Reel Action Sports Fishing Pty Ltd (ACN 092 732 888) v Marine Engineering Consultants Pty Ltd (in Liq) - [2022] QSC 271

SUPREME COURT OF QUEENSLAND

CITATION:

Reel Action Sports Fishing Pty Ltd (ACN 092 732 888) v Marine Engineering Consultants Pty Ltd (in Liq) & Anor [2022] QSC 271

PARTIES:

REEL ACTION SPORTS FISHING PTY LTD ACN 092 732 888

(plaintiff)

v
MARINE ENGINEERING CONSULTANTS PTY LTD (In Liquidation)

(first defendant)

CHRISTOPHER JOHN BASKERVILLE
(second defendant)

FILE NO/S:

BS 1377/21

DIVISION:

Trial Division

PROCEEDING:

Claim

ORIGINATING COURT:

Supreme Court of Queensland at Brisbane

DELIVERED ON:

13 December 2022

DELIVERED AT:

Brisbane

HEARING DATE:

11, 12 August 2022 and 5 September 2022.

JUDGES:

Brown J

ORDER:

The Orders of the Court are:

1.   The plaintiff has leave to proceed against the second defendant;

2.   A declaration that the plaintiff was until 15 September 2021 the owner of the Vessel;

3.   A declaration that the plaintiff had until 15 September 2021 the right to immediate possession of the Vessel;

4. A declaration that no interest in the Vessel or its sales proceeds has vested in the first defendant pursuant to s 267 of the PPSA;

5.   The defendants are liable to pay damages for conversion to the plaintiff in the amount of $20,000 being the difference of the value of the boat of $550,00 at the date of conversion less the price for the sale of the Vessel in September 2021;

6.   The parties are directed to provide orders for the payment of monies maintained in trust accounts of the plaintiff’s solicitors and defendants’ solicitors after the sale of the Vessel, damages for conversion or otherwise to give effect to the declarations made, in accordance with these reasons and as to interest by 2pm on 16 December 2022;

7.   The parties are to provide submissions in relation to orders of costs by email to the Associate for Brown J by 4pm on 20 December 2022.

CATCHWORDS:

CORPORATIONS — INSOLVENCY — WINDING UP — SECURITY INTEREST – where the plaintiff entered into a contract with the first defendant for the construction of a Vessel – where a dispute arose between the parties and the parties subsequently entered into a deed of settlement and guarantee – where the Vessel was incomplete at the time of the first defendant’s winding up – where the Vessel was subsequently sold to a third party – whether the plaintiff or first defendant is entitled to the proceeds of sale – where there are competing security interests – whether the plaintiff has any interest in the Vessel on the proper construction of the deed of settlement and guarantee – whether the plaintiff’s interest in the Vessel is a security interest within the meaning of s 12(1) of the Personal Property Securities Act 2009 (Cth) – whether registration was effective – whether plaintiff’s security interest has priority – whether the plaintiff took the Vessel free of any other security interests pursuant to section 46(1) of the Personal Property Securities Act 2009 (Cth)

CORPORATIONS – WINDING UP – LIQUIDATORS – DUTIES AND LIABILITIES – NEGLIGENCE – where the second defendant was appointed to wind up the first defendant – where the second defendant’s position was that that the plaintiff did not have an effective security interest in the Vessel and detained the Vessel – where the Vessel was moved outside at the direction of the second defendant and damaged as a result of being stored outside – whether the second defendant owed the plaintiff a duty of care in respect of its dealings with the Vessel – whether the second defendant breached any such duty of care

CORPORATIONS – WINDING UP – LIQUIDATORS – CONVERSION – where the second defendant denied the plaintiff’s entitlement to possession – where the Vessel was subsequently sold to a third party – whether the second defendant is liable for conversion

Civil Liability Act 2003 (Qld) s 9
Corporations Act 2001 (Cth) ss 180, 182, 474, 478,479, 545, 530C, 568, 1318
Personal Property Securities Act 2009 (Cth) ss 8, 12, 46, 151, 164, 254, 267

