CBA v MTC Diesel Pty Ltd - [2019] VCC 639

IN THE COUNTY COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL DIVISION

Revised
Not Restricted
Suitable for Publication

BANKING & FINANCE LIST

Case No. CI-18-02585

Commonwealth Bank of Australia (ACN 123 123 124)	Plaintiff
v
MTC Diesel Pty Ltd (ACN 089 100 970) & Ors	Defendants

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JUDICIAL REGISTRAR:	Judicial Registrar Burchell
WHERE HELD:	Melbourne
DATE OF HEARING:	7 May 2019
DATE OF JUDGMENT:	15 May 2019
CASE MAY BE CITED AS:	CBA v MTC Diesel Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2019] VCC 639

REASONS FOR JUDGMENT
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Catchwords: Warehousemen’s Lien – when lien is claimed over goods stored – possession of goods – immediate possession – storage costs.
Security interest – registered security interests – within meaning of Personal Property Securities Act 2009 (Cth) – whether a valid lien pursuant to legislation takes priority over a security interest.
Notice – requirements of notice – whether notice requirements complied with pursuant to statute.

Legislation Cited: Acts Interpretation Act 1901 (Cth); Credit Act 1984 (Vic); Education Services for Overseas Students Act 2000 (Cth); Electronic Transactions (Victoria) Act 2000 (Vic); Estate Agents Act 1980 (Vic); Migration Act 1958 (Cth); Personal Property Securities Act 2009 (Cth); Personal Property Securities Regulations 2010 (Cth); Storage Liens Act 1935 (NSW); Storage Liens Act 1973 (Qld); Warehouseman’s Liens Act 1952 (WA); Warehousemen’s Lien Act 1958 (Vic).
Cases Cited:Advisory Services Pty Ltd v Augustin (2017) CCV 1197; David v Moss (Unreported, Charteris DCJ, 1 September 2011); Egglishaw v Australian Crime Commission [2010] FCAFC 82; Electrolux Home Products Pty Ltd v Australian Workers’ Union [2004] HCA 40; Epstein and Morton v WorkCover SA [2003] SASC 231 at [49]; Equipment Investments Pty Ltd v MJ Dowthwaite & Co Pty Ltd (1968) 16 FLR 23; Fearnley v Finlay [2014] QCA 155; Kalazich v Yang (2012) 16 DCLR (NSW) 116; Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd (1973) 1 ALR 1; MIMIA v Ahmed [2005] FCAFC 58; MIMIA v Zhou (2005) 152 FCR 115; Morsed v MIMIA [2005] 88 ALD 90; Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd [2015] VSC 77; Permanent Mortgages Pty Ltd v Cook and Anor [2006] NSWSC 1105; Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355; Re Arcabi Pty Ltd (Receivers and Managers Appointed) (in Liq) [2014] WASC 310; Ship “Sam Hawk” v Reiter Petroleum Inc [2016] FCAFC 26; Stapley v Towing Master Pty Ltd [2009] NSWSC 139; SZGME v Minister for Immigration and Citizenship (2008) 168 FCR 487; Uddin v MIMIA (2005) FMCA 841; Westpac Banking Corporation v Tesoro [2012] VSC 182; Whim Creek Consolidated v Colgan (1991) 31 FCR 469; Wilson v MIAC [2012] FCA 1421; Wu v Minister for Immigration and Ethnic Affairs (1996) 64 FCR 245; Zubair v MIMIA [2004] FCAFC 248.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	P Thiagarajan	Turks Legal
For the Second Defendant	S Buchanan	Lennon Lawyers

JUDICIAL REGISTRAR:

Introduction

This proceeding concerns the law of secured transactions. In particular, it examines the competing interests under the Warehousemen’s Lien Act 1958 (Vic) (the Act) and a security interest within the meaning of the Personal Property Securities Act 2009 (Cth) (PPSA). This decision considers the circumstances in which a valid lien under the Act takes priority over a security interest.

Factual Background

On 3 March 2015, the Commonwealth Bank of Australia (CBA) provided finance to Simran Logistics Pty Ltd (Deregistered) (Simran) in the form of Equipment Finance for a 2012 Freightliner Argosy VIN 1FVJAWBGXCLBR9745 (the loan). The loan amount was in the sum of $160,000.00 with a total amount of interest payable in the amount of $30,463.00, making a total of $190,463.00. The loan was to be repaid with 60 monthly instalments in the sum of $2,641.01, and a final payment due on 3 March 2020 in the sum of $32,000.00 (the Argosy). The Equipment Finance was secured by a first registered charge over the Argosy and a guarantee by Miss Simran Kaur, the Third Defendant.

The CBA registered its security interest with the Personal Property Securities Register (PPSR) on 5 March 2015, properly described by the Argosy’s serial number in accordance with sections 153(1), 164(1)(b), 165(a) of the PPSA Act and Paragraph 2.2 of Schedule 1 of the Personal Property Securities Regulations 2010 (Cth). As such, the security was perfected by registration.

Pursuant to the Current Terms and Conditions for Business Finance, Simran was to make all payments due to the CBA as directed and to ensure that it was not in default under the loan. A default included anything happening that in the CBA’s reasonable opinion means Simran would not meet its obligations under the loan, a failure to pay any amount owed to the CBA on time, the appointment of an administrator, the guarantor or a grantor becoming insolvent or subject to any form of administration.

Further, under the terms of the loan, if Simran was in default, then the CBA could choose to enforce the loan by giving Simran a default notice. If Simran did not remedy the default within the time specified in the notice, then the CBA could decide that all amounts owed by Simran are due immediately and take possession of the secured property and sell it.

According to the ASIC search of Simran dated 6 May 2019, on 16 March 2017, controllers were appointed to Simran; on 25 September 2017, external administrators were appointed to Simran and on 12 February 2018, Simran was deregistered.

In light of the appointment of controllers and administrators and deregistration, Simran was in default of its loan. Further, the CBA’s Statement of Account in relation to the loan indicated that Simran was failing to make payments due on the loan in accordance with its terms, and was consistently in arrears from 25 October 2016.

By letter dated 16 January 2017, the CBA informed Simran that it was in default under the loan for failure to make payments totalling $7,923.16. The CBA demanded that Simran rectify the default within 7 days or the CBA would take possession of and sell the Argosy as security for the loan and receive the proceeds of sale. There was no response to the first letter of demand.

A second letter of demand was sent by the CBA to Simran care of the ASIC Property Law Group on 1 May 2018, notifying it that there remained an amount of $139,806.51 under the loan. The CBA required that the total amount owing be paid within 30 days of the date of the letter.

By certificate of moneys owed pursuant to clause K.9 of the Current Terms and Conditions for Business Finance, the amount of moneys outstanding pursuant to the loan as at 6 May 2019 was $173,473.62, and are now due and payable by Simran to the CBA.

As a result of Simran’s failure to rectify default under the loan, the CBA engaged Pickles Auctions (Pickles) as its agents to exercise its right to possession of the Argosy.

Despite affirming its Affidavit of Documents on 30 October 2018, and not producing documents sought regarding the storage of the Argosy by Heavy Haulage Towing Pty Ltd (the Second Defendant) (Heavy Haulage) for Merchant Truck and Car Repairs Truck repair shop (the First Defendant) (Merchant), on the day of the trial, Heavy Haulage produced a purported Authority to Tow Docket Number 1729 dated 13 March 2017 charged to Merchant for the Argosy.

By email dated 6 April 2017, Jason Lloyd of Pickles (Jason) informed Anthony Chahoud of the CBA (Anthony) that the Argosy was with “Peter Hewat” (Peter) at his yard which he was holding for another repairer. Jason was waiting on clearance from Peter to go and look at two other Argosy’s held in his yard. It had not been approved yet and Jason would let Anthony know when he got clearance to inspect.

