De Bourbel Pty Ltd (in Liq) v Distilleria Pty Ltd

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
DE BOURBEL PTY LTD (IN LIQ) v DISTILLERIA PTY LTD & ANOR
[2023] SASC 88
Judgment of the Honourable Justice Stein
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - CONSTRUCTION AND INTERPRETATION
LANDLORD AND TENANT - LEASES AND TENANCY AGREEMENTS - FORMAL REQUIREMENTS - NECESSITY FOR WRITING
LANDLORD AND TENANT - RENT - BREACH OF COVENANT TO PAY - DISTRESS FOR RENT
PERSONAL PROPERTY - OWNERSHIP AND POSSESSION
PERSONAL PROPERTY - OTHER CASES AND MATTERS
TORTS - INTERFERENCE WITH PROPERTY - INTERFERENCE WITH GOODS - CONVERSION AND DETINUE - CONVERSION
CORPORATIONS - MANAGEMENT AND ADMINISTRATION - DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION - FIDUCIARY AND RELATED STATUTORY DUTIES - DUTIES INVOLVING CONFLICTS OF INTEREST
DAMAGES - ASSESSMENT OF DAMAGES IN TORT - EVIDENCE
CORPORATIONS - MANAGEMENT AND ADMINISTRATION - DUTIES AND LIABILITIES OF OFFICERS OF CORPORATION - FIDUCIARY AND RELATED STATUTORY DUTIES - REMEDIES AND PENALTIES FOR BREACH OF DUTY - COMPENSATION
In 2018, discussions between Mr Christopher Rochfort and Mr Giuliano Ursini resulted in the purchase of a property at Hindmarsh Valley and the incorporation of the applicant to conduct a whisky distillery business. A distillery was constructed, equipment purchased and the applicant commenced operating the business from the property owned by the first respondent. The first respondent, or entities associated with the second respondent, paid for the purchase of the property, purchase of equipment and construction of the distillery. The second respondent was a director of both the applicant and first respondent. No amount of rent or occupation fee was ever paid by the applicant for the occupation of the property. The first respondent purported to execute a warrant of distraint for unpaid rent. The applicant was evicted from the property. The applicant was placed into voluntary liquidation.
The applicant in liquidation brought three principal claims against the respondents:
1.A claim against the first respondent for unlawful distraint.
2.A claim against the first and second respondent for conversion of goods including barrels of whisky containing whisky purchased by Private Barrel Owners (PBOs).
3.A claim against the second respondent for breaches of director’s duties under the Corporations Act 2001 (Cth).

At trial, the applicant asserted there were only ever in principle discussions, there was no contract, the parties never agreed a formal written lease and the applicant occupied the property pursuant to a license. The applicant contended that if there was an oral lease or occupancy agreement, it was a term that rent was not payable until the applicant’s business was profitable, the first respondent did not have a right to levy rent or a fee for occupancy and the rent levied was not in an agreed amount. The applicant asserted it owned plant and equipment but that if it did not, the plant and equipment vested in the applicant on its insolvency pursuant to the Personal Property Securities Act 2009 (Cth). The applicant contended that the second respondent breached directors’ duties owed to it in that there was a conflict between the second respondent’s duties as director of the applicant and his duties as a director of the first respondent, and he gave preferential treatment to the first respondent in taking a number of steps by which he engineered a position contrary to the verbal agreement he made as director of the applicant.
The respondents denied all of the claims. They contended that the parties agreed all the necessary matters for an enforceable lease, including the quantum of the rent by reference to a formula. They contended there was a lease under the Retail and Commercial Leases Act 1995 (SA), rent was due and owing at the time of the distraint and the distraint was lawful. The first respondent asserted it owned the plant and equipment and denied that the equipment vested in the applicant on its liquidation. The respondents denied the PBO barrels vested in the applicant on its liquidation and denied conversion of any goods. The second respondent denied any breaches of his duties to the applicant and denied that any loss flowed from the alleged breaches.
Held:
1.There was binding oral agreement which contained the essential terms required for a lease. The terms included agreement for payment of rent at 10 percent of the capital expenditure incurred in purchasing the land, constructing the distillery and purchasing the plant and equipment.
2.There was no written, executed lease capable of conveying a leasehold interest pursuant to the provisions of the Law of Property Act 1936 (SA).
3.While the applicant initially entered into occupation of the property pursuant to a lease under the Retail and Commercial Leases Act 1995 (SA), by operation of the Retail and Commercial Leases Regulations 2010 (SA), the Act ceased to apply on 25 July 2019. Thereafter, and at the date the warrant of distraint was executed, the applicant’s interest was an interest at will.
4.The purported distraint was unlawful.
5.The proceeds of the sale by public auction of property owned by the applicant represent the value of that property.
6.The applicant failed to establish the value of the applicant’s barrels of whisky.
7.Further submissions required in relation to other property owned by the applicant.
8.At the date of the unlawful distraint, the first respondent owned the plant and equipment.
9.The plant and equipment which constituted personal property vested in the applicant on liquidation pursuant to the Personal Property Securities Act 2009 (Cth). Certain manufacturing distillery equipment which was affixed to the Property was not proved to constitute personal property within that Act.
10.The PBO barrel whisky did not vest in the applicant on liquidation pursuant to the Personal Property Securities Act 2009 (Cth).
11.The applicant did not establish its claim of conversion of the ADC equipment.
12.The applicant did not establish its pleaded case of breach of director’s duties and/or that it suffered any loss resulting from the alleged breaches.
13.Further submissions required from the parties concerning the relief sought.

Retail and Commercial Leases Act 1995 (SA) ss 3(1), 4, 5, 6, 11, 12, 68; Personal Property Securities Act 2009 (Cth) ss 8, 10, 12, 13, 20, 21, 24, 123, 267, 269, 296; Corporations Act 2001 (Cth) ss 180, 181, 182, 183, 513B, 553, 553C, 556, 588FL, 597(14), 1317E, 1317H; Uniform Civil Rules 2020 (SA); Law of Property Act 1936 (SA) ss 7, 28, 29, 30, 31; Retail and Commercial Leases Regulations 2010 (SA) reg 4(2)(e); Retail and Commercial Leases (Miscellaneous) Amendment Act 2019 (SA); Retail Leases Act 1994 (NSW) s 8; Legislation Interpretation Act 2021 (SA) ss 3, 19; Landlord and Tenant Act 1936 (SA) ss 10, 12, 14, 16, 17, 22, 33, 34, 37; Real Property Act 1886 (SA) s 125(a); Residential Tenancies Act 1995 (SA) s 60; Evidence Act 1929 (SA) s 53; Magistrates Act 1983 (SA) s 22; Judicial Administration (Auxiliary Appointments and Powers) Act 1988 (SA) s 5(1), referred to.
Evans v Braddock [2015] NSWSC 249; Masters v Cameron (1954) 91 CLR 353; Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622; John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43; Australian Broadcasting Corporation v XIVth Commonwealth Games (1988) 18 NSWLR 540; Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; DW Fox Tucker Pty Ltd v Morgan [2023] SASCA 11; Darzi Group Pty Ltd v Nolde Pty Ltd (2019) 100 NSWLR 394; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193; Profile Events Pty Ltd v West Beach Trust [2011] SASCFC 1; NZI Insurance Australia Ltd v Baryzcka (2003) 85 SASR 497; Harvey v Pratt [1965] 2 All ER 786; Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; Apperly v Federal Commissioner of Land Tax (1914) 17 CLR 535; Malavazos v Govcorp Finance Pty Ltd [2022] SASC 44; Abjornson v Urban Newspapers Pty Ltd [1989] WAR 191; Moore v Dimond (1929) 43 CLR 105; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 157 CLR 17; Turner v York Motors Proprietary Limited (1951) 85 CLR 55; Hosanna Excelsis One Universal Church Inc v Pastina Pty Ltd (2020) 136 SASR 571; SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; Manly Council v Malouf (2004) 61 NSWLR 394; R v Kearney; Ex parte Jurlama (1984) 158 CLR 426; Darzi Group Pty Ltd v Nolde Pty Ltd [2019] NSWSC 335; Hamilton v Whitehead (1988) 166 CLR 121; Diakou Nominees Pty Ltd v Gouger Street Pty Ltd [2017] SASC 72; Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in liq) (rec and mgr apptd) (2017) 52 WAR 90; Barker v The Queen (1983) 153 CLR 338; Attorney-General (NSW) v Brewery Employees Union of New South Wales (1908) 6 CLR 469; Re News Corp Ltd (1987) 15 FCR 227; Mendes v Commissioner of Probate Duties (Vic) (1967) 122 CLR 152; Goodwin v Ron Heath Tyre Service (SA) Pty Ltd (1999) 74 SASR 508; Asian Pacific Building Corp Pty Ltd v Sharon-Lee Holdings Pty Ltd [2013] VSC 11; Turner v Kostoglou (2003) 227 LSJS 45; Cheapside Land Development Co Ltd v Messels Service Co [1978] AC 904; Ex Parte Voisey (1882) 21 ChD 442; Greater London Council v Connolly [1970] 2 QB 100; Glynn v Thomas (1856) 156 ER 1085; Sazzi (SA) Pty Ltd v Chang [2013] SADC 178; Hemer Pty Ltd v Benni [2011] SASCFC 35; Turner v Kostoglou [2009] SASC 204; Angas Law Services Pty Ltd (in liq) v Carabelas (2005) 226 CLR 507; Hobbs v Petersham Transport Co Pty Ltd (1971) 124 CLR 220; Bredenkamp v Gas Sensing Technology Corp, in the matter of Welldog Pty Ltd (in liq) (recs and mgrs apptd) [2017] FCA 1065; WD & HO Wills (Aust) Ltd v State Rail Authority (1998) 43 NSWLR 338; Forge Group Pty Ltd (in liq) v General Electric International Inc (2016) 305 FLR 101; David Morris Fine Cars Ltd v North Sky Trading Inc [1996] 7 WWR 332; Rabobank New Zealand Ltd v McAnulty [2011] 3 NZLR 192; Agripower Barraba Pty Ltd v Blomfield (2015) 317 ALR 202; National Australia Bank Ltd v Blacker (2000) 104 FCR 288; Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700; Air Liquide New Zealand Ltd v Supagas 2009 Ltd [2012] NZHC 2583; Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88; Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; Penfold Wines Pty Ltd v Elliott (1946) 74 CLR 204; Caxton Publishing Co Ltd v Sutherland Publishing Co [1939] AC 178; Chabbra Corporation Pte Ltd v Jag Shakti (Owners) [1986] 1 AC 337; Costello v Chief Constable of Derbyshire Constabulary [2001] 3 All ER 150; Flowfill Packaging Machines Pty Ltd v Fytore Pty Ltd (1993) Aust Torts Reports 81-244; Hospital Products Ltd v United States Surgical Corp (1984) 156 CLR 41; Australian Securities and Investments Commission v Adler (2002) 168 FLR 253; R v Byrnes & Hopwood (1995) 183 CLR 501; Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; Slea Pty Ltd v Connective Services Pty Ltd (No 9) [2022] VSC 136; Macks v Viscariello (2017) 130 SASR 1; Macks v Viscariello (2017) 130 SASR 1; The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1; Re Hot Frog Pty Ltd [2022] NSWSC 6 [2022] NSWSC 6; Northside Developments Pty Ltd v Registrar-General (1990) 170 CLR 146; Streeter v Western Areas Exploration Pty Ltd (No 2) (2011) 278 ALR 291; Links Golf Tasmania Pty Ltd v Sattler (2012) 213 FCR 1; Canberra Residential Developments Pty Ltd v Brendas (2010) 188 FCR 140; Chan v Zacharia (1984) 154 CLR 178; Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165; R v Byrnes (1995) 183 CLR 501; Australian Careers Institute Pty Ltd v Australian Institute of Fitness Pty Ltd (2016) 340 ALR 580; Howard v Commissioner of Taxation (2014) 253 CLR 83; Barclay Mowlem Construction Ltd v Dampier Port Authority (2006) 33 WAR 82; KTC v David [2022] FCAFC 60; Chubb Cash Ltd v John Crilley & Son (1983) 2 All ER 294; Ferrari Investment (Townsville) Pty Ltd (in liq) v Ferrari [2000] 2 QD R 359; Mordecai v Mordecai (1988) 12 NSWLR 58; Southern Real Estate Pty Ltd v Dellow (2003) 87 SASR 1; Jones v Dunkel (1959) 101 CLR 298; Agricultural Land Management Ltd v Jackson (2014) 48 WAR 1; Adler v ASIC (2003) 179 FLR 1; Wellnora Pty Ltd v Florentino (2008) 66 ACSR 229; Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185; Johnson v Perez (1988)166 CLR 351; Furness v Adrium Industries Pty Ltd [1996] 1 VR 668; Forston v Commonwealth Bank (2008) 100 SASR 162; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; Giorginis v Kastrati (1988) 49 SASR 371; Nanosecond Corporation Pty Ltd v Glan Carron Pty Ltd (No 2) [2018] SASC 188; Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; Gorski v Miller (1993) 174 LSJS 251, considered.

