and the carriers themselves. Commodities submits that Gilgandra is a complete stranger to those dealings. For the reasons which follow I do not think that this submission is correct. 88The form of the GM contracts readily invites the conclusion that Gilgandra was to receive more directions about the mode of delivery of the wheat than was contained within the contracts. The GM contracts did not specify exactly whether the delivery at DCT Sydney would be to Commodities, a forwarding agent or some agent especially appointed for the purposes of accepting delivery at that point. At the time Gilgandra issued each of the GM contracts to Commodities no specific directions were given by Commodities to Gilgandra in relation to delivery of the wheat. The precise directions came later. 89Before all the wheat left Gilgandra's possession Commodities gave Gilgandra new instructions in relation to delivery of the wheat. Mr Spellson, the marketing manager (cotton and logistic) for Auscott explained the receipt of these instructions. Mr Spellson was not cross-examined. This evidence appeared to be uncontroversial. 90I accept Mr Spellson's evidence that he had conversations between January and March 2010 with Mr Alam which Mr Alam explained " I have booked the contract of carriage with the freight forwarder, Excalibur" and " I have made the booking direct with the shipping line". Mr Spellson understood that Commodities was to forward the packing instructions and all booking confirmations to Gilgandra as and when they were made. He understood that that was the arrangement. But I also accept Mr Spellson's evidence that Mr Alam on behalf of Commodities did not always provide the booking confirmations to Auscott on behalf of Gilgandra and on a number of occasions before shipment Mr Spellson had to contact Mr Alam directly to ascertain the booking details so that Auscott could finalise the packing and delivery of the wheat. The reason that Mr Spellson had to get this booking information from Mr Alam or from Excalibur before packing is clear from the way that the rail freight system worked. 91The booking confirmations sent to Mr Spellson at Auscott contained all the information Auscott required to pack the goods into containers and arrange the containers for transport by rail to the Port Botany container terminal for loading onto the relevant vessel or vessels for transportation to their final destination. The information included: (a) tonnage; (b) name of the shipping line; (c) name of the vessel; (d) estimate time of departure to the vessel; and (e) the shipping line booking confirmation number. 92Once Auscott had possession of the shipping lines' booking confirmation number it could collect the empty containers which would be sent by the shipping line by rail to the railhead, receive grain into Auscott's store to meet the shipping schedule, pack the wheat into the containers and transport the containers back to Port Botany container terminal. 93It is not possible to send a container to Port Botany by rail and then to hope that somehow at Port Botany the right train meets the right vessel. The evidence is that the Port Botany terminal is organised far more efficiently than that. It is not possible to load a container on a train destined for Port Botany that would be received at the container terminal without the shipper submitting a pre-receival advice on a computerised system known as "1-Stop". The pre-receival advice notifies the Port Botany terminal operators that a shipper such as Auscott is transporting containers for loading onto a particular vessel. 94Auscott submits a pre-receival advice for every container that it shipped under the GM contracts. The Port Botany based "1-Stop" system indicates then to Auscott whether the pre-receival advice has been accepted or rejected. Once accepted Auscott is only then able to submit a load manifest which is also called in the industry a "Train Consist" to the railway company showing which containers Auscott is placing on the train and connecting them with the vessels onto which they are to be loaded. The obvious efficiency of a system such as this needs no elaboration. 95Once Auscott loads the containers on the train and they set out for Port Botany, Auscott does not receive any notification that the containers have arrived. Auscott only received notification if the containers have not arrived. 96Mr Spellson then gives some useful examples of how the system works in respect to particular containers. His evidence is to the effect that all the containerised wheat in Schedule 2 of the Amended Statement of Claim was the subject of train consists in relation either to South Spur Rail Services (NSW) Pty Ltd ("South Spur Rail") or Independent Railways Australia Pty Ltd ("I.Rail"). All the rail consists refer to the bill of lading to which each container was referrable, and the vessel on to which it was to be loaded by the stevedores of Port Botany who were either DP World or Patrick Stevedores. The Train Consists also contain details of exactly where each container is loaded on the train and its precise weight. 