By email dated 26 April 2017, the CBA’s agent, Bloomfields, informed Anthony of the CBA that Merchant claimed a repairer’s lien over the Argosy.

By letter dated 5 July 2017, the CBA’s solicitors advised Merchant that it had a registered security over the Argosy and made a formal demand requesting evidence to support its asserted repairer’s lien. The CBA required copies of all invoices and details to support the asserted lien, or that the Argosy be surrendered to the CBA’s agent.

By email dated 11 July 2017, Merchant provided an invoice number 00013141 dated 18 April 2016 billed to Simran in the sum of $12,762.48.

By letter dated 2 August 2017, the CBA’s solicitor requested a copy of any notice/s issued to the CBA of the lien over the Argosy, and photos and invoices to verify the work done on the Argosy including but not limited to the labour (towing, gearbox components/rebuild and gear oil change) asserted in the invoice.

By email dated 28 August 2017, the CBA’s solicitor noted that whilst a copy of the invoice had been provided, Merchant had not provided all of the documents requested or supplied a copy of any notice/s to the CBA of the lien over the Argosy. The CBA required details as to how the agreement was reached between Merchant and Simran for the work undertaken and the price for the work. For example, a work order or quote that was accepted by Simran and what warranty or guarantee was provided by Merchant for the work performed. The CBA advised that if no notice was received it would commence proceedings for possession of the Argosy without further notice. Turks Legal noted that:

“Pursuant to section 6 of the Warehouseman’s Lien Act 1958 (Vic), you are required to give notice within 2 months after the date of the deposit of the goods to any person who has an interest in the goods, to his knowledge. Where such notice is not given, that party’s lien, as against the person to whom he fails to give notice (in this case CBA), shall be void as from the expiration of the period of two months from the date of the deposit of the goods. As you are aware, CBA has a registered security interest in the [Argosy]. Therefore, unless you are able to show that notice was provided to CBA within 2 months of the [Argosy] being deposited with you, your lien claim is void.”[1]

[1]For the reasons set out below, Turks Legals’ observations in relation to the Act would have been correct if Merchant had, in addition to its repairer’s lien, also sought a warehousemen’s lien for storage costs. However, Merchant was then asserting a repairer’s lien under general law and not under the Act. Up until Merchant relinquished possession of the Argosy on 13 March 2017, it had a repairer’s lien over the Argosy with priority over the CBA’s interest in the Argosy pursuant to sections 8(1)(c) and 73(1) of the PPSA. However, because the right is possessory, Merchant’s lien had been broken. Further, it was not until 23 September 2017 that the CBA’s agent could inspect the Argosy and it could not be determined whether all works had been conducted pursuant to Merchant’s invoice. On 25 July 2018, Merchant advised the CBA that it had no interest in the Argosy.

By email dated 7 September 2017, Anthony requested that Jason inspect the Argosy at Merchant and noted that they were claiming approximately $12,000.00 for work done pursuant to the invoice. The CBA requested confirmation that the work had been completed.

By email dated 23 September 2017, Jason reported back to Anthony advising that he had been out to inspect the Argosy as requested. It was actually located at the premises of Heavy Haulage, and not at Merchant’s address. In reviewing the Argosy as against the invoice, it was noted that the steering wheel had been tied off as the truck had obviously been towed into the yard (which matched the invoiced works conducted); the top of the cylinder head had been removed (which matched the invoiced works conducted); there was evidence of some mechanical works carried out at the back of the block and bell housing, but Jason was unable to confirm conclusively that any works to the transmission in terms of removal, washing and reassembly of parts, new clutch kit and re-fitment had been carried out. The transmission would need to be opened up again to ensure a new kit was fitted. Therefore, some of the works conducted in Merchant’s invoice had been carried out, but Jason was unable to confirm that all works had been conducted.

By email dated 19 January 2018, Troy Ratcliffe of the CBA (Troy) wrote to its agent, Bloomfields, asking if they had been able to find the Argosy. Bloomfields responded on the same day that they had found it “ages ago”, and that work had been done by a repairer who had not been paid, who then decided to have someone store it for him and that it had a large lien over it with Turks Legal (the CBA’s solicitors) fighting for them.

Troy replied to Bloomfields asking if they were able to take possession of the vehicle and referred to Jason’s 23 September 2018 email. He asked whether he should go back to Turks Legal and say that the vehicle was still with Heavy Haulage and that no attempt had been made to obtain possession by Bloomfields because of the large lien with Merchant.

By email dated 31 January 2018, Bloomfields responded that the agent had spoken with Peter Hewat of Heavy Haulage some time ago who advised that the Argosy was not leaving his premises until the “liens” were paid. Bloomfields stated that they were unsure whether Peter also wanted storage. They assumed that he would knowing his past dealings. In their opinion, if the Argosy was taken legally by CBA then Merchant may be asked to pay the storage by Peter.

By letter dated 5 April 2018, Turks Legal (on behalf of the CBA) wrote to Merchant demanding surrender of the Argosy and noting that Merchant refused to release the Argosy to the CBA until payment of its invoice had been met; it refused to provide any documentation to support Merchant’s lien claim; the CBA did not engage Merchant’s to carry out any work on the Argosy, and it had not demonstrated any agreement with Simran that entitled Merchant to maintain as against the CBA’s possession of the Argosy.

By email dated 6 April 2018, Elvin Lawyers responded to Turks Legal on behalf of Merchant requesting a copy of the security that the CBA alleged that it had over the Argosy.

Following a telephone discussion between the solicitors, Elvin Lawyers asserted by email dated 13 April 2018 that it did not consider that the CBA had a security over the Argosy and that the CBA had not provided any documentation to substantiate the claim.

On the same day, Turks Legal provided a copy of the PPSR search evidencing the CBA’s security over the Argosy which was publicly available material and that the CBA had rejected Merchant’s lien claim. Turks Legal demanded that Merchant surrender the Argosy to the CBA immediately.

On 16 April 2018, Elvin Lawyers requested by email a copy of the document (charge, agreement order, deed, or otherwise) or summary of the circumstances pursuant to which the CBA alleged gave rise to its security over the Argosy. This request was rejected by Turks Legal who demanded the surrender of the Argosy.

By letter dated 24 April 2018, Turks Legal wrote to Heavy Haulage demanding the surrender of the Argosy. They noted that Heavy Haulage claimed to be in possession of the Argosy over which the CBA had a registered security; that Heavy Haulage refused to release the Argosy to the CBA until payment is received, and that the CBA had not received any invoices from Heavy Haulage or documentation to support its lien claim.

On 26 April 2018, the solicitor from Turks Legal had a telephone conversation with Peter from Heavy Haulage. The CBA relied on the content of the file note as a business record. Peter did not recall the telephone conversation “off the top of his head”. The file note relevantly sets out the following:

“Peter has possession been there for over one year. Asked why CBA letter claims he stole the truck. Advised Peter that another company claims to have possession. Peter asked Bruno [Salerni of Merchant]. Storing it for [Merchant], trucks go to Peter after a certain amount of time if nobody pays. [Merchant] leases part of the yard from him. When the bill gets paid, he will surrender the truck. Repo agent back and forth, CBA hasn't paid repairs and now they are to pay storage. Bruno says needs to be compensated for his work. Advised Peter that he cannot demand payment on behalf of [Merchant]. Mentioned that [Merchant] broke their lien when their possession was transferred. He claims he's only holding the truck for [Merchant] and payment needs to go to [Merchant]. Advised him that if he is not asserting a lien I need to discuss the matter with [Merchant’s] lawyers. Regardless the lien has been broken.”

