Court of Appeal
New South Wales
Case Title: De Vries & Anor v Rapid Metal Developments (Australia) Pty Ltd Medium Neutral Citation: [2011] NSWCA 100 Hearing Date(s): 15 March 2011 Decision Date: 28 April 2011 Jurisdiction: Before: Hodgson JA at 1, Macfarlan JA at 2, Sackville AJA at 3
Decision: 1. Appeal allowed.
2. Set aside the orders made by RA Hulme J on 10 February 2010 and on 9 March 2010.
3. In lieu of the orders set aside, order that:
(a) the proceedings be dismissed;
(b) the Respondent pay the Appellants' costs of the proceedings, other than any costs incurred by them as the result of the adjournment of the proceedings on 3 March 2008; and
(c) the Appellants pay the Respondent's costs thrown away as a result of the adjournment of the proceedings on 3 March 2008, on an indemnity basis.
4. The Respondent pay the Appellants' costs of the appeal.
5. Direct that the Respondent, if otherwise qualified, have a certificate under the Suitors Fund Act 1951 (NSW).
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]Catchwords: CORPORATIONS - mortgagee in possession - corporation in business of hiring scaffolding - whether agents of mortgagee ("Controllers") liable under s 419A(2) of the Corporations Act for rent due to third party for scaffolding in possession of corporation - whether third party proved that its scaffolding was in the possession of the corporation at the date of Controllers' appointment - whether the language of s 419A(2) of the Corporations Act extends to the corporation's liability to make payments at the end of a period of hire - whether the primary Judge was correct not to excuse the Controllers from liability pursuant to s 419A(7) of the Corporations Act.
TORTS - conversion - whether sale by Controllers of scaffolding constituted conversion - whether damages should be assessed by reference to owner's list prices.
Legislation Cited: Corporations Act 2001 (Cth)
Civil Procedure Act 2005 (NSW)
Evidence Act 1995 (NSW)
Suitors Fund Act 1951 (NSW)
Uniform Civil Procedure Rules
Corporate Law Reform Bill 1992 (Cth)Cases Cited: Axon v Axon [1937] HCA 80; 59 CLR 395
Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353
Deputy Commissioner of Taxation v Clark [2003] NSWCA 91; 57 NSWLR 113
Hill v Reglon Pty Ltd [2007] NSWCA 295
House v R [1936] HCA 40; 55 CLR 499
Re Nardell Coal Corporation (In Liq) v Hunter Valley Coal Processing Pty Ltd [2003] NSWSC 642; 46 ACSR 467
Warren v Coombes [1979] HCA 9; 142 CLR 531Texts Cited: J D Heydon, D Byrne, Cross on Evidence: Australian Edition (1996-), LexisNexis
Australian…
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- Case
- [2011] NSWCA 100
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether the controllers were liable under s 419A(2) of the *Corporations Act* for payments due to RMD, whether RMD had proven that its scaffolding was in the company's possession at the date of the controllers' appointment, and whether the language of s 419A(2) extended to liabilities arising at the end of a hire period. Additionally, the court considered whether the primary judge erred in not excusing the controllers from liability under s 419A(7) and whether the sale of the scaffolding by the controllers constituted conversion, with damages to be assessed by reference to the owner's list prices.
The court allowed the appeal, setting aside the orders of the primary judge. The court reasoned that the language of s 419A(2) of the *Corporations Act* was not apt to extend to a liability to make payments under a hiring agreement that was not incurred or enforceable until the end of the hire period. The court found that RMD's claim for the replacement of lost or damaged goods, calculated at list prices, was not a payment attributable to a period of hire or use, but rather to the company's failure to return the scaffolding in good condition. This interpretation was supported by the absence of words such as "as is attributable to a period" in the liability, and by the context of the draft legislation considered by the Australian Law Reform Commission, which suggested that such a liability was not intended to be covered by s 419A(2).
Consequently, the proceedings were dismissed, with orders regarding the payment of costs between the parties and a direction for the respondent to have a certificate under the *Suitors Fund Act 1951* (NSW).
Orders
Orders of the court
1. Appeal allowed.
2. Set aside the orders made by RA Hulme J on 10 February 2010 and on 9 March 2010.
3. In lieu of the orders set aside, order that:
(a) the proceedings be dismissed;
(b) the Respondent pay the Appellants' costs of the proceedings, other than any costs incurred by them as the result of the adjournment of the proceedings on 3 March 2008; and
(c) the Appellants pay the Respondent's costs thrown away as a result of the adjournment of the proceedings on 3 March 2008, on an indemnity basis.
4. The Respondent pay the Appellants' costs of the appeal.
5. Direct that the Respondent, if otherwise qualified, have a certificate under the Suitors Fund Act 1951 (NSW).
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The draft legislation prepared by the Australian Law Reform Commission provided (App A, at 54) as follows: "Where a corporation continues in possession of, occupies or uses property the legal title to which belongs to some other person under an agreement made before and subsisting at the date of the appointment of a receiver of property of the corporation or the taking of possession of or assuming control of property of the corporation by a person under a charge, the receiver or person is liable for the rent or other payments payable under the agreement with respect to any period during which the corporation continues to possess, occupy or use the property while the receiver remains in office or the person remains in possession or control of the property of the corporation unless the Court orders that the receiver or person ought fairly to be excused." (Emphasis added.) It will be recalled that RMD's case was that Rildean's liability under the Hiring Agreement arose on completion of the Sale Agreement on 3 December 2004. At that time, the Controllers' actions brought the bailment under the Hiring Agreement to an end and Rildean's liability to replace all lost or damaged equipment. According to RMD, the amounts payable by Rildean were attributable to the period identified in s 419A(2) of the Corporations Act . In my opinion, the language of s 419A(2) is not apt to extend to a liability to make payments under a hiring agreement between an owner of goods and a corporation, when the liability is not incurred or is not enforceable until the end of the period of hire . I do not think that it can be said that the liability imposed on Rildean by cl 22(b) of the Hiring Agreement was to make payments attributable to the period of hire or to the use of the goods during that period. Rildean's liability was to replace all lost or damaged goods at RMD's ruling list prices. The liability to make payments calculated in this way was attributable to Rildean's failure, for whatever reason, to return the hired scaffolding to RMD in good condition, as required by s 419A(2). The amounts payable by Rildean were not attributable to a period, but to its failure to return the scaffolding in good condition. If RMD's submissions are correct, it is difficult to see what purpose is served by the words " as is attributable to a period " in s 419A(2). If the drafter intended s 419A(2) to cover all liabilities that are incurred during or at the end of a hiring agreement, it would have been simple enough to say so. There is nothing in the Harmer Report or in the Explanatory Memorandum that leads to any different conclusion. The Harmer Report considered that it was inequitable that a receiver should permit a company to use chattels under a hiring agreement without being liable to the payments which the company was liable to make for that continued use. A liability to replace all lost or damaged goods is difficult to characterise as a payment for continued use of those goods. The draft legislation prepared by the Law Reform Commission suggests, if anything, that it did not intend a liability of the kind imposed by cl 22 of the Hiring Agreement to be caught by s 419A(2).