97Importantly, Mr Spellson says that "without the information recorded in a Train Consist the containerised wheat cannot leave Auscott's possession for delivery by rail to the shipping lines or their stevedoring agents at Port Botany container terminal". 98I agree with Gilgandra's submission about this evidence that it is inconsistent with a fresh transit beginning at Port Botany. Through this system the instructions to Gilgandra's agent Auscott come either from the buyer or the buyer's agent Excalibur. The instructions include a seamless continuation of transport from the railhead onto the vessel without particular significance being attached to pausing or any form of exchange at Port Botany. Port Botany appears to be a way point and nothing more. Commodities did not lead evidence that the containers were required to be kept at Port Botany until fresh instructions were issued to the carriers as to wheat's destination in Chittagong. There is no evidence of specific instructions from Commodities that the shipping lines were to take delivery of the wheat on the buyer's behalf at Port Botany. I agree with Gilgandra's submission that the wheat has always been in the hands of the shipping line as carriers and still is in Chittagong. 99This evidence means in my view that when the wheat containers are on the various vessels in transit to Chittagong, then the containers are in the hands of the carriers "by reason...of the directions of the purchaser to the vendor" within Lord Esher's words in Bethell & Co v Clark & Co (1888) 20 QBD 615. Importantly, the whole composite of directions including the connection between each container and its export vessel were required to be given to Auscott before the journey was even possible. The "appointed destination" for the purposes of Sale of Goods Act, s 47 is the export destination of the vessels. This seems to have been communicated to Gilgandra who began invoicing the wheat sales described, for example, as "export Monica" or such other vessel on which the wheat was loaded. Auscott issued packing reports showing the destination as "Chittagong Bangladesh". 100Commodities points to a discussion between Mr Alam and Mr Moppett about a wheat spillage which occurred on one of the ships in July 2010. I accept Mr Moppett's version of this conversation. He is said to have asserted "Mohammed, this is not GMCL's problem. We have delivered the wheat. We do not supply the containers. I will mention it to Auscott but you need to take this up with Auscott." This is not in my view a conversation designed to formalise arrangements in relation to delivery it was merely discussion about who should be involved in dealing with the spillage issue. Nor do I think that the fact that Gilgandra was not the party that engaged the carriers and did not pay for the freight diminishes Gilgandra's rights of stoppage in transitu. Assent to disposition of Wheat 101Finally, Commodities has raised the issue of Gilgandra's alleged assent to resale. This is a statutory limit upon the exercise of the right of stoppage in transitu. The issue arises if the Court finds that Gilgandra had a right of stoppage in transitu. I have found that Gilgandra does have that right. The point does now have to be decided. The starting place for the point is Sale of Goods Act, s 49 which provides:- "Subject to the provisions of this Act, the unpaid seller's right of lien or stoppage in transitu is not affected by any sale or other disposition of the goods which the buyer may have made unless the seller has assented thereto: Provided that where a document of title to goods has been lawfully transferred to any person as buyer or owner of the goods, and that person transfers the document to a person who takes the document in good faith and for valuable consideration, then if such last-mentioned transfer was by way of sale the unpaid seller's right of lien or stoppage in transitu is defeated, and if such last-mentioned transfer was by way of pledge or other disposition for value the unpaid seller's right of lien or stoppage in transitu can only be exercised subject to the rights of the transferee." 102What is "assent" for the purpose of Sale of Goods Act, s 49 is defined by Sale of Goods Act, s 28(2) and (3) as follows:- "(2) Where a person having bought or agreed to buy goods obtains with the consent of the seller possession of the goods or the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for that person of the goods or documents of title under any sale pledge or other disposition thereof to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods shall have the same effect as if the person making the delivery or transfer were a mercantile agent intrusted by the owner with the goods or documents of title. (3) In this section the term mercantile agent means a mercantile agent having in the customary course of business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods." 103There is some evidence of Commodities on selling the wheat to buyers in Bangladesh. On several occasions during the conversations between Mr Moppett and Mr Alam in May and June 2010 Mr Moppett refers to "buyers in Bangladesh", to whom Mr Alam claimed to be looking in order to source funds to pay Gilgandra. Mr Alam refers to these buyers in order to assuage Mr Moppett's understandable anxiety by that time about Commodities' slowness in payment. There is written evidence of sales contracts for a total of 7,000 tonnes of APH wheat to Jesi Enterprise and Abu Sayed apparently made on 20 April 2010. 