On 18 June 2018, the CBA commenced repossession proceedings in this Court.

By email dated 25 July 2018, Bruno Salerni of Merchant (Bruno) emailed Turks Legal referring to numerous telephone calls advising that Merchant has no interest in the Argosy and they have disclosed where the Argosy is located.

According to the latest PPSR search, the CBA PPSA registration over the Argosy had been discharged on 3 January 2019. The CBA claimed that the discharge was due to an inadvertent administrative error by the CBA and they were attending to re-registration of the security interest. At all relevant times to the issues in this proceeding, the CBA had perfected its security interest on the PPSR.

The pleadings

Under the security documents set out above, the CBA is entitled to possession of the Argosy. The question for determination is whether Heavy Haulage is entitled to claim a warehousemen’s lien pursuant to the Act over the asset.

By defence dated 5 September 2018, Heavy Haulage claimed that it was not required to deliver up the Argosy to the CBA and claimed $50.00 per day for storage.

By their Amended Defence and Counterclaim filed on the day of the trial, Heavy Haulage claimed that on 13 March 2017, Merchant entered into an oral agreement with Heavy Haulage for the storage of the Argosy at the sum of $35.00 per day. It further contended that Heavy Haulage had a lien in respect of the Argosy for its storage costs pursuant to section 6 of the Warehousemen’s Liens Act 1958 (the Act), alternatively, by reason of section 9 of the Act for substantial compliance with section 6 or that it would be inequitable to deem the lien void by reason of non-compliance with section 6.

The CBA did not oppose the filing of the Amended Defence and Counterclaim in the interests of the expedient resolution of the proceeding. The parties had agreed to the summary of key issues in the proceeding, and the revised pleadings crystallised those matters.

The CBA’s Reply and Defence to Counterclaim denied that the matters relied upon by Heavy Haulage could constitute proper and valid notice pursuant to section 6 of the Act, or could otherwise satisfy the requirements of section 9. It claimed that Heavy Haulage never issued a notice under section 6, nor was there substantial compliance with that provision. Further, the CBA submitted that even if Heavy Haulage could establish a lien under the Act, such lien could not take priority over its secured interest.

Issues in the proceeding

There were a number of issues in dispute between the parties:

(a) Whether CBA is entitled to immediate possession of the Argosy.

(b) Whether Heavy Haulage Towing Pty Ltd is entitled to claim a lien under the Warehousemen’s Liens Act 1958 (Vic). This issue comprises the following sub-issues:

(i) Whether Heavy Haulage gave any notice to CBA under the Act, as required by section 6 of that Act;

(ii) If such notice was given, whether it complied with the requirements of section 6?

(iii) Whether section 6(4) applies so as to limit Heavy Haulage’s lien, if available, to two months’ worth of storage charges.

(iv) Whether, if Heavy Haulage did give notice as required by section 6 of the Act, but such notice did not strictly comply with the requirements of that section, the requirements of section 9(1) were satisfied so as to entitle Heavy Haulage to a lien beyond the limit prescribed in section 6(4)?

Legal Framework

The Act enables persons who store goods to recover the cost of storage where the person who deposits the goods does not pay for the storage or cannot be located if the provisions of section 6 are satisfied.

The primary purpose of the Act is to allow for the creation of a warehousemen’s lien and outline a power to sell goods in order to recover storage costs, all lawful claims for expenses in relation to the goods, and all reasonable charges for any notice required to be given under the provisions of the Act (section 5).

A warehouseman is defined under the Act as a person who is lawfully engaged in the business of storing goods as a bailee for hire and reward (section 3).

There is no recognisable lien in favour of warehousemen at common law (see Majeau Carrying Co Pty Ltd v Coastal Rutile Ltd[2]). The lien may be created as a creature of statute pursuant to the provisions of the Act (section 6). The lien is a proprietary interest which arises in favour of the warehouseman in possession of goods belonging to another person (the depositor or the owner of the goods). The lien allows the warehouseman to retain possession of the goods until charges covered by the lien have been paid.
[2](1973) 1 ALR 1 at p 2 per Gibbs J.

The lien can be enforced in situations where the depositor or owner does not return to collect the goods or does not pay the storage fees and other expenses of the warehouseman. Under the Act, the warehouseman must give notice to the depositor, owner or any other person with an interest in the goods, before the lien can be enforced to recover the storage fees and other expenses (section 6(1)).

Critically, the warehousemen’s notice shall be served personally or by registered post within two months of the goods being deposited for storage (section 6(1)). If no notice is given, then the lien becomes void and unenforceable as from the date two months from the date of the deposit of the goods with the warehouseman (section 6(4)).

The notice shall be in the prescribed form and contain:

(a) a brief description of the goods;

(b) a statement showing the location of the warehouse where the goods are stored, the date of their deposit with the warehouseman and the name of the person by whom they were deposited;

(c) a statement that the lien is claimed by the warehouseman in respect of the goods under the Act; and

(d) any other prescribed particulars (section 6(2)(a)-(d)).

The prescribed form was previously set out in the Warehousemen’s Liens Regulations 1982, which expired in 1992 and has not been renewed. Regulation 6 of the 1982 Regulations provided that “[t]he notice of any lien required to be given by a warehouseman in pursuance of the provisions of section 6 of the Act shall be in the form or to the effect of the form contained in the Third Schedule hereto”.

The Third Schedule provided:

Regulation 6

THIRD SCHEDULE
Warehousemen’s Liens Act 1958

NOTICE OF LIEN

To

Take notice that pursuant to the Warehousemen’s Liens Act 1958 I/we claim a lien in respect of goods being (here insert a brief description of the goods or refer to a description of the goods contained in the Notice of Lien*) deposited for storage by on 19 and which are stored at my/our warehouse located at

And further take notice that if default within the meaning of the said Act is made in satisfying such lien I/we am are empowered to sell the said goods and apply the proceeds of sale in satisfaction of all charges, &c., lawfully due.

Dated 19

(Signature)

(This notice may be given personally or by registered post)

* If the goods are contained in sealed or closed boxes or packages insert a brief description of such boxes or packages.

Given the power to sell the asset under the Act, there are similarities with enforcement proceedings which must not be brought against a debtor or mortgagor in relation to a credit contract or mortgage unless the debtor or mortgagor is in default. A separately addressed default notice must be sent to each debtor and to each guarantor (section 107 of the Credit Act 1984 (Vic)) and either served personally or sent it by post to the person’s last known address (if a person) or left or sent to a corporation’s registered address (section 164 of the Credit Act). The default notice must specify:

(a) the default;

(b) the action necessary to remedy the default; and

(c) if the default may be remedied:

(1) the period in which it must be remedied (at least 30 days), and

(2) that a subsequent default of the same kind within that period, which is not remedied within the period, may be subject to enforcement proceedings without further notice.

A default notice is a precondition of the exercise of the power of sale in respect of general law mortgages where the default relates to the payment of money. Similarly, a notice is the precondition to crystallise the warehouseman’s lien with a power to sell the asset to recover their charges.

Given the significant subject matter of the powers contained in section 6 of the Act, in my view, the notice must be in accordance with the requirements contained in that provision, or substantially comply with the statutory requirements (section 9).

Validity of Notices

Section 6 sets out the notice requirements for warehousemen’s liens under the Act.

In the area of migration law, Applicants have successfully challenged the validity of section 20 notices under the Education Services for Overseas Students Act 2000 (Cth) (the ESOS Act) issued by the registered provider for failure to comply with mandatory legislative requirements under the Act in light Morsed v MIMIA[3], Uddin v MIMIA[4] and MIMIA v Zhou,[5] and other relevant decisions.
[3][2005] 88 ALD 90.
[4](2005) FMCA 841.
[5](2005) 152 FCR 115.

