The background to the present application is set out in the affidavit affirmed 25 June 2019 by the plaintiff (the liquidator's affidavit). It may be summarised as follows.
The Company was incorporated on 10 September 1992 and (under various trading names) operated a retail business supplying barbeque equipment and outdoor appliances both in store, by telephone and via an online website. The usual retail trade of the Company included selling goods to customers, by payment in cash or card before delivery. The goods sold by the Company varied in value from simple barbeque accessories to top quality barbeque systems valued, in some instances, at over $8,000. (See the liquidator's affidavit at [4]-[5].)
The Company traded from a showroom located at St Leonards, New South Wales (the showroom), where the majority of display stock was stored. All other stock was stored (and continues to be stored) in a cordoned off section of a warehouse at Revesby, New South Wales (the warehouse), the owner of which warehouse is Jackman Logistics Pty Ltd (Jackman Logistics). (See the liquidator's affidavit at [11].)
The Company went into voluntary administration on 26 April 2019 (at which time Mr Darin, a partner of Worrells Solvency and Forensic Accounting, was appointed as voluntary administrator pursuant to s 436A of the Corporations Act). The Company went into liquidation on 31 May 2019 (and Mr Darin was then appointed as liquidator) when a meeting of creditors convened pursuant to s 439A of the Corporations Act and resolved that the Company be wound up.
The only current director of the Company is Mr Matthew Edwards (see the liquidator's affidavit at 4(i)).
The liquidator has deposed to the work undertaken during the voluntary administration period (the liquidator's affidavit at [8]ff), including steps taken to identify, care and preserve the assets of the Company (particularly the stock held by the Company); and communications with customers and secured creditors (mainly being suppliers of stock). The employment of all the Company's employees (other than its warehouse manager, Mr Simon Lirosi) was terminated.
The liquidator prepared an advice to creditors dated 30 April 2019, in advance of the first meeting of creditors on 8 May 2019. He prepared a further report to creditors dated 23 May 2019. The second creditors' meeting was held on 31 May 2019 and, as noted above, at that meeting the creditors resolved that the Company be wound up.
Meanwhile, on 26 April 2019, a valuer who had been engaged to provide a valuation of the stock held by the Company (Mr Ryan Clifton of Cardinal Asset Services) met with Mr Lirosi at the warehouse to conduct a stocktake on the basis of which the valuer prepared a stock listing and formal valuation of the stock (the liquidator's affidavit at [39]) (see the report dated 29 April 2019 exhibited to the liquidator's affidavit); and, on 29 April 2019, an employee of the liquidator, Mr Damien Beven (who has affirmed an affidavit in these proceedings on 25 June 2019), attended the warehouse with Mr Lirosi to identify and preserve the stock stored at the warehouse (the liquidator's affidavit at [40]).
The Company used the "MYOB" computer program to monitor customer orders and stock. The liquidator has deposed (at [41] of the liquidator's affidavit) that it is his understanding of the Company's systems that:
… someone working in the sales team at the Showroom would enter details of the sale onto the MYOB system and Mr Lirosi was responsible for entering details of any deliveries or fulfilments onto the MYOB system, by closing fulfilled orders once the stock was picked up or delivered to the customer.
Mr Beven has deposed to his review of the records of the Company and his enquiries of Mr Lirosi from which he gained an understanding of the processes and systems of the Company (see Mr Beven's affidavit at [4]). Broadly speaking, that process was as follows.
At the showroom, stock orders were taken by store staff members by way of telephone, online or by way of customer "walk-ins". Orders placed by telephone or "walk-in" were entered on the MYOB system at the point of sale; orders placed online were manually entered into the MYOB system by staff members at the showroom; "open customer orders" could then be generated from the MYOB system (Mr Beven's affidavit at [4(a)-(b)]). Customers would usually order a number of items within one order and pay in full by cash or card at the time (Mr Beven's affidavit at [4(c)]). If stock was available at the showroom, the customer could take the stock on the day of purchase and the order was immediately closed on MYOB (Mr Beven's affidavit at [4(d)]).
Larger items (such as barbecues) required fulfilment by the warehouse. Those orders were left open on MYOB to be dealt with by staff at Revesby (see Mr Beven's affidavit at [4(e)]).
The MYOB system would be checked for open orders every couple of hours by Mr Lirosi (Mr Beven's affidavit at [4(f)]).
If the stock ordered was not available at either the showroom or the warehouse, Mr Lirosi would order the stock from the supplier, usually placing such orders on the same day as the customer's order or, at the latest, the following business day (Mr Beven's affidavit at [4(g)]). Usually, stock was ordered from suppliers as it was requested by customers but some stock (such as stock ordered from overseas or the subject of a minimum order requirement by suppliers) was kept in surplus (Mr Beven's affidavit at [4(h)]).
At [5] of Mr Beven's affidavit, Mr Beven deposes to the process adopted for the allocation of stock to customer orders. When an order was placed that required fulfilment by the warehouse (for example, if the stock was not available at the showroom), Mr Lirosi would manually allocate stock to the customer by locating the stock and physically labelling the stock by placing a printed label with the customer's name, address and contact number on the stock (Mr Beven's affidavit at [5(d)-(e)]). Thus, the liquidator has deposed (at [44] of the liquidator's affidavit) to his understanding that:
… Mr Lirosi would, in the usual course of business, manually allocate stock available at the Warehouse to any open or unfulfilled customer order by sticking a label on each item of allocated stock with the name of the customer, their address and usually their contact phone number, often without updating the MYOB system. The allocated stock would then remain stored at the Warehouse until it was collected or delivered. [my emphasis]
Where a customer order could not be fulfilled because the order required stock to be supplied to the Company, then, as stock arrived, it would be unpacked, checked against open orders and then manually allocated to the customer's order (Mr Beven's affidavit at [5(f)]).
Mr Beven has deposed (Mr Beven's affidavit at [5(g)] that:
Once all the stock was received for that customer order and manually allocated to the customer's order … , that stock would either be:
i. collected from the Company's premises; or
ii. delivered to the customer
At the time of the appointment of the administrator, some of the stock located at the warehouse had been allocated to customers' orders and was ready to be delivered and awaiting collection by the courier (Mr Beven's affidavit at [5(h)]).
Some stock was delivered directly to customers by the supplier; and, on rare occasions (i.e., in circumstances where special requests had been made by customers), deliveries of orders were completed in stages as stock became available (Mr Beven's affidavit at [5(k)]).
Mr Beven has deposed (Mr Beven's affidavit at [5(l)]) that occasionally staff members would manually override the allocation of stock from one customer to another customer where a second customer order could be completed in full and there was still a lead time for the first customer's stock to arrive. Mr Lirosi has advised Mr Beven (and Mr Beven has found no information in the Company's records to contradict this) that there was no re-allocated stock at the warehouse as at the date of appointment of the administrator (Mr Beven's affidavit at [5(n)]).
Once the stock was delivered by or collected from the warehouse the order was closed on the MYOB system by Mr Lirosi "within half an hour of that delivery and/or collection" (Mr Beven's affidavit at [5(m)]).
The difficulty that has led, at least in part, to the present application is that Mr Beven has determined that the Company's MYOB records did not provide an accurate record of the allocation of stock (the liquidator's affidavit at [44]). With Mr Lirosi's assistance, on 29 April 2019, Mr Beven carried out an assessment of open or unfulfilled customer orders, generated from the Company's MYOB records - Mr Lirosi indicating (by way of a tick or a cross, and in some cases a question mark, on the hard copy customer order reports print-out) which orders could (and which could not) be fulfilled by the available stock at the warehouse as at the date of administration. It appears that a physical inspection of the warehouse contents revealed some stock (and Ms Carolyn Burgemeister's order is an example of this) where the MYOB records do not disclose an open or unfulfilled customer order but where the stock appears to have been allocated to an order placed by the customer (and had not been delivered or collected in fulfilment of the order).
Apart from the fact that there has been some difficulty in identifying the stock as against the claims to that stock, there are some instances where there are multiple orders for particular items of stock and insufficient stock to meet all those orders (notwithstanding that the customers had paid for the stock in full at the time of the order).
Also posing a difficulty for the liquidator is the fact that various suppliers have been identified as secured creditors (having registered security interests in respect of goods supplied to the Company). One of those secured creditors, Electrolux Home Products Pty Limited (Electrolux), not only had a retention of title clause in its contract with the Company but also a general charging clause, which gave rise to an ALLPAAP security interest (i.e., 'All Present and after Acquired Property security interest') (see further below). Further, a lien has been claimed by Jackman Logistics in respect of unpaid invoices of $31,160 for storage and transport charges (the Warehousemen's Lien).
The liquidator has thus been faced with the dilemma that the stock situated at the Company's showroom and warehouse has been subject to claims by customers, suppliers with security interests and the warehouse landlord (Jackman Logistics).
[2]
Present application
On 26 June 2019, the liquidator commenced proceedings in this Court by filing his originating process dated 25 June 2019. On that occasion, directions were made for notice of the application to be given to interested parties and for documents to be posted on the liquidator's website (see Orders 6 and 7 made by Black J on 26 June 2019).
In respect of compliance with those orders, the liquidator relies on two affidavits affirmed by a file accountant in his employ, Mr Kevin Chen, made on 28 June 2019 and 8 July 2019, respectively.
The liquidator notes that interested parties were given early notice of the difficulties that had been encountered in relation to the identification of stock and his intention to strike a levy over stock (see the communications to which the liquidator has deposed at [14]-[23] of the liquidator's affidavit).