Aardwolf Industries LLC v Riad Tayeh [2020] NSWSC 299, considered
Aardwolf Industries LLC v Tayeh [2020] NSWCA 301, cited
Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd (2017) 324 FLR 378; [2017] NSWSC 1230, considered
Australian Securities and Investments Commission (ASIC) v Vines (2005) 65 NSWLR 281; [2005] NSWSC 1349, cited
Balanced Securities Ltd v Dumayne Property Group Pty Ltd (2017) 53 VR 14; [2017] VSCA 61, considered
Bredenkamp v Gas Sensing Technology Corporation, Re Welldog Pty Ltd (In Liq) (Recs and Mgrs Apptd) [2017] FCA 1065, cited
Brookfield Multiplex Limited and Owners Corporation Strata Plan 61288 & Anor (2014) 254 CLR 185; [2014] HCA 36, cited
Brybay Pty Ltd (in liq) & Ors v Esanda Finance Corp Ltd [2002] WASC 309, considered
Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185; [1966] HCA 38, cited
Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258, considered
Chelliah v NSW Police [2018] NSWSC 55, cited
Concut Pty Ltd v Worrell (2000) 176 ALR 693; [2000] HCA 64, cited
Crouch v Adams [2006] NSWSC 1029, cited
Crowther v Australian Guarantee Corp Ltd (1985) Aust Torts Rep 80-709, cited
Dura (Australia) Constructions Pty Ltd (in liq) (recs and mgrs apptd) v Hue Boutique Living Pty Ltd (formerly SC Land Richmond Pty Ltd) (2014) 49 VR 96 [2014] VSCA 326, cited
Federal Commissioner of Taxation v Sara Lee Household & Body Care Australia Pty Ltd (2000) 201 CLR 520; [2000] HCA 35, cited
Flowfill Packaging Machines Pty Ltd v Fytore Pty Ltd (1993) Aust Torts Reports 81-244, cited
Future Revelation Ltd v Medica Radiology & Nuclear Medicine Pty Ltd (2013) 283 FLR 122; [2013] NSWSC 1741, considered
Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236; [1987] HCA 30, considered
General Motors Acceptance Corp Australia v Southbank Traders Pty Ltd (2007) 227 CLR 305; [2007] HCA 19, cited
Gold Valley Iron Pty Ltd (In Liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134, cited
Hausmann v Smith (2006) 24 ACLC 688; [2006] NSWSC 682, cited
Hillam v Iacullo, (2015) 90 NSWLR 422; [2015] NSWCA196, cited
Hobbs v Petersham Transport Co Pty Ltd; Petersham Transport Co Pty Ltd v ASEA Electric (Australia) Pty Ltd (1971) 124 CLR 220; [1971] HCA 26, considered
Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172, considered
Maelor Jones Investments (Noarlunga) Pty Ltd & Ors v Heywood-Smith (1989) 54 SASR 285, considered
Marsh v Baxter (2015) 49 WAR 1; [2015] WASCA 169, cited
McDermott v Black (1940) 63 CLR 161; [1940] HCA 4, considered
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited
National Australia Bank Ltd v Garrett (2016) 340 ALR 532; [2016] FCA 714, considered
Perpetual Nominees Limited v McGoldrick & Anor (No 3) (2017) 317 FLR 227; [2017] VSC 78, considered
Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36, cited
Re Blyth Shipbuilding and Dry Docks Company, Limited [1926] 1 Ch 494, considered
Re Lambert (1994) 20 OR (3d) 108, cited
Re Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd [2013] NSWSC 852, cited
Re OneSteel Manufacturing Pty Ltd (Admin Apptd) [2017] NSWSC 21, cited
Schreuders v Grandiflora [2016] VSCA 93, cited
Seaman v Silvia [2018] FCA 97, considered
Spittlehouse v Northshore Marine Inc. (1994) 18 O.R. (3d) 60; [1994] OJ No. 809, cited
Sydlow Pty Ltd (in liq) v TG Kotselas Pty Ltd & Ors (1996) 65 FCR 234, considered
Viscariello v Macks (2014) 103 ACSR 542; [2014] SASC 189, cited
Warehouse Sales Pty Ltd (in Liq) & Lewis and Templeton v LG Electronics Australia Pty Ltd (2014) 291 FLR 407; [2014] VSC 644, considered
Williams (as liquidator of Scholz Motor Group Pty Ltd) (in liq) v Scholz [2007] QSC 266, cited
Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16, cited