104But this point does not succeed for several reasons both procedural and substantive. The procedural answer to the point is that Commodities did not plead it and only included argument on the matter in its final submissions. Gilgandra said in submissions in reply that it was taken by surprise by the point. Gilgandra's point has substance. The point was not pleaded. It should have been. Notification of the issue in the pleadings would readily have affected the course of evidence and cross-examination in the way the trial was conducted. I consider that the failure to plead the point has prejudiced Gilgandra's capacity to respond to it. On this ground alone the point could not succeed. 105Even had it been pleaded the point would not have succeeded. Nothing in the conversations between Mr Alam and Mr Moppett in April and May 2010 amounts to an "assent" by Gilgandra to on sale of the goods. The flavour of all these conversations (and I accept Mr Moppett's version of them where his version differs from Mr Alam's version) is that Mr Alam is telling Mr Moppett as a matter of history about his dealings with his buyers in Bangladesh. He is not asking Mr Moppett for Mr Moppett's consent to on sales to these buyers. Rather he is referring to the fact of these dealings in very general terms so as to keep Mr Moppett from taking more immediate action. Mr Alam is a master of the art of the indirect. None of the conversations amount to a direct request for Gilgandra's assent to on sales to buyers in Bangladesh. Nor should they be taken as implying such assent. Mr Moppett is by nature a careful man who was unlikely to allow himself to indicate such assent on behalf of Gilgandra without a degree of formal ceremony on his part. He at no stage gave to Mr Alam the sort of indication that is necessary for assent, namely a complete renunciation of Gilgandra's rights over the goods such that the unpaid seller intends that the on sale by the buyer should be carried out irrespective of the terms of the original contract: cf Mount (D.F.) Ltd v J & J Provisions Co Limited [1960] QB 159; [1959] 3 All ER 307. 106Moreover Gilgandra did not give any document of title in the wheat to Commodities from which consent could be inferred. The generation of shipping documents by the carriers referring to some of the buyers in Bangladesh and their transmission to Gilgandra's packing agent Auscott does not amount to assent by Gilgandra.

(d) The Equitable Lien Claim 107Gilgandra also claims an equitable lien over the wheat in respect of the unpaid purchase price. In Hewitt v Court (1983) 149 CLR 639 at 668, Deane J identified the elements sufficient for the implication, independently of agreement, of an equitable lien between parties in a contractual relationship, relevantly in the following terms: (a) There is an actual or potential indebtedness on the part of the party who is the owner of property to the other party arising from a promise of the payment of consideration in relation to the acquisition of the property; (b) The property was specifically identified and appropriated to the performance of the contract; and (c) The relationship between the indebtedness and the property is such that it would be unconscientious or unfair for the owner to dispose of the property without the consent of the other party. 108There is an additional requirement in order for a vendor's lien to be available, where the contract in question is for the sale of goods. In such a case the plaintiff must establish that the goods were delivered under a specifically enforceable contract: Hewitt v Court (1983) 149 CLR 639 at 649 per Gibbs CJ. Deane J's judgment in Hewitt v Court (1983) 149 CLR 639, at 667 appears in general terms to support the availability of an equitable lien without a specifically enforceable contract, his Honour stating that there was "no proper basis for precluding the implication of an equitable lien by reason of the suggested unavailability of specific performance". But in Equitable Enterprises Retail Property Ltd v Rodgers (1988) 15 NSWLR 473 Kearney J analysed the judgments in Hewitt v Court on this issue and concluded that Gibbs CJ, Wilson and Dawson JJ (and it is to be inferred Murphy J) all support the requirement for a specifically enforceable contract before an equitable lien can arise. Kearney J was attracted to Deane J's conclusion. But as a judge at first instance Kearney J did not feel at liberty on existing authority to hold that an equitable lien was available in the absence of the goods being delivered under a specifically enforceable contract. Like Kearney J I do not consider that I am free to dispense with the requirement for specific enforceability of the contract under which the lien is said to arise. 