In evidence before me on the present application were copies of communications received from various customers and suppliers. Only one interested party appeared on the hearing of this application - a customer, Ms Burgemeister, who made submissions in essence against the imposition of a levy over the stock claimed by her (for which she has fully paid and in respect of which the liquidator accepts that, on the better view of the law, title to the goods had passed to her prior to the commencement of the administration). I will address in due course the submissions made by Ms Burgemeister, who appeared without the benefit of legal representation.
On this application, the liquidator relies heavily on earlier cases in the Corporations List where similar relief (both by way of directions as to how to deal with assets and as to the imposition of a levy in respect of stock or items of property held by the relevant company (see Crouch v Adams [2006] NSWSC 1029 (Crouch v Adams); International Art Holdings Pty Ltd (admin apptd) v Adams [2011] NSWSC 164; (2011) 85 ACSR 1 (International Art Holdings); In the matter of Renovation Boys Pty Ltd (admins apptd) [2014] NSWSC 340 (Renovation Boys), to which I will refer in more detail in due course).
[3]
Categories of Stock identified by the liquidator
The liquidator has identified six separate categories of stock presently held by the Company. One of those categories is no longer relevant, having regard to the disclaimer by Electrolux of reliance on its general charge.
Those categories are as follows:
Category A Stock: being stock for which a customer has paid in full, where there is sufficient stock held at the warehouse to fulfil the customer's entire order and the stock has been allocated by the Company to the customer's order in the manner described above (i.e., by the location of the stock and the placement of a label recording an individual customer's details on that stock item) (Ms Burgemeister's stock fits within this category);
Category B Stock: being stock for which a customer has paid in full, but where there is insufficient stock held in the warehouse to fulfil the entirety of the customer's order;
Category C Stock: being stock for which a customer has paid in full, but where there are more open customer orders for that stock on MYOB than there is stock available at the warehouse to fulfil the order;
Category D Stock: being stock subject to a PMSI security interest where an ALLPAAP also exists (the Electrolux stock);
Category E Stock: being stock that is subject to a PMSI security interest only; and
Category F Stock: being the remaining stock.
[4]
Category A Stock
This category comprises stock allocated (in the manner referred to above, by the affixing of a label to the stock item(s)) to 21 customers. As already noted, Ms Burgemeister is one such customer.
Exhibited to the liquidator's affidavit (Exhibit B at 226) is a Stock List in respect of the Category A Stock, which has been valued (by reference to the recommended retail price of each item of stock - RRP) as totalling $60,305.80.
The liquidator's understanding is that customers who have been identified as having Category A Stock have title to the stock, despite any claim of encumbrances to the stock by secured creditors but subject to any Warehousemen's Lien.
Directions are sought in relation to the Category A Stock (Orders 1 and 4 of the proposed short minutes of order handed up at the hearing) in effect that the liquidator is justified in treating these stock items on the basis that title has passed to the customer (notwithstanding that security interests over these stock items have been registered under the Personal Property Securities Act 2009 (Cth) (PPSA)).
Relevantly, a direction is also sought that the liquidator is justified in acting on the basis that, in respect of any stock item, the stock item has been allocated or appropriated to a customer if the stock item bears a label placed on it by the Company and identifying the customer (Order 6 of the proposed short minutes of order).
[5]
Category B Stock
The Category B Stock consists of stock allocated to 49 customers (again, by the affixing of labels to the stock) but in circumstances where there was insufficient stock at the warehouse to satisfy the entirety of those customers' orders - i.e., where there was a "partially fulfilled customer order".
The estimated value of the Category B Stock, again calculated by reference to the recommended retail price of each item, is $74,119.99 (see the Stock List and valuation at 227-230 of Exhibit B).
In his affidavit, the liquidator deposes that he seeks directions that he would be justified in selling the stock and making a distribution to the customers identified as having Category B Stock on a pari passu basis, but subject to any Warehousemen's Lien (see Orders 2, 4 and 5 of the proposed short minutes of order).
[6]
Category C Stock
The Category C Stock consists of 14 items of stock, being six different types of stock items, in respect of which there are 27 open orders (see the Stock List and valuation at 231-232 of Exhibit B) and insufficient items of that stock to satisfy all of those orders. The estimated total value of the Category C Stock calculated by the recommended retail price of each item is $37,126.
The liquidator deposes that the Category C Stock that is available was allocated to a customer on a first in time basis until the available stock was exhausted (see the liquidator's affidavit at [58]).
The liquidator seeks directions that he would be justified in selling the stock and making a distribution to the customers identified as having Category C Stock on a tenants in common basis, but again subject to any Warehousemen's Lien. The liquidator, however, also notes that there may be an alternative position; namely, that title in the stock passed when the label was placed on the stock, naming one customer who had paid in full for that stock item and that such stock should be treated in the same manner as that within Category A or Category B (see the liquidator's affidavit at [60]).
[7]
Category D Stock
Category D Stock comprises stock from one supplier, Electrolux, with an estimated value of $35,719.49 calculated using the cost price of the stock value (see the Stock List and calculation at 234 of Exhibit B).
This stock formed a separate category because of the view by the liquidator that the Electrolux agreement had the effect of charging all of the Company's beneficial interest in any real and personal property (including all after acquired property) in favour of Electrolux (see cl 12) thereby giving rise to an ALLPAAP security interest for the purpose of securing payment of moneys owing to Electrolux (see the liquidator's affidavit at [63]).
Contradictory positions were taken by Electrolux as to its reliance on that general charge (see the liquidator's affidavit at [24]-[37] and the affidavit of the liquidator's solicitor, Mr Mark Doble, sworn 9 July 2019, in respect of the notice given to, and communications with, Electrolux). By the time of the hearing of the application, however, Electrolux' position was that it did not press its interest under the general charging clause and that it had released its PMSI (i.e., its security interest in the stock). As a consequence, this category of stock now falls within Category F Stock (see below) and need not be considered as a separate category of stock.
[8]
Category E Stock
Category E Stock is stock that is subject to a registered security interest under the PPSA (a PMSI). Only six secured creditors have registered PMSIs (see the liquidator's affidavit at [67]).
The Category E Stock has been valued at an estimated cost price of $88,770.34 (see 235-236 of Exhibit B). The secured creditors in question are: SMEG Australia Pty Ltd, Worldwide Appliances Pty Ltd, Arisit Pty Limited, EuroStyle Group Pty Ltd, Weber-Stephen Products Co. (Australia) Pty Ltd and Masport Australia Pty Ltd (see the liquidator's affidavit at [67]ff).
The liquidator is currently acting on the basis that the Category E Stock should be treated in the same manner as Category A Stock by reason of ss 46 and 47 of the PPSA, but subject to any Warehousemen's Lien.
[9]
Category F Stock
Finally, the Category F Stock comprises all remaining stock in the Company's possession (see the Stock List and valuation at 290-293 of Exhibit B).
Part of the Category F Stock (which was stored at the showroom) was sold during an online auction between 9 May 2019 and 13 May 2019 for a gross sale price of $24,250.43 including GST (see the liquidator's affidavit at [90]). A further item of this category of stock was sold to an unrelated party for consideration of $5,000 inclusive of GST by agreement dated 5 May 2019 (see the liquidator's affidavit at [91]).
The remaining Category F Stock is stored at the warehouse and is estimated (excluding accessories and spare parts which have not been separately itemised and valued) to have a forced liquidation value of approximately $143.906.50 (see the liquidator's affidavit at [92]).
The liquidator is currently acting on the basis that the Category F Stock is the property of the Company and can be disposed of by the liquidator, subject to the Warehousemen's Lien (see the liquidator's affidavit at [93]).
[10]
PPSA Act
In the originating process, at Orders 5 and 6, the liquidator seeks, in effect, an order that, notwithstanding that there are security interests registered/perfected under the PPSA, title has passed to the customers in particular circumstances.
Sections 46 and 47 of the PPSA provide, in effect, that a buyer of personal property, such as a customer of the Company, takes the personal property free of a security interest.
Section 46 of the PPSA relevantly provides that :
Main rule
(1) A buyer or lessee of personal property takes the personal property free of a security interest given by the seller or lessor, or that arises under section 32 (proceeds - attachment), if the personal property was sold or leased in the ordinary course of the seller's or lessor's business of selling or leasing personal property of that kind.
Exceptions
(2) Subsection (1) does not apply if:
(a) in a case in which personal property of that kind may, or must, be described by serial number - the buyer or lessee holds the personal property:
(i) as inventory; or
(ii) on behalf of a person who would hold the collateral as inventory; or
(b) in any case - the buyer or lessee buys or leases the personal property with actual knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest."
Section 47 of the PPSA provides that:
Main rule
(1) A buyer or lessee of personal property, for new value, that the buyer or lessee intends (at the time of purchase or lease) to use predominantly for personal, domestic or household purposes takes the personal property free of a security interest in the property if the market value (worked out at the time each part of the total new value is given) of the total new value given for the personal property is not more than:
(a) $5,000; or
(b) if a greater amount has been prescribed by regulations for the purposes of this subsection - that amount.
Exceptions
(2) Subsection (1) does not apply if:
(a) the personal property is of a kind that the regulations provide may, or must, be described by serial number in a registration; or
(b) the buyer or lessee buys or leases the personal property with actual or constructive knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest; or
(c) at the time the contract or agreement providing for the sale or lease is entered into, the buyer or lessee believes, and it is actually the case, that the market value of the personal property is more than:
(i) $5,000; or
(ii) if a greater amount has been prescribed by regulations for the purposes of this paragraph - that amount.