Section 20 of the ESOS Act requires that a notice must be sent to the visa holder if the holder has breached a student visa condition relating to attendance or satisfactory academic performance. The relevant condition in this case is condition 8202. Once a section 20 notice has been sent, the visa may be automatically cancelled pursuant to section 137J of the Migration Act 1958 (Cth) (Migration Act).

Where a visa is cancelled on the basis of section 137J of the Migration Act (either on the basis of non-compliance with the notice or failure to attend at an office of the Department), section 137K of the Act provides that the affected person may apply for a revocation of the cancellation by applying in writing to the Minister. Upon application, the Minister may (pursuant to section 137L(1)(b)) revoke the cancellation if, and only if, the applicant satisfies the Minister that the breach was due to exceptional circumstances beyond the applicant's control. The validity of the section 20 notice issued by the registered provider pursuant to the ESOS Act (see Uddin v MIMIA[6]) turned on the defective notice for not stating the sub-section (4) requirements of particulars of the breach, attendance before an officer and the effects of sections 137J and 137K of the Migration Act.
[6][2005] FMCA 841.

In Advisory Services Pty Ltd v Augustin (Advisory Services)[7] an estate agent was unable to sue for or recover commissions claimed by reason of section 50 of the Estate Agents Act 1980 (Vic) because the exclusive sale authority did not contain a rebate statement that complied with section 49A(4) of that Act. Justice Cameron in Oliver Hume (Australia) Pty Ltd v Land Source Australia Pty Ltd (Oliver Hume)[8] referred to the requirements of section 49A(4)(c) as being “strict”.
[7](2017) CCV 1197 per Marks J at [32]; upheld by the Court of Appeal [2018] VSCA 95 per Santamaria, McLeish & Niall JJA.
[8][2015] VSC 77 at [38], [48] per Cameron J.

In Epstein and Morton v WorkCover SA[9], Besanko J found that there were four factors which enabled him to discern whether there was “a legislative purpose to invalidate any act that fails to comply with the condition”. Those factors were:
[9][2003] SASC 231 at [49].

(a) the use of imperative language in the section;

(b) the significant subject matter of the power in the section;

(c) the importance of the body who exercises the power; and

(d) that the question of whether the requirements of the Act have been met is capable of being determined relatively easily.

In Project Blue Sky v Australian Broadcasting Authority[10] (Project Blue Sky), the key principle (at 388–390) is that:

“An act done in breach of a condition regulating the exercise of the statutory power is not necessarily invalid and of no effect. Whether it depends on whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. ...
… reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition … The cases show various factors that have proved decisive in various contexts …
… In determining the question of purpose, regard must be had to “the language of the relevant provision and the scope and object of the whole statute.””

[10] (1998) 194 CLR 355 at 388–389.

In Egglishaw v Australian Crime Commission[11], the appellant sought declarations that both the summons and the notice were invalid, and that the examination conducted pursuant to the summons issued under section 28(1) of the Australian Crime Commission Act 2002 (Cth) and the production of documents and things purportedly pursuant to the notice to produce were unlawful by referring to “an” examiner and not “the” examiner and asking for documents to be produced “forthwith”.
[11][2010] FCAFC 82.

The enquiry is whether there is a legislative intent to invalidate any act which breaches that condition. The requirement at issue in Epstein and Morton was imperative — it used the words: “[t]he regulation … cannot be made unless …”

So, too, here. Section 4 of the Act says “[s]ubject to the provisions of section 6 of this Act”; section 6(2) of the Act states that “[t]he notice shall...” and “where the warehouseman fails to give the notice required by this section … his lien … shall be void …”

Heavy Haulage was unable to point to direct evidence of the notice being given personally or by registered post, or at all, to the CBA. Heavy Haulage alleged that it sent the notice by picture messages of the Argosy at its premises, as well as pictures of its VIN and registration to Jason (the CBA’s agent), between one and three months after the delivery of the Argosy (the picture messages).

Peter gave oral evidence that he could no longer locate the alleged picture messages sent to Jason. Peter also claimed that a few days after sending the photographs to Jason, he telephoned Jason confirming whether he had received the photographs (the telephone call).

Heavy Haulage claimed that the combined effect of the picture messages and the telephone call satisfied the notice requirements under section 6.

Although the picture messages themselves were not before the Court, given the email of 6 April 2017 from Jason to Anthony advising the CBA that the Argosy was with “Peter Hewat” at his yard which he was holding for another repairer, I accept that Peter sent the picture messages to Jason and had the telephone call with him in early April 2017. However, in my view, for the reasons set out below, the picture messages and telephone call did not occur in order to give notice of Heavy Haulage’s lien.

Peter’s evidence was that he had heard through the grapevine that the owner of the truck had “taken off”. In these circumstances, Peter’s usual practice at the time was to contact Pickles to ask them to check to see who owned the vehicle, for example, if it was on hire purchase or if there was a charge on the asset. Peter said that at that time did not know how to conduct a PPSR search.

I accept that Jason asked Peter for the VIN and registration of the Argosy for the purposes of identifying the vehicle to undertake the searches requested of him by Peter. I further accept that Peter took pictures of the VIN and registration and sent it to Jason. Subsequently, Jason informed Peter that the Argosy “was the Commonwealth Bank’s”. Based on the contemporaneous documentary evidence, I reject Peter’s oral evidence that during the late April 2017 telephone call he told Jason that there was money owing on the Argosy for Heavy Haulage’s storage charges. His oral evidence as vague at best. Further, the email of 26 April 2017 only refers to Merchant’s repairer’s lien over the Argosy. And the first time the question of storage charges sought by Heavy Haulage was mentioned was in the 31 January 2018 email when Bloomfields stated that they were unsure whether Peter wanted storage. I do, however, accept that Peter informed Jason that Bruno (Merchant) needed to be compensated for his work (pursuant to the repairer’s lien).

In my view, the picture messages and the telephone call were undertaken to check to see whether the Argosy was under finance/lease via a registered security interest, and not to give notice to the CBA under section 6 of the Act.

Even if I am wrong about the characterisation of the picture message and telephone call, there are defects such that they constitute invalid notice for the purposes of section 6.

On a proper reading of the provisions, the notice must be in writing. Even though there are no current regulations under the Act providing for a prescribed form, the notice must contain the information that the section requires. Further, given the requirements under section 6(3) for the notice to be given personally or by registered post, when read as a whole, it is clear that the notice must be written notice, not oral, and not given via an agent or imputed by constructive notice. Formal notice is what is contemplated by the Act.

Invalid service of Notice

Section 6(3) states that the notice may be given personally or by registered post.

This is to be contrasted with, for example, section 115 of the ESOS Act which requires that the notice be sent by either delivering it to the individual personally, leaving it at the address of the individual’s place of residence or business last known to the Secretary, and taking reasonably practicable steps to draw the individual’s attention to the notice or by sending it by ordinary or any other class of pre-paid post.

In Kalazich v Yang,[12] Neilson DCJ distinguished David v Moss[13] as follows:
“Section 222 of the Motor Accidents Compensation Act 1999 (NSW) is headed "Service of documents generally". Section 110 involves the insurer of a person against whom a claim is made who may give the claimant notice requiring the claimant to commence court proceedings in respect of the claim.”
[12](2012) 16 DCLR (NSW) 116; [2012] NSWDC 261; BC201240484.
[13](Unreported, Charteris DCJ, 1 September 2011).
It has similar terms with respect to service of production notices under the ESOS Act:

(1) If by or under this Act a notice or other document is required to be, or may be, given to or served on a person other than the Authority, that notice or other document may be given to or served on:
(a) an individual:
(i) by delivering it to the individual personally, or
(ii) by leaving it at the individual's place of residence last known to the person who issued the notice or other document with a person who apparently resides there, being a person who has or apparently has attained the age of 16 years, or
(iii) by sending it by prepaid post addressed to the individual at that place of residence, or ...