COUNSEL:

J W Peden QC with B Vass for the plaintiff
P O’Brien for the first and second defendants

SOLICITORS:

Broadley Rees Hogan for the plaintiff
Thynne + Macartney Lawyers for the first and second defendants

Reel Action Sports Fishing Pty Ltd (formerly known as Bribie Island Charters Pty Ltd), (the plaintiff), entered into a Vessel Construction Agreement (the VCA) with Marine Engineering Consultants Pty Ltd (the first defendant), which carried on the business of boat building, on 27 September 2017 whereby the first defendant agreed to build a 17-metre catamaran (the Vessel)[1] for the plaintiff. On 13 March 2019, the plaintiff lodged for registration on the Personal Property Securities Register (PPSR), a document notifying its security interest over the Vessel. Prior to completion of the Vessel, a dispute arose between the plaintiff and the first defendant which resulted in the parties entering into a Deed of Undertaking, Warranty and Forbearance on or around 13 August 2019 (the Undertaking) and subsequently, a Deed of Settlement and Guarantee dated 31 October 2019 (the Deed of Settlement). A sale to a third party of the incomplete Vessel which was contemplated by the Deed of Settlement did not occur. The Vessel remained in the shed known as “Shed H60” at the Gold Coast. On 27 November 2020, the first defendant was ordered to be wound up and Christopher Baskerville (the second defendant) was appointed by the Court as liquidator. On 5 February 2021, the plaintiff instituted proceedings in this Court seeking delivery of the possession of the Vessel. Subsequently the matter was ordered to proceed by claim and statement of claim. By negotiation between the parties, the Vessel was sold on 15 September 2021 and the funds were placed in the trust account of the solicitors for the plaintiff and first defendant.
[1]The reference to ‘Vessel’ in this judgment refers to the catamaran in whatever state of construction.
The plaintiff claims it owned the Vessel after making a payment on 5 October 2017 to the first defendant under the VCA, which provided for a transfer of title to the plaintiff of the Vessel. The defendants contend that any proprietary right of the plaintiff in the Vessel ended when the parties entered into the terms of the Deed of Settlement, and the plaintiff had no interest in the Vessel after 31 October 2019. In any event, the defendants contend that the provision for the transfer of title together with other terms of the VCA created a security interest which was unperfected when the first defendant was wound up.
The present dispute requires the Court to determine which party is entitled to the proceeds of sale. The Court is further required to determine a claim for damages by the plaintiff as a result of wrongful detention of the Vessel by the defendants in conversion and negligence due to the Vessel being moved outside of Shed H60 at the direction of the second defendant.
Subject to a question of leave to amend the relief sought by the plaintiff being granted, the defendants agree the broad issues for determination by the Court have been correctly outlined by the plaintiff’s Counsel in their closing submissions.[2] Given the defendants identify a threshold issue I have added the original issue from the Agreed List of Issues to the issues for determination. The Court must determine:
[2]Agreed List of Issues.
(a)did the plaintiff have any interest in respect of the Vessel upon entry into the Deed of Settlement;
(b)is the plaintiff’s ownership of the Vessel a security interest within the meaning of s 12(1) of the Personal Property Securities Act 2009 (Cth) (PPSA);
(c)if the plaintiff’s ownership is a security interest:
(i)is its registration effective; and
(ii)what is the priority of the plaintiff’s security interest;
(d)did the plaintiff take the Vessel free of any other security interests pursuant to section 46(1) of the PPSA; and
(e)are the defendants liable for conversion or negligence, and if so, what damages flow to the plaintiff;[3]
(f)if the plaintiff is not entitled to judgement as to ownership of the Vessel, is the second defendant entitled to a lien;[4]
[3]This issue subsumes issues 5, 6, 7 and 8 of the Agreed List of Issues handed up at trial.
[4]Leave was given to the defendants to amend its defence in relation to [24A] of the Second Further Amended Defence on 12 August 2022.