The liquidator anticipates that there might be some contention that, as the Company is no longer trading at this time, the protection to customers under ss 46 and 47 of the PPSA does not apply, because the sale needs to be in the ordinary course of the seller's business. The liquidator submits in this regard that the sales to customers took place prior to his appointment as administrator, when the Company was trading in the ordinary course and (subject to the Court giving the directions sought) title passed to the relevant customers at that time.
[11]
Submissions by the plaintiff
It is noted that it is within the duties of the administrator, and now the liquidator, to take possession of all the stock, identify the claims to that stock and the stock items themselves, and facilitate the delivery or return of the stock. It is also noted that there is a large amount of stock which has been classified as being company stock (Category F Stock).
It is submitted that the plaintiff, as administrator, has a right of indemnity over the property of the Company, which is secured by a statutory and equitable lien over that property; and, as liquidator, has a right of indemnity over the property of the Company, which is also secured by an equitable lien (noting that an equitable lien is created by the Court, regardless of the intent of the parties, as a remedial device to protect a party against some inequitable loss).
The liquidator notes the authority to the effect that "a stranger who carries out work or services, or otherwise confers a benefit on another, without a request, actual or implied, to do so, is not entitled to payment or compensation" (see Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 (Falcke)) but points to the decision of Perram J at first instance in White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) [2018] FCA 471; (2018) 125 ACSR 163 (Mossgreen), where his Honour there referred to Stewart v Atco Controls Pty Ltd (In Liquidation) (2014) 252 CLR 307; [2014] HCA 15 (Stewart), for the proposition that the principle in Falcke has "no application to work undertaken in the realisation of assets as part of a liquidator's statutory duties" (see Stewart at [48]).
It is noted that in Mossgreen, in respect of all relevant goods, at no time did the company, Mossgreen, own the goods; rather, at all times Mossgreen had no title or interest in the goods, other than as a bailee and, as an auctioneer, Mossgreen owed certain duties and obligations; and the liquidator accepts that, upon the appointment of the administrators, Mossgreen became obliged to return the consigned items to their owners (such that the stock, no matter how it was identified, never became the property of Mossgreen to sell).
It is submitted that this can be contrasted with the present case in which a "fair proportion" of the stock ($168,594.67 out of some $391,498.89 calculated on recommended retail prices, on the liquidator's calculations as at 15 July 2019) was property of the Company at the date of the appointment of the administrator; and that the stock (which the liquidator accepts now belongs to the customers) was, prior to its sale, property of the Company.
The liquidator points out that the Court has recognised that an administrator with responsibilities of the kind that an administrator has, should not be criticised for being careful to ensure that the property was identified, located and preserved pending a determination as to who had an interest in those assets (referring to the authorities in this Court to which reference has been made above).
The principal source of information, for the purpose of identifying ownership of the stock at the warehouse, is said to have been the knowledge of one person (being Mr Lirosi, the warehouse manager). The liquidator submits that it was not only reasonable, but proper, for the liquidator not immediately to place sole reliance on the information provided by Mr Lirosi (and, instead, to conduct his own investigations of the Company's records). It is said that the liquidator required some time to carry out those investigations, so as to form the views and opinions which are the basis for this application (in contrast to the position in White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) v Robertson [2018] FCAFC 63 (the Mossgreen Appeal), where it was said that "it was possible for Company staff to trace most items through utilising various search functions across each of the Systems").
The liquidator further notes that a number of issues have been addressed by the liquidator without the need for any application for directions (such as the validity of the PMSIs and of the claimed Warehouseman's Lien under the Storage Liens Act 1935 (NSW) (Storage Liens Act)); as a result of which it is said that the costs of the present application have been minimised.
The liquidator emphasises that the communications with the secured creditors do not suggest that any of those creditors maintained records of the level and identify of their stock that was held by the Company at the date of the administration; and that the lists of this stock (Category D Stock and Category E Stock) had to be created by the liquidator without the assistance of the secured creditors.
It is noted that the reasonableness of the amount of the lien is a factor in determining whether equity would grant a lien.
In that regard, it is said that the liquidator has turned his mind to minimising costs (and, as an example, that he did not conduct a stocktake of the numerous small value items collectively described as "accessories", valued collectively at an estimated $65,000); and that he has been careful not to include, within his calculation of a levy, amounts which are not attributable to the task of identification, preservation and distribution of those stock items; nor does he seek to recover relatively nominal costs (such as insurance, wages of administration staff or superannuation on wages) out of the proposed levy.
The calculation of the levy (as originally proposed) was set out in Exhibit B (at 318). The calculation was amended in a minor respect during the course of the hearing and then again on 15 July 2019 when an updated levy calculation was provided by the plaintiff. The figures outlined in this judgment (unless otherwise indicated) are based on the revised levy calculation dated 15 July 2019 (with my own minor arithmetical corrections) and with some adjustment to the proposed apportionment of the levy (as explained below).
In summary, and prior to the liquidator's consideration of Ms Burgemeister's submissions, the proposed levy to be imposed was a levy of 44.23%, as the proportion of the estimated total of the costs characterised as Stock Preservation Costs (of $192,587.51) referable to the estimated total value of stock (calculated at $435,385.63).
As to the value of stock, this was calculated by the liquidator as follows:
Company Stock sold $31,157.00
Est. total value of remaining Company Stock $143,906.50
Est. value of PMSI Stock (at cost) $88,700.34
Est. value of Customer Stock (at RRP) $171,551.79
Est Total Value of Stock $435,385.63
As to the estimated Stock Preservation Costs, these are comprised of:
Est. Liquidator Costs $71,633.79
Rent - 12 weeks to 19/7/19 $24,792.64
Wages - 12 weeks $15,001.08
Legal costs $50,000.00
Warehousemen's Lien $31,160.00
Total Costs $192,587.51
The time frame for the estimate of certain of those costs to 19 July 2019 was based on the assumption that the Court would be in a position to deliver judgment on the present application in that (expedited) time frame (the objective urgency to which the liquidator points in that regard being the continued incurring of rental and other expenses).
The liquidator (at Orders 8(a) and 8(b) of the proposed orders) seeks, in effect, orders that he is entitled to a lien for Stock Preservation Costs and that he has an entitlement to an indemnity in equity out of stock items for those Stock Preservation Costs.
The levy amount (according to the Levy Calculation handed up at the hearing), as initially calculated by the liquidator, was proposed to be borne as to 40.21% by the Company Stock (i.e., Category F Stock); 20.39% by the PMSI Stock (i.e., Category E Stock) and 39.40% by the Customer Stock (i.e., the Category A Stock, Category B Stock and Category C Stock).
It is noted that the liquidator has not yet called for the customers or secured creditors to pay any levy (though he has adverted to the possibility of such a levy in reports/communications to creditors).
The liquidator has pointed to possible alternatives to the imposition of a levy. In that regard, the liquidator submits that it is the claimed Warehousemen's Lien which poses the greatest difficulty. The liquidator has considered that it would be open to him to disclaim the Company's interest in the stock which is subject to the claims by secured creditors (the Category E Stock) and to allow those creditors and the warehouse landlord to deal with their competing claims directly with each other. The liquidator has also pointed to the fact that there is stock which is owned by the Company (the Category F Stock) which could be sold and used to meet the Stock Preservation Costs but it is said that this would place the burden of all of those costs on the unsecured creditors (and, to the extent of any deficiency, on the liquidator personally).
The liquidator, thus, submits that the most equitable manner of dealing with the issue is in accordance with the directions now sought (though amended in terms of the levy calculation as I explain below).
In respect of each category of stock and the payment of a levy, the liquidator seeks orders in the nature of directions as follows:
1. Category "A" Stock: that title has passed; payment of a levy and make stock available for collection (Order 8(c),(d));
2. Category "B" Stock: either
1. that title has passed; payment of a levy and make stock available for collection (Order 8(c),(d)); or
2. that title has not passed to one customer; sale of that stock; payment of a levy and distribution of the balance pari passu to those customers (Order 3 (a));
1. Category "C" Stock: either
1. that title has passed; payment of a levy and make stock available for collection (Order 8(c),(d)); or
2. that title has not passed to one customer; sale of that stock; payment of a levy and distribution of the balance pari passu to those customers (Order 4(a));
1. Category "E" Stock: payment of a levy and release stock to secured creditor (Order 8(f));
2. Category "F" Stock: that Company owned stock be sold.
[12]
Submissions by an interested party (Ms Burgemeister)
In essence, Ms Burgemeister objects to the proposed 44.43% levy on the stock she purchased for the following reasons. (I interpose here to note that, at the time Ms Burgemeister made her submissions, the proposed levy was 44.43%. In the levy calculation handed up at the hearing, the proposed levy had been changed to 44.23%. At the hearing, Counsel for the plaintiff indicated that the plaintiff's instructions were to propose a reduced levy for Category A Stock and, ultimately, what was put forward in the 15 July 2019 calculation in this regard was a 22.22% levy.)
First (and the liquidator does not suggest otherwise), that the stock for which she has fully paid is not an asset of the Company (i.e. it is not part of Company Stock) since her order (of 2 January 2019) was fully paid for and fulfilled; her goods were clearly labelled and stored at the warehouse awaiting pick-up or delivery; and hence the title to the goods had passed to her. Ms Burgemeister emphasises that her order was not an open pre-paid order awaiting the supply and allocation of stock. In this regard, the Company's records did not disclose Ms Burgemeister's order as an open order (there was no record of it in the open orders report as generated from the Company's MYOB records). Ms Burgemeister's stock apparently only came to light on an inspection of stock items in the warehouse (where it was found with a label affixed to it bearing her details). There is no dispute, however, that Ms Burgemeister ordered the stock in question and had paid for it in full (see Exhibit F); and that the stock is in the warehouse awaiting delivery to or collection by her.