DE BOURBEL PTY LTD (IN LIQ) v DISTILLERIA PTY LTD & ANOR
[2023] SASC 88
Civil
STEIN J.
Contents
SECTION A – INTRODUCTION
Overview
Issues in the trial
Overview of De Bourbel’s pleaded case
Overview of the respondents’ pleaded case
Course of the trial
Observations of witnesses
Mr Christopher Rochfort
Mr Lachlan Rochfort
Mr Robert Naudi
Mr Mark Tonkin
Mr Giuliano Ursini
Mr Dario Nazzari
Mr Danny Galanti
Ms Thao Nguyen
Mr William Eglinton
Affidavits of Mr Jamie Codling and Ms Terese Allen
Summary
Background and commencement of discussions
Purchase of land, incorporation of entities and construction activities
SECTION B – NATURE OF OCCUPATION OF PROPERTY
Relevant principles in relation to agreement
When are parties bound?
Objective assessment
Relevance of post-contract conduct
Evidence about discussions and what, if anything, was agreed
Documentary evidence
Evidence of Mr Christopher Rochfort
Evidence of Mr Giuliano Ursini
Evidence of Mr Lachlan Rochfort
Evidence of Mr Danny Galanti
Evidence of Ms Thao Nguyen
Evidence of Mr Dario Nazzari
Evidence of Mr Robert Naudi
Findings in relation to the discussions between Christopher and Giuliano
Did the parties intend to be bound?
What was agreed in relation to the occupation of the Property?
Was rent agreed and in what quantum?
When did the rent obligation start?
What was the term of occupancy?
Was rent payable at March 2020?
Was plant and equipment included in rent?
Was Giuliano obliged to continue to fund De Bourbel?
Nature of De Bourbel’s occupation of the Property
Minimum essential terms for lease
Statutory requirement for writing
Were the essential terms of a lease agreed?
Retail and Commercial Leases Act - relevant provisions
Was there an RCLA lease?
Did the RCLA apply?
Regulations

Conclusion
SECTION C – THE DISTRAINT
Evidence in relation to issue of rent invoices and distraint
Documentary evidence
Evidence of Mr Lachlan Rochfort
Evidence of Mr Giuliano Ursini
Evidence of Mr Christopher Rochfort
Evidence of Mr Danny Galanti
Evidence of Mr William Eglinton
Evidence of Mr Jamie Codling
Evidence of Mr Robert Naudi
Factual findings relevant to issue of rent invoices, demand and distraint
Relevant principles - distraint
Was the distraint lawful?
Certainty of quantum of rent
Notice to remedy default
SECTION D – OWNERSHIP AND POSSESSION OF ASSETS
Basis for De Bourbel’s claims in relation to plant and equipment
Plant and equipment
Accounting records in relation to plant and equipment
Evidence of Mr Dario Nazzari
Evidence of Mr Giuliano Ursini
Evidence of Mr Danny Galanti
Evidence of Mr Lachlan Rochfort
Evidence of Mr Christopher Rochfort
Evidence of Mr Robert Naudi
Findings in relation to accounting records
Conclusions in relation to accounting records
Who owned the plant and equipment?
PBO barrels
ADC equipment
SECTION E – POTENTIAL APPLICATION AND IMPACT OF THE PPSA
Relevant provisions of the PPSA
Relevant authorities
Plant and equipment
Submissions
Personal property or fixture?
Regularly engaged in the business of bailing goods?
Enforceability
PBO barrels
SECTION F – CONVERSION
Relevant principles
PBO barrels
Relevant correspondence
Evidence of Mr Giuliano Ursini
Evidence of Mr Robert Naudi
Submissions
Findings
Analysis
ADC equipment
SECTION G – DIRECTOR’S DUTIES
Pleaded case
Evidence
Evidence of Mr Giuliano Ursini
Evidence of Mr Lachlan Rochfort
Evidence of Mr Danny Galanti
De Bourbel’s submissions
Respondents’ submissions
Findings concerning pleaded case
Relevant principles
Acts of Giuliano as director of De Bourbel?
Conclusions concerning pleaded case
Pleadings objections
Findings concerning issues exceeding pleaded case
SECTION H – LOSS
$3 million conversation
Evidence of Mr Lachlan Rochfort
Evidence of Mr Giuliano Ursini
Evidence of Mr Danny Galanti
Evidence of Mr Christopher Rochfort
Submissions in relation to $3 million conversation
Findings in relation to $3 million conversation
Evidence of Mr Robert Naudi
Hilco Global report
Evidence of Mr Mark Tonkin
Circumstances of production of Hilco Global report
Continued use versus liquidation basis for valuation
Date of report
Breaches of director’s duties - loss
Submissions
Quantification methodology
Causation
Liquidation fees and expenses
Conversion - general principles concerning assessment of damages
PBO barrels
ADC equipment
Unlawful distraint
Property of De Bourbel other than whisky
Whisky
Double damages
Plant and equipment
Set off
Remedies
Orders
SECTION A – INTRODUCTION
Overview

Prior to 2018, Mr Christopher Rochfort was involved in conducting a whisky distillery operation through an entity called McLaren Vale Distillery Pty Ltd, which I will refer to as “MVD”. MVD ran a barrel purchase program through which individuals could purchase whisky in barrels on specified terms. Mr Giuliano Ursini met Christopher Rochfort and then purchased some MVD barrels of whisky. After difficulties arose in relation to MVD’s operations, Christopher Rochfort and Giuliano Ursini discussed commencing a whisky distillery business to distil, bottle and sell whisky under the name “Rochfort Distillery”. In 2018, land at Hindmarsh Valley (“Property”) was purchased, entities were incorporated, a distillery was built on the Property and production of Rochfort Distillery whisky commenced. The first respondent, which I will refer to as “Distilleria”, became the owner of the Property. The applicant, which I will refer to as “De Bourbel”, was incorporated to conduct the distillery business and became the occupier of the Property. The second respondent, Giuliano Ursini, was a director of both De Bourbel and Distilleria. Giuliano Ursini or entities associated with him funded the purchase of the Property and equipment, construction of the distillery and the commencement of the distillery operations. Two of Christopher Rochfort’s sons, Lachlan and John Rochfort, were involved in the venture, including in constructing the distillery and distilling and selling whisky. The arrangements and understanding upon which the whisky distillery business commenced and proceeded were never formally documented. A written lease was never finalised and executed. Unfortunately, after commencing operations, the relationship between the individuals involved in the business broke down. The deterioration in the relationship started in 2019. In light of his significant expenditure, Giuliano Ursini expressed concerns about a lack of whisky sales and revenue. In early 2020, after the relationship worsened, invoices for rent and a statement of account and thereafter a notice to remedy default were rendered to De Bourbel by or on behalf of Distilleria. De Bourbel denied rent was payable and did not pay any amount said to be owing. An agent on behalf of Distilleria carried out a distraint for unpaid rent. De Bourbel was evicted from the Property. Shortly after, De Bourbel was placed into voluntary liquidation. A public auction to sell assets the subject of the distraint did not proceed as the sale was prevented by injunction orders obtained by the liquidator of De Bourbel. The liquidator later sold at public auction some bottled spirits and minor items. In 2021, De Bourbel brought proceedings against the respondents claiming that the distraint was unlawful, assets of De Bourbel were converted and Giuliano Ursini breached his duties as a director of De Bourbel.
Issues in the trial

De Bourbel’s claim raises the following main issues:
1.What, if any, agreement was reached by Christopher Rochfort and Giuliano Ursini in relation to the occupation of the Property and was any such agreement binding?
2.What was the nature of the occupation by De Bourbel of the Property?
3.Was there an agreement for the payment of rent or a fee for occupation and, if so, what was the agreed amount?
4.Was there a lease pursuant to the provisions of the Retail and Commercial Leases Act 1995 (SA) (“RCLA”)?
5.Was the distraint unlawful?
6.Which entity owned plant and equipment?
7.Was there conversion of certain goods?
8.What was the basis on which De Bourbel held certain barrels of whisky which were the subject of barrel purchase programs?
9.Did the Personal Property Securities Act 2009 (Cth) (“PPSA”) apply to the plant and equipment and barrels of whisky, and if so, with what effect?
