Re Mossgreen Pty Ltd (in liquidation)
[2018] VSC 230
•9 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS’ LIST
S CI 2018 01603
IN THE MATTER OF MOSSGREEN PTY LTD (IN LIQUIDATION)
BETWEEN
| SOBRAZ PTY LTD | Plaintiff |
| NEIL ROBERTSON | Amicus curiae |
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JUDGE: | Robson J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 1, 8 May 2018 |
DATE OF JUDGMENT: | 9 May 2018 |
CASE MAY BE CITED AS: | Re Mossgreen Pty Ltd (in liquidation) |
MEDIUM NEUTRAL CITATION: | [2018] VSC 230 |
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CORPORATIONS – Mossgreen Pty Ltd (in liquidation) carried on business as an auctioneer – Company kept customers’ goods in warehouses – Administrators gave up possession of warehouse owned by the plaintiff – Plaintiff now in possession of customer’s goods – Liquidators do not intend to return the goods to customers – Application by plaintiff landlord for the appointment of receiver of the goods in its warehouse to assist owners to be given their goods – Application refused.
CORPORATIONS – Appointment of a receiver under s 27 of the Supreme Court Act 1958 or under the Court’s inherent jurisdiction – Jurisdiction discussed.
CONSUMER PROTECTION – Owners of goods entitled to delivery up of the goods under Part 4.2 of the Australian Consumer and Fair Trading Act 2012 (Vic) – Appointment of receivers may add to the charges the owners of the goods must pay to obtain delivery up of the goods and delay obtaining delivery up of goods – Opportunity given to owners of the goods to exercise rights under the Australian Consumer and Fair Trading Act 2012 (Vic) without costs and possible delays associated with appointment of a receiver.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P Fary | Maddocks |
| For the Amicus Curiae | Dr O Bigos | Piper Alderman |
| For the Liquidators | Ms L Papaelia | King & Wood Mallesons |
HIS HONOUR:
Mossgreen Pty Ltd (in liq) (‘Mossgreen’) is an auction-house that went into liquidation on 4 May 2018. Previously, administrators had been appointed to Mossgreen on 21 December 2017.
Mossgreen conducted a high-profile auction-house and gallery. In carrying on its business as an auctioneer, it held a large quantity of goods (the ‘consigned goods’) belonging to other people (the ‘consignors’). The consigned goods consisted of:
(a) goods delivered to it to be auctioned, but which had not yet been auctioned;
(b) goods delivered for auction, but which had failed to sell and which were awaiting collection by their owners; and
(c) goods which, although successfully sold at auction, had not been collected by the successful bidders.
Mossgreen had three warehouses in which it stored goods belonging to the consignors. Sobraz Pty Ltd (‘Sobraz’), the plaintiff in the application before me, is the landlord of one of these warehouses, which is situated at 1 Torteval Place, Clayton.
Upon appointment, the administrators undertook a stocktake of the goods held by Mossgreen at a cost in excess of $1 million.
The administrators then sought to levy each consignor with the sum of $353.20 per lot as a condition for releasing the lot to the consignor. The administrators asserted that they had an equitable lien that entitled them so to act.
The administrators sought a direction from the Federal Court of Australia that they were justified in acting on the basis that they were entitled to a lien for the expenses incurred for the identification, preservation, and distribution of the consigned items.[1] The administrators also sought a direction that they were accordingly entitled to impose a levy as a condition of the return of the goods to their rightful owners. Perram J of the Federal Court of Australia held that the liquidators were not so justified. The administrators appealed to the Full Federal Court.[2] The appeal was dismissed.
[1]Re White, Mossgreen Pty Ltd (admins apptd) [2018] FCA 471 (9 April 2018).
[2]White (in their capacities as voluntary administrators of Mossgreen Pty Ltd) (admins apptd) v Robertson [2018] FCAFC 63 (19 April 2018).
On 23 April 2018, the administrators gave notice to Sobraz under s 443B(3) of the Corporations Act that they did not propose to exercise rights in relation to Sobraz’s warehouse. The administrators thus gave up possession of the warehouse to the landlord.