Second, as to the amount (44.43%) of the proposed levy, Ms Burgemeister argues that this is: excessive and disproportionate for Category A Stock (as ownership was easily identifiable, requiring minimal effort and cost; and goods could have been released to owners rather than withheld to incur the additional costs claimed); and incorrectly being applied to an inflated value for the goods (i.e. to the Recommended Retail Price (RRP)), not the price actually paid for the stock (which Ms Burgemeister submits is the true value of the goods).
As to the impact of calculation by reference to the RRP, Ms Burgemeister submits that this effectively imposes an additional surcharge on her goods (on the basis that she paid $7,550 but the RRP is listed as $9,479 for her stock item). It is noted that a 44.43% levy imposed on the RRP adds another $4,211.52. Ms Burgemeister submits that this imposes an onerous price on goods for which she has already paid in full.
Ms Burgemeister also points out that, as an individual customer, she is disadvantaged as goods were purchased at retail prices (post-tax) and (unlike a supplier trading with the Company) she is not in a position to write off any losses against taxable income. Further, she says that she has been advised that she has no recourse from either her bank (as the purchase price was paid by card more than three months ago) or her insurance company for a refund of the money paid; and therefore she is in the position that she will face a full loss of $7,550 (subject, presumably, to any recovery as an unsecured creditor in the winding up) unless she pays an additional $4,211.52 (levy) for the goods (she also says that the goods were already purchased over her budget limit but that seems to me not to be relevant to the present question regarding the reasonableness of the levy).
Thus, Ms Burgemeister asks that a levy not be applied to her goods, and that orders be made to release her goods from the warehouse into her possession.
[13]
Revised levy calculations
After considering Ms Burgemeister's submissions, the liquidator indicated that he would be prepared to agree to a modification of the proposed levy in relation to Category A Stock customers, which would reduce the impact on customers such as Ms Burgemeister. However, Ms Burgemeister maintained her opposition to the levy even in that reduced amount indicated. While she (quite fairly) concedes that some expenses have been incurred by the liquidator in identifying and preserving the goods in question, she maintains that the bulk of those costs could have been avoided in her case had the goods (once identified as allocated to her) been released into her possession at that stage. Ms Burgemeister similarly contends that warehouse charges would have been of a lesser amount had the goods been released into her possession at the stage.
Revised levy calculations were provided by the liquidator after judgment on this application was reserved. The revised levy calculation (set out below) as at 15 July 2019 provides for costs being incurred for a period of 14 weeks (rather than 12 weeks) and includes the current level of legal fees, costs and charges. It also provides for a different basis of valuing the customer stock (namely the invoice price rather than the RRP).
The proportion of the levies proposed to be borne across the various categories of stock has been varied as follows:
Category A Stock - 22.22% (half the rate of Categories B and C Stock);
Categories B and C Stock - 44.43% (the same rate as the initial levy calculation); and
Categories E (PMSI) and F (Company) Stock - 65.98% (being a rate sufficient to raise an amount to meet the balance of the costs).
The liquidator's solicitors have advised that:
The rationale in respect of the recalculation is based, in part, upon the Plaintiff Liquidator's consideration of the submissions made by Mrs Burgemeister to the effect, inter alia, that:
Category A stock is different to the other categories in that, subject to any discrepancy in the companies records, the stock was labelled and ready to be collected, such that to impose an equal levy upon owners of Category A stock may be inequitable; and
So far as concerns Category E stock, the owners of that stock (being secured creditors enjoying the benefit of a PMSI interest) are engaged in trade and commerce and will more likely than not be allowed a tax deduction for the payment of any levy.
The revised components of the proposed levy calculation are set out as follows.
Revised value of stock for purposes of levy calculations:
Company Stock sold (actual net sale proceeds) $18,396.11
Est. total value of remaining Company Stock $150,198.56
Est. value of PMSI Stock (at cost) $88,770.34
Est. value of Customer Stock (per invoices) $134,133.88
Est Total Value of Stock $391,498.89
As to the revised estimated Stock Preservation Costs:
Est. Liquidator Costs $71,633.79
Rent - 14 weeks $28,924.74
Wages - 14 weeks $17,501.26
Legal costs $70,000.00
Warehousemen's Lien $31,160.00
Total Costs $219,219.79
The effect of the revised levy calculation would be that Category A Stock customers would between them be levied $10,188.94; Category B Stock customers, $25,242.76; Category C Stock customers, $13,979.63; Category E Stock secured creditors, a total of $58,570.64; and that would leave the balance (and lion's share of the levy - 65.98% or $111,238.76) to be recouped out of Category F Stock.
[14]
Determination
In similar applications to that presently brought that have previously been brought by liquidators and administrators, respectively, under the provisions of the Corporations Act that applied prior to the commencement of the Insolvency Law Reform Act 2016 (Cth), it has been recognised that the Court may give directions to provide guidance on matters of law or to protect the liquidator/administrator against accusations that he or she has acted unreasonably. In those cases, it has also been recognised that in such applications the Court may make orders declaratory of substantive rights or give directions that have the practical effect of dictating the course of the liquidation (and the amounts received by different classes of investors). It is also open to a liquidator (as the liquidator here does), where the liquidator is holding assets as a bare trustee for a third party, to make an application for an opinion, advice or direction under s 63 of the Trustee Act 1925 (NSW) or otherwise under the inherent or implied jurisdiction of the Court.
As I have already indicated, there is no issue in the present case as to the liquidator's standing to bring the present application and I accept that it has been appropriately brought by the liquidator. Nor is there an issue raised as to the power to make the orders here sought.
In Shirlaw v Taylor (1991) 31 FCR 222 (Shirlaw v Taylor) (at 228), the Full Court of the Federal Court said that:
… in addition to equitable liens arising from contractual dealings in property, equity may raise liens based either upon general considerations of justice or upon the principle that he who seeks the aid of equity in enforcing some claim (eg in an administration of assets) must admit the equitable rights of others directly connected with or arising out of the same subject matter.
[15]
Relevant legislation
Before turning to address the relevant categories of stock and then the lien that the liquidator seeks to impose, it is convenient here to set out potentially applicable sections of the Sale of Goods Act 1923 (NSW) (Sale of Goods Act).
Section 21 of the Sale of Goods Act relevantly provides that where there is a contract for the sale of unascertained goods, no property in the goods is transferred to the buyer unless and until the goods are ascertained.
Section 22 of the Sale of Goods Act provides that where there is a contract for the sale of specific or ascertained goods, the property in those goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred. For the purposes of ascertaining the intention of the parties s 22(2) provides regard shall be had to the terms of the contract, the conduct of the parties, and the circumstances of the case.
Section 23 of the Sale of Goods Act sets out various rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to a buyer, unless a "different intention" appears. Those rules include:
Rule 1. Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment or the time of delivery, or both, be postponed.
Rule 2. Where there is a contract for the sale of specific goods, and the seller is bound to do something to the goods for the purpose of putting them in a deliverable state, the property does not pass until such thing be done and the buyer has notice thereof.
…
Rule 5. (1) Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.
…
The term "future goods" is defined in s 5(1) of the Sale of Goods Act as "goods to be manufactured or acquired by the seller after the making of the contract of sale".
Section 5(4) of the Sale of Goods Act provides that goods are in a "deliverable state" when they are in such a state that the buyer would under the contract be bound to take delivery of them.
Section 28(1) ('Seller or buyer in possession after sale') of the Sale of Goods Act provides:
(1) Where a person having sold goods continues or is in possession of the goods or of 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 the previous sale shall have the same effect as if the person making the delivery or transfer were expressly authorised by the owner of the goods to make the same.
[16]
Category A Stock
The issue arising in relation to the Category A Stock is as to whether title to the goods has passed to the customers whose details appear on the printed labels affixed to particular items of stock in the warehouse.
Relevantly, in Crouch v Adams, White J, as his Honour then was, considered the position of unascertained goods (where company records did not show the allocation of an identifiable machine to particular investors) and said at [35]-[38]:
35 The goods in this class of case are unascertained goods, title to which would not pass to an investor, unless there were an unconditional appropriation of the goods to the contract by the company (the seller), with the assent of the investor (the buyer) (Sale of Goods Act, ss 21 and 23).
36 There is an important distinction between there being no appropriation of goods to a contract and its [sic] being impossible now to determine what goods were appropriated to an individual contract. It does not follow that because the liquidator cannot now determine which machines were appropriated to which contract, that no appropriation occurred. If there were an appropriation, the property in the machines, both at law and in equity, passed to the individual buyers. If there were not, then, in my view, property in the machines, both at law and in equity, remained with the company.
37 Where property passed to the buyers, but it is not possible now to identify which machines belong to which buyer, in my view, the buyers are entitled at law, as tenants in common, to a proportionate interest in the total number of such machines as can now be identified as being in the company's possession, but as having been appropriated to some buyer (Spence v Union Marine Insurance Co Limited (1868) LR 3 CP 427 at 438; Re Stapylton Fletcher Limited [1994] 1 WLR 1181 at 1199-1200).
38 Appropriation requires the assent of the buyer. However, a buyer may assent in advance by agreeing to the seller's making a selection of the goods to which the contract will attach. If the buyer assented to the company's appropriating some machine of the kind the buyer purchased, and which then became the subject of a management agreement, it does not matter that the buyer did not know the details of the machine so appropriated. It would be sufficient that the buyer assented to the company making the selection and the company did so (Wait v Baker (1848) 2 Exch 1 at 7; Carlos Federspiel & Co SA v Charles Twigg & Co Limited & Anor [1957] 1 Lloyds Rep 240 at 255).