An issue as to whether there was a Vessel which existed and could be sold that was raised by the defendants in the second further amended defence was ultimately not pressed at trial. The fact that construction of the Vessel had not begun on 5 October 2017 is still a matter of relevance to the passing of title which I will consider.
Evidence at the trial was primarily given by way of affidavit. Some additional oral evidence and cross-examination occurred. There is little dispute in relation to the factual matters relevant to issues 1 to 4, save in respect of whether the registration of the security interest contained a seriously misleading defect. The factual issues with respect to the claim for damages for conversion and negligence are more contentious. If the Court determines that the plaintiff had ownership of the Vessel, and that it was not a security interest, the issues within [4(c)] above do not fall for determination. I will outline the background facts which are generally uncontentious and are particularly relevant to the issues in [4(a)-(d)] above.
Background factual matters
The National Australia Bank (NAB) registered an all present and after acquired property security interest by two registrations dated 30 January 2012 and 17 August 2012 against the first defendant.
The plaintiff and first defendant signed the VCA dated 27 September 2019.
The Vessel[5] was a bespoke build which catered to the plaintiff’s particular needs as it intended to use the Vessel in its fishing charter business.
[5]In referring to the ‘Vessel’ I refer to the vessel the subject of construction under the VCA at its various stages of construction.
The first stage payment under the VCA was invoiced by the first defendant in the sum of $484,000 including GST on 27 September 2017 and was paid by the plaintiff on 5 October 2017.
Between 5 October 2017 and 4 September 2018, the plaintiff paid $1,709,933.50 to the second defendant for the construction of the Vessel.
From about October 2017 to on or around 28 March 2019, the first defendant took steps to construct the Vessel.
The director of the plaintiff became concerned as to the progress of the construction of the Vessel during an inspection in March 2019.
On 13 March 2019, the plaintiff, by its solicitors, lodged for registration on the PPSR two security interests over the Vessel (insofar as it had one), a watercraft registration and an “other goods registration”. The relevant registration for these proceedings was the “other goods registration”, a general security interest.
In or around April 2019, the plaintiff and first defendant fell into dispute regarding the construction of the Vessel, as the plaintiff raised concerns that the construction of the Vessel was not occurring in accordance with the timeframes required by the VCA and that the Vessel was too small, which could not be rectified by a change to the internal layout. As a result, the first defendant was told to stop work. In the course of negotiations regarding the dispute, Mr Murray Owen, director of the first defendant company prior to its liquidation, agreed with the plaintiff that the plaintiff could leave the Vessel in the first defendant’s business premises, being a secure shed at the Gold Coast City Marina, Shed H60, free of charge, pending the resolution of the dispute.
It appears that no further work was done on the Vessel. The Vessel at that time was a shell of the hull with a partial fit out.
The dispute resulted in the plaintiff, first defendant and Mr Owen entering into two deeds:
(a)the Undertaking; and
(b)the Deed of Settlement.
Contrary to what was contemplated in the Undertaking and Deed of Settlement, the Vessel was not sold to a third party and the first defendant did not perform the terms of the Deed of Settlement.
Following the non-performance of the Deed, the Vessel remained in Shed H60, pursuant to a gratuitous bailment between the plaintiff and first defendant.
On 6 December 2019, the plaintiff commenced proceedings against the first defendant and Mr Owen for the monies said to be owed to the plaintiff under the Deed of Settlement in the Supreme Court.