At [20], Neilson DCJ said:

“With great respect to Charteris DCJ I cannot read the Act as requiring that any formal notice, such as a notice under s 110, must be served upon the claimant personally where the claimant is legally represented and where all communications are being passed through the solicitor by both the insurer and the claimant. The Act does not require personal service upon a claimant of, for example, a notice under s 110. If one were to construe the Act in the fashion construed by Charteris DCJ, any time that a claimant is required to do something he would be required to do it personally. That is clearly not the intention of the Act and clearly the MAA Claims Handling Guidelines indicate that the insurer should contact the claimant only through his or her solicitor, subject to the exceptions provided in Ch 8 of the Guidelines.” [Emphasis added]

The decision of Justice Edmonds in Wilson v MIAC[14] (Wilson) involved a factual scenario where a notification of cancellation under the Migration Act was sent to the applicant’s authorised recipient but Australia Post delivered it to the wrong address, being another law firm. Subsequently, the law firm hand delivered the notification letter to the applicant’s authorised recipient. The application to the Tribunal was out of time taken from the postal rule but was within time if taken from the hand delivery date. In the circumstances of that case, his Honour found that the notification letter had not been delivered by post but had been given by hand by another law firm. His Honour was of the view that the notification letter had not been given as it did not comply with the requirements under section 501G(1)(f)(ii) of the Migration Act.
[14][2012] FCA 1421.

Further, there may be an interaction of section 8 of the Electronic Transactions (Victoria) Act 2000 (Vic) (ET Act) and the notification provisions contained in section 6 of the Act.

The primary purpose of the ET Act is to provide that for the purposes of a law of the State, a transaction is not invalid simply because it took place by electronic means. This is subject to a contrary intention in the specific State legislation.

Section 8 of the ET Act applies where a State law imposes a requirement on a person to give information in writing.

Relevantly for our purposes, where the information is required or permitted to be given in writing to a person sections 8(1) and 8(2) have the effect that the information may be given by electronic means if the following conditions are met:

(a) at the time that the information is given, it was reasonable to expect that the information would be readily accessible so as to be usable for subsequent reference (sections 8(1)(a) and 8(2)(a)); and

(b) the person to whom the information is required to be given consents to the information being given by electronic means (sections 8(1)(d) and 8(2)(d)).

For the purposes of section 8, a requirement to 'give information' would include (relevantly) where the warehouseman is required or permitted to give, send or serve a notification (section 8(5)(c)).

However, section 8(3) expressly provides that section 8 does not affect the operation of any other law of the State that makes provision for or in relation to requiring or permitting information to be given, in accordance with particular information technology requirements:

(a) on a particular kind of data storage device; or

(b) by means of a particular kind of electronic communication.

Under the definitions section of the ET Act, section 3 provides that a “data storage device" means “any article or material (for example, a disk) from which information is capable of being reproduced, with or without the aid of any other article or device” and “electronic communication” means—

“(a) a communication of information in the form of data, text or images by means of guided or unguided electromagnetic energy, or both; or
(b) a communication of information in the form of sound by means of guided or unguided electromagnetic energy, or both, where the sound is processed at its destination by an automated voice recognition system; …”

Although I do not have to decide the issue in the present case, it may be that if the requirements of sections 8(1) and (2) of the ET Act are satisfied then service of the notice by picture message, text message or email may be valid service for the purposes of section 6(3). It should be noted that since consent of the other party is required in order for section 8 of the ET Act to apply, one would be estopped from relying on section 6(3) of the Act to dispute good service of the notice.

On Heavy Haulage’s own case, the alleged notices were not sent to the CBA personally or by registered post. Rather, picture messages were sent to the CBA’s agent (although there was no evidence that it was authorised to accept service on behalf of the CBA) and there were oral discussions with Jason in late April 2017 and with the CBA’s lawyers on 26 April 2018.

Unlike Kalazich v Yang, the Act does require personal service or sending the notice by registered post. Heavy Haulage submitted that the permissive use of the word “may” indicated that other methods of service were open to a claimant such as by picture messages and oral notice. In my view, the preferred interpretation is that the claimant may choose either to serve the notice personally or by registered post. As neither occurred in this case, no notice has been given to the CBA pursuant to section 6.

At its highest, the combined effect of the picture messages and the telephone call was that Jason (and not the CBA) was given pictures of the Argosy’s VIN and registration, was orally told by Peter that the Argosy was at his yard, and that he was holding it for another repairer. By email dated 26 April 2017, Bloomfields informed the CBA that Merchant was claiming a repairer’s lien over the Argosy.

Therefore, even if the pictures could satisfy the requirements of section 6(2)(a) being a brief description of the goods, there was no compliance with (b) and (c) as there was no statement showing: the location of the warehouse where the goods were stored (only orally told by Peter that the Argosy was at his yard, with no specificity), the date of the deposit of the goods (the authority tow docket was produced for the first time by Heavy Haulage at the trial), the name of the person who deposited the goods (only orally told that Peter was holding it for another repairer, with no specificity) or a statement that a warehousemen’s lien was being claimed (only orally told that Merchant was claiming a repairer’s lien over the Argosy).

In particular, on no view could section 6(2)(b) regarding the date of the deposit of the goods be satisfied. Similar to Equipment Investments Pty Ltd v MJ Dowthwaite & Co Pty Ltd (Equipment Investments)[15] in relation to the date on which the hire purchase agreement was said to commence, it is critical that there can be no controversy as to the date on which the Argosy was deposited because of the calculation of the 2 month time period by which the warehousemen’s lien must be perfected. The date was not specified as required by section 6(2)(b) of the Act and therefore there was non-compliance with the notice provisions.
[15](1968) 16 FLR 23.

Given the defects in the alleged notice in not providing a brief description of the goods, or a statement showing the location of the warehouse where the goods were stored, or the date of the deposit of the goods, or the name of the person who deposited the goods or a statement that a lien was being claimed by the warehouseman, there was no power to issue the notice: Project Blue Sky. The defects are not a mere slip or error in that it failed to contain the information set out in section 6(2)(a)-(c) of the Act.

Alternatively, Heavy Haulage relies on the telephone discussion between Turks Legal and Peter on 26 April 2018 by which the section 6 notice was allegedly provided to the CBA. Under the Act, Heavy Haulage had 2 months to give notice of its lien. If I accept the Heavy Haulage Delivery Docket date of 13 March 2017, then the time limit expired on 13 May 2017. By 26 April 2018, time had long since passed in relation to the expiration of the 2 months from the date of the deposit of the Argosy. No notice could be given by reasons of the 26 April 2018 telephone discussion as a matter of limitation period (sections 6(1) and (4)); as a matter of form (section 6(2)) or valid service (section 6(3)).

In any event, in respect of section 6 requirements, the file note of 26 April 2018 merely notes the following:

(a) a brief description of the goods (only refers to “the truck”, with no specificity);

(b) statement showing the location of the warehouse where the goods were stored (“Peter has possession”, with no specificity),

(c) the date of the deposit of the goods (“been there for over a year”),

(d) the name of the person who deposited the goods (“storing it for [Merchant]”);

(e) a statement that a warehousemen’s lien was being claimed (“CBA hasn’t paid repairs and now they are to pay storage. Bruno says needs to be compensated for his work”, no specificity of a lien claimed by a warehouseman in respect of the goods under the Act).