10.Did Giuliano Ursini breach duties owed by him as a director of De Bourbel?
11.What losses were suffered by De Bourbel if any of the causes of action are proved?
For ease of reference and without any disrespect, I will refer to Mr Christopher Rochfort, Mr Lachlan Rochfort, Mr John Rochfort and Mr Giuliano Ursini by their first names.
In order to assist in understanding the causes of action and issues which arose in the trial, I commence with an overview of the pleadings.
Overview of De Bourbel’s pleaded case
De Bourbel pleaded that the whisky business was commenced following a verbal agreement between Giuliano and the proposed directors of De Bourbel, being Christopher and Lachlan. The essence of the pleaded verbal agreement was that Giuliano would provide the majority of the funding to commence the business including purchasing premises, funding the cost to construct a building and enabling the business to trade profitably. An aspect of the pleaded verbal agreement was that some funding would be procured through a barrel purchase program to be run by De Bourbel and also by the transfer by private barrel owners (“PBOs”) of barrels containing whisky from MVD (“MVD PBO barrels”) to Rochfort Distillery.
De Bourbel pleaded that an aspect of the verbal agreement was that Giuliano or a related entity would provide funding to acquire plant and equipment by way of a loan to De Bourbel or, alternatively, would acquire the plant and equipment and lease it to De Bourbel for a fee or provide plant and equipment as required by De Bourbel. Christopher, Lachlan and John would provide the liquor production and sales expertise to run the business.
De Bourbel’s primary case on occupation of the land was that the premises were subject to a licence to occupy implied by conduct or verbal agreement, or, alternatively, by a verbal lease pursuant to the verbal agreement. De Bourbel pleaded the terms of the licence, or lease, were that De Bourbel would pay an occupation fee, or rent, of 10 percent of the capital expenditure, being the cost of the purchase of the premises and the cost of the building but excluding fit out, and the fee was payable only once De Bourbel could afford to pay. De Bourbel pleaded that in about April 2018, it was discussed and anticipated that De Bourbel would trade profitably by November 2018, however, De Bourbel had not paid any amount for occupancy and never was in a position where it could afford to do so.
De Bourbel pleaded that the issue by Distilleria of invoices for rent, a statement of account for rent and a notice to remedy default were in breach of the terms of the licence or lease. De Bourbel pleaded that the distraint by Distilleria was unlawful. It pleaded that in circumstances in which the licence was terminated or the lease revoked, the business had no means of trading, and if rent or an occupancy fee was properly due and payable, De Bourbel was insolvent and it was placed into voluntary liquidation on 27 March 2020.
De Bourbel’s primary case on plant and equipment was that they were assets of De Bourbel bought with funds loaned by Giuliano in accordance with the verbal agreement. De Bourbel pleaded that Giuliano unilaterally instructed accountants to effect a paper transfer of plant and equipment from De Bourbel to Distilleria which was void as it was done without authority. Alternatively, De Bourbel pleaded plant and equipment was leased from Distilleria, in which case it was the subject of an unperfected security interest and vested in De Bourbel under the PPSA.
De Bourbel contended that PBO barrels vested in De Bourbel immediately prior to liquidation under the PPSA and, despite warning by the liquidator, Distilleria released some PBO barrels to PBOs which amounted to conversion. De Bourbel pleaded that Giuliano and Distilleria were put on notice that dealing with plant and equipment, PBO barrels or distrained assets which the liquidator asserted vested in De Bourbel amounted to conversion.
De Bourbel pleaded that Giuliano breached his duties as a director of De Bourbel. The precise terms of the plea assumed some significance in the trial and I address it in greater detail in Section G below.
Overview of the respondents’ pleaded case
The respondents asserted that discussions about the arrangements occurred between Christopher, John and Giuliano in their capacities as future shareholders of entities not yet incorporated. The arrangements were described in a series of documents and the essential terms were agreed.
On the respondents’ case, the agreement was that Giuliano would purchase the land for developing a distillery, purchase plant and equipment, pay for the construction of the distillery and infrastructure and pay sundry costs prior to De Bourbel commencing trading. Distilleria was to become the landlord, De Bourbel would be the tenant and the Rochforts would run the distillery business. The respondents pleaded that Distilleria owned the Property and the plant and equipment which would be leased to De Bourbel. The rent to be paid was 10 percent of money spent on the Property, construction of the distillery (including improvements), plant and equipment and sundry costs prior to commencement of trade. De Bourbel would have an option after eight years to purchase the Property, improvements and plant and equipment from Distilleria. The respondents denied it was verbally agreed that the purchase of the Property, plant and equipment and construction of the distillery was to enable the business to trade profitably.
On the respondents’ case, while rent was payable, Distilleria granted De Bourbel an unenforceable indulgence in respect of payment of rent which otherwise was payable on a monthly basis. On the respondents’ case, Giuliano expected and was promised significant sales from the outset without which he would not have made the investment. While denying the assertion that rent was only payable when De Bourbel was profitable, the respondents pleaded that any such promise was conditional upon Christopher, Lachlan and John competently and adequately operating the distillery and running the business, which they failed to do.
The respondents pleaded there was a lease under the RCLA or, in the alternative, an equitable lease.
The respondents pleaded that the accounting records did not properly record the loan and asset position of De Bourbel and the accounting records were corrected by the accountant with the knowledge of Giuliano, Lachlan, Christopher and John.
The respondents asserted they were entitled to issue the statements of rent, the notice to remedy default and to distrain for unpaid rent.
The respondents disputed De Bourbel’s case on breach by Giuliano of his duties as director on a number of grounds including that pleaded acts were acts of Distilleria, not Giuliano. Further, the respondents asserted no loss was caused because De Bourbel was insolvent at the time of the impugned acts.
The respondents denied that any assets vested in De Bourbel immediately prior to liquidation and pleaded that some plant and equipment constituted fixtures and there was no deemed security interest under the PPSA.
Course of the trial
The trial of these proceedings took place over several weeks. Lay witnesses gave their evidence in chief by way of affidavit with oral evidence largely confined to cross-examination.
An expert report was produced in circumstances which I address below in Section H.
The parties filed written closing submissions which they supplemented orally.
A number of volumes of documents were tendered. I received some subject to determination of issues of admissibility. I thereafter concluded a number of documents were not admissible as they were properly subject to settlement privilege.[1]
[1] Ruling delivered on 26 April 2022 (FDN 103).
De Bourbel tendered signed transcripts of public examinations of Giuliano pursuant to s 597(14) of the Corporations Act2001 (Cth) (“Corporations Act”) which enables their use in evidence in legal proceedings against the person.
Observations of witnesses
Prior to setting out a high level and general summary of the nature of the evidence given by each witness and making some high level observations about each of the witnesses, I refer to the following statements which have been made in the context of the assessment by a trial judge of issues of credit and demeanour.
In Evans v Braddock,[2] Hallen J said:
The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities…
A court, in cases involving events which occurred long before the litigation, usually prefers to rely upon contemporaneous, or near contemporaneous, documents, which will often provide valuable and, usually, more revealing, information than what may be flawed attempts at recollection of those facts by persons with an interest in the outcome of the litigation… Greater weight is usually accorded to such documents, as often they provide a safer repository of reliable fact, particularly when it is clear that they have been prepared by a person with no reason to misstate those facts in the documents and where there is no suggestion that the documents are other than genuine…
[2] [2015] NSWSC 249 at [73]-[74].
Justice Hallen continued as follows:[3]
In this regard, I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd’s Rep 403, at 431:
“Credibility involves wider problems than mere ‘demeanour’ which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part.”
[3] Evans v Braddock [2015] NSWSC 249 at [75].
I have been guided by these statements in assessing the evidence. I recognise there are risks in making overarching findings about credibility of a witness and that if evidence in respect of a particular matter is rejected, it does not necessarily mean all of the evidence of a witness will not be accepted.
Mr Christopher Rochfort
Christopher conducted the discussions with Giuliano in relation to the establishment of the venture and was involved in aspects of the conduct of the business and in the breakdown of the relationship between the Rochfort family and Giuliano.
During evidence, Christopher was firm to the point of being dogmatic about his recollection of what was characterised as the in principle agreement reached with Giuliano. He maintained a resolute position on his version of the agreement even when documents were put to him which were apparently inconsistent with his understanding of the agreement and when, in cross‑examination, suggestions were put to him that his version of the agreement lacked a logical basis. Christopher maintained his unshakable view of his recollection of what was agreed despite being unable to recall many details, such as when and where certain conversations took place. During his evidence Christopher stated that his memory was very poor, was “shocking” and was not what it used to be including by reason of his age and health.[4] Despite these references to his poor memory, Christopher’s affidavit deposed to details of precise words said in conversations with Giuliano. In cross-examination, Christopher conceded that some matters referred to in his affidavit were not strictly correct and matters stated in the affidavit were the gist of conversations rather than the precise words used.
[4] T377.18; T378.1-2.
Christopher was at times defensive and evasive. Not infrequently, he failed directly to answer questions put to him. He had a tendency to reiterate his version of the agreement rather than answer a direct question and at times answered questions only after being asked several times.
On a number of occasions Christopher asserted that a document, such as minutes of meetings of directors and emails from Giuliano, misdescribed what was said or was not accurate. Nevertheless, he accepted that if documents had not accurately recorded relevant matters, he was obliged to correct any misstatement.At times, when taken to documents containing references which were inconsistent with his recollection of the discussions, such as minutes of a meeting of directors on 26 October 2018, Christopher said he could not recall relevant details or could not recall receiving documents or expressed confusion, perhaps because of the lapse of time. Christopher was unable to explain in any satisfactory way his failure to express contemporaneously his concerns with asserted misstatements in documents, including the signed minutes of a meeting of directors on 26 October 2018. He was similarly unable to explain satisfactorily his contemporaneous agreement with concerns expressed by Giuliano in writing, such as in Giuliano’s “Watershed Moment” email.[5] In Christopher’s email to John and Lachlan on 21 June 2019, Christopher stated his agreement with matters raised by Giuliano.[6] Given at the time Christopher either accepted or did not contradict statements in Giuliano’s emails, his maintenance of his version of the discussions was unconvincing.
[5] Exhibit A1 – Tender Book A at 581-584.
[6] Exhibit A1 – Tender Book A at 581.