On 27 November 2020, the first defendant was wound up.
There was an exchange of correspondence between the plaintiff’s solicitors and the solicitors acting on behalf of the defendants between December 2020 and March 2021 where the plaintiff asserted primarily that it held title to the Vessel under the terms of the VCA, and in any event held a valid PPSR security interest. The defendants’ solicitors disputed that the plaintiff had an effective security interest, claimed it had vested in the first defendant and claimed a lien over the Vessel.
In December 2020 the Vessel was shifted out of Shed H60 into open storage at the discretion of the second defendant. That is said to have resulted in damage to the Vessel, which is supported by the evidence in this Court.
On 5 February 2021 the plaintiff instituted the current proceedings by originating application in the Supreme Court. That application was opposed by the defendants and the matters subsequently proceeded by way of claim.
The Vessel in its incomplete state was ultimately sold to a company, Lemoncrest Pty Ltd (Lemoncrest), on 15 September 2021 for $530,000, as documented by a Vessel Sale Deed of the same date (the Vessel Sale Deed) by agreement of the plaintiff and defendants.
Under the terms of the Vessel Sale Deed, the sum of $370,000 is held in the plaintiff’s solicitor’s trust account and $160,000 is held in the defendants’ solicitor’s trust account, pending the resolution of this dispute. That remains the case.
Leave
The plaintiff obtained leave to proceed against the first defendant but not against the second defendant. The plaintiff filed an application for leave together with an affidavit on the first day of trial. The second defendant opposed leave being given to proceed with a claim against the second defendant and for a damages claim against the first defendant.
The plaintiff contends that leave ought to be granted because:
(a)the claim is not spurious or vexatious;
(b)the claim does not wrongfully interfere with the winding up process; and
(c)the claim has sufficient merit to justify the granting of leave.
The plaintiff further notes that it made its claim to the Vessel at an early stage of the liquidation and that the second defendant asserted that the Vessel had vested in the first defendant but did not apply for judicial advice. It also contends that the second defendant moved the Vessel outside and took no action to make it watertight, notwithstanding it was on notice from the plaintiff that the Vessel would likely be damaged if exposed to the elements. The second defendant has been a party since the matter proceeded by way of a claim.
The Court must be conscious to protect a Court appointed liquidator from spurious or vexatious litigation. In the present case however, while satisfied that the plaintiff has an arguable case in negligence and conversion, I have not found that there is a duty of care owed in this instance. There is a significant overlap of the factual evidence for each cause of action. I have found that the plaintiff has established that the defendants are liable in conversion. In the circumstances I consider it is in the interests of justice that leave be granted for the plaintiff to proceed with its claims against the second defendant.
The defendants also contend that the claim for damages for conversion and negligence were added after the originating application and leave is required to proceed against the first defendant. I am satisfied however that, as pleaded in the Amended Reply, orders made on 26 February 2021 which provided for leave to proceed against the first defendant and that the applicant file and serve its claim and statement of claim was sufficient to provide leave. In the circumstances it was not necessary for the plaintiff to seek leave in relation to the claim for conversion and negligence against the first defendant.
Parties’ contentions – plaintiff’s interest in the Vessel