It is, in fact, a fault of the purported notices which takes it outside the ambit of sections 4 and 6 Act. It is a question of whether there is any power to issue a notice in the terms in which it was purportedly issued as a matter of statutory interpretation pursuant to section 9 of the Act.

Doctrine of Substantive Compliance

Section 9 of the Act raises the issue of the doctrine of substantial compliance and a residual equitable discretion.

Substantial compliance with section 9 might suffice which brings into question whether the purported notice in question constitutes substantial compliance (see Equipment Investments).

In Equipment Investments, Gibbs J considered whether the form of a hire purchase agreement before him complied with the requirements of that Act. The first requirement was that a statement had to be given “in accordance with the form” in that Act. His Honour noted at [31] that:

“...a statement is ‘in accordance’ with the form [within the meaning of that Act] if it is substantially in accordance with it and does not depart from it in any material respect. A divergence from the form would be substantial or material if it caused the statement to convey less information than the form requires or to confuse or mislead the prospective hirer as to the matters which the form is designed to bring to his notice.” [Emphasis added]

The second question in Equipment Investments was whether the hire purchase agreement was required to specify the date on which the agreement was deemed to have commenced. Gibbs J determined that, on the proper construction of the agreement, the intention of the parties was that the hiring was to commence on the date of the agreement (at [37], [57]). The fact that the agreement contained terms from which the date required to be specified could be determined by implication, or by interpreting the agreement, was not sufficient compliance with the Act. The date had to be specified. Anything less was not sufficient compliance. There, strict compliance was required (see Advisory Services (at [38]).

In Advisory Services at [39], Marks J stated that Equipment Investments was authority for the following principles:

“• It is a question of construction of legislation whether particular requirements to include statements or other information in certain agreements must be strictly complied with, or whether substantial compliance will suffice; and
• Where substantial compliance is sufficient, the statement or information in fact provided must not depart from the wording or form required by the legislation in any material respect, and any divergence which causes the statement or form to convey less information than the legislation requires or to confuse or mislead the class of persons the legislation is intended to protect as to matters required to be brought to their notice will not comply.” [Emphasis added]
(see also Lansdowne AsJ, in Westpac Banking Corporation v Tesoro[16] where a notice cannot be said to “reasonably convey” the intended message if it contains less information than the form or section requires.).

[16][2012] VSC 182 at [27]-[28].

In Permanent Mortgages Pty Ltd v Cook and Anor[17] in relation to a default notice under the State Code, precursor to section 88 of the National Credit Code (section 80 of the State Code). The Court dismissed an appeal from Hoeben J at first instance who had held that the default notice sufficiently complied with the legislative requirements. Young JA, with whom Beazley and McColl JJA agreed, held that, in accordance with prior authority on default notices under conveyancing legislation, default notices “are valid so long as they reasonably convey to the recipient the message that the section intends the borrower to receive and the borrower is not misled.”
[17][2006] NSWSC 1105 at [59].

In Wu v Minister for Immigration and Ethnic Affairs,[18] Carr J and Nicholson J accepted, at 261G and 279F, respectively, that there is room for the application of the substantial compliance doctrine, by reason of section 25C of the Acts Interpretation Act 1901 (Cth), in relation to the manner in which an applicant completes an approved form. See also A at 444-445 [39]-[44] per Merkel J; Nader at 360-361 [37]; Li at 500 [62] per curiam; SZGME v Minister for Immigration and Citizenship[19] at 506-507 [75]-[79] per Black CJ and Allsop J. Whether the Appellants substantially complied with Regulation 2.07(3) is to be judged by reference to compliance with the Internet application form as a whole and not by reference to individual parts of the form: SZGME at 506 [79].
[18](1996) 64 FCR 245.
[19](2008) 168 FCR 487.

The threshold question to engage section 9 is whether a notice of lien under the provisions of section 6 has been given. Only then can there be a determination of whether the notice substantially complies with the provisions of section 6. As I have found that the picture messages and the 26 April 2018 telephone call do not constitute proper and valid notices pursuant to section 6 of the Act, section 9 has not been engaged.

If I am wrong in my determination of the picture messages and the 26 April 2018 telephone call, in my view, they each contained less information that the section requires such that each of the requirements under section 6, being the description of the goods, or a statement showing the location of the warehouse where the goods were stored, or the date of the deposit of the goods, or the name of the person who deposited the goods or a statement that a lien was being claimed by the warehouseman have not been sufficiently complied with. The information given by Peter to Jason and/or Turks Legal cannot be said to reasonably convey the intended message that section 6 requires and only contained very vague references.

Residual Discretion: Inequitable to deem lien void

In Uddin v MIMIA[20] (Uddin 2), the Court (albeit reluctantly following previous Full Court authority in MIMIA v Ahmed[21]), found that the Tribunal was able to rectify the deficiencies in the section 119 notification by issuing a section 359A letter that sets out the relevant grounds of cancellation. Furthermore, in Zubair v MIMIA[22], the Full Court held that the Tribunal is able to review a decision of a delegate who has not followed procedure notwithstanding the fact that the decision may not be valid. In Ahmed (at [12]), the Full Court held that:

“The complaint of the Minister was that the approach of the Federal Magistrate misconceived the role of the Tribunal in rehearing the decision in question and was contrary to established authority viz Zubair v MIMIA [2004] FCAFC 248 and the authorities referred to therein. The defects in the notification under 119 (now accepted) was said to be flawed in following the statutory procedure required of the delegate. While this was sufficiently serious to vitiate, by jurisdictional error, the delegate's decision, the Tribunal's statutory functions of review operate on both valid and invalid decisions. The defects in the 119 notice became, it was said, a matter of administrative history as part of the procedures of the delegate. Upon review, the Tribunal was bound to follow the procedure laid down in the Act and Regulation. If it did so, and if it committed no other relevant error it could reach its own decision and if it reached the same result as the delegate, the decision would be affirmed.”

[20][2005] FCAFC 218.

[21][2005] FCAFC 58.

[22][2004] FCAFC 248.

Therefore, any deficiencies in the Cancellation Notice were cured by the Tribunal's review process, specifically the section 359A procedural fairness letter. Similarly, in Whim Creek Consolidated v Colgan[23], any defects in the seizure notice was remedied by the claimant’s subsequent conduct: at 489-499, where the claimant’s actions implied that it accepted the validity of the notices.
[23](1991) 31 FCR 469.

As with the analysis in relation to the doctrine of substantial compliance, the threshold question to engage section 9 for the purposes of whether it would be inequitable that the lien should be deemed to be void by reason of non-compliance of the notice under the provisions of section 6 is whether a notice of lien under the provisions of section 6 has been given. As I have found that the picture messages and the 26 April 2018 telephone call do not constitute proper and valid notices pursuant to section 6 of the Act, section 9 has not been engaged.

If I am wrong in my conclusion set out above, then in my view, the subsequent conduct of the parties would be a relevant consideration in the exercise of section 9 of the Act with respect to whether it would be inequitable that the lien should be deemed to be void by reason of non-compliance of the notice under the provisions of section 6.

However, the difficulty for Heavy Haulage in the present case is that at all material times the parties were concerned with Merchant’s asserted repairer’s lien and it is not until the email of 31 January 2018 from the CBA’s agent, Bloomfields, that CBA was informed that they were “unsure whether [Heavy Haulage] also wanted storage”. If notice had been given to the CBA and/or their agents then there would not be uncertainty as at 31 January 2018 of the existence of storage charges claimed by Heavy Haualge.

Turks Legal then wrote to Heavy Haulage on 24 April 2018 requesting invoices from it to demonstrate any claim, and the file note of the 26 April 2018 telephone conversation between Turks Legal and Heavy Haulage referred to “CBA hasn’t paid repairs and now they are to pay storage”. It was not at all clear on what basis Heavy Haulage was holding the Argosy.