I did not form the view that Christopher was being untruthful in his evidence. Rather, I considered he had a belief about his recollection of the discussions, whether accurate or not, which perhaps was reinforced and became more fixed over time, whether through unconscious bias, discussion with others, or emotion, such that he could not entertain any alternative suggestion. Given the references by Christopher to a lack of recollection and to his poor memory, his inability to recall relevant and important details and his inability to provide convincing explanations for his failures at the time documents were created to correct what he considered to be misstatements or misdescriptions, I have concluded I cannot rely on him as a reliable narrator. That conclusion extends to his evidence of the discussions and the intended terms of the agreement.
I have therefore approached Christopher’s evidence with some caution. In making findings of fact, I have considered the consistency of evidence with, and been guided primarily by, contemporaneously created documents.
Mr Lachlan Rochfort
Lachlan appeared quite nervous; initially he had noticeably shaky hands, he rubbed his face and his chin frequently and licked his lips. At times he was defensive and argumentative and at times appeared visibly angry. At points in his evidence his anger towards Giuliano was palpable, such as when he referred to the company just being on the verge of being able to pay its own way when they were evicted from the Property.
Lachlan’s evidence in relation to his involvement in work on the Property, the construction and distilling was reliable and convincing. When it came to matters relevant to the nature of the arrangement with Giuliano and its implications, Lachlan’s manner changed. In contrast to direct answers given about matters such as the construction of the shed, when asked about some matters relevant to the arrangement, such as the accounts, Lachlan said he did not recall. At times I was left uncertain whether Lachlan was genuinely grappling with questions asked of him and whether his evidence was based on his own recollection or on a review of documents. There were some inconsistencies in his evidence, for example, he confidently said he reviewed certain documents (such as the accounting records) then later said he could not recall.
On a number of occasions, in an argumentative and non-responsive manner, Lachlan referred to his understanding of the agreement struck between Christopher and Giuliano. He was very definite, to the point of fixation, on what was agreed, despite the fact he was not involved in negotiating the agreement and despite his inability to recall other important details. I was at times concerned that the degree of attachment he, and his father, had to the terms of the discussions left him unable to contemplate any other reasonable possibility, resulting in evasive or argumentative responses.
Lachlan was cross-examined about numerous entries for rent in the financial records which were sent to him on about a monthly basis. He said he did not agree with the entries nor the amount for which rent was recorded and he described the rent as grossly excessive. He disputed agreeing it was okay for the entries to be made and said that he thought he spoke to his father about those entries. He accepted he did not voice his dispute with the entries and his explanation was that he was waiting to receive a shareholder agreement and lease agreement. Lachlan said he was talking to his father to discuss what they were going to do and he wanted to be properly educated about the law and was doing research. Lachlan vigorously denied he was simply making up these answers. His explanations were inherently implausible and lacked authenticity.
Lachlan was cross-examined about references in his affidavit to the financial records of the company. Lachlan said he remembered the relevant details when he swore the affidavit but when giving evidence he could not remember and he could not recall what he had been shown and what the details were. His answers were not convincing. It is not apparent why in a time lapse of approximately one month from swearing his affidavit to giving evidence, he could not recall significant details.

I therefore had concerns about the extent to which Lachlan’s evidence in relation to the issues directly or indirectly touching upon the subject matter of the discussions between Christopher and Giuliano, the payment of rent and the accounting records were reliable. I consider his evidence on such topics was more likely a product of subconscious reconstruction or exaggeration based on his beliefs about what was agreed and his emotional reaction to the consequences for his family of the eviction from the Property and the liquidation of De Bourbel rather than deliberate untruthfulness. I have therefore approached his evidence with some caution and again I have been guided primarily by contemporaneously created documents.
Mr Robert Naudi
Mr Robert Naudi is the liquidator of De Bourbel. His evidence primarily related to his quantification of asserted losses. He was direct and forthright in his evidence. Mr Naudi accepted he is not an expert in business valuation and could not give evidence about accepted methods of business valuation. He maintained his position in relation to his quantification of asserted losses. Mr Naudi was genuine in his view that the assessment methodology he employed to place a valuation on the company was legitimate. I have no reason to doubt Mr Naudi’s honesty or credibility. I address separately in Section H below the methods Mr Naudi employed to assess quantum.
Mr Mark Tonkin
Mr Mark Tonkin is a certified practicing valuer. In July 2020, Hilco Global APAC (“Hilco Global”) was retained by Mr Naudi to provide a valuation of assets to assist Mr Naudi in carrying out his duties under the Corporations Act. A valuation dated 20 July 2020 was prepared by Mr Tonkin and Mr Ben Roden (“Hilco Global report”). The valuation was prepared on two alternative bases, the first being fair market value in continued use and the other being a forced liquidation value. The respondents objected to the admission of the Hilco Global report. It was not prepared as an expert report in a form compliant with the Uniform Civil Rules 2020 (SA) (“UCR”) and was not provided to the respondents in an unredacted form until the first day of trial. After De Bourbel conceded the report was an expert report, De Bourbel applied for leave to obtain a supplementary report which I granted.[7] I set out further details of what transpired in relation to the Hilco Global report in Section H below.
[7] Ruling delivered on 22 April 2022 (FDN 102).
Mr Tonkin was direct and straightforward in the evidence he gave. He was clear when he was unable to recall matters and he made appropriate concessions. I accept his expertise and his independence. I accept his evidence was honest and credible. I address the questions which arise from the Hilco Global report in Section H below.
Mr Giuliano Ursini
De Bourbel submitted that Giuliano’s evidence was candid in some respects, which should be accepted, but that where inconsistent with other witnesses, must be approached with caution. De Bourbel contended that much of Giuliano’s evidence was self-serving. De Bourbel submitted that in assessing Giuliano’s evidence, the Court should place great weight on the clandestine and opportunistic manner in which Giuliano approached the distraint. There were aspects of the way in which Giuliano conducted matters, such as the secretive manner in which the distraint was conducted,[8] and the way he addressed correspondence from the liquidator, including emails concerning the movement of PBO barrels,[9] which are open to criticism. To the extent such criticisms are relevant to the pleaded causes of action, I address them in my findings. In assessing Giuliano’s credibility, I have considered Giuliano’s evidence about such matters, including his explanations which in some respects were unconvincing.
[8]    See Section C below.
[9]    See Section F below.
Giuliano appeared generally calm, assured and confident in giving evidence. Towards the end of his cross-examination, perhaps when he was tiring, he displayed brief signs of stress or possibly anger or frustration. Giuliano was careful in his responses. At times he answered questions briefly in ways that were not necessarily clear. Giuliano gave some evasive, argumentative or ambiguous answers, such as asking for definitions of words such as “possession” and “false” and saying his actions speak for themselves. There were some aspects of Giuliano’s evidence that were unsatisfactory, as they left me questioning whether he was attempting to avoid answering questions or tailoring his answers to accord with his case. However, Giuliano did answer some questions contrary to his interests, make some concessions and say when he could not recall. Giuliano’s evidence was in the main consistent with contemporaneous documents. Given his role, the inevitable conscious or unconscious bias towards his own position, and the matters to which I have referred above, I have scrutinised his evidence with care. In making findings I have been guided primarily by the consistency of the evidence with contemporaneous documents.
Mr Dario Nazzari
Mr Dario Nazzari is a Chartered Accountant. He has practiced since 1997 and been managing partner of UHY Haines Norton (“UHY”), a firm of Chartered Accountants, since 2014. Mr Nazzari provided accounting services to Giuliano personally as well as for five or six corporate entities associated with Giuliano. He answered questions directly and concisely and he was clear and forthright. I accept he has a retainer with Giuliano. Nevertheless, I had no reason to consider that retainer had influenced his evidence and I accept his evidence was honest and reliable.
Mr Danny Galanti
Mr Danny Galanti was appointed De Bourbel’s General Manager on 1 July 2019, reporting primarily to Giuliano. De Bourbel submitted that I should approach Mr Galanti’s evidence with considerable caution as he was a knowing participant in Giuliano’s plan to engage in a clandestine distraint.
Mr Galanti appeared somewhat nervous but gave direct and concise answers to questions. He appeared to have a generally good recall of events. It was apparent from his evidence there was a significant breakdown in relationships between Giuliano and the Rochfort family and between Mr Galanti and the Rochfort family. While I have accepted aspects of Mr Galanti’s evidence, I consider he downplayed the extent to which he was aligned with Giuliano and in his evidence placed a gloss on what occurred on the topic of the distraint. As I discuss below, by at least March 2020, Mr Galanti was firmly aligned with Giuliano. After De Bourbel was placed into liquidation, Mr Galanti became the general manager of Distilleria and now is the general manager of Cut Hill Wall Pty Ltd (“Cut Hill Wall”), an entity presently operating a distillery from the Property. I am mindful of the extent to which Mr Galanti’s relationship with the Rochfort family had deteriorated and of his ongoing employment relationship with Giuliano. I therefore have approached his evidence, particularly in relation to events in February and March 2020 concerning the distraint and the discussions he said he had with the Rochfort family members, with some caution. Again, I have relied primarily on contemporaneous documents.
Ms Thao Nguyen
Ms Nguyen was employed by Giuliano as a bookkeeper. She gave evidence concerning her bookkeeping services, the entries within the accounting records and a process whereby changes were made to the accounts. While Ms Nguyen was quietly spoken and appeared nervous, she answered questions directly, said when she could not remember and, on one occasion, corrected her evidence. She is employed by Giuliano. Nevertheless, that relationship did not cause me to doubt her evidence and I accept her evidence was honest and reliable.
Mr William Eglinton
Mr Eglinton is a licenced security and investigation agent. He was retained to conduct the distraint. He gave evidence about his retainer and the process of distraint. Mr Eglinton was independent of the parties. I accept his evidence was honest and credible.
Affidavits of Mr Jamie Codling and Ms Terese Allen
Mr Jamie Codling, managing director of Mason Gray Strange Valuations and Auctions (“Mason Gray Strange”), and Ms Terese Allen, a bookkeeper and administration assistant employed by Giuliano, were not required for cross-examination and I accept their affidavit evidence.
Summary
In making my findings, particularly in relation to the discussions between Christopher and Giuliano and the topics of what, if anything, was agreed, wherever possible I have considered the contemporaneous documents and paid close attention to the consistency or otherwise of the evidence with those documents. I have primarily relied on those documents wherever possible. I have taken into consideration the matters to which I have referred to above, including Christopher and Lachlan’s inability to adequately explain in a plausible way the differences between their accounts and the contemporaneous documents, the agreement in writing of Christopher and John with certain email correspondence sent by Giuliano and Giuliano’s self interest.
Background and commencement of discussions
In this part of my reasons, I set out a narrative of the factual findings I have made in relation to the background to, and commencement of, discussions between Christopher and Giuliano and the subsequent start of the whisky distilling venture. The relevant evidence on these matters was largely not in contest.
