RE ACN 009 068 473 PTY LTD (IN LIQUIDATION); EX PARTE HODGSON & HEWITT as joint and several liquidators of ACN 009 068 473 PTY LTD (IN LIQUIDATION) [2025] WASC 406 (30 September 2025)

(a) a distribution of $552,130.56 to GrainCorp Foods Australia Pty Ltd (GrainCorp);

(b) a distribution of $79,012.25 to H.J. Langdon & Co. Pty Ltd (Langdon & Co); and

(c) a distribution of $37,800.60 to New Food Coatings Pty Ltd (New Food)

1. Originally, another creditor, George Weston Foods Ltd (George Weston), was included in the originating process as a recipient of the Proposed Priority Distributions. However, a representative of George Weston has recently confirmed that neither George Weston nor its insurer claims any security interest against the Company and that their security interest has been discharged.[1]
2. In support of the application, the liquidators rely on three affidavits, being:

(a) an affidavit of David Mark Hodgson, the first-named plaintiff, filed 19 June 2025;

(b) an affidavit of Amanda Kelly Gardiner, a personal assistant employed by the Liquidators' solicitors, filed 17 July 2025; and

(c) an affidavit of Mallika de Toni, a solicitor employed by the Liquidators' solicitors, filed 23 July 2025.

1. I have also had the very significant benefit of a written outline of submissions, as well as brief oral submissions from counsel who appeared before me this morning.
2. On the evidence before me, I am satisfied that the application has been served on the Australian Securities and Investments Commission (ASIC), as required by r 2.8 of the Supreme Court (Corporations) Rules 2004 (WA), and that notice of the application has been given to secured creditors who may have security in relation to the ingredients used by the Company in manufacturing its products.[2] Neither ASIC nor any of these creditors have given notice that they wish to be heard on the application and no one appeared at the hearing today to oppose the orders sought.

1. The Company was incorporated in 1983. Its primary business was manufacturing bakery products, including pies, sausage rolls, and other similar baked goods.[3]
2. On or around 30 September 2022, the Company and its subsidiary, Lyle Holdings (New Zealand) Ltd, entered into an asset sale agreement (Sale Agreement) with Aus Pie Co Pty Ltd (Aus Pie Co), pursuant to which Aus Pie Co agreed to purchase the Company's business assets.
3. The purchase price under the Sale Agreement was $14.5 million for the business assets and approximately $9.679 million for stock equipment and spare parts (Purchase Price).[4]
4. The Sale Agreement was completed on or about 31 October 2022. On 1 and 2 November 2022, the Purchase Price (together with an additional amount of $2,685.66) was paid into the Company's Westpac Banking Corporation Ltd (Westpac) accounts as follows:[5]

(a) on 1 November 2022, $9.17 million was paid into the Company's Westpac account ending 660;

(b) on 1 November 2022, $13.05 million was paid into the Company's Westpac account ending 050;

(c) on 2 November 2022, $500,000 was paid into the Company's Westpac account ending 660; and

(d) on 2 November 2022, $1.452 million was paid into the Company's Westpac account ending 050.

1. On 9 November 2022, the Liquidators were appointed as joint and several liquidators of the Company, pursuant to a creditor's voluntary winding up.[6]

1. The evidence before me is that the Company had five bank accounts with Westpac.[7]
2. On or about 24 June 2019, the Company entered into a general security deed with Westpac (Westpac Deed). Under the Westpac Deed, Westpac was entitled to apply all money it received, including by payment into its accounts, in a manner and order that it determined.[8]
3. Between 3 November 2022 and 19 January 2023, Westpac, in accordance with its rights under the Westpac Deed, applied the Purchase Price and the amounts that were paid into the Company's Westpac accounts in satisfaction of the amounts owed to Westpac by the Company.[9]
4. On 16 February 2023, Westpac's solicitors confirmed that all outstanding amounts owed by the Company to Westpac had been repaid, and that Westpac held surplus funds that it intended to remit to the Liquidators to hold on trust for the Company's creditors.[10]
5. Between 16 February 2023 and 3 August 2023, Westpac paid a sum of $1,868,779.28 to the Liquidators, being the surplus funds after all of the Company's debts to Westpac had been repaid (Returned Funds).[11]
6. The funds currently available for distribution to the Company's creditors are $1,768,672.01 (Available Funds), representing various adjustments that the Liquidators have made to the Returned Funds they received from Westpac.[12]

1. Following his appointment, on 10 November 2022, Mr Hodgson caused searches of the Personal Properties Securities Register (PPSR) to be made in relation to the Company, including the various trading names that it operated under. On or about 5 December 2022, Mr Hodgson sought legal advice in relation to the results that he obtained from these searches.
2. Mr Hodgson now understands the results of these searches to contain the following PPSR registrations:[13]

(a) three registrations made in respect of security interests held by Westpac, including a valid and enforceable security interest in all of the Company's present and after acquitted property;

(b) 83 registrations made in respect of various purchase money security interests (PMSI) by 36 different secured creditors; and

(c) 11 registrations made in respect of non‑PMSI security interests by eight different secured creditors, five of which did not also hold a registration in respect of a PMSI.