It is no answer for Heavy Haulage to say that the CBA knew from 6 April 2017 that the Argosy was held by Heavy Haulage at its premises, and that it did not take any steps to inspect the asset until 7 September 2017 to assert that it is inequitable for the CBA to deny the lien. The lien in dispute at the relevant time was Merchant’s repairer’s lien. The inspection was to verify that the repair works the subject of the invoice had been completed. No quantification of storage costs was sought by nor communicated to the CBA as a result of the inspection on 23 September 2017.

Heavy Haulage was critical of the CBA in not taking steps to recover the Argosy from it until 24 April 2018, and that it was taking advantage of Heavy Haulage at its expense in keeping the asset safe and secure. The contemporaneous documents indicate that from 6 April 2018 – 25 July 2018, Merchant, through its lawyers, was still agitating for its repairer’s lien. The file note of 26 April 2018 also evidences that Peter was demanding payment on behalf of Merchant. The 19 January 2018 email clearly sets out that no attempt had been made to obtain possession by the CBA’s agents because of the large lien asserted by Merchant.

In the circumstances, even if Heavy Haulage could overcome the precondition of giving a notice that did not strictly comply with section 6 of the Act, there is nothing in the CBA’s subsequent conduct that would give rise to a basis that it would be inequitable that the lien should be deemed to be void or that any defects in the notices had been remedied by the parties’ subsequent conduct.

Whether section (4) applies so as to limit the lien (if available) to 2 months’ worth of storage charges

As set out above, I have found that Heavy Haulage does not have a warehousemen’s lien over the Argosy. The High Court in Majeau Carrying Co Pty Ltd[24] found when contemplating the Queensland equivalent of the Act that, at common law, there is no general right of a warehouseman to a possessory lien, and that if the common law did confer such a right it was extinguished upon the enactment of the Act. Gibbs J noted that “[i]t is impossible to suppose that the legislature intended rights given by this enactment to be additional to any right to alien that might have existed in favour of a warehouseman at common law, and that that the proper conclusion is that the intention in expressly granting to a warehouseman a right to a lien in accordance with the provisions of the statute was to displace any right to a lien which they might otherwise have had at common law.” In Electrolux Home Products Pty Ltd v Australian Workers’ Union,[25] Gleeson CJ observed that “modern legislatures regularly enact laws that take away or modify common law rights”. Therefore, the right in the nature of a lien is created by statute (see Stapley v Towing Master Pty Ltd[26]).
[24]at p 2 per Gibbs J.
[25][2004] HCA 40 at [307]-[313].
[26][2009] NSWSC 139 at [12] per Palmer J.

The Queensland Court of Appeal in Fearnley v Finlay[27] considered the Queensland equivalent of the Act and noted that their Act “provided for a warehouseman who had the benefit of a lien to give notice of the lien to various parties within three months of the date of the deposit. … It was also provided that a warehousemen’s ‘lien, as against the person to whom he failed to give notice, shall be void as from the period of expiration of three months from the date of the deposit of the goods’. The implication is that a warehouseman with a statutory lien under s 3 took in priority to the claim… over the relevant goods, if the notice was given”.
[27][2014] QCA 155 at [61].

As Heavy Haulage failed to give notice to the CBA pursuant to the requirements of section 6 of the Act, the statutory lien had not been perfected. Heavy Haulage had a time limit of 2 months from the date of the deposit of the Argosy to give notice as required under the Act in order to create the statutory lien. Any warehousemen’s lien that Heavy Haulage might otherwise have had under the Act was void on and from the expiration of the 2 months from the date of the deposit of the Argosy. Therefore, Heavy Haulage does not have a warehousemen’s lien (as understood by section 4) over the Argosy that it can enforce in priority over the CBA’s secured interest (within the meaning of the PPSA) (see Re Arcabi Pty Ltd (Receivers and Managers Appointed) (in Liq)[28]).
[28][2014] WASC 310 at [115] per Sanderson M.

As there is no common law right to a lien, in my view, Heavy Haulage does not have a lien (statutory or at general law) available to it for two months’ worth of storage charges. Even if a lien was available to it for the two month time period, it could not rank in priority over the CBA’s secured interest such that Heavy Haulage could seek to be paid out first overriding the CBA’s ability to immediately repossess and sell the Argosy. To give section 6(4) that interpretation would mean that the warehousemen would not have any incentive to mitigate their storage term to less than 2 months (and the charges that would arise as a result) as the Act would guarantee two months’ worth of charges in priority to all other interests without the necessity of giving the section 6 notice.

The practical effect would be that a warehouseman could sit on their hands for a period of 1 day short of the 2 month deadline and then serve a notice on the relevant parties to maximise its charges before perfecting its statutory lien and obtain priority ranking in relation to the asset. I find that the better view is that the harsh consequences of not serving the required notice within the 2 month time, is that on the expiration of the period, the warehouseman loses its lien over the goods stored by it by reason of the fact that it never had a warehousemen’s lien for the purposes of the Act, is an incentive for the warehouseman to ensure that it has a valid and enforceable lien crystallised within the shortest possible period of time from the deposit of the goods. The preferred interpretation of section 6(4) ensures that there is a duty to minimise storage time and reduce reasons for delays in releasing the stored good.

In Advisory Services[29] Marks J dealt with an Exclusive Authority that did contain the precise words set out in section 49A(4) of the Act. The Act required that a rebate statement must (a) be in a form approved by Consumer Affairs and (b) include in the statement the words “the agent is not entitled to retain any rebate and must not charge the client an amount for any expenses that is more than the cost of those expenses” (the prescribed warning). The real estate agents contended that the Authority nonetheless complied with the requirements of section 49A(1), as substantial compliance was all that was required, and that it substantially complied.
[29][2017] CCV 1195 per Mark J; [2018] VSCA 95 per Santamaria, McLeish & Niall JJA at [49].

In Oliver Hume, in the context of the Estate Agents Act and the strict operation of the legislation, Cameron J noted at [38]-[39] that:
“There is no scope, on that plain reading, for distinguishing between sophisticated parties or those who may be commercially inexperienced. Given the construct of the legislation, harsh consequences may follow from a failure to comply with its terms. …
The authorities have construed such provisions strictly. They stand for the proposition that it is not for litigants to seek the aid of equity to nullify what Parliament has decreed, nor to permit parties to recover remuneration or commission in clear circumvention of Acts of Parliament.”
So, too, here. Warehousemen such as Heavy Haulage must be educated about the PPSR publicly available searches and should either instruct lawyers or their office staff to draft notices that set out the required information mandated by section 6(2) of the Act (I refer to the Third Schedule set out above). As such, a warehouseman should as soon as reasonably practicable on the deposit of goods, search the PPSR to determine whether there are any persons listed as having a registered security interest, who must be notified in writing of the warehousemen’s lien. It is likely that the relevant bank or financier would be interested in repossessing the good as quickly as possible in light of the PPSR giving priority to a warehousemen’s lien over their secured interest in order to maximise any equity in the goods by minimising storage costs as a deduction on the current market value of the secured asset.

Priority dispute

The conclusions in relation to the narrow interpretation given to section 6(4) are fortified by the interplay between the warehousemen’s lien and section 73(1) of the PPSA. Although, given my findings it is unnecessary for me to reach a determination of the issues of priorities, I make the following observations.

The Consumer Affairs Victoria (CAV) “Storage Industry Position Paper” considered the interaction between the warehousemen’s lien and the PPSA at page 10 as follows:

“The Storage Act 1935 in New South Wales provides that a warehousemen’s lien over property has priority over any other interest in the property and displaces the priority rules set out in the PPSA. As a result, in NSW a person cannot take action to enforce a PPSA security interest if the action is inconsistent with warehousemen’s liens legislation.