In about 2014, Christopher commenced the whisky distilling venture, MVD, with Mr Jock Harvey. Christopher agreed with Mr Harvey that MVD would rent a shed at 10 percent of the cost of construction of the shed and other buildings used by MVD. The cost of the shed fit out was paid for by MVD. MVD developed a barrel purchase program which allowed PBO purchasers to pay $5,000 to obtain title to 100 litres of whisky and which granted the PBOs various options when the whisky matured. PBOs could obtain a return through a guaranteed buy back price or exercise an option to receive a number of bottles of whisky.
Giuliano met Christopher and John in 2015 at a whisky presentation. Giuliano become one of the first PBOs of MVD by buying 10 barrels of whisky for $55,000. Thereafter, Christopher started to have informal discussions with Giuliano, including over lunches, during which Christopher discussed with Giuliano problems he was having with MVD. Christopher regarded Giuliano as a trusted advisor, mentor and a good friend.
Following discussions between Christopher and Giuliano, in order to assist MVD with cash flow issues it was experiencing, in December 2017, Giuliano bought some MVD plant and equipment for $35,000 on a leaseback basis over 12 months with a repurchase option. Giuliano also bought a further 12 MVD barrels for $66,000. A number of his friends also purchased barrels.
Purchase of land, incorporation of entities and construction activities
On 8 January 2018, Distilleria was registered. Giuliano was and still is the sole director, secretary and sole shareholder. Distilleria is the trustee of the Goldilocks Trust.
De Bourbel was incorporated on 31 January 2018 with Giuliano and Christopher as directors. The two shareholders, holding 50 percent each of the shares, were Bellfield (SA) Pty Ltd (“Bellfield”), representing the Rochforts’ shareholding, and Flavon Nominees Pty Ltd (“Flavon”), representing Giuliano’s shareholding. Each of Christopher, Lachlan, John and Mr Nicholas Rochfort are directors and shareholders of Bellfield. The directors of Flavon are Giuliano and Rosemary Ursini. Rosemary Ursini holds one fully paid ordinary share and Giuliano holds 10 fully paid ordinary shares in Flavon. Flavon is the trustee of the Dacro Trust.
Lachlan, John and Christopher determined which property was most suitable for the distillery. On 30 January 2018, Giuliano signed a contract for the purchase of the Property for $825,000 for the purpose of establishing the business. Settlement occurred on 20 April 2018.
Lachlan resigned as head distiller of MVD and, in about February 2018, commenced work, initially cleaning up the Property. Earthworks for building the distillery shed commenced on around 30 April 2018. Lachlan project managed the construction and built the fit out where his expertise allowed, including installing plant and equipment, except for plumbing and electrical services. Lachlan worked on renovating the cellar door and improving the Property.
Giuliano, through entities controlled by him, paid all the expenses associated with the construction. Capital works included improvements to an existing building as a cellar door; construction of infrastructure and a purpose built distillery building; purchase and installation of distilling equipment; earthworks; the upgrade and installation of plumbing and electrical services and the installation of water tanks and waste water systems.
From around 9 February 2018, Lachlan and John ordered various items such as stills, furniture and other equipment for the cellar door. Some invoices for purchases were issued to Distilleria, including for purchase of stills,[10] while other invoices were issued to Rochfort Distillery,[11] Lachlan and John.[12] Lachlan and John were then reimbursed for their expenditure.
[10] Exhibit A1 – Tender Book A at 25-28.
[11] Exhibit A1 – Tender Book A at 29-30.
[12] Exhibit A1 – Tender Book A at 34.
Christopher resigned as a director of De Bourbel and Lachlan was appointed a director on 19 March 2018. Christopher remained an advisor to Lachlan and he spoke to Lachlan about a variety of issues in relation to the business. Lachlan did not have much experience as a director and, until his appointment as director, did not play an active role in the management or finances of De Bourbel.
Construction of a distillery shed was completed in about October 2018, the distillery began operating and the cellar door was opened to the public shortly thereafter. Whisky production started in about November 2018.
Lachlan was operations manager and head distiller. Christopher worked in the cellar door and on the Property assisting John and Lachlan. John was responsible for sales, marketing, cellar door operations and hosting functions. Christopher was initially responsible for bookkeeping functions, day to day administrative tasks and for compiling and forwarding receipts to UHY.
Distilleria purchased the land for $887,243.23. The total amount spent on construction of the distillery buildings was approximately $597,000. The total amount spent on plant and equipment was approximately $450,000. The total amount spent on sundry expenses, such as wages incurred by De Bourbel, exceeded $130,000. The overall amount spent by Distilleria thus was in the order of $2,000,000.
SECTION B – NATURE OF OCCUPATION OF PROPERTY
The nature of De Bourbel’s occupation of the Property is relevant to the question whether or not the distraint in March 2020 was lawful. In order to address the basis of De Bourbel’s occupation of the Property, it is necessary first to determine what was discussed between Christopher and Giuliano, whether there was a binding agreement and, if so, what were its terms.
Before addressing the resolution of differences in the evidence concerning the discussions about establishing the business, I set out some principles relevant to determination of the intention of the parties.
Relevant principles in relation to agreement
When are parties bound?
In Masters v Cameron,[13] the High Court distinguished between three classifications of cases. Those classifications relate to when parties intend to be immediately bound, when parties are agreed on all terms, but intend to make performance of terms conditional on execution of a formal agreement, and when parties do not intend to be bound until a formal contract is executed. There is potentially a fourth classification, in which parties intend to be bound immediately by terms they have agreed, while expecting to make a further agreement in substitution for the binding agreement.[14] That question is not the same as, but is closely related to, the question whether the parties have reached agreement on all the essential terms that are required to create a contract.[15]
[13] (1954) 91 CLR 353.
[14] Baulkham Hills Private Hospital Pty Ltd v GR Securities Pty Ltd (1986) 40 NSWLR 622 at 628 per McLelland J; John R Keith Pty Ltd v Multiplex Constructions (NSW) Pty Ltd [2002] NSWSC 43.
[15] Australian Broadcasting Corporation v XIVth Commonwealth Games (1988) 18 NSWLR 540 at 548 per Gleeson CJ.
The essential question is whether the conduct of the parties, including what was or what was not said, and the evident commercial aims and expectations, reveals an agreement indicating an intention to be legally bound to the essential elements of a contract.[16]
[16] Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424 at [369] per Allsop J.
In Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd,[17] McHugh JA (with whom Hope and Mahoney JJA agreed) said:
[A] contract may be inferred from the acts and conduct of parties as well as or in the absence of their words… The question in this class of case is whether the conduct of the parties, viewed in the light of the surrounding circumstances shows a tacit understanding or agreement. The conduct of the parties, however, must be capable of proving all the essential elements of an express contract…Care must also be taken not to infer anterior promises from conduct which represents no more than an adjustment of their relationship in the light of changing circumstances.
…
Moreover, in an ongoing relationship, it is not always easy to point to the precise moment when the legal criteria of a contract have been fulfilled. Agreements concerning terms and conditions which might be too uncertain or too illusory to enforce at a particular time in the relationship may by reason of the parties’ subsequent conduct become sufficiently specific to give rise to legal rights and duties. In a dynamic commercial relationship new terms will be added or will supersede older terms. It is necessary therefore to look at the whole relationship and not only at what was said and done when the relationship was first formed.
[17] (1988) 5 BPR 11,110 at 11,117-11,118.
Objective assessment
In Ermogenous v Greek Orthodox Community of SA Inc,[18] Gaudron, McHugh, Hayne and Callinan JJ said:
Because the search for the 'intention to create contractual relations' requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) the circumstances which might properly be taken into account in deciding whether there was the relevant intention are so varied as to preclude the formation of any prescriptive rules. Although the word 'intention' is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.
[18] (2002) 209 CLR 95 at [25].
The rights and liabilities of parties are determined objectively, not by the subjective beliefs or understandings of the parties. The question is what each by words and conduct would have led a reasonable person in the position of the other to believe.[19] Usually, that requires consideration of the text of any written agreement and the surrounding circumstances known to the parties, and the purpose and object of the transaction.[20]
[19] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.
[20] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ.

Where there is a contract, the task of interpreting a commercial contract is approached on the assumption the parties intended to produce a commercial result and to avoid it making commercial nonsense.[21]
[21] DW Fox Tucker Pty Ltd v Morgan [2023] SASCA 11 at [37] per Livesey P, Doyle and Bleby JJA.
Relevance of post-contract conduct
In this case, whether agreement was reached and, if so, what the parties agreed are significant issues. When the issue involves determining the existence or subject matter of a contract as a fact, or whether or not either party intended to be bound until a formal contract had been prepared, relevant surrounding circumstances extend to both pre-contractual and post‑contractual conduct.[22] Subsequent conduct is relevant, on an objective basis, to identify the subject matter of the contract or to determine necessary terms, as distinct from interpreting the meaning of words in a written contract.[23]
[22] Darzi Group Pty Ltd v Nolde Pty Ltd (2019) 100 NSWLR 394 at [4] per Bathurst CJ; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [7]-[8], [17] per Spigelman CJ.
[23] County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 at [20]-[21] per Spigelman CJ, [161] per McColl JA; Profile Events Pty Ltd v West Beach Trust [2011] SASCFC 1 at [18], [25] per Doyle CJ.
Evidence about discussions and what, if anything, was agreed
In this section, I address the evidence about the discussions between Christopher and Giuliano. Contemporaneous documents were put to witnesses during their evidence and many of those documents were significant in my reasoning and findings. I therefore commence by summarising relevant documents and then proceed to address the evidence of the witnesses.
Documentary evidence
Evidence relevant to what, if any, agreement was reached included documentary evidence both before and after the commencement of the business.
On 3 January 2018, Giuliano sent to his solicitors, Minicozzi Lawyers, copied to Christopher and John, an email with a subject entitled “Rochforts. Plans/Program”. The email contained what was described as a letter to the Rochforts which stated:[24]
[24] Exhibit A1 – Addendum to Tender Book A at 244-245.
Morning Gents,
Yesterday it became clear that we are forging ahead in a quasi-random way rather than in pursuit of a resolutely calculated and coordinated plan/program.
The respective timing of property fit for commissioning, still availability (existing and new), maturation of MVD barrels, cash flows, MVD lease and Harvey issues seems to be disjointed.
Salient factors/issues for consideration in establishing such a plan/program
·We are (likely) spending much effort on finding the right property.
·Subject to acquisition of a licence GU can control the future use of the plant and equipment for use of the soon to be established Rochfort Distillery.
·Said equipment is leased to MVD for 12 months, but needed in 5 months.
