Central Cleaning Supplies (Aust) Pty Ltd v Elkerton - [2014] VSC 61

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

COMMERCIAL COURT
CORPORATIONS LIST

S CI 2013 3530

IN THE MATTER of

SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900)

BETWEEN:

CENTRAL CLEANING SUPPLIES (AUST) PTY LTD	Plaintiff
v
ANTHONY WAYNE ELKERTON (in his capacity as Joint and Several Liquidator of SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900))	First Defendant
DAVID GREGORY YOUNG (in his capacity as Joint and Several Liquidator of SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900))	Second Defendant

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JUDGE:	Ferguson J
WHERE HELD:	Melbourne
DATE OF HEARING:	19 February 2014
DATE OF JUDGMENT:	7 March 2014
CASE MAY BE CITED AS:	Central Cleaning Supplies (Aust) Pty Ltd v Elkerton
MEDIUM NEUTRAL CITATION:	[2014] VSC 61

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CORPORATIONS — Appeal from liquidators’ decision to reject claim for the return of cleaning equipment subject to retention of title — Transitional security agreements under Personal Property Securities Act 2009 (Cth) — Transitional provisions applying if transitional security agreement in force immediately before 30 January 2012 and provides for security interest — Credit application completed by purchaser before 30 January 2012 — Credit application included that supply of goods governed by Standard Terms and Conditions — Invoices included Condition of Sale that title in goods ‘subject of this sale’ remain property of supplier — Condition of Sale not incorporated into credit application but incorporated into each separate contract of supply — Separate contracts after 30 January 2012 with result that transitional provisions do not apply — Decision of liquidators confirmed — Personal Property Securities Act 2009 (Cth) ss 322(1), 307 and 308(b).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D F McAloon	Tisher Liner FC Law
For the Defendants	Mr D R Luxton	TressCox Lawyers

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Personal Property Securities legislation........................................................................................ 2

Agreed facts......................................................................................................................................... 5

Is the Credit Application a ‘transitional security agreement’?................................................... 7

Conclusion......................................................................................................................................... 14

HER HONOUR:

Introduction

Central Cleaning Supplies (Aust) Pty Ltd (“Central Cleaning”) supplied cleaning equipment and products to Swan Services Pty Ltd (“Swan Services”). In September 2009, the financial controller of Swan Services signed a credit application. Amongst other things, the credit application provided for 30 days’ credit to be afforded to Swan Services. The credit application also included a statement that the supply of goods was governed by Central Cleaning’s ‘Standard Terms and Conditions’. Thereafter, from time to time Central Cleaning supplied Swan Services with cleaning equipment and products. Printed at the bottom of the relevant invoices is a retention of title ‘condition of sale’. It stated that the goods the subject of the particular invoice remained the property of Central Cleaning until the whole of the purchase price had been paid by Swan Services in full for those goods.

Swan Services is now in liquidation. Central Cleaning has claimed the return of the cleaning equipment which it supplied to Swan Services.[1] The Liquidators[2] have rejected that claim on the basis that the cleaning equipment has vested in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] VSC 61
Decision Date: 7 March 2014

CaseChat Overview and Summary

Central Cleaning Supplies (Aust) Pty Ltd sought the return of cleaning equipment that had been sold to Elkerton, a company that had since gone into liquidation. The liquidators had rejected the claim, asserting that the equipment remained the property of Central Cleaning Supplies under a retention of title arrangement. The matter was brought before the court to determine whether the liquidators' decision was correct.

The central issue before the court was whether the retention of title arrangement was protected under the transitional provisions of the Personal Property Securities Act 2009 (Cth). Specifically, the court had to decide if the retention of title arrangement was a transitional security agreement in force before 30 January 2012, which would have entitled Central Cleaning Supplies to retain the equipment despite Elkerton's liquidation.

The court examined the credit application completed by Elkerton and the conditions of sale included in the invoices. While the credit application included a reference to the Standard Terms and Conditions, which in turn referred to the retention of title clause, this did not suffice to incorporate the condition into the credit application. Each separate contract of supply, post-30 January 2012, included the Condition of Sale, but this meant that the transitional provisions did not apply. Consequently, the court upheld the liquidators' decision, confirming that the equipment remained the property of the liquidators.

The court's decision was based on the specific timing of when the retention of title clause was incorporated into the contracts. As the clause was not part of the credit application but was included in separate contracts after 30 January 2012, the transitional provisions of the Personal Property Securities Act did not apply. The court's ruling was grounded in sections 322(1), 307, and 308(b) of the Act, which detail the criteria for transitional security agreements and their applicability. The liquidators' decision to reject the claim for the return of the cleaning equipment was thus confirmed, and Central Cleaning Supplies' appeal was dismissed.

Orders