As noted above, Rule 5 set out in s 23 of the Sale of Goods Act refers to goods being "unconditionally appropriated" to the contract. In Benjamin's Sale of Goods, 8th ed ([5.071], [5.073]), as noted by Black J in Renovation Boys (at [16]), that concept is explained as being satisfied where the party appropriating that property intends that it will pass by the appropriation, if assented to by the other party, and not upon the occurrence of some further event such as payment or tender of the price, and if the appropriation "is not subject to any condition, express or implied, upon the fulfilment of which the passing of property depends".
In the present case, other than display stock purchased from the showroom and collected at point of sale, there was no identification in the sales invoices that the sale was of specific stock items (rather, the reference was to an item code). The invoices (and a pertinent example is that issued to Ms Burgemeister - see Exhibit F) include a statement to the effect "[p]lease choose carefully as we do not refund or exchange goods if you [sic]" or "if you change your [sic]". Presumably the intent was to notify customers that there would be no refund or exchange of goods for a change of mind by the customer.
I consider that the logic applied by Black J in Renovation Boys (at [19]) is, thus, applicable in the present case, namely that "the customer's assent to the Company's appropriation of items to the customer's purchase order in advance should be treated as implied from terms set out in the purchase order and the customer's consent to have the items made available at the selection of the Company, from the goods that were available in stock at the time of the allocation".
At [21], his Honour concluded that:
On balance, it seems to me that the better view is that property in category "A" stock passed to customers upon the Company's allocation of goods to the relevant purchase order, consistent with the facts that the relevant customers had paid for the goods in full, the Company had undertaken an act of allocation in respect of an item to a customer, although the particular items was not then or now individually identifiable, and those goods are available for collection and would have been collected or delivered, had the Company not been placed in administration. In these circumstances, and where the administrator does not have funds to investigate the individual circumstances of orders placed for category "A" stock, and that such a course would unreasonably delay the administration and be a waste of monies otherwise available to creditors even if it were possible, a direction should be made that the administrators are justified in proceeding on the basis that title has passed in respect of category "A" stock to customers who have ordered such items. …
I have reached a similar conclusion in relation to the Category A Stock in the present case. In my opinion, the customers of that stock should be taken to have impliedly assented to the appropriation by the Company of the particular stock item(s) answering the item code(s) specified in the order out of the stock held at the warehouse (or otherwise ordered in from suppliers) and that the act of placing a printed label with the customer's details on that stock item (or items) amounted to an unconditional appropriation of the goods to the purchase order.
Thus, I find that property in the Category A Stock passed to the customer identified on the labels affixed to the various stock items at that time.
I also find (for the reasons set out in relation to the Category E Stock) that the owners of Category A Stock take their interest in that stock free of the interest of the secured creditors (and subject only to the Warehousemen's Lien, which I consider in due course).
[17]
Category B Stock
The same conclusion as to the passing of property in the goods follows, in my opinion, in respect of the customers whose details were printed on the labels placed on Category B Stock.
The concern raised by the liquidator as to this category of stock arises because, in the case of these customers, the entirety of their order cannot be fulfilled. However, I see nothing in the sample of the tax invoices relating to the sales which specifies that the purchase/sales contract was an entire contract (i.e., that unless and until the whole contract could be completed no property would pass in any of the stock items the subject of the contract notwithstanding that some of those items had been allocated to the customer's order). The fact that it was the practice of the Company not to treat the order as closed (and not to deliver or make the goods available for collection) until the whole order was able to be fulfilled, seems to me not determinative of the parties' intention as to whether property in the individual items on the order was to pass.
I consider the better view to be that, where a stock item the subject of a customer's order has been unconditionally appropriated to the contract (by the affixing of a label with the customer's details) property in that item has passed to the relevant customer and, in relation to that item or those items (as opposed to the balance of the items in the order which remains unfulfilled), the customer takes his, her or its title to the said item free of the interests of the secured creditors (subject only to the Warehousemen's Lien).
That may be tested by posing the hypothetical example of a customer of Category B Stock contacting the warehouse and demanding the release of one item on a particular customer order (for which payment had been made in full) in advance of the balance of the order. It can surely not be contended that the Company would not have been obliged to permit the collection of that item or those items notwithstanding that there remained other items on the (partially unfulfilled) order. Whether it would have been entitled to impose an additional freight or delivery charge would be a different issue but will not arise here as there are no goods to satisfy the balance of the stock items ordered and paid for by these customers (and the unfulfilled parts of the order would simply give rise to a claim as an unsecured creditor in respect of the moneys already paid for those items).
It may of course be that a particular customer falling within this category takes the position that, unless the whole order is filled, the customer is not obliged to take receipt of (or does not wish to collect) those items that have already been appropriated to its contract (particularly, perhaps, if the customer does not wish to pay any levy or lien amount to obtain partial delivery of the order - say, if the item in stock is of small value). A customer might wish, for example, to argue that the order does represent an entire contract or that the contract has been frustrated or rendered impossible of performance in full by the supervening administration and then liquidation of the Company. If that is the case, then the liquidator would be justified in my view in treating the unclaimed stock as part of the Company Stock (in effect as having been abandoned) and the customer in question would simply have a claim for refund of the moneys paid at the time of order (for which a proof of debt could be lodged in the liquidation).
[18]
Category C Stock
As to the Category C Stock, where there is stock for which a customer has paid in full, but where there are more open customer orders for that stock on the Company's MYOB records than there is stock available at the warehouse to fulfil the order, again the reasoning as to the Category A Stock would lead to the conclusion that property passed in relation to those goods to those customers whose details have been placed on particular items of stock (meaning that the other customers who have ordered that item would be in the position of customers with unfulfilled contracts who would have a claim for refund of the moneys paid at the time of the order (for which a proof of debt could be lodged in the liquidation)).
The liquidator, however, has pointed to the conclusion reached in Crouch v Adams as to the second category of machinery there considered - namely, where there were multiple claimants to identified machines, as potentially pointing to a different conclusion. There, his Honour had regard to the provisions of s 28(1) of the Sale of Goods Act (extracted above) and said (from [24]):
24 I deal next with the second category of case, that is, where there are multiple claimants to identified machines. The evidence on this application is that the sale of machines to investors was accompanied by their entering into the management agreement with the company pursuant to which the company took possession of the machines. Accordingly, in this class of case, machines have been sold to successive investors and it is possible to identify that a particular machine has been bought by an investor because of a serial number, or other identifying feature, recorded in the company's records, and the machine, which was the subject of a management agreement, has also been sold to another buyer.
25 Where it is possible to identify the order of sales, and where the machine has remained at all times in the possession of the company pursuant to a management agreement, then the liquidator is justified in acting on the basis that the last purchaser acquired title to the machine. [His Honour there setting out the text of s 28(1) of the Sale of Goods Act]
…
26 In this category of case, the machine would have been left in the possession of the company as bailee under the management agreement, notwithstanding that it had sold the goods. There would have been no break in the continuity of physical possession. It is irrelevant to the operation of subs 28(1) that the title pursuant to which the company had possession changed, such that it assumed possession as hirer under the management agreement (Pacific Motor Auctions Pty Ltd v Motor Credits (Hire Finance) Pty Ltd (1965) 112 CLR 192 at 202).
27 A subsequent sale of the machine to another investor, accompanied by a new hiring under the management agreement would, prima facie, be a delivery, or transfer, by the seller in possession. Such a new buyer, who received the goods in good faith and without notice of the previous sale, would acquire a good title pursuant to subs 28(1). Although there would be no physical delivery to, or receipt by, the new investor of the machine, the entry into a new management agreement would, prima facie, amount to constructive delivery and receipt (Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236 at 245, 246, 251, 255, 261).
28 Where it is possible to ascertain title to goods, the law has not adopted the mechanism of allocating the goods, or the proceeds of sale, pari passu between innocent claimants. Except with the consent of rival claimants, I do not think the liquidator would be justified in distributing the machines, or their proceeds of sale, pari passu. If the liquidator has obtained the consent of all rival claimants to a particular machine or machines being sold and the proceeds divided pari passu, or to the machines being divided in specie pari passu (which could arise where multiple machines were the subject of contracts), the liquidator would be justified in acting on those consents.
In the present case, however, where there has been an unconditional appropriation of stock items to a particular customer (by the affixation of labels on the particular stock items with the customer's personal details), although it is true that the seller (the Company) has remained in possession of the goods after the sale, there has been no subsequent re-allocation of the goods to another purchaser (i.e., there has been no displacement or substitution of the labels by which the stock items were appropriated to the first customer's order). I do not see (in contrast to the position in Crouch v Adams) that there has been any subsequent "delivery or transfer … of the goods or documents of title under any sale pledge or other disposition thereof" to a subsequent purchaser so as to give rise to the operation of s 28(1) of the Sale of Goods Act; nor do I consider that the issue of the tax or sales invoice amounts to a constructive delivery and receipt (cf the facts considered in Crouch v Adams).
The position would arguably be different if there had been some allocation of stock items in the MYOB records to suggest a re-allocation had taken place (albeit with no physical appropriation of the goods to the subsequent customer order). (In that case there might be a question as to whether property had passed in the first place.) If the issue of the first invoice amounted to a constructive delivery and receipt, then I accept that so, too, would the second or subsequent invoice(s) and, on the reasoning in Crouch v Adams, the purchaser latest in time would (on the assumption that the sale was in good faith and without notice of the previous sale(s)) have the better title to the goods. However, as I understand the evidence, that issue does not arise in the present case where there was a physical allocation of particular items to particular customer orders. Nor does the difficulty arise that arose in Crouch v Adams as to uncertainty of order of sales (which led to the making of the pari passu order in relation to the multiple purchasers category there considered) as, in the present case, the order of sales can be determined from the tax invoices.