·A significant number of the current barrel stock at MVD will mature sometime around mid year.
·It is critical that the optimum moment of maturation to produce the best whiskey MUST be the determining factor in the program. No subliminal influences born of other exigencies can be allowed to influence that critical decision. Independent assistance (eg Bill Lark, Mark Nicholson) should be sought to ensure this is for practical purposes and also for appearances to the public.
·The bottling of the spirit in these barrels will create an excise liability with a concomitant and significant income from sales around mid year.
·The current directors (Chris Rochfort, Jock Harvey) of MVD will be in control of these transactions and the risk/reward process.
·Ideally, these barrels are required to kick-start the new Rochfort venture.
In light of the above, the following must be achieved before the time of maturation of the existing barrels.
·Rochfort Distillery Pty. Ltd. As Trustee for The Rochfort Distillery Unit Trust should be established after advice from accountants…
·Distilling licence to be acquired in the required names etc.
·Acquisition of the right property by GU Interests. (Entity TBA).
·All required statuary [sic] approvals and licences
·Required conversion and improvements to the above.
·Fabrications/acquisition of all required plant and equipment.
·Installation and commissioning of the above.
·Negotiations with barrel owners regarding relocation thereof. Coordination of the relocation and timing vis a vis bottling, excise payment and sales.
·Negotiations with current MVD shareholders.
·Management of the likely difficulties emerging from the above.
·John in consultation with Chris is to consider and advise the time lines for all aspects of the way forward and distribute.
·GU to register on the PPRS the plant and equipment he acquired and leased back to MVD.
·John will email all barrel owners reminding them of his previous advice to register their barrels on PPRS to ensure absolute security.
·GU has advised John R to send him the documents to commission the fabrication of the new stills for lease by Rochfort Distillery as the MVD stills are leased back to them for 12 months yet R.Dist needs stills by May. Upon acquiring the licence, GU will own the new stills. (Cost $220,000).
·All salient issues to be committed to email correspondence to ensure proper records and coordination. Contemporaneous notes to be kept by Chris R and John R with copies issued weekly to Giuliano for information and confirmation.
GU has now committed $121,000 for 22 barrels, $35,000 for MVD stills and $220,000 for new stills, with a large amount for the purchase of the new property and development of same to come shortly. This renders the commitment and risk for GU to be great and totally reliant on the strength, skills, probity, good will and health of the Rochforts. Accordingly, there is no room for any misunderstanding, nor wavering in saying what we do and doing what we say in a timely and complete matter. Recording by way of contemporaneous notes is critical in this. Any doubts must be discussed urgently at all times.
Gents, the [sic] is no doubt more that I have missed, so feel free to add as required. Further, lets [sic] establish a free email flow which will at once assist us in the in the difficulties to come, and protect all parties in the process.
Regards
Giuliano.
On 31 January 2018, Giuliano sent to Christopher and John an email referring to instructions to set up a company to be the distillery operator to lease the Property. The email referred to a lease and shareholders’ agreement to be discussed and established as soon as possible.
Giuliano attended a meeting on 5 March 2018 with Christopher and made some notes of that meeting. Giuliano said he and Christopher discussed various things to do with the Property, barrels, banking and business model, then moved to the more formal part of details such as ACNs, ABNs, and trust names. Giuliano said at that point in the meeting he wrote the notes more carefully as they discussed what had to be done to correctly put in place all critical aspects. The notes stated the following:[25]
Distilleria shall acquire the property at 34 Mont Rosa Rd Hindmarsh Valley AND develop it by converting to a distillery
AND buy & install plant & equipment to commence distilling
All monies expended by the interest of GMU (and entities owned/ controlled by GMU in this pursuit shall be used as the principal.
DeB/ Rochfort Distillery shall pay 10% of this principal, per annum as the rent. Variable outgoings to be paid by the Tenant. Land tax by landlord
Rent shall commence when the distillery is ready to commence distilling.
DeB/ Rochfort Distillery shall be granted a CALL OPTION to purchase the property from Distilleria/ Goldilocks buy time after 01.01.2028
The consideration shall be the market value extant at the time the call option is exercised.
…
[25] Exhibit R5 – Affidavit of Giuliano Mario Ursini sworn on 8 April 2022 at [69].
Giuliano was not cross-examined about the notes which he said accurately recorded the conversation.
On 26 October 2018, a board meeting was held, attended by Giuliano, the Rochfort family members and Mr Les Avory as a guest. Mr Avory created a set of minutes of the meeting.[26] I will refer to the meeting as the “October meeting”. The minutes of the October meeting featured significantly in cross-examination. The October meeting minutes commenced with a reference to the imminent production and selling of spirit in the marketplace. The minutes noted that arrangements for receipt of barrels should be obtained and ready for movement as soon as practicable after ATO approval. From context, this appears to be a reference to the movement of MVD PBO barrels from MVD to a bond store to be run by De Bourbel. The minutes noted that distilling and bottling could take place at the distillery as soon as the facility was completed and that Christopher informed the meeting that 6 barrels of spirit would return $400,000 (exclusive of all costs).
[26] Exhibit A1 – Tender Book A at 539-541.
Under a heading “Annual Rent of Property” the minutes stated: [27]
Following discussion it was resolved that ; [unclear] RENT will be the sum of 10% of all up CAPEX cost, offset against the income of business(s); lease to commence on 1^st November.
[27] Exhibit A1 – Tender Book A at 541. The reference to [unclear] notes a word which was cut off in the copying process.
The minutes of the meeting were signed by Christopher and Lachlan.
On 7 December 2018, a board meeting was attended by Giuliano, the Rochfort family members and Mr Avory. The first entry in the minutes noted that the minutes of the October meeting were received as a true and correct record.[28] The minutes of the December meeting stated that Christopher “impressed upon all the importance of selling matured barrels of Stock on Hand, in order to self fund the RD operation”[29] and that bottles had been delivered and labelling and bottling had taken place. According to the minutes, Christopher reported that cash flow was expected to be positive by 30 June 2019 and John confirmed 17 December 2018 as the earliest date for the first product release.
[28] Exhibit A1 – Tender Book A at 543.
[29] Exhibit A1 – Tender Book A at 543.
On 8 February 2019, Giuliano sent to the Rochfort family members an email entitled “Finances”. The email stated:[30]
Wednesday I paid out several thousand more dollars. I have not yet added up all I have spent, but it is a scary number. All cash. I have never questioned any expenditure, but simply took your advice as to what you needed to produce the “world’s best whisky.” (That is our Mantra.) I have no regrets. Neither regarding what I spent, nor that I took your advice without question. Indeed, I am very happy and proud.
However, some time ago I expressed concern at how much I have paid out and that it had become quite a burden. No bank would lend to a business that hasn’t traded for a significant period, nor would it lend against a property without a trading tenant. Consequently, I had to fund it from my personal resources.
We expected to have $400,000 net of expenses in Dec. I relied on that and did not expect to have been injecting significant cash for a further several weeks. Of course it is no one’s fault that things have gone wrong. But I am now under pressure and cannot inject anymore cash into this project. In any case, a bottomless pit approach is bad business even if it is available. It is also worth remembering that we intend that De Bourbel will repay the loan from me to be able to own the plant and equipment. It is appropriate, good business and will lower the rent to a proper affordable level.
We are so close and it is awkward timing, but we must now make De Bourbel pay it’s [sic] way. Relatively easy new barrel sales were going to fund some expenditure, but I have heard no more about it. Rent from the house will also be of assistance…
When we start selling the main corpus of whisky from the existing barrels, money will start flowing quickly and in large amounts. Cash evaporates quickly if not tightly managed. We regularly hear of companies with large revenues going bankrupt… We are not structured properly to manage the large cashflow and expenditure…
Gentlemen, I am feeling uncomfortable at present. We need to pull all this together to make sure things don’t get out of hand and that we capitalise on the wonderful distilling skills of John and Lachie.
[30] Exhibit A1 – Tender Book A at 547.
On 7 March 2019, Giuliano sent an email to the Rochforts explaining that Distilleria had spent over $2 million and had provided $100,000 for necessary payments. The email stated:[31]
I have asked Terese to give me a provisional report of money I have expended to date on the distillery just to give us an idea of where we stand.
Distilleria Pty Ltd direct expenditure…………………………. …. $2,129,358.88 plus GST
Capitalisation of De Bourbel Pty Ltd for it to make necessary payment in its own right… $100,567.05 plus GST.
My total outlay is…………………………………………………. $2,229,922.93 plus GST
When time permits, she will give us a breakdown of items which we can use to decide what should be owned by De Bourbel. Then, as revenue permits, reimbursal [sic] can be effected. The remaining figure will be the basis of the rental which, as agreed, will commence on 1^st Nov. 2018 and be paid in arrears.
[31] Exhibit A1 – Tender Book A at 549.
The email referred to the need for close control and reporting and the absence of information about income and expenditure, but stated Giuliano’s continuing belief and passion in the operation.
Lachlan responded to the email by saying “[c]ool I will be here Monday managing the earthworks”.[32]
[32] Exhibit R5 – Affidavit of Giuliano Mario Ursini at [103].
On 12 March 2019, a meeting of the board was held, attended by Giuliano, Lachlan and John. Minutes of the meeting were signed by Giuliano on 16 March 2019.[33] The minutes noted that the distillery was operating at half of potential capacity. They noted that Giuliano reiterated the importance of tight financial reporting and control, the need to formalise accounting and administration activities, that Ms Thao Nguyen would commence work for Giuliano next week and he would assess her for suitability to prepare accounts. The minutes noted the need to make barrel sales as soon as possible to bolster revenue. Lachlan reported by the end of the week about $80,000 worth of whisky would be bottled and ready for sale and gin production had commenced.
[33] Exhibit A1 – Tender Book A at 553-555.
On 10 May 2019, Giuliano sent an email[34] noting a number of concerns. The email contained a number of headings and started with a preamble which referred to it being “essential that we say what we do and do what we say. If we can’t, we owe notice to the others with an alternative that we can all support, own, then deliver on”. Giuliano referred to acting as one and the importance of communication. Giuliano continued to say he was not motivated by the prospect of earning a new dollar, but he was in the venture to build the foundation of the next two hundred years and beyond. Giuliano’s email stated he had struck a deal with Mr Harvey with details being attended to and it was necessary to bottle and sell the MVD whisky to fund a $500,000 payment to be made to Mr Harvey progressively within the agreed 12 months. This had to run in parallel with bottling and selling their own product. The email noted the De Bourbel shareholders’ agreement and lease had been left on the shelf while more pressing matters were addressed, but would be prepared and sent to Christopher. The email also referred to a lack of finance reporting and Giuliano not having any idea where operational finances sat, how many bottles had been sold or what had been spent. The email included a reference to rent as follows:[35]
Rent has been accruing since the agreed date of commencement, 1^st Nov’ 18. We must consider how and when we can make inroads into the debt and rent payable by De Bourbel before it gets out of hand.
