In the matter of Renovation Boys Pty Ltd (admins apptd) (No 2)
[2014] NSWSC 354
•26 March 2014
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Renovation Boys Pty Ltd (admins apptd) (No 2) [2014] NSWSC 354 Hearing dates: 26 March 2014 Decision date: 26 March 2014 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Order made amending previous directions to extend to claims by retention of title holders
Catchwords: CORPORATIONS - voluntary administration - application by administrators for directions under Corporations Act 2001 (Cth) s 447D -- whether an equitable lien entitles administrators to impose a levy upon retention of title holders to whom relevant stock is made available in respect of costs incurred to identify and maintain that stock. Legislation Cited: - Corporations Act 2001 (Cth) s 447D Cases Cited: - Coad v Wellness Pursuit Pty Ltd (in liq) [2009] WASCA 68; (2009) 226 FLR 91; (2009) 71 ACSR 250 Category: Interlocutory applications Parties: Jason Mark Tracy and Vaughan Neil Strawbridge in their capacity as joint and several administrators of Renovation Boys Pty Ltd (admins apptd) (Plaintiffs) Representation: Counsel:
J Shepard (Plaintiffs)
Solicitors:
Gadens Lawyers (Plaintiffs)
File Number(s): 2014/78844
EX TEMPORE Judgment (Revised 27 March 2014)
On 25 March 2014, I delivered judgment in these proceedings ([2014] NSWSC 340) that set out my reasons for making certain orders in respect of the conduct of the administration of Renovation Boys Pty Ltd ("Company"). I amended the orders proposed by the administrators in several respects, but stayed the orders until 6pm today to allow the administrators or any interested person to bring the matter back before the Court if any issue arose in respect of the amended orders that I may not have anticipated.
The administrators have, properly, raised a question as to the omission from paragraph 1(f) of the orders that I had made of the words "and by valid retention of title holders" contained in their draft orders. As they point out, the effect of that omission was that the administrators would not be directed that they were justified in requiring payment of a levy by retention of title holders so far as the stock items are made available to them.
In amending the orders, I had deleted the words "and by valid retention of title holders" in that paragraph because I had held that a direction should be made with effect that customers' claims to stock within category "A" (as described in that judgment) would be recognised to the exclusion of claims of retention of title holders over stock within that category. However, the administrators have drawn my attention to the fact that I had not had regard to the fact that retention of title claims exist in categories of goods as to which the administrators had formed a view and (subject to the issue of retention of title claims) proposed to act on that view without the need for further directions of the Court.
The administrators had submitted before me that, so far as the issue arose in respect of those categories, a prior securityholder would not be able to rely on any priority arising from that position against the equitable lien available to a voluntary administrator because to do so would be unconscientious. Although there has been some debate as to that question in the authorities, the position in which the administrators refer is consistent with appellate authority, having been adopted by the Supreme Court of Western Australia in Coad v Wellness Pursuit Pty Ltd (in liq) [2009] WASCA 68; (2009) 226 FLR 91; (2009) 71 ACSR 250 at [95]-[96].
I had set out in my judgment the steps that had been and would be taken by the administrators to maintain stock and make it available to claimants to it, which have included the retention of the warehouse premises in which the stock is located, employees and equipment required to handle that stock. I have held in my judgment that the administrator should have leave to sell the stock, which is subject to retention of title claims, and which is not otherwise to be distributed to customers, subject to treating the proceeds in accordance with the provision of Pt 5.3A Div 8 of the Corporations Act 2001 (Cth). The reasoning in my judgment that supported the assertion of an equitable lien by the administrators in respect of the stock to be delivered to customers, equally supports the assertion of an equitable lien in respect of persons with retention of title claims. In particular, it seems to me that it would be unconscientious for those persons to now take property in the stock, without recognising the efforts that the administrators have made to identify and preserve it, so that it can be made available to them.
For these reasons, I now make a further order, amending order 1(f) of the orders that I had made on 25 March 2014, but stayed to later today, to insert in the second line, after the words "customers to whom title in stock items has passed", the additional words "and by valid retention of title holders", and to insert in the third line after the words "those customers", the words "and those retention of title holders".
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Decision last updated: 04 April 2014
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