The Victorian Act is silent on the issue of priority. A warehouseman can satisfy their lien from the proceeds of sale, but the Act does not clearly establish that the warehousemen’s lien takes priority over other interests. 6

The Act does not require a court to give priority to the interests of warehousemen. However, it is possible that a lien created under the Act and perfected by possession of the goods could be treated as having priority, meaning the warehousemen’s lien would take priority over a subsequent registered security interest.”[30]

[30]Warehousemen’s Liens Act 1958 Review, Storage Industry Consultation Paper, Consumer Affairs, 2016, p 10

The CBA sought to rely on the observations contained in the CAV position papers and, in particular, the recommendation that the Act be amended to include a “declaration under section 73(2) of the [PPSA] of the Commonwealth that a storage lien will be given priority over other interests, including interests registered on the [PPSR]”.[31]
[31]Warehousemen’s Liens Act 1958 Review, Storage Industry Position Paper, Consumer Affairs, 2017, p 4

Both parties conceded that the operation of section 73(1) and/or (2) of the PPSA in relation to the warehousemen’s lien was an open question.

Heavy Haulage relied on the learned authors of the “Australian Personal Property Securities Law”[32] that the PPSA does not change the legal right for warehousemen to hold goods (such as the Argosy) until they have been paid for their storage charges (subject to conditions).
[32]Duggan & Brown, 2^nd Edition, Lexis Nexis Butterworths Australia 2016 p 84-85.

Section 8(1)(b) of the PPSA relevantly provides that the Act does not apply to a lien, charge or other interest in personal property that is created, arises or is provided for under a law of the Commonwealth, State or Territory, unless the person who owns the property in which the interest is granted agrees to the interest. Accordingly, warehousemen’s liens are not registrable security interests under the PPSA. In my view, priorities between a warehousemen’s lien and a holder of a registered security interest (such as a financier) will be determined by section 73(1) of the PPSA if the conditions in section 73(1)(a) to (e) are met (see Duggan & Brown [3.47]).

Section 73(1) of the PPSA provides that a lien created by operation of general law or under statute arising out of providing goods or services in the ordinary course of business has priority over a security interest registered under the Act if the person who provided the goods or services did not know that the agreement that created the security interest prohibited the establishment of a lien by the debtor.

For example, a warehouseman who stores goods as a bailee for hire or reward in the ordinary course of business might be aware that the asset has a registered security interest to a financier, but is not aware of the terms of the security agreement which might prevent the asset owner from creating other interests in the asset. As a result of section 73(1) of the PPSA, the warehousemen’s lien over the asset will have priority over the financier’s interest in the asset.

The CBA submitted that it was unclear whether a right under the Act was a “statutory interest” for the purposes of section 73(2), or a “priority interest” to which section 73(1) applies. The CBA’s preferred view is that a warehouseman’s lien is a “statutory interest” in accordance with section 73(2) as it “arises, by being created, arising or being provided for, under a law of the Commonwealth, a State or a Territory”. Then the section provides that the issue of priority will only be determined by the law creating the statutory interest “if, and only if, that law declares that section 73(2) applies to the statutory interests of that kind”. As noted above, unlike the position in NSW, Queensland and WA[33], the Victorian Act does not contain an equivalent provision expressly providing for the priority of storage liens over a security interest.
[33]Section 3 of the Storage Liens Act 1935 (NSW), s 3 of the Storage Liens Act 1973 (Qld) and section 4(2) of the Warehouseman’s Liens Act 1952 (WA).

Again, I prefer the interpretation given by Duggan & Brown in relation to section 73(2) that it provides an extended reach for priorities to apply. Sub-section 73(2) enables legislature to explicitly provide for interests that do not fall within the purview of section 73(1), being an interest arising in relation to providing goods or services in the ordinary course of business, to contain a declaration in the relevant statute to explicitly provide for priority over a security interest, for example, a government lien for unpaid taxes.

I do not accept the CBA’s contention that if section 73(1) applies to warehousemen liens then there would be no need for a section 73(2) mechanism to apply, such as in the equivalent NSW, Queensland and WA Acts. The express provision contained in those Acts pursuant to section 73(2) overcomes the potential risks involved in a warehouseman not satisfying the conditions contained in section 73(1)(a) to (e). If the Act expressly provided that a valid warehousemen’s lien took priority over a security interest pursuant to section 73(2) then the warehouseman would only need satisfy the requirements under section 6 of the Act in order to override a financier or bank’s secured interest, without having to additionally satisfy the further conditions required under section 73(1) of the PPSA.

My view is reinforced by the observations by the Full Court of the Federal Court decision in Ship “Sam Hawk” v Reiter Petroleum Inc[34] in the context of maritime liens. Chief Justice Allsop and Eldelman J stated:
[34][2016] FCAFC 26 per Allsop CJ and Edelman J at [144]-[148].

(a) that maritime liens were either interest that arose by operation of the general law or an interest that is “created, arises or is provided for under a law of the Commonwealth [s 15 of the Admiralty Act]” (see section 8(1)(b), 8(1)(c) and section 8(2)).

(b) that the priority that maritime liens enjoy over the PPSA is subject to qualifications such as whether:

i. it arose “in relation to providing goods or services in the ordinary course of business” (section 73(1)(b)). If it did, not then it would not have propriety conferred by the PPSA.

ii. “the person who holds the priority interest acquired the interest without actual knowledge that the acquisition constitutes a breach of the security agreement that provides for the security interest” (section 73(1)(e)).

For the mathematically minded, the analysis can be explained through the use of a Venn diagram. Set A (priority interest arising in relation to providing goods and services in the ordinary course of business, for example, the warehousemen’s lien) and Set B (statutory interests declared by law) with the intersection comprising declarations under the NSW, Queensland and WA equivalent Acts under section 73(2) explicitly providing for priority over a security interest.

Conclusion

For the above reasons, the answers to the issues propounded by the parties in this proceeding are as follows:

(a) Whether CBA is entitled to immediate possession of the Argosy. Answer: Yes.

(b) Whether Heavy Haulage Towing Pty Ltd is entitled to claim a lien under the Warehousemen’s Liens Act 1958 (VIC). This issue comprises the following sub-issues:

(i) Whether Heavy Haulage gave any notice to CBA under the Act, as required by section 6 of that Act; Answer: No.
(ii) If such notice was given, whether it complied with the requirements of section 6? Answer: No.
(iii) Whether section 6(4) applies so as to limit Heavy Haulage’s lien, if available, to two months’ worth of storage charges. Answer: No.
(iv) Whether, if Heavy Haulage did give notice as required by section 6 of the Act, but such notice did not strictly comply with the requirements of that section, the requirements of section 9(1) were satisfied so as to entitle Heavy Haulage to a lien beyond the limit prescribed in section 6(4)? Answer: No.

The Court proposes to order the following relief:

(a) The Court declares that the Plaintiff is entitled to possession of the 2012 Freightliner Argosy VIN 1FVJAWBGXCLBR9745 (the Asset).

(b) The First and Second Defendant, and each of them, are restrained from selling, disposing of or otherwise dealing with the Asset without express, written consent of the Plaintiff.

(c) The Second Defendant is to deliver up the Asset to the Plaintiff immediately or in the alternative, provide access on to the Plaintiff and/or its agents to collect the Asset from its property.

I will hear the parties on the question of the costs of the proceeding.

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Certificate

I certify that these 35 pages are a true copy of the judgment of Judicial Registrar Burchell delivered on 15 May 2019.

Dated: 15 May 2019.

Larissa Travassaros
Associate to Judicial Registrar Burchell