By an originating process dated 1 May 2018, Sobraz applies under s 37(1) of the Supreme Court Act 1986 (Vic), or in the inherent jurisdiction of the Court, for orders, inter alia, that Andrew William Beck and Ben Charles Verney be appointed as joint and several receivers (‘Receivers’) without security to any goods (‘Goods’) in the premises at Clayton. Sobraz asked for the Receivers to have the following powers:
(a) to enter into possession and take control of the Goods;
(b) to insure the Goods;
(c) to take on, lease, or hire or to acquire any property necessary or convenient in connection with the carrying on of the receivership;
(d) to appoint a solicitor, accountant, or other professionally qualified person to assist the Receivers;
(e) to appoint an agent to do any business that the Receivers were unable to do, or that it was unreasonable to expect the Receivers to do in person;
(f) to investigate ownership of the Goods;
(g) to prepare and file a report to the Court within seven days outlining the status of the Receivers’ investigations and the Receivers’ proposed approach for the ‘expeditious and cost-effective’ return or sale of the Goods; and
(h) to do all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the Receivers were appointed.
Sobraz sought other orders as well, largely relating to costs.[3]
[3]Sobraz Pty Ltd, Originating Process, 1 May 2018, [4]–[5], [7].
The application by Sobraz came before me on 2 May 2018. I was informed that the administrators of Mossgreen were holding a second meeting of creditors on 4 May 2018, and that the administrators were proposing to recommend that the creditors resolve to wind up the company.[4] I expressed the view that, if that was the case, I would prefer to hear from the liquidators as to their views as to their responsibilities in relation to the Goods.[5] Accordingly, I adjourned the matter to 8 May 2018, with directions for service of the plaintiff’s material on the administrators, or, if appointed, the liquidators.
[4]Transcript of Proceedings, Sobraz Pty Ltd (Supreme Court of Victoria, S CI 2018 01603, Robson J, 2 May 2018) 2 (P Fary).
[5]Transcript of Proceedings, Sobraz Pty Ltd (Supreme Court of Victoria, S CI 2018 01603, Robson J, 2 May 2018) 28 (Robson J).
On 7 May 2018, Mr Neil Robertson sought leave to appear as amicus curiae. Mr Robertson was a party to the Full Federal Court appeal. Mr Robertson had delivered a substantial collection of antique furniture, paintings, drawings, prints, pottery, objets d’art, and other goods to Mossgreen for auction.
A small part of Mr Robertson’s collection was sold in December 2017, but Mr Robertson has not received the proceeds from the sale as yet.
Mr Robertson’s goods are stored in the Clayton warehouse owned by Sobraz.
Mr Robertson opposes the appointment of a Receiver of the goods. Mr Robertson submits that the scheme under the Australian Consumer Law and Fair Trading Act 2012 (Vic) pt 4.2, which is titled ‘Disposal of uncollected goods,’ should be permitted to proceed without the appointment of Receivers at this stage.
It should be noted that in this proceeding, and in this judgment, the word ‘receiver’ is used to denote two distinct concepts. First, ‘receiver’ has the meaning of the word as it is commonly understood:[6]
a person appointed … to take possession of property and to deal with it as directed. In the context of company law a receiver is a person appointed to take control of a company’s undertaking, or part of its property, for enforcement of a creditor's security or to prevent improper disposal of the company’s property.
The word has a second meaning, that given to it under the Australian Consumer Law and Fair Trading Act 2012 (Vic): ‘the person who takes possession of goods under a bailment.’[7] In this judgment I will refer to the first kind of receiver with a capital letter, and to the second kind with a lower-case letter.
[6]Ford, Austin & Ramsay’s Principles of Corporations Law (LexisNexis Butterworths, 2018) [25.030].
[7]Australian Consumer Law and Fair Trading Act 2012 (Vic) s 3, definition of ‘receiver’.
The liquidators appeared through counsel, Ms Papaelia, and informed the Court that the liquidators do not intend to take any steps in relation to the goods that were consigned to the company but which were no longer in the possession of the company.[8] The liquidators referred to s 545 of the Corporations Act that provides:
(1)Subject to this section, a liquidator is not liable to incur any expense in relation to the winding up of a company unless there is sufficient available property.
(2)The Court or ASIC may, on the application of a creditor or a contributory, direct a liquidator to incur a particular expense on condition that the creditor or contributory indemnifies the liquidator in respect of the recovery of the amount expended and, if the Court or ASIC so directs, gives such security to secure the amount of the indemnity as the Court or ASIC thinks reasonable.
(3)Nothing in this section is taken to relieve a liquidator of any obligation to lodge a document (including a report) with ASIC under any provision of this Act by reason only that he or she would be required to incur expense in order to perform that obligation.
