De Vries v Rapid Metal Developments (Australia) Pty Ltd

The appeal concerned the liability of the appellants, as controllers appointed under a charge, for rent due to the respondent, Rapid Metal Developments (Australia) Pty Ltd ("RMD"), for scaffolding hired by a company. RMD contended that the controllers were liable under s 419A(2) of the *Corporations Act 1989* (Cth) for payments due under a hiring agreement for scaffolding that remained in the company's possession. The dispute also involved a claim for conversion concerning the sale of the scaffolding by the controllers.

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).