109Elements (a) and (b) of Deane J's elements are not in issue in this case. My findings in relation to what was due and payable under the contract show that Gilgandra as vendor has not received the whole of the purchase money and therefore Commodities, the owner of the goods, is indebted to Gilgandra. Moreover, there is no doubt that specific goods were identified and appropriated to the performance of the contract. That occurred when each train consist that Mr Spellson described was prepared and particular wheat was put in particular containers, sealed up and loaded on the particular trains identified in the train consist, bound from Warren and Narrandera to Port Botany. Also in some cases there can be an issue whether the contract terms, expressly or by implications, exclude such a lien. Here Commodities, has not argued that the contract excludes a lien either expressly or by implication. That leaves for determination the two issues: whether the contracts are specifically enforceable; and, whether it is unconscionable for Commodities to on-sell the wheat (assuming it has been on-sold). 110The contracts are not specifically enforceable. They are contracts for the sale of goods. There is sufficient evidence before the Court from Mr Alam, Mr Moppett and Mr Horton of a substantial Australian export market for the varieties of wheat the subject of the proceedings for the Court to infer that goods of an identical character were in the first half of 2010 and are now obtainable on market. There is nothing unique about the goods the subject of these contracts. Damages at law are an adequate remedy. 111But the plaintiff says that damages are not an adequate remedy because of Commodities' threatened insolvency. There is no doubt of Commodities' present or anticipated insolvency. An administrator has been appointed to Commodities. I have found in relation to the Sale of Goods Act claim that Commodities is actually insolvent due to its non-payment of Gilgandra's invoices. But that is not a basis itself to decree specific performance on the ground that damages are not an adequate remedy. The authorities suggest that the additional element of the insolvency of a defendant is not a basis to grant specific performance of a contract for the breach of which damages would otherwise be held to be an adequate remedy. The issue was considered by Goulding J in Anders Utkilens Rediari A/S v O/Y Lorisa Stevendore & Co A/B [1985] 2 All ER 669 who was required to determine whether specific performance would have been granted of a compromise of certain litigation. The compromise involved an agreement to sell certain property and then to divide the proceeds of sale. The defendant had been placed into liquidation after the compromise. His Honour rejected the argument that damages were an inadequate remedy based simply on the defendants' financial instability. His Honour said [at 674]: "Counsel for the plaintiff has asserted, pursuant to a suggestion of my own, that damages would not have been an adequate remedy for the plaintiff, because of the defendant's dubious financial situation, known (as appears from certain correspondence by telex) to both parties at the time of compromise. Therefore, he says, such terms would properly have been the subject of specific performance. He has referred me to a passage in Spry on Equitable Remedies (2nd edn, 1980) p 64 and to a dictum by Leach V-C in Doloret v Rothschild (1824) 1 Sim & St 590 at 598, 57 ER 233 at 236, where a purchaser sought specific performance of a contract for the purchase of certain Neapolitan government stock. The Vice-Chancellor said: 'I am of opinion that, inasmuch as this Bill prays a delivery of the Certificates which would constitute the Plaintiff the Proprietor of a certain quantity of Stock, the Bill in Equity will hold; because a Court of Law could not give the Property, but could only give a remedy in Damages, the beneficial effect of which must depend upon the personal responsibility of the Party.' That observation, however, has been the subject of severe criticism in successive editions of Fry on Specific Performance (see 1st edn (1858), para 19 and 6th edn (1921), para 65). Now it is true that, when considering the grant of an interlocutory injunction to protect a plaintiff from alleged unlawful acts until trial, the court is often influenced by evidence that the defendant might be unable to satisfy an eventual award of damages. But in my opinion it is illegitimate to extend the argument to the sphere of the present debate. Commercial life would be subjected to new and unjust hazards if the court were to decree specific performance of contracts normally sounding only in damages simply because of a party's threatened insolvency. Thus I cannot accept the argument based simply on financial instability. But I think that on a broader view of the situation the plaintiff must succeed. Immediately before the compromise the plaintiff had a money judgment for nearly £130,000. The judgment was challenged in a pending appeal and it was uncertain whether the defendant's net assets could ever satisfy it. By the bargain