1. On 10 November 2022, Mr Hodgson caused letters to be issued to all 41 secured creditors identified in these searches. The Liquidators received 26 letters from creditors in response.[14]
2. On 1 and 2 March 2023, the solicitors for the Liquidators sent correspondence to a number of the PMSI creditors and received responses from four of these creditors.[15]
3. Mr Hodgson understands the claims of the PMSI creditors relate to the proceeds of the Company's sale of co‑mingled goods, such as pies made out of raw ingredients supplied by these creditors.[16]
4. Based on his investigations and a memorandum analysing the interests of the Company that he caused to be prepared, Mr Hodgson believes that some of the PMSI creditors have a priority interest in the Available Funds. These creditors include GrainCorp, Langdon & Co, and New Food.[17]
5. The Liquidators estimate the claims from unsecured creditors of the Company are approximately $23.325 million.[18]

Should the directions sought by the plaintiffs be given?

1. I am satisfied that the Liquidators have standing to bring this application pursuant to s 90-20 of the IPS, as they are officers of the Company.
2. Section 90-15 of the IPS confers a broad power on the court to make orders in relation to the external administration of the company.
3. The approach of the court on an application for directions under s 90‑15 of the IPS is well‑established. Subject to the liquidator making full and fair disclosure of the material facts, the effect of a direction is to protect the liquidator from claims that they have acted unreasonably, inappropriately, or in breach of their duties; it does not determine rights and liabilities that arise out of the proposed transaction. Put another way, the order of the court sanctions a proposed course of conduct by the liquidator.[19]
4. As was noted by Vaughan J in Re GGA Lifestyle Pty Ltd (admin appt); Ex parte Woodhouse:[20]

A direction that an external administrator may properly and justifiably carry out a proposed course of conduct is used to signify that it is appropriate that he or she do so. It is a conventional form of direction in common use. It is implicit in such an order that the court is approving the proposed conduct. Often a proposed direction in this form will raise an issue of propriety or reasonableness. Directions are available and appropriate on that basis.

1. In this case, given the complexity of the issues raised on the application, I accept that it was and is appropriate for the Liquidators to seek directions from the court before they take the proposed course of action.
2. I accept that by operation of s 75 of the Personal Property Securities Act 2009 (Cth) (PPSA), Westpac was afforded priority over any other security interest in relation to the funds held in the Company's Westpac accounts, including in relation to claims of PMSI creditors. On this basis, I accept and find that Westpac was justified in asserting their rights under the Westpac Deed and applying the Purchase Price to the Company's outstanding debts.

1. Section 32 of the PPSA expressly provides that if collateral gives rise to proceeds (by being dealt with or otherwise), the security interest continues in the collateral and attaches to the proceeds, unless the security agreement provides otherwise.
2. Counsel for the Liquidators submitted, which I accept, that in order for the Returned Funds to be characterised as 'proceeds' of collateral under s 31 of the PPSA, the funds must be traceable from particular collateral.
3. The Liquidators say that the security interests of the Company's other secured creditors were not traceable to the amounts in the Company's Westpac accounts while the Company's loan from Westpac remained outstanding. However, as soon as Westpac was repaid in full by the Company, which occurred on 16 January 2023, I accept that the debtor creditor relationship reversed, and the Returned Funds became traceable property of the Company.
4. These funds comprise a mixture of trade‑debtor receipts and other miscellaneous charges.[21] I accept that these funds are properly characterised as the proceeds of collateral and are traceable to the Company.
5. The Liquidators submit, which I accept, that it is necessary to determine which collateral had a sufficiently close connection to the Available Funds so as to justify allowing a creditor's rights in the original property to flow through to the Available Funds.[22]
6. This assessment is particularly complex in the circumstances of this case, as there was no direct conversion of the original property to the Available Funds due to the co-mingling of collateral to form new products. These new products were ultimately the subject of the relevant trade-debtor receipts comprising the Available Funds.[23] By way of example, ingredients such as flour and meat were used to manufacture pies and sausage rolls, the proceeds of the sale of which were paid into the Company's Westpac accounts.
7. The Liquidators say that, through the operation of s 99(1) and s 100 ‑ s 102 of the PPSA, the collateral of the Company's secured creditors with perfected PMSIs were mixed together to create a new product. The effect of this is that each of these creditors, whose collateral or ingredients were used:[24]

(a) have a security interest that continues in the new product or mass;

(b) have priority over any unperfected security interests or any perfected non PMSI in the same product or mass; and

(c) are entitled to share in the product or mass in the same proportion as the ratio of their secured obligation to the sum of all of the obligations secured by perfected security interests in the same product or mass, provided that that obligation does not exceed the value of their particular collateral on the day on which that collateral became a part of the new product or mass.