[34] The persons to whom the email was sent are not identified.
[35] Exhibit A1 – Tender Book A at 559.
On 10 May 2019, John responded to Giuliano.[36] The email commenced:
Good evening Giuliano, it pained me to read the truths of the content of your preamble.
[36] Exhibit A1 – Tender Book A at 556-557.
On 20 June 2019, Giuliano sent to the Rochfort family members an email entitled “Watershed Moment”.[37] The email referred to it being “make or break time” and said “we are on the edge of a cliff hanging by our nails”. The email stated:
I have just been told by John that we can’t sell significant quantities of bottled whisky as we don’t have enough bottles and that is because I stopped pouring more money in. The regrettable inference is clearly that I created the problem.
[37] Exhibit A1 – Tender Book A at 581-584.
The email also included the following:[38]
Of course after $2.3million buying everything you requested without question and out of absolute trust, I assessed that there was enough investment at risk and no evidence of income. No budgets, no hard facts, no business plans, no commitments, just talk.
…
In the interests of clarity, let me remind you that I was promised large and quick sales from the beginning; before we even built the distillery. When from time to time I asked the question about sales, it was treated as a source of mirth, as if it was silly to question it. Without that assurance I would have been a fool to invest. The intention was that large, speedy sales revenue would fund the company. It was never appropriate for me to continue pouring money into a company with 94 almost mature barrels. That is the driver of the whole enterprise! That is the money we need! And expected to have! Now all I have is all the reasons why we can’t have it.
…
Our whole business model was based on having bottles to sell immediately because we didn’t have to wait for 3 years to mature the whisky. That was the fundamental which made the whole thing possible. Without that, we would not have done anything. I certainly would not have invested $2.3 million.
[38] Exhibit A1 – Tender Book A at 582-583.
The email referred to a lack of financials, reports, inventory, sales strategy, budgets, systems and communication and stated that Giuliano had at risk $2.3 million, his reputation and director’s risk. The email stated: [39]
Further, rent was to start 1 November ‘18 at 10% of CAPEX. Since there has been no payment, that too is at risk.
[39] Exhibit A1 – Tender Book A at 583.
The email asked the Rochfort family to own and fix problems, get $100,000 by 5 July 2019 and raise enough from sales to properly capitalise the company. “Use the strategy I was told was going to deliver $400,000 by last Dec”.[40] The email referred to other concerns including lack of attempts to sell new barrels and lack of reporting. Giuliano referred to the business as “currently backyard and not viable”.
[40] Exhibit A1 – Tender Book A at 584.
On 21 June 2019, Christopher sent to John and Lachlan an email forwarding on Giuliano’s email entitled “Watershed Moment”. That email stated:[41]
I am sure you both have read Giuliano’s email and he is absolutely correct in what he is saying… We have very little time to come up with achievable plans and solutions to the current situation. Correct it we must or apart from letting down Giuliano – which would be unforgivable, we will have wasted the last six years of our lives and destroyed any hope we currently harbour of being a success in the whisky industry. You both have to cancel anything you have organised so we can devote our minds to saving our futures…
[41] Exhibit A1 – Tender Book A at 581.

Given I have found the distraint was unlawful, De Bourbel would be entitled to damages in respect of its goods unlawfully seized. It matters not whether the damages are characterised as based on conversion, trespass or unlawful distraint. However, I am unable to find with certainty what De Bourbel’s assets were at the date of the distraint. I have concluded that plant and equipment purchased by funds provided by Giuliano was owned by Distilleria at the time of the distraint. Nevertheless, it appears some assets, in addition to distilled spirit, were owned by De Bourbel, and the adjusted balance sheet recorded some amounts for assets. The auction list[433] prepared by Mason Gray Strange was a subset of the list of items on the Property at the time of distraint which were to be auctioned following assessment of declarations pursuant to s 22 of the Landlord and Tenant Act. Apart from questions about the ownership of plant and equipment, Mr Naudi accepted the auction list represented the items owned by De Bourbel. The auction list appears to represent the assets which the respondents considered were assets of De Bourbel at the date of distraint and appears to be the most reliable evidence of De Bourbel’s assets at the date of distraint. Mr Tonkin’s forced liquidation valuation could be applied to the list of goods to be auctioned to determine the quantum of the unlawfully distrained goods apart from whisky, which I address separately below, and excluding items sold by Mr Naudi at public auction. However, I have determined I should receive further submissions from the parties before I adopt that approach including for reasons that I was not taken to evidence of the items sold.
[433] Exhibit R15 – Tender Book C at 685-718.
Whisky
There was no suggestion that any entity other than De Bourbel owned the Rochfort Distillery gin or whisky other than any whisky sold to PBOs.
Bottles of spirits were sold at public auction. There was no evidence of the sale price per bottle. I accept that the actual sale price of those items obtained at public auction represents the market price of those assets.[434] De Bourbel is entitled to the proceeds of the sale. I require further submissions on the form of order I may make to give effect to my reasons in relation to the proceeds of sale.
[434] See for example Forston v Commonwealth Bank (2008) 100 SASR 162 at [26] per Debelle J (with whom Doyle CJ and Bleby J agreed).
The value of whisky in other receptacles is a vexed problem. De Bourbel relied on the valuations in the Hilco Global report in respect of Rochfort Distillery whisky. The Hilco Global report valued whisky in bottles, in barrels and in demijohns, a vessel used in the process of moving whisky from the barrel to a bottle.
The Hilco Global report listed barrels in the distillery, described as Rochfort Distillery whisky spirit, by reference to a barrel number and other details such as the barrel type, fill date and spirit volume. Some entries included details of the history of the barrel (examples include “15 Individual Vintages of Yangarra Shiraz”[435] and “Seppelt Family Owned Barrel”[436]). The fill dates appeared to range from about February 2019 to February 2020.[437]
[435] Exhibit R15 – Tender Book C at 648 (Hilco Global report).
[436] Exhibit R15 – Tender Book C at 648 (Hilco Global report).
[437] Three barrel fill dates were stated as 25 August 2017 which predated the commencement of Rochfort Distillery eg Section 3 item 54; item 56 of the Hilco Global report.
The Hilco Global report forced liquidation value for bottled whisky was in the order of $140 per litre ($100 per 700 ml bottle). Whisky in Rochfort Distillery barrels in the distillery was valued at various figures which converted to about $80 per litre, taking into account the volume of spirit in the barrel. Whisky in demijohns (containing differently described whisky) was valued in the order of between about $6 to $10 per litre. PBO barrels were ascribed a value on a forced liquidation basis of $50 each.
Mr Tonkin did not have information about how the whisky was made, the quality of the barrels, the maturity of the whisky or when the whisky would be ready to sell. Mr Tonkin lacked relevant information about pricing or cost of production figures for barrel stock or the extent of sales of whisky, whether in bottles or barrels. Mr Tonkin used blanket assumptions. He could not recall what he meant by provenance details, which could have referred to the barrels, or the way the whisky was made, or the period of maturation, and he agreed those matters would affect the value of the product.
Mr Tonkin understood the demijohn was used to transfer whisky having reached a desired maturation level from a barrel into bottles. He could not recall why he valued whisky in demijohns and whisky in barrels at such significantly different valuations, a range of about $10 per litre to about $80 per litre. Given the whisky in demijohns was ready for transfer to bottles, and consequently must have reached the required maturation, the significantly higher valuation placed on barrel whisky was unexplained. If the vessel in which the whisky was located accounted for the difference, that was not explained.
It was not entirely clear whether the valuations of the barrels in the bond store were a value only for the barrel or also for the whisky contents. In contrast to the value of about $80 per litre for Rochfort Distillery whisky in barrels, Mr Tonkin valued PBO barrels containing about 100 litres of whisky at $50 per barrel on a forced liquidation basis. The Hilco Global report described barrels in the bond store as “MVD” or “Rochfort Distillery” and by reference to a date, cask number and name of the PBO. The barrels in the distillery were described as “Barrel Rochfort Whisky Spirit” followed by details such as the date, cask number, weight and so on. The difference in description, together with the low value placed on the barrels in the bond store, may suggest the valuation of each barrel in the bond store was a valuation of the barrel only, while the valuation of the barrels in the distillery was a valuation of the whisky contents. However, if that was the case, it was not clear and the notes at the front of the report, which referred to the discussions with the representatives of Tasmanian distilleries, suggest otherwise. The reference to those discussions were to discussions about valuation of “this stock” immediately after a reference to the barrel stock of whisky in both the distillery and the bond store.[438] During cross-examination, Mr Tonkin confirmed he was instructed to value items whether they were intended to be auctioned or not. Mr Tonkin was taken to email correspondence between Mr Naudi and Mr Paley of Hilco Global.[439] In that correspondence, Mr Naudi set out the background to his request for a quotation in relation to assets situated on the Property. Mr Naudi referred to assets that had vested in the company that may previously have been owned by third parties, including the landlord. Mr Naudi asked for a quote to conduct a valuation of all assets on site, including about 100 barrels of whisky in various stages of maturation. Mr Naudi’s email referred to excise tax being applicable to a number of items, and markets being restricted for full barrels of whisky which may only be sold to persons with appropriate licences and movement authorities to other bond stores. Mr Naudi’s email stated that the full 100 whisky barrels were not available as he was working through ownership/PPSR issues with the owner of each barrel but he expected at least 50-70 barrels would be available. Mr Paley responded to acknowledge those matters, among other things, and provided the requested quote. On 9 July 2020, Mr Tonkin sent an email to Mr Naudi asking if there was any record to identify the contents of the barrels in the bond store. Mr Naudi asked a member of his staff to forward any information on barrel contents to Mr Tonkin, saying that the PBO list may show the “date barrelled”.[440] This correspondence suggests the intention was for Mr Tonkin to value the contents of the PBO barrels. I also note that Mr Tonkin valued empty barrels in the cellar door at $30 per barrel on a forced liquidation basis.
[438] Exhibit R15 – Tender Book C at 617.
[439] Exhibit R15 – Tender Book C at 729-733.
[440] Exhibit R15 – Tender Book C at 756-757.