between the parties the plaintiff not only got rid of the risks of appeal but in effect gave up its rights as a judgment creditor for rights of quite a different character. Instead of pursuing a personal judgment enforceable by execution or liquidation against the defendant's assets generally, the plaintiff was now to be satisfied out of the proceeds of specified assets that the defendant undertook to realise forthwith. They were expected to produce less for the plaintiff than the amount of the judgment, but the terms offered the chance of a bonus should the property sell to unforeseen advantage. The sum receivable by the plaintiff was not merely to be measured by reference to the proceeds of sale, but was actually to be a share thereof. Had that promise been broken by the defendant, it would plainly, in my judgment, have been an inadequate remedy to remit the plaintiff to a fresh money judgment, presumptively of less amount than before the compromise and subject to the same uncertainties of satisfaction. Good conscience would require the defendant to realise the property exactly as agreed with the plaintiff, for in truth the defendant had irrevocably dedicated the property to the purposes of the compromise. For those reasons and notwithstanding some initial hesitation, I do not now doubt that the terms would, had the necessity arisen, have been decreed to be specifically performed. It follows, in my judgment, that the compromise imposed an immediate trust for sale and division of the proceeds on the property in the defendant's hands." 112The learned authors of Meagher Gummow and Lehane, Equity, Doctrines and Remedies, 4th Edition, [20-030] conclude that the authorities offer "a diversity of views" on whether the remedy of damages, if otherwise adequate, becomes inadequate because of the possible insolvency of the defendant, citing Anders Utkilens Rediari A/S v O/Y Lorisa Stevendore & Co A/B [1985] 2 All ER 669 and Associate Portland Cement Manufacturers Limited v Teigland Shiping A/S ('The Oakworth') [1975] 1 Lloyd's Rep. 583. The latter case is an example of a Court exercising well established interlocutory equitable jurisdiction by taking into account the threatened insolvency of a defendant in granting purely interlocutory injunctive relief to a plaintiff, which had given an undertaking as to damages. In the present case Gilgandra seeks final relief. If it is granted it would cause prejudice to the other creditors of Commodities who are not parties to this action. This argument fails in my view. The contracts are not specifically enforceable. 113Nor has Gilgandra demonstrated unconscionability. This is a further obstacle to Gilgandra establishing an equitable lien. Commodities has exercised its rights to deal with the wheat the subject of these contracts once title passed to Commodities when the shipments reached DCT. Properly considered the contracts made Commodities' rights to so deal with the wheat clear. There is nothing that equity would recognise as unconscientious in Commodities' exercising its ordinary contractual rights in this way, despite the result that Gilgandra must now pursue its remedies against an insolvent company. Nor is there other unconscionable conduct on Commodities' part sufficient to attract equity's intervention. For example, in May and June 2010 Commodities gave Gilgandra many excuses for its non-payment. It has not been established that Mr Alam had any basis for belief in the truth of what he was stating about expecting imminent payment or in the validity of his excuses. But it has equally not been established that Mr Alam, when offering these excuses, was actually aware that Mr Horton or Mr Moppett had, for example, a mistaken view of the effect of the GM contracts and that Mr Alam was consciously taking advantage of that mistaken view, such as would ground findings of unconscionable conduct against him and Commodities through him. There is no room for the operation of doctrines of unconscionability in these circumstances.

Conclusions and Orders 114In the result therefore I have found that the monies that Gilgandra claims are due under the contract including the higher rates of $300 and $310 per tonne for high protein wheat. I have found that Gilgandra has not retained title to the wheat and does not have an equitable lien but has not lost its right of stoppage in transitu. The injunction therefore will continue permanently. The parties will need to make arrangements based upon the reasoning in this judgment as to the disposition of the wheat. Other consequential matters will need to be dealt with including the carriers' cross-claims, the statutory demand and issues of costs. I direct the parties to bring in Short Minutes of Order within 7 days to give effect to these reasons.

Amendments 21 December 2012: references to "Commodities" has been changed to Commodity; minor tyographical amendments to paragraphs [2], [19], [29], [45], [48], [49], [52], [86], [88], [96], [105], [107], [108], [109]. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 December 2012

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