The liquidators informed the Court that they do not have any proceeds with which to carry out any further steps in relation to the goods that were formerly in the possession of the company.[9]
[8]Transcript of Proceedings, Sobraz Pty Ltd (Supreme Court of Victoria, S CI 2018 01603, Robson J, 8 May 2018) (L Papaelia).
[9]Transcript of Proceedings, Sobraz Pty Ltd (Supreme Court of Victoria, S CI 2018 01603, Robson J, 8 May 2018) (L Papaelia).
The administrators, as mentioned above, have previously given up occupation of the Clayton warehouse. By so doing, they have also given up possession of the goods in the warehouse. I accept that those goods are now in the possession of the landlords of the premises, and in particular that Sobraz is in possession of the goods in its warehouse.
‘Uncollected goods’ are defined under s 54 of pt 4.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic). Under s 54(1)(d), goods under bailment are uncollected goods if:
the provider has not paid the relevant charge payable to the receiver in relation to the goods within a reasonable time after being informed by the receiver that the goods are ready for delivery.
Dr Bigos, who appeared for Mr Robertson, submitted that his client’s goods are not ‘uncollected goods’ within that definition, because the provider (being his client, Mr Robertson) has not been informed by the ‘receiver’ (being the landlord, Sobraz) that the goods are ready for delivery, nor has the relevant charge payable in relation to the goods been calculated or communicated to Mr Robertson. Section 55 provides:
(1)The relevant charge is the amount payable by the provider to the receiver for goods under bailment and payment of which entitles the provider to take delivery of the goods.
(2)Unless determined otherwise by a court order, the amount payable to the receiver is the sum of the following—
(a)for any carriage or storage of the goods or for any repairs, cleaning, treatment or other work done in connection with the goods—
(i)the amount agreed to by the provider and receiver as the charge payable to the receiver; or
(ii)in the absence of an agreement, an amount that is reasonable;
(b)the amount of costs for any storage, maintenance or insurance of the goods incurred by the receiver from—
(i)the giving of a notice under Division 2 of the receiver's intention to dispose of the goods until the disposal of the goods; or
(ii)the making of an application for a court order under Division 3 until the disposal of the goods.
Section 59 provides:
The provider, the owner of the uncollected goods or any other person with an interest in the goods is entitled, on payment of the relevant charge, to delivery of the goods at any time before their disposal.
As mentioned above, Mr Robertson’s goods are at this stage not classified as ‘uncollected goods.’ Nevertheless, Mr Robertson is a person with interests in the goods. Therefore, under the statutory scheme, Mr Robertson is entitled, when he pays the relevant charge, to delivery of the goods at any time before their disposal.
As mentioned above, the ‘relevant charge’ is the charge for any carriage or storage of goods or for any repairs, cleaning, treatment, or other work done in connection with the goods in ‘the amount agreed to by the provider and receiver as the charge payable to the receiver’ or, in the absence of an agreement, ‘an amount that is reasonable.’[10]
[10]Australian Consumer Law and Fair Trading Act 2012 (Vic) s 55(2)(a).
At this stage it appears that Mr Robertson would be liable for the cost of storing the goods for the period in which the administrators have no longer been in possession of the goods. The administrators gave up possession of the premises, and thus of the goods, on 20 April 2018, that being the date the administrators gave notice to Sobraz that they were no longer exercising their rights in relation to the premises.[11] The fee would be the amount that is reasonable for the storage of the goods or other work done in connection with the goods. At this stage it is not clear whether any other work has been done in connection with the goods.
[11]Email from James White to Sam Kingston and Pravin Aathreya, 20 April 2018, exhibited to the affidavit of Samuel Roadley Kingston, sworn 1 May 2018.
The statutory scheme provides for certain circumstances in which uncollected goods may be disposed of. Goods are characterised into low-value uncollected goods, medium-value uncollected goods, and high-value uncollected goods. Different provisions apply to the circumstances in which a receiver may dispose of the goods in those different categories.
As mentioned above, the Australian Consumer Law and Fair Trading Act 2012 (Vic) provides a scheme not only for the disposal of goods, but for obtaining delivery of goods by a person who has an interest in the goods, if those goods are in the hands of a statutory receiver.
Section 57 provides:
The common law relating to the bailment of goods remains in force to the extent to which it is not affected by this Part and a person is entitled to exercise any rights that the person may have at common law in relation to the recovery of goods or compensation for the loss of or damage to goods except to the extent to which this Part otherwise provides.