The plaintiff’s contentions include that:
(a)the VCA operated to transfer title in the Vessel to the plaintiff on or about 5 October 2017 and it owned the Vessel in whatever state it was constructed, and from that time no security interest was created by the VCA;
(b)from 5 October 2017, the remaining obligations under the VCA were for the first defendant to construct a stage of works, certify that stage and issue an invoice. The plaintiff was then to pay the invoice after each stage of work. The performance of the first defendant’s obligations was secured by the stage payments, not the plaintiff’s ownership of the Vessel;
(c)if the first defendant failed to perform its obligation to build the Vessel and thereby committed a material breach of the VCA, the plaintiff could give notice under cl 14.1(b) of the VCA and terminate the VCA if the breach was not rectified within 28 days;
(d)if the plaintiff did terminate the VCA, then, subject to it having paid for the works that had been undertaken (pursuant to cl 14.3 of the VCA and the first defendant’s workman’s lien), it could retrieve its Vessel (as bailor and owner of the Vessel);
(e)if the plaintiff terminated the VCA, it could then sue the first defendant for damages attributed to its failure to keep building the Vessel, or for defective work that claim would be unsecured;
(f)if the plaintiff failed to perform its obligations under the VCA, the first defendant could retain possession of the Vessel until it was paid for the work it had performed under a workman’s lien. Thus, the only party that had any form of security under the VCA was the first defendant which was outside the operation of the PPSA;
(g)by the time of the first defendant’s liquidation on 27 November 2020, the VCA had been terminated;
(h)in the circumstances whereby the plaintiff acquired ownership of the Vessel, the plaintiff’s ownership did not secure the first defendant’s performance of the VCA and the plaintiff did not have a security interest in the Vessel;
(i)the plaintiff remained the owner of the Vessel from 5 October 2017 until it was sold to Lemoncrest on or about 15 September 2021;
(j)once title in the Vessel passed in October 2017, the relationship between the plaintiff and the first defendant was in the nature of a bailment. It arose under the common law on the basis that the plaintiff granted the first defendant an exclusive right to possess the Vessel for the purpose of constructing it, the defendant voluntarily assumed the possession and the obligation to keep the Vessel safe including by cl 13 of the VCA, and the first defendant was obliged to return the Vessel to the plaintiff upon completion of construction pursuant to the VCA or earlier termination of the VCA[6];
(k)section 8(1)(c) of the PPSA applied to the bailment;
(l)the security interest in the Vessel was registered on the PPSR by the plaintiff only out of precaution and to the extent that the plaintiff’s interest was a security interest;
(m)the Deed of Settlement did not supersede or replace all of the terms of the VCA, particularly the plaintiff’s ownership of the Vessel under cl 15.3, or the rights and obligations that ran with bailment;
(n)the first defendant sold the Vessel to the Plaintiff in the ordinary course of its business as a boat builder, in which it sold constructed vessels of that kind;
(o)in the circumstances, the plaintiff took the Vessel free of all security interests, particularly NAB’s security interest, pursuant to section 46 of the PPSA;
(p)the plaintiff took the Vessel free of all other security interests and no security interest vested in the first defendant upon liquidation that would give it the right to own or retain possession of the plaintiff’s Vessel;
(q)the Vessel did not vest in the first defendant on liquidation; and
(r)by 27 November 2020, the plaintiff became entitled to immediate possession of the Vessel by reason of the first defendant’s liquidation, bringing the bailment to an end.
[6]Further Amended Statement of Claim at [11].
The defendants’ contentions include that:
(a)the VCA was a contract for supply of labour and services by the first defendant, and not for sale of a Vessel or boat;
(b)if it is found that title to any chattel could pass as at 5 October 2017, then title to the Vessel passed when it was intended to pass according to the VCA on or about 5 October 2017;
(c)the transfer of title was a “transaction” within the meaning of s 12(2) of the PPSA (which contains examples of transactions that may be a security interest);
(d)the transfer of title secured the ongoing performance by the first defendant of its obligations under the VCA;[7]
(e)in the circumstances the transfer of title was a security interest as provided for in s 12(2)(k) of the PPSA;
(f)the registration by the plaintiff of a security interest in the Vessel was ineffective because it was seriously misleading and therefore vested in the first defendant pursuant to s 267 of the PPSA;
(g)regardless of the position under the VCA, the defendants’ primary contention is that the plaintiff had no interest in the Vessel from 31 October 2019 following its entry into the Deed of Settlement, which they contend superseded and replaced the rights of the parties under the VCA;
(h)the Deed of Settlement did not contain any rights in favour of the plaintiff with respect to the Vessel and it ceased to have any ownership or security interest upon entry into the Deed of Settlement;
(i)any default under the Deed of Settlement resulted in a monetary claim against the first defendant and guarantor; and