1. The evidence before me is that the Liquidators have undertaken a comprehensive tracing analysis of the claims of the PMSI creditors, with reference to the Company's financial records. Based on this analysis, they say the products sold by the Company are traceable into the Available Funds. They have identified the value of the input ingredients supplied by the PMSI creditors used in the manufacturing of those products.
2. Importantly, this analysis shows that not all ingredients were the subject of a valid and enforceable claim and not all products supplied by PMSI creditors (notably Baiada Poultry Pty Ltd, Bartter Enterprises Pty Ltd, BPL Adelaide Pty Ltd, BPL Melbourne Pty Ltd, and Tangaratta Stockfeeds Pty Ltd (together, Baiada)) could be traced to the Available Funds.[25] I accept the findings of this analysis.

Which creditors are entitled to priority distributions?

1. The rules for priority distribution set out in s 101 ‑ s 102 of the PPSA apply to the Available Funds.
2. I am satisfied, on the evidence before me, that GrainCorp, Langdon & Co, and New Food each have perfected security interests and are entitled to priority payment over the creditors with unperfected security interests. I also accept, on the evidence before me, that Baiada is not entitled to any distribution as a secured creditor and that it is properly treated by the Liquidators as an unsecured creditor.
3. Given these conclusions, I accept that orders should be made that the Liquidators are justified in making the Proposed Priority Distributions. The remaining balance of the Available Funds should then be distributed to all remaining creditors of the Company in accordance with the Act.

1. The Liquidators sought orders for the costs of the application to be paid from the assets of the winding up of the Company. I consider this to be the appropriate costs order and will make that order.
2. I also accept that the form of orders sought in terms of service of the court's orders, and the allowance for any agreed party to apply to this court to vacate or vary these orders, will protect the creditors of the Company from any possible prejudice that arises from these orders.
3. For these reasons, it is my view that it is appropriate to make orders in terms of the Liquidators' amended minute of proposed orders, subject to the amendment that I proposed to O 4, which is to make the time 14 days.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Affidavit of Mallika de Toni filed 23 July 2025 [8], 'MDT3'.

[2] Affidavit of Amanda Kelly Gardiner filed 17 July 2025 [6] - [8], 'AKG1' - 'AKG7'.

[3] Affidavit of David Mark Hodgson filed 19 June 2025 [13] - [14], 'DMH2'.

[4] Affidavit of David Mark Hodgson filed 19 June 2025 [16] - [17], 'DMH3'.

[5] Affidavit of David Mark Hodgson filed 19 June 2025 [18] - [19].

[6] Affidavit of David Mark Hodgson filed 19 June 2025 [10], 'DMH1'.

[7] Affidavit of David Mark Hodgson filed 19 June 2025 [15].

[8] Affidavit of David Mark Hodgson filed 19 June 2025 [32], 'DMH10'; Plaintiffs' submissions filed 19 June 2025 [5].

[9] Affidavit of David Mark Hodgson filed 19 June 2025 [32] - [54].

[10] Affidavit of David Mark Hodgson filed 19 June 2025 [55] - [56], 'DMH-28'.

[11] Affidavit of David Mark Hodgson filed 19 June 2025 [59].

[12] Affidavit of David Mark Hodgson filed 19 June 2025 [61].

[13] Affidavit of David Mark Hodgson filed 19 June 2025 [24], [27] - [28], 'DMH6' - 'DMH7'.

[14] Affidavit of David Mark Hodgson filed 19 June 2025 [29], [62], 'DMH8', 'DMH30'.

[15] Affidavit of David Mark Hodgson filed 19 June 2025 [65] - [66], 'DMH31' - 'DMH32'.

[16] Affidavit of David Mark Hodgson filed 19 June 2025 [75].

[17] Affidavit of David Mark Hodgson filed 19 June 2025 [75] - [78].

[18] Affidavit of David Mark Hodgson filed 19 June 2025 [70].

[19] Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 679 ‑ 680.

[20] Re GGA Lifestyle Pty Ltd (admin appt); Ex parte Woodhouse [2019] WASC 167 [23] (citations omitted).

[21] Affidavit of David Hodgson filed 19 June 2025 [61], 'DMH 37'.

[22] Plaintiffs' submissions filed 19 June 2025 [41].

[23] Plaintiffs' submissions filed 19 June 2025 [42].

[24] Plaintiffs' submissions filed 19 June 2025 [43] - [48].

[25] Affidavit of David Mark Hodgson filed 19 June 2025, 'DMH37'.