When asked questions about the correspondence with Mr Naudi concerning limitations on full barrel sales to which I have referred above, Mr Tonkin could not recall whether he worked on the assumption that restrictions applied to the market for full barrel sales. He said he assumed so, and said that if he had adopted that approach, the restrictions would limit the market because it required a purchaser to have appropriate licences and an ATO approved bond store. The potential extent to which such limitation would impact the value was not explained, nor was any impact of potential excise tax. The Hilco Global report did not expressly refer to the issue of any limitation on the market for sales of barrels. The introductory remarks were more consistent with the whisky in barrels being valued on the basis of a mid-range retail price.
If the valuation of barrels in the bond store included the whisky contents as well as the barrel, the equivalent value for the whisky was approximately 50c per litre, assuming each 100 litre barrel was full and assuming no value was placed on the barrel. If some value was to be placed on the barrels, the value of the whisky would have been lower, potentially as low as 20c per litre if the $30 valuation placed on empty barrels in the report was considered the appropriate value for the barrels. Either way, that value was significantly lower than the value of approximately $80 per litre placed on the whisky in the barrels in the distillery. If the value was of the whisky, the discrepancy may indicate that the whisky contained in the barrels in the bond store was valued taking into account limitations in the market referred to in the correspondence. However, if that was so, it is not clear why the same limitations would not apply to the whisky in the barrels in the distillery. If the Rochfort Distillery whisky was valued on the basis of sale other than in the form of whole barrels, issues such as access to bottling equipment and associated bottling costs were not explored.
As Mr Tonkin did not recall whether he took into account the limitation in the market, but assumed he did, uncertainty remains as to whether the Rochfort Distillery whisky in barrels in the distillery was valued using simply a mid-range retail price for bottled whisky, or whether that approach was modified to take into account the factors limiting the market for full barrels. If Mr Tonkin amended the values in the light of that limitation, how he did so and the impact on the values given to the whisky was not explained.
I cannot rely on the Hilco Global report in relation to the valuations of whisky. The Hilco Global report was produced for a purpose which differed to that for which it was used. The addendum report stated that inventory was not valued at the lower of cost and net realisable value in accordance with Australian Accounting Standards and the likely approach adopted for an expert report.[441] The report contained the assumptions and limitations to which I have referred above. Specific matters relevant to the quality of the whisky, including maturity, were not taken into consideration. The different values placed on the whisky in different receptacles was not explained in a manner which enabled me properly to understand the methodology or understand or reconcile those differences.
[441] Exhibit R15 – Tender Book C at 680.
That being the case, I am left to assess damages based on evidence which is not the best evidence which could have been adduced. As a general principle, the Court must do its best to assess a plaintiff’s loss based on the evidence available to it, even if there are difficulties in the process that result in significant uncertainty and estimation.[442] However, it may be that it is necessary to differentiate between a plaintiff being unable to adduce precise evidence of loss and a plaintiff not adducing such evidence, despite apparently being able to do so, such that estimation may be necessary in assessing damages in the former kind of case.[443] The Court, however, is not required to find a figure irrespective of the quality of the evidence or engage in speculation.[444] The Court must still consider the quality and the sufficiency of evidence having regard to evidence available to be adduced.[445] I consider this is an example of the latter kind of case. De Bourbel bore the onus of proving loss and the amount of the loss suffered on the balance of probabilities with as much precision as the subject matter reasonably permitted.[446] I consider De Bourbel failed to do so. De Bourbel did not call evidence from a person with expertise in assessing whisky. The purpose of the Hilco Global report, the significant limitations inherent in the report, the uncertainties to which I have referred above and the inability to reconcile the different values placed on whisky in different receptacles robs the Hilco Global valuations of whisky of a proper foundation and their reliability. The quality and sufficiency of the evidence is inadequate to prove the quantum of loss. If I were to endeavour to place a figure on the whisky, it would amount to no more than pure guesswork or speculation as to which figure in the range of figures referred to in the Hilco Global report ought to be ascribed to the whisky.
[442] McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 411-412 per Dixon and Fullagar JJ; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 83 per Mason CJ and Dawson J; Giorginis v Kastrati (1988) 49 SASR 371 at 375 per von Doussa J; Nanosecond Corporation Pty Ltd v Glan Carron Pty Ltd (No 2) [2018] SASC 188 at [421] per Doyle J.
[443] Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [38] per Hayne J.
[444] Nanosecond Corporation Pty Ltd v Glan Carron Pty Ltd (No 2) [2018] SASC 188 at [421] per Doyle J.
[445] Nanosecond Corporation Pty Ltd v Glan Carron Pty Ltd (No 2) [2018] SASC 188 at [422] per Doyle J; Chabbra Corporation Pte Ltd v Jag Shakti (Owners) [1986] 1 AC 337 at 349 per Lord Keith; Gorski v Miller (1993) 174 LSJS 251 at 256 per Matheson J.
[446] Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 at [37] per Hayne J.
Double damages
The respondents disputed the claim for double damages for wrongful distraint as being wholly misconceived. Counsel submitted s 37 of the Landlord and Tenant Act applies in the case where no rent was due and distress and sale has occurred.
I accept the respondents’ submissions that s 37 does not apply if there has not been a sale. The auction of the goods was enjoined, as a consequence of which the sale did not proceed. Accordingly, there could be no basis for double damages.
Plant and equipment
De Bourbel is not entitled to damages for plant and equipment which it did not own at the date of the distraint. While the plant and equipment was not De Bourbel’s at the date of the distraint, the plant and equipment that constituted personal property vested in De Bourbel on 27 March 2020 by operation of the PPSA. De Bourbel sought declarations concerning the application of the PPSA and an order for the respondents to deliver up the plant and equipment. The basis upon which the Court could order delivery up was not identified and the respondents asserted the application was without merit. To the extent that De Bourbel has an entitlement to orders in relation to plant and equipment based on vesting under the PPSA, those orders would have to exclude fixtures. In the circumstances in which the respondents challenge my power to make orders for delivery up in favour of De Bourbel in this action, counsel for De Bourbel did not make submissions on that topic, and it is not clear to me that I have the power to make such orders, I consider I should hear from the parties in relation to what, if any, orders I have the power to make in this action concerning the plant and equipment which vested in De Bourbel pursuant to the PPSA.
I note that the respondents have indicated an intention to claim damages pursuant to s 269 of the PPSA. However, counsel for the respondents indicated that the respondents did not ask me to address that question and accordingly I have not done so.
Set off
The respondents pleaded a right of set off against any damages to which De Bourbel may be entitled. Section 553C of the Corporations Act provides that, subject to sub-s (2), where there has been mutual credit, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company, an account is to be taken of what is due from the one party to the other in respect of those mutual dealings. The sum due from the one party is to be set off against any sum due from the other party and only the balance is admissible to proof or payable to the company. Section 533(2) provides that a person is not entitled to claim the benefit of a set off if, at the time of giving credit, the person has notice of the fact the company was insolvent. Counsel for the respondents sought a set off for all of the unpaid rent together with the loan made by Distilleria in March 2019. Counsel for De Bourbel addressed first and did not make submissions in relation to the pleaded set off. I will hear from the parties further in relation to what orders I could make in relation to the claimed set off based on the factual findings I have made.
Remedies
The respondents submitted that the Court does not have the power to grant a number of the remedies sought by De Bourbel. The respondents contended that there is no proper basis for granting declaratory relief when other relief is also sought. The respondents contended the only remedy available is damages, not delivery up of assets, as some of the relief sought is relief only available to a liquidator under the Corporations Act and the Court has no jurisdiction to make the orders sought as the liquidator is not the applicant.
The respondents submitted that there was no evidence upon which the Court could make an order relieving De Bourbel from the obligation to pay rent and requiring the respondents to pay compensation.
The first set of remedies sought are a series of declarations. I would not make some of the declarations sought given the findings I have made. Some of the declarations sought are in any event potentially problematic as their wording lacks sufficient clarity. For example, I would not declare that the Distrained Goods (as defined in the statement of claim) are owned by De Bourbel. I will hear from the parties in relation to what, if any, declarations I could make to give effect to my reasons.
Orders were sought for the delivery up of the distrained goods, the plant and equipment and PBO barrels. Given my conclusion in relation to the PBO barrels, I would not make any order in relation to PBO barrels, including for damages in respect of the cause of action in conversion. I will hear from the parties in relation to the power to order delivery up of plant and equipment and goods owned by De Bourbel that were the subject of the unlawful distraint.
For the sake of completeness, I address De Bourbel’s prayer for relief in the event the RCLA applied such that in March 2020 there was an RCLA lease between the parties. In that event, De Bourbel occupied the Property pursuant to a RCLA lease. De Bourbel submitted that Distilleria’s failure to comply with s 12(2) of the RCLA enlivened De Bourbel’s rights pursuant to s 12(5) to seek remedial orders. De Bourbel was not provided with a disclosure statement pursuant to s 12(1) of the RCLA. De Bourbel was not provided with a written copy of the proposed retail shop lease pursuant to s 11 of the RCLA. De Bourbel submitted it had rights to seek remedial orders from the Magistrates Court to remedy any prejudice it had suffered and is entitled to discretionary relief under s 68 of the RCLA. De Bourbel contended that while s 68 orders are within the jurisdiction of the Magistrates Court, s 22 of the Magistrates Act 1983 (SA) confers upon a Supreme Court Judge the power to exercise the jurisdiction, powers or functions of a Magistrate.[447] The respondents submitted De Bourbel did not prove any prejudice suffered as a consequence of not being provided with disclosure statements and the appropriate remedy was an action in the Magistrates Court. De Bourbel did not make substantive submissions in relation to any asserted consequences of the failure to provide a draft lease or a disclosure statement, potential prejudice nor what orders the Court ought to make pursuant to s 68 of the RCLA. In those circumstances, I do not consider De Bourbel has established sufficient foundation for me to consider discretionary relief pursuant to s 68 of the RCLA.
[447] I also note s 5(1) of the Judicial Administration (Auxiliary Appointments and Powers) Act 1988 (SA).

Paragraph 31.5 of the statement of claim sought orders relieving De Bourbel from the obligation to pay rent and requiring the respondents to pay compensation. No specific submissions were made in support of that order. I do not consider there was sufficient basis upon which to make any such orders.
The findings I have made preclude the making of some of the orders sought, such as compensation pursuant to s 1317H of the Corporations Act, damages for unlawful termination of the lease and damages for conversion of the PBO barrels and ADC equipment.
De Bourbel sought an order that the respondents permit a sale process to be conducted from the Property and the liquidator be granted access for a two month period to the Property. I was not directed to the basis upon which I have the power to make such an order. As set out above, clarification is required in relation to the power to make such an order.
Orders
I will hear the parties in relation to the orders that should be made to give effect to my reasons.

[2023] SASC 88

31 May 2023