(j)the Vessel vested in the first defendant and the plaintiff had no interest in the Vessel.
[7]Second Further Amended Defence at [16(b)(iii)(A)]; See cll 2, 3.2, 3.3, 4, 5, 8.2, 8.4, 10, 12, 13, 15.1, 15.2, 15.4, 16, 17.5, 17.6, 18.3 of the VCA.
The terms of the VCA
Amongst other things, the VCA provided:
(a)by cl 2.1, “[t]he Builder agrees to construct the vessel and the Buyer agrees to buy the vessel, generally described as Aluminium Power Catamaran (Hull No MECY20) (the Vessel), as more specifically described in the Specifications as set out in Schedule 1 together with any drawings and plans in accordance with the Terms of this Agreement”;
(b)by cl 2.2, “[t]he Builder is responsible for the costs and provision of all labour, materials and expertise in the construction of the Vessel”;
(c)by cl 3.1, “[t]he price of the Vessel is the amount set out in Schedule 2 (Contract Price). The Buyer agrees to pay the Contract Price by instalments as set out in Schedule 2 (Stage Payments) and subject to the terms of this Agreement”;
(d)by cl 3.3, “[t]he Builder must certify in writing that the stage has been satisfactorily completed whereupon the relevant Stage Payment will become due and payable 7 days following the receipt by the Buyer of the written certification in accordance with the terms of this Agreement”;
(e)by cl 9, remedies for the Builder (i.e., the first defendant) if the instalments are not paid which include the Builder being entitled to stop construction of the Vessel until payment, the right to charge interest after 14 days from the day payment was due and a right to terminate 28 days after the payment was due and payable;
(f)by cl 10, provision was made for the completion and delivery of the Vessel on conclusion of an acceptance trial and payment of the balance of the purchase price (cll 10.6 and 10.7);
(g)by cl 13, “[t]he Builder must insure the Vessel…in the joint names of the Builder and the Buyer from the date of this Agreement until the acceptance of delivery of the Vessel by the Buyer”;
(h)by cl 14, provision was made for termination of the VCA;
(i)by cl 15.1, “[t]he Builder warrants that title to all materials and equipment in the building of the Vessel, including the Vessel and all subsequently acquired materials whether incorporated in the Vessel or identified to be delivered with the Vessel, passes to the plaintiff upon payment of the First Stage Payment by the Buyer, free from all Security Interests, liens, claims, or encumbrances”;
(j)by cl 15.3, “[t]he Vessel and/or all materials and equipment purchased or appropriated from time to time by the Builder specifically for its construction (whether in their premises, upon the water or elsewhere) become the property of the Buyer upon the payment of the First Stage Payment”;
(k)by cl 15.4, “[t]he Builder will, insofar as it is reasonably practicable to do so, mark all individual items of equipment and materials which are purchased for or appropriated to the construction of the Vessel so that they are clearly identifiable as the Buyer’s property”;
(l)by cl 17, the parties addressed the PPSA including that:
(i)by cl 17.2, clause 17 of the VCA would apply “to the extent that the Buyer’s rights and interests under this Agreement, including for the avoidance of any doubt, the Vessel in whatever state or form of construction as contemplated by this Agreement, all equipment in respect of the Vessel whether supplied by the Buyer or the Builder, and any other arrangement under or contemplated by the Agreement (Collateral) constitutes a security interest”;
(ii)by cl 17.3, “[t]he Builder acknowledges and agrees that the Buyer may register its security interest…on the Personal Property Securities Register at any time after this Agreement is signed or accepted by the Builder”;
(iii)by cl 17.5, “[t]he Builder must not, without the Buyer’s written consent, assign, mortgage, grant a security interest in or otherwise part with possession of the Collateral”;
(iv)by cl 17.9, “if the Builder defaults under this Agreement, the Buyer may (in addition to any other rights it may have under this Agreement):
(A) enforce its security interest in the Collateral by exercising all or any of its rights under this Agreement or the PPSA; and
(B) exercise right of entry”;
(5)by cl 17.10, “[n]othing in this clause is limited by any other provision of this Agreement or any other agreement between the parties”; and
(6)by cl 17.11, “[n]otwithstanding the provisions this Clause, the risk in the Vessel remains at all times with the Builder until the actual delivery of the Vessel to the Buyer”.
The terms of the Deed of Settlement
The terms of the Deed of Settlement included the following[8]:
[8]Adapting it to be consistent with terminology used above.
(a)by recitals A and B, that the first defendant and the plaintiff entered into the VCA, and that the plaintiff had paid the first defendant the sum of $1,709,933.50 pursuant to the VCA (the BIC Amount);
(b)by recital D, that the plaintiff has a registered security interest over the Vessel;
(c)by recital F, that the first defendant had located a third party interested in acquiring the Vessel for a purchase price of $2,722,500 and had entered into a Vessel Construction Agreement with the third party;
(d)by recital H, that the parties had agreed to resolve the dispute on the terms in the Deed of Settlement including the payment of the Settlement Sum by the first defendant to the plaintiff;
(e)a definition of “Settlement Sum” under cl 1.1.12, which “means the sum of $1,755,504.89 including GST, calculated with reference to the BIC Amount ($1,709,933.50) and interest on the finance facility calculated to 11 November 2019 in the sum of $45,571.39;