Therefore, I consider that those customers whose details were printed on labels affixed to the Category C Stock take their interest in those goods free of competing claimants to the stock and subject only to the Warehousemen's Lien.
[19]
Category D Stock
No issue now arises in relation to this stock (the Electrolux stock) given that Electrolux has now confirmed that it is no longer pursuing any retention of title claim and has released its PPSR security (see Exhibit D).
[20]
Category E Stock
Category E Stock is the stock that is subject to a PMSI security interest only. No issue as to the validity of the security interests registered on the PPSR register was raised. The liquidator has satisfied himself on the basis of his own investigations as to the position in this regard. He is justified in dealing with this stock as proposed (subject only, again, to the Warehousemen's Lien).
[21]
Category F Stock
This is Company stock. No issue arises in relation to this stock as there are no competing claimants to this stock.
[22]
Warehousemen's Lien
The liquidator has satisfied himself as to the validity of the claimed Warehousemen's Lien and no direction is sought as to that issue.
What was raised by the liquidator in his submissions (as summarised above) was as to the manner in which he proposes to deal with this claim (by including it in the levy proposed to be raised across all categories of stock, proportionate to the value of the stock), as opposed to other alternatives (such as disclaimer of the goods and, hence, leaving it to the secured creditors to deal with the warehouse landlord's claim to a Warehousemen's Lien).
Subject to one qualification, I consider that in principle the proposed treatment of the lien (apportioning it across the various categories of stock) is appropriate.
Section 4 ('Charges covered by lien') of the Storage Liens Act provides that:
The lien shall be for the amount of the storer's charges, that is to say:
(a) all lawful charges for storage and preservation of the goods, and
(b) all lawful claims for money advanced, interest, insurance, transportation, labour, weighing, coopering, and other expenses in relation to the goods, and
(c) all reasonable charges for any notice required to be given under the provisions of this Act, and for notice and advertisement of sale, and for sale of the goods where default is made in satisfying the storer's lien.
There appears to have been little judicial consideration of claims made in relation to liens of this kind (and I was not taken to any in the course of argument). It is clear from the text of the legislation that it applies to an owner of goods even where the owner has not himself or herself entrusted the goods to the possession of the storer (in the present case, say, the situation where property in Categories A, B or C goods passed to the customers after the goods had already become subject to the storer's lien (here referred to as the Warehousemen's Lien)). The issue I raised in the course of oral argument was to how, as between multiple customers (to whom title to their respective goods has already passed) and claimants in respect of other goods, any liability in relation to the overall amount claimed by the warehouse owner under the lien would be apportioned. In that regard, I postulated the scenario where there was no dispute as to title to one stock item in the warehouse and what claim could be made by the storer for storage and preservation or other charges in respect of that particular item could be made.
Consideration was given to the equivalent legislation in South Australia in Bob Jane Corp Pty Ltd v Barrot FT Pty Ltd [2010] SASC 220; (2010) 271 LSJS 211 by Kourakis J, as the Chief Justice then was. There, the defendant (a transport operator) had warehoused the retailer plaintiff's tyres. The question which arose was whether the defendant was entitled to exercise a lien over the plaintiff's tyres in accordance with the Warehouse Liens and Storage Act 1990 (SA). At [160], his Honour, quoting Scrutton LJ in Albemarle Supply Co Ltd v Hind & Co [1927] All ER Rep 401 at 406; [1928] 1 KB 307 outlined some of the case law in relation to liens over stored property:
… I have considered the numerous authorities cited, and in my view the law stands as follows: A person claiming a lien must either claim it for a definite amount, or give the owner particulars from which he himself can calculate the amount for which a lien is due. The owner must then in the absence of express agreement tender an amount covering the lien really existing. If he does not, unless excused, he has no answer to a claim of lien. He may be excused from tendering (1.) if he has no knowledge or means of knowledge of the right amount; (2.) if the person claiming the lien for a wrong cause or amount makes it clear that he will not release the goods unless his full claim is satisfied, and that claim is wrongful. The fact that the claim is made for more than the right amount does not matter unless the claimant gives no particulars from which the right amount can be calculated, or makes it clear that he insists on the full amount of the right claimed: see Scarfe v Morgan; Dirks v Richards; Huth & Co v Lamport, per Lord Esher; and Rumsey v North Eastern Ry, per Erle CJ and Willes J.12 (citations omitted).
In the present case, the warehouse owner's overall claim is not disputed by the liquidator but it could not surely be the case that (for example) an owner of one stock item stored at the warehouse could be met with a claim for a storage amount or other charges referable to numerous other items in which that owner has no interest.
That, to my mind, informs the reasonableness of the present proposal for the apportionment of the amount claimed under the lien as between the various categories of stock (and this is the qualification to which I have referred above).
Once it became clear to the liquidator that property in the Category A Stock had passed to the customers of that stock, I do not consider that it is reasonable that those customers should be required to pay a proportion of charges relating to storage thereafter.
In that regard, there is some doubt as to when the position as to the ownership of the Category A Stock was clarified. I accept that it was reasonable for the liquidator to make enquiries to ascertain the position (and not to rely on the MYOB records). Indeed, had the liquidator only relied on the MYOB records the position of Ms Burgemeister's stock might not have been identified until she later made a claim in relation to that stock. However, at least from the time that it was discovered that there had been appropriation of items of stock (by the placing of labels) to customer orders (and there were no competing claimants to that stock), and the liquidator had had the opportunity to obtain legal advice on that issue, I consider that no further storage charges should be borne by the Category A Stock customers.
In that regard, the inspection of the warehouse carried out by Mr Beven with Mr Lirosi was on 29 April 2019. At that meeting the Category A Stock was identified (see the liquidator's affidavit at [48]). By 13 May 2019, the liquidator had identified those customers who had paid for stock and where there was stock available fully to complete their orders (see the liquidator's affidavit at [18]). The liquidator deposed in his affidavit that it was his understanding, and he was "currently acting", on the basis that Category A Stock customers had title to the stock (subject to any Warehousemen's Lien).
The proof of debt lodged by Jackman Logistics appears to calculate the amount claimed the subject of the Warehousemen's Lien at $31,160.18 (inclusive of GST) up to 15 April 2019. This seems to be separate to the rent charge (itemised in the levy calculation as at 15 July 2019 for 14 weeks at $28,924.74). The liquidator has deposed (see at 96), that pursuant to the Company's agreement with the warehouse landlord rent is payable in weekly increments of $2,066.05.
On that basis it seems to me that it would be reasonable for owners of Category A Stock to bear a proportion of the Warehousemen's Lien for the period claimed to 15 April 2019 (i.e., before the commencement of the administration) and for a proportion of the warehouse rent. In respect of the latter, there is of course the factual difficulty of ascertaining when precisely the position was ascertained in relation to each Category A Stock customer. One solution to this might be to limit recovery of any levy in respect of the warehouse rent for such customers to the period to 31 May 2019 on the basis that this is a month after their ownership of the stock was ascertained (and two weeks after the liquidator's communication by email to them as to the availability of stock in relation to their orders) and allows a reasonable time for the liquidator to obtain advice as to the position (after which advice it seems the liquidator has been acting on the basis that they had good title to the stock subject only to the Warehousemen's Lien). I accept that in the scheme of things this might not amount to a large reduction in the levy applicable to those customers (given that rent for a month would be in the order of somewhere around $8,265), but nevertheless the liquidator impressed upon me his concern to minimise Stock Preservation Costs and that points to his appreciation as to the impact of such costs on customers of the stock.
Thus, and but for the conclusion that I have reached as to a more general reduction of the levy amount, I consider that there would need to be some re-calculation of the levy to be struck for Category A Stock customers to reflect a lesser claim for the rent component of the levy calculation.
I do not consider that a similar reduction is warranted in relation to the apportionment of the levy in relation to Categories B and C or E Stock customers, in circumstances where I accept that there were issues as to how the liquidator would be justified in dealing with the Category B and Category C Stock customers; and the Category E Stock customers (the secured creditors) have in part contributed to the delay in the resolution of the issues by the lack of provision of details of stock claimed as subject to their respective PMSIs.
[23]
PPSA Issues
That brings me to the issue raised as to the operation of ss 46 and 47 of the PPSA. It is not necessary to spend much time on this issue. I cannot see how sales effected before the Company went into administration could not be said to be in the ordinary course of the Company's business (and hence s 45 would apply); failing which s 47 would in any event apply to a large proportion of the stock.
[24]
Calculation and manner of imposition of the lien
I am satisfied as to the reasonableness of the amounts calculated by the liquidator (his revised calculations with my own minor corrections) as relating to the expenses incurred by him in the identification and preservation of the assets comprised by the various categories of stock (in respect of which he seeks to impose a levy), i.e., the amount of the revised Stock Preservation Costs.
However, I consider that the complaint made by Ms Burgemeister as to the basis on which the levy has been calculated by reference to the recommended retail price of the goods (rather than actual purchase price) is well-founded. The reality is that customers paid a price for the stock represented by the amounts disclosed on the sales invoices. Just as the Category E Stock and Category F Stock is valued at a forced liquidation value (which represents the present reality) so should the Category A Stock, the Category B Stock and the Category C Stock be valued at the actual sales prices in respect of that stock.
Similarly, as adverted to above, I consider that the levy to be imposed on Category A Stock holders should be reduced to reflect a reduction of the rent component as identified above, with that additional component to be borne proportionately by the other Category Stock holders (i.e., Categories B, C, E and F).
I have concluded that the liquidator is justified in acting on the basis that he is entitled to a lien for reasonable remuneration for work done in the identification, preservation, or realisation of the stock the subject of this application. As made clear in Crouch v Adams (see at [20]), that lien is enforceable against the property which the liquidator has identified, preserved or realised, notwithstanding that certain categories of that stock belong to the customers to whom title has passed or are subject to the interests of secured creditors (reference being made in Crouch v Adams in this regard to: Re Universal Distributing Co Limited (in liquidation) (1933) 48 CLR 171 at 174-175; [1933] HCA 2; Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64 at 70-71; Shirlaw v Taylor at 228; Crouch v Abell; Application of Crouch [2005] NSWSC 1308 at [8]).
Similarly, as to work performed by the liquidator in his capacity as administrator, it has been recognised that an administrator has an entitlement to claim an equitable lien securing the expenses and fees incurred in realising or maintaining assets in the course of the administration of the company (see Renovation Boys at [30]-[31]; International Art Holdings at [81]; Mossgreen at [20]).
The decision of the Full Court of the Federal Court on the appeal from the decision in the Mossgreen Appeal does not gainsay this (although there, in the specific circumstances of that case, such a claim was not upheld).
At [22]-[23] of the Full Court's decision in the Mossgreen Appeal, it was said:
22. … if costs have truly been incurred by an administrator in performing statutory responsibilities necessary to identify, preserve and facilitate the return to the owners of their property then a lien (whether statutory under s 443F or in equity) may arise over the company's property or the property owned by the consignors in respect of those costs. What was claimed here was an equitable lien over the property of the consignors.
23. There is no general principle which covers the diversity of cases in which an equitable lien has been held to be created: Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; 252 CLR 307 at 318 [14] approving Gibbs CJ in Hewett v Court [1983] HCA 7; 149 CLR 639 at 645. In our view, there can be such a lien in favour of administrators in respect of costs incurred in dealing with claims for the return of items even where there is no claim to ownership by the company under administration, including costs in holding them and keeping them secure in the meantime. This is but a small step from the circumstances in which a lien has been recognised in other cases.
In the Mossgreen Appeal, there were three reasons why it was found that a sufficient basis for the existence of an equitable lien of the kind and in the amount contended for by the administrators had not been established (see [26]-[28]): first, that, on the evidence, much of the costs alleged to be the subject of the lien had been incurred in respect of consigned items that the administrators understood from the outset had been abandoned and were of little value (and the costs of undertaking a stocktake were not seen as having been necessary); second, that if there was a need to undertake a stocktake in order to identify the ownership of consigned property that need arose from a breach by Mossgreen of its obligations as bailee and to the extent that costs were incurred in order to redress this liability, those costs should not fall on the consignors ahead of the general creditors; and, third, that much of the costs had been incurred for the benefit of the general body of creditors (who had an interest in preserving the engagement of employees, exploring the possibility of a deed of company arrangement and undertaking a stocktake for the purpose of being able to demonstrate the extent of consigned items that a purchaser of the business might take on for sale by auction; and outcome in which the owners of consigned items had no interest because they would not benefit at all from such a sale).
Factors of that kind are not applicable in the present case. Apart from any criticism as to the delay in dealing with the Category A Stock (which was relatively short), this is not a case where it can be said that the liquidator should have taken the view that the costs of a stocktake were unnecessary (and, as already noted, the evidence is that the liquidator acted responsibly to minimise the costs of the stocktake). This is also not a case where the Company had the specific obligations owed by a company in the position of Mossgreen, albeit that the Company did hold some of the stock items in effect as bailee for the customers to whom property in the stock had passed. There was some inadequacy in the Company MYOB records but not of the kind of deficiency of record keeping that had occurred in the case of Mossgreen.
The Full Court of the Federal Court in the Mossgreen Appeal saw the cases in this Court (Crouch v Adams; International Art Holdings and Renovation Boys), where an administrator has been entitled to an equitable lien over property of third parties, as proceeding on the basis that the court was satisfied that the lien arose in the particular circumstances but not as standing for "any broader proposition that an administrator dealing with property owned by third parties will always have a right to a lien over such property for expenses so incurred" nor as limiting "the potential for a lien to arise to cases where there is comingled company property or disputes as to ownership". The Full Court emphasised that the threshold questions as to whether equity ought to recognise a lien and the costs to be protected by such lien must be answered in the particular circumstances of each case (see from [82]ff.) Those propositions (which I readily accept and which are consistent with the reasoning in the cases to which reference has been made) neither mandate nor lead to any conclusion that a lien would not be available in the present case, where the factors that gave rise to the rejection of the claim in that case are not here present.
I have concluded that the imposition of an equitable lien and the raising of voluntary levies in the present case is justified (albeit that I consider that the proportion of the levies to be borne by the respective categories of stock customers should be adjusted). It was necessary for the liquidator to conduct reasonable investigations to determine the stock position and, while so doing, to incur the cost of storage and preservation of the stock items themselves.
I consider that the liquidator would be justified in delivering the Category A Stock, the Category B Stock and the Category C Stock (in respect of which labels have been affixed bearing the customer's details to those particular stock items), subject to payment of a levy borne by those customers proportionate to the amount actually expended by the customers in respect of the stock items concerned (i.e., the invoice prices) (and reduced in respect of Category A Stock customers as set out in these reasons); in delivering the Category E Stock to the secured creditors, subject to payment of a levy borne proportionate to the forced liquidation value of those stock items; and in selling the balance of the stock (and any stock in respect of which the customer or secured creditor declines to pay the levy) out of the proceeds of which the liquidator would be justified in recouping the balance of the Stock Preservation Costs.
Having regard to the view I have taken as to the position of the Category A Stock issue and the submissions made by the liquidator as to the position of the Category E Stock, and given the basis on which the revised levy calculations have been made by the liquidator, I would, on a broad brush basis, further reduce the levy applicable to the Category A Stock to 17.22% and increase the levy applicable to the Category B and C Stock to 45% (to be calculated on the actual invoice prices, as per the revised stock value calculations), and I would permit the liquidator to recover the shortfall by correspondingly increasing the levy applicable to the Category E Stock.
I accept that the orders sought for the giving of notice to the affected parties are reasonable and should be made; as should the orders sought by the liquidator in respect of costs generally. I will stay the operation of the orders for 14 days to give interested parties an opportunity to seek any variation of the orders. I will also give liberty to apply if any issue arises in relation to the implementation of these orders.
[25]
Orders
For the above reasons, I make the following orders:
1. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth), that the plaintiff is justified in acting on the basis that, in respect of the Category A Stock items described at [47(a)] of the liquidator's affidavit, title has passed to a customer who has paid for a stock order in full and to whom items had been allocated/appropriated to the customer within the physical stock inventory located at the Company's warehouse at the date of the appointment of the administrator; subject to the orders below in respect of the payment of a levy.
2. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) or ss 63 and 81 of the Trustee Act 1925 (NSW), that the plaintiff is justified in acting on the basis that, in respect of the Category B Stock items described at [47(b)] of the liquidator's affidavit, that title has passed to each customer who has paid for a stock order in full (notwithstanding that there are insufficient items in stock to satisfy the stock order in full) in respect of any item(s) that had been allocated/appropriated to the customer within the physical stock inventory located at the Company's warehouse at the date of the appointment of the administrator; subject to the orders below in respect of the payment of a levy.
3. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) or ss 63 and 81 of the Trustee Act 1925 (NSW), that the plaintiff is justified in acting on the basis that, in respect of the Category C Stock items described at [47(c)] of the liquidator's affidavit, that title has passed to each customer who has paid for a stock order in full and to whom items had been allocated/appropriated to the customer within the physical stock inventory located at the Company's warehouse at the date of the appointment of the administrator, on the basis of a first in time allocation of that stock; subject to the orders below in respect of the payment of a levy; and that in respect of any Category C Stock in which there has been no allocation/appropriation to an individual customer, that title has passed to a group of customers who have paid for a stock order including that item in full (but in respect of which there are insufficient items in stock to satisfy the stock order in full) and in selling those items in stock and making a distribution of the proceeds pari passu to those customers, subject to any other orders in respect of the payment of a levy.
4. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth), that the plaintiff is justified in acting on the basis that, in respect of the stock items in categories A, B and C described in the above orders, title has passed to a customer, in the circumstances of the above orders, notwithstanding that security interests over those stock items have been registered under the Personal Property Securities Act 2009 (Cth) (PPSA).
5. Further to Order 4 above and pursuant to s 442C(2)(c) of the Corporations Act 2001 (Cth), grant leave to dispose of such property of the Company that is subject to a security interest under the PPSA.
6. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) or ss 63 and 81 of the Trustee Act 1925 (NSW), that the plaintiff is justified in acting on the basis that, in respect of any stock item, the stock item has been allocated/appropriated to a customer if the stock item bears a label placed on it by the Company identifying the customer.
7. Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) or ss 63 and 81 of the Trustee Act 1925 (NSW) that:
1. the plaintiff is justified in acting on the basis that he is entitled to a lien for expenses incurred in the identification, preservation and distribution of stock items;
2. the plaintiff is justified in acting on the basis that he has an entitlement to an indemnity in equity out of stock items for reasonable expenses incurred in the identification, preservation and distribution of stock items;
3. the plaintiff is justified in requiring payment of a levy by customers to whom title in stock items has passed, payable prior to the release of such stock to those customers, representing the plaintiff's reasonable expenses incurred in the identification, preservation and distribution of those stock items as specified, and in the proportions as set out, in these reasons;
4. the plaintiff is justified in distributing stock items to a customer where;
1. title has passed to that customer;
2. the stock items are collected within 14 days from the date of these directions; and
3. the customer has paid to the plaintiff a sum of money or levy representing the reasonable expenses incurred by him in the identification, preservation and distribution of the stock items in accordance with Order 7(c).
1. the plaintiff is justified in:
1. selling any stock items, within Category C where;
a. the stock item has not been physically allocated to a particular customer order and the item is one in a stock item category in respect of which more than one customer has paid for such an item; and
b. there are insufficient (unallocated) stock items on hand to satisfy all of the orders placed by the customers.
1. deducting from the sale proceeds a levy in the proportions as set out in these reasons; and
2. making a distribution of the balance of the sale proceeds pari passu to those customers;
1. the plaintiff is justified in disposing of any stock not collected in accordance with Order 7(d) within 14 days of the plaintiff providing written notice to the customer of his intention to do so, in accordance with the orders of the Court and to recover the expense incurred by the plaintiff in the identification, preservation, distribution and disposal of that stock from the proceeds of sale in accordance with Order 7(c);
2. the plaintiff is justified in requiring payment of a levy by secured creditors to whom title in stock items has remained, being the stock items in Category E (described at [47(e)] of the liquidator's affidavit), payable prior to the release of such stock to those secured creditors, representing the plaintiff's reasonable expenses incurred in the identification, preservation and distribution of those stock items as specified, and in the proportions as set out in these reasons.
1. Order that notice of Order 7(e) be given by text message to mobile phone or landline numbers or by email.
2. Direct that the plaintiff notify affected parties of the final orders, by:
1. uploading a copy of the final orders to www.worrells.net.au/plantationoutdoorkitchens;
2. with respect to customers for whom the plaintiff has mobile numbers, by sending the following text message:
"Plantation Outdoor Kitchens P/L (in Liq): The Supreme Court has made final orders in relation to the Liquidator's application. Customers are directed to the following website www.worrells.net.au/plantationoutdoorkitchens to obtain a copy of the orders";
1. with respect to customers for whom the plaintiff has landline numbers, by a computer generated message (text to voice message) to the landline number, in the same terms as the message set out in Order 8(b) above;
2. with respect to suppliers with retention of title claims that are registered on the Personal Property Securities Register, by sending a letter attaching the orders, by email, to those suppliers; and
3. with respect to customers for whom the plaintiff has email addresses, by sending a letter attaching the orders, by email, to those customers.
1. Grant liberty to any interested person including those claiming an interest in a stock item to apply within 7 days on 48 hours' notice.
2. Stay the operation of the above orders for 7 days.
3. Order that the plaintiff be indemnified from the Company's assets for the costs of these proceedings.
4. These orders be entered forthwith.
[26]
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: 19 July 2019
in acting on the basis that, in respect of any stock item, the stock item has been allocated/appropriated to a customer if the stock item bears a label placed on it by the Company identifying the customer.
(7) Direct, pursuant to 90-15(1) of the Insolvency Practice Schedule (Corporations), being Schedule 2 to the Corporations Act 2001 (Cth) or ss 63 and 81 of the Trustee Act 1925 (NSW) that:
(a) the plaintiff is justified in acting on the basis that he is entitled to a lien for expenses incurred in the identification, preservation and distribution of stock items;
(b) the plaintiff is justified in acting on the basis that he has an entitlement to an indemnity in equity out of stock items for reasonable expenses incurred in the identification, preservation and distribution of stock items;
(c) the plaintiff is justified in requiring payment of a levy by customers to whom title in stock items has passed, payable prior to the release of such stock to those customers, representing the plaintiff's reasonable expenses incurred in the identification, preservation and distribution of those stock items as specified, and in the proportions as set out, in these reasons;
(d) the plaintiff is justified in distributing stock items to a customer where;
(i) title has passed to that customer;
(ii) the stock items are collected within 14 days from the date of these directions; and
(iii) the customer has paid to the plaintiff a sum of money or levy representing the reasonable expenses incurred by him in the identification, preservation and distribution of the stock items in accordance with Order 7(c).
(e) the plaintiff is justified in:
(i) selling any stock items, within Category C where;
a. the stock item has not been physically allocated to a particular customer order and the item is one in a stock item category in respect of which more than one customer has paid for such an item; and
b. there are insufficient (unallocated) stock items on hand to satisfy all of the orders placed by the customers.
(ii) deducting from the sale proceeds a levy in the proportions as set out in these reasons; and
(iii) making a distribution of the balance of the sale proceeds pari passu to those customers;
(f) the plaintiff is justified in disposing of any stock not collected in accordance with Order 7(d) within 14 days of the plaintiff providing written notice to the customer of his intention to do so, in accordance with the orders of the Court and to recover the expense incurred by the plaintiff in the identification, preservation, distribution and disposal of that stock from the proceeds of sale in accordance with Order 7(c);
(g) the plaintiff is justified in requiring payment of a levy by secured creditors to whom title in stock items has remained, being the stock items in Category E (described at [47(e)] of the liquidator's affidavit), payable prior to the release of such stock to those secured creditors, representing the plaintiff's reasonable expenses incurred in the identification, preservation and distribution of those stock items as specified, and in the proportions as set out in these reasons.
(8) Order that notice of Order 7(e) be given by text message to mobile phone or landline numbers or by email.
(9) Direct that the plaintiff notify affected parties of the final orders, by:
(a) uploading a copy of the final orders to www.worrells.net.au/plantationoutdoorkitchens;
(b) with respect to customers for whom the plaintiff has mobile numbers, by sending the following text message:
"Plantation Outdoor Kitchens P/L (in Liq): The Supreme Court has made final orders in relation to the Liquidator's application. Customers are directed to the following website www.worrells.net.au/plantationoutdoorkitchens to obtain a copy of the orders";
(c) with respect to customers for whom the plaintiff has landline numbers, by a computer generated message (text to voice message) to the landline number, in the same terms as the message set out in Order 8(b) above;
(d) with respect to suppliers with retention of title claims that are registered on the Personal Property Securities Register, by sending a letter attaching the orders, by email, to those suppliers; and
(e) with respect to customers for whom the plaintiff has email addresses, by sending a letter attaching the orders, by email, to those customers.
(10) Grant liberty to any interested person including those claiming an interest in a stock item to apply within 7 days on 48 hours' notice.
(11) Stay the operation of the above orders for 7 days.
(12) Order that the plaintiff be indemnified from the Company's assets for the costs of these proceedings.
(13) These orders be entered forthwith.
Catchwords: CIVIL PROCEDURE - Originating process - Liquidated claim - where a retail business supplying barbeque equipment and outdoor appliances went into liquidation - whether title to stock held by the company had passed to customers - whether the liquidator was justified in charging a levy to customers and suppliers for the expenses incurred in identifying, preserving and distributing the stock
Legislation Cited: Corporations Act 2001 (Cth), ss 9, 436A, 439A, 600K, Sch 2
Insolvency Law Reform Act 2016 (Cth)
Personal Property Securities Act 2009 (Cth), ss 46 and 47
Sale of Goods Act 1923 (NSW), ss 5, 21, 22, 23, 28
Storage Liens Act 1935 (NSW), s 4
Trustee Act 1925 (NSW), ss 63, 81
Warehouse Liens and Storage Act 1990 (SA)
Cases Cited: Albemarle Supply Co Ltd v Hind & Co [1927] All ER Rep 401 at 406; [1928] 1 KB 307
Bob Jane Corp Pty Ltd v Barrot FT Pty Ltd [2010] SASC 220; (2010) 271 LSJS 211
Commonwealth Bank of Australia v Butterell (1994) 35 NSWLR 64
Crouch v Abell; Application of Crouch [2005] NSWSC 1308
Crouch v Adams [2006] NSWSC 1029
Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234
In the matter of Renovation Boys Pty Ltd (admins apptd) [2014] NSWSC 340
International Art Holdings Pty Ltd (admin apptd) v Adams [2011] NSWSC 164; (2011) 85 ACSR 1
Re Universal Distributing Co Limited (in liquidation) (1933) 48 CLR 171; [1933] HCA 2
Shirlaw v Taylor (1991) 31 FCR 222
Stewart v Atco Controls Pty Ltd (In Liquidation) (2014) 252 CLR 307; [2014] HCA 15
White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) [2018] FCA 471; (2018) 125 ACSR 163
White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) v Robertson [2018] FCAFC 63
Texts Cited: Michael Bridge (ed), Benjamin's Sale of Goods, (8th ed 2010, Sweet & Maxwell/Thomson Reuters)
Category: Principal judgment
Parties: Christopher Damien Darin in his capacity as liquidator of Plantation Outdoor Kitchens Pty Ltd (In Liquidation) (Plaintiff)
Carolyn Burgemeister (Interested Party)
Representation: Counsel:
GD McDonald (Plaintiff)
C Burgemeister (Interested Party) (Self-represented)
The liquidator accepts that due notice must be given of any orders made by the Court on the present application and has put forward proposed orders (Orders 9-11) seeking to minimise costs in this regard and noting that, in Renovation Boys, orders were made to the effect of those here proposed.
The liquidator also seeks an order that he be indemnified from the Company's assets for the costs of these proceedings. It is noted that, unless he has acted unreasonably, he is entitled to payment of his costs out of the assets of the Company and seeks an order as to costs to avoid any doubt.