In substance, Mr Robertson seeks to exercise his statutory rights. Mr Robertson opposes the appointment of a Receiver because such appointment will impose an extra layer of charges that the Receivers will seek to recoup from Mr Robertson and other persons who are entitled to property which is currently stored in the warehouse. As discussed above, a court may otherwise order that a further payment be made by the person entitled to the goods in favour of the receiver — that is, in this case, in favour of Sobraz. Under the Australian Consumer Law and Fair Trading Act 2012 (Vic), ‘court’ is defined to include VCAT. Mr Fary, who appeared on behalf of Sobraz, submitted that to be able to deal satisfactorily with the goods that have, by default, fallen into the possession of Sobraz, somebody has to be able to evaluate and identify the rightful claimants to and owners of the property. He submits that the most effective way of doing this is to appoint a Receiver. In the initial proceeding before Perram J in the Federal Court of Australia, his Honour noted several options that were open to the administrators.[12]
A third option was for the administrators, having no claim on the consignors’ goods and no need to deal with them for the purposes of administering the company’s property, in effect, to appoint themselves as receivers de son tort of the consigned goods. Under this option, the administrators would take charge of the consigned goods with a view to returning the consigned goods to the consignors.
[12]Re White, Mossgreen Pty Ltd (admins apptd) [2018] FCA 471 (9 April 2018) [8].
The second option noted by his Honour was that the administrators could apply to the Court to appoint Receivers of the consigned goods. His Honour said: ‘The classes of case where the Court may appoint receivers is not closed and the remedy is a flexible one.’[13] His Honour said that, had the administrators applied for the appointment of a Receiver, the ensuing process would have been under the supervision of the Court.
[13]Re White, Mossgreen Pty Ltd (admins apptd) [2018] FCA 471 (9 April 2018) [7], citing University of Western Australia v Gray (No 6) [2006] FCA 1825, [71]–[72] (French J).
There is clear authority, therefore, for the view that a Receiver could be appointed, as Mr Fary contends ought to be done.
My concern is, however, that the appointment of a Receiver would add an extra layer of expense to the operation of the statutory scheme of the Australian Consumer Law and Fair Trading Act 2012 (Vic).
The landlord, Sobraz, which is the receiver within that word’s meaning in pt 4.2 of the Australian Consumer Law and Fair Trading Act 2012 (Vic), may undertake its task of identifying the owners of the goods in the warehouse. What, if any, assistance Sobraz will receive from the liquidators is not clear. I assume that the liquidators now hold the stocktake information that they accumulated in their role as administrators.
It is not necessary to answer the question of whether the liquidators are under any obligation to inform the consignors, whose goods were entrusted to Mossgreen’s possession, that they may wish now to pursue their rights under the Australian Consumer Law and Fair Trading Act 2012 (Vic). Nevertheless, it could be useful if the liquidators informed the consignors that the Court has declined the landlord’s application to appoint a Receiver so that the consignors may pursue their rights under the Australian Consumer Law and Fair Trading Act 2012 (Vic).
In my opinion, it is appropriate that Mr Robertson should be able to avail himself of his rights under the Australian Consumer Law and Fair Trading Act 2012 (Vic) without the extra costs of the appointment of Receivers being imposed upon him. There may well be others who also fall into the same category as Mr Robertson, who may be able to readily identify their goods and give the appropriate notice under the Australian Consumer Law and Fair Trading Act 2012 (Vic) seeking to claim delivery up of their goods by the landlord. In my opinion, a reasonable time should be given for Mr Robertson, and those others in similar positions, to avail themselves of their statutory rights unencumbered by the appointment of a Receiver.
I acknowledge that if Receivers are appointed, they could distribute the goods to the consignors without the necessity that the consignors resort to the Australian Consumer Law and Fair Trading Act 2012 (Vic). I accept that at some stage, when the statutory scheme has been given a reasonable time to operate without the appointment of a Receiver, it may be appropriate for a Receiver to be appointed. I do not need to decide the matter at this time.
I also acknowledge that the Receivers would be subject to the Australian Consumer Law and Fair Trading Act 2012 (Vic) but, nevertheless, would seek the Court’s approval to levy additional charges on the consignors, as a condition of the return of their consigned goods.
Accordingly, I reject the application of Sobraz for the appointment of a Receiver and manager over the stock it currently possesses in its warehouse. By doing so, I do not mean or intend that at some future time a further application by Sobraz should not be entertained. Accordingly, the application is dismissed. In the circumstances I will make no order for costs.
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