(f)by cl 2.1, a recognition that the first defendant had entered into a Vessel Construction Agreement for the purchase by a third party of a Vessel for a total of $2,722,500 (inc. GST), with payment by seven instalments, with the first instalment of $1,750,000 on or before 11 November 2019, and six trailing monthly instalments through to May 2020;
(g)by cl 3.1, in consideration of the mutual covenants and releases contained in the Deed of Settlement, the plaintiff and the first defendant agreed on the following terms:
(i)the first defendant agreed to pay the Settlement Sum (as defined in the Deed of Settlement as $1,755,504.89) to the plaintiff as follows:
(A)     $1,550,000.00 by bank cheque or electronic funds transfer from the third-party buyer on or before 11 November 2019 (the Initial Payment);
(B)     $34,250.82 on or before 11 December 2019;
(C)     $34,250.82 on or before 11 January 2020;
(D)     $34,250.82 on or before 11 February 2020;
(E)      $34,250.81 on or before 11 March 2020;
(F)      $34,250.81 on or before 11 April 2020; and
(G)     $34,250.81 on or before 11 May 2020;
(h)by cl 3.1.2, a payment made by the third-party buyer to the plaintiff, on behalf of or at the direction the first defendant, was to be treated as a payment in reduction of the first defendant’s liability to the plaintiff;
(i)by cl 3.1.3, upon clearance of funds paid for the Initial Payment in accordance with clause 3.1.1.1, the plaintiff was to immediately, in the following order:
(i)release any and all PPSR security interests in the Vessel pursuant to the VCA; and
(ii)transfer the title and ownership in the Vessel to the third-party buyer or as otherwise directed by the first defendant.
(j)by cl 3.1.6 if any of the Instalment Payments were not cleared and received by the due date specified in clause 3.1.1, without prejudice to any other rights the plaintiff may have against the first defendant,
(i)the first defendant was in default of the Settlement Deed (cl 3.1.6.1);
(ii)if the first defendant did not comply with any Notice to Remedy issued by the plaintiff, the plaintiff was able to do, in its absolute discretion, any one or a number of things outlined in 3.1.6.3.1 to 3.1.6.3.4, none of which included any rights of recovery or possession of the Vessel itself;
(k)by cl 4.1, subject to the plaintiff receiving the Settlement Sum in cleared funds, the first defendant and plaintiff “release, discharge and forever quit and abandon all claims, causes of action or rights which either have, or may have, against each other in relation to the subject matter of the Dispute or otherwise the subject of this Deed save for a breach of this Deed”;
(l)by cl 9, the Settlement Deed was an entire deed and understanding between the parties on everything connected with the subject matter of the Settlement Deed and “supersedes any prior Deed or understanding on anything connected with that subject matter”; and
(m)by cl 17, provision for a guarantee by Mr Owens as director, which provides for some 17 events which would result in Mr Owens being liable.
Did the Deed of Settlement supersede and extinguish all rights under the VCA?
As set out above, the defendants contend that the Deed of Settlement superseded and replaced the VCA on the basis that it was in respect of the same subject matter as the VCA, in that it concerned the construction and sale of the Vessel. According to the defendants, in place of the rights and obligations of the plaintiff and the first defendant under the VCA, new rights were acquired by the plaintiff against the first defendant which obliged the first defendant to find a replacement customer and to pay the plaintiff more than the amounts paid by the plaintiff under the VCA with the first defendant’s director, Mr Owens providing a guarantee. The defendants submit that no rights in relation to the Vessel in favour of the plaintiff were provided for in the Deed of Settlement. Alternatively, it is said that the Deed of Settlement varied the VCA so new rights were created as against the first defendant and the director only, and not as against the Vessel or shell. Thus, according to the defendants, the plaintiff had no interest in the Vessel (in its incomplete form) after 31 October 2019 when the Deed of Settlement was executed by the parties.
The plaintiff however contends that the application of the Deed of Settlement only effected a change of title of the Vessel upon performance, namely when the plaintiff received the initial payment of the settlement sum in cleared funds, upon which the plaintiff agreed to transfer title in the Vessel to the third party. The first instalment and Initial Payment provided for under the Deed of Settlement was never made. The plaintiff contends that the consequences of the first defendant’s failure to pay the Settlement Sum included the matters set out in cll 3.1.4 and 3.1.6, which were without prejudice to any other rights that the plaintiff may have against the first defendant and did not affect the continuation of the plaintiff’s right of ownership and right to immediate possession subject to the bailment. Nor to the extent they existed did it release the PPSR security interests.
The defendants draw support for their contention by the fact proceedings were instituted by the plaintiff in the Supreme Court against the first defendant and Mr Owen seeking payment of $1,550,000 pursuant to the Deed of Settlement and that those proceedings remain on foot.
The Victorian Court of Appeal in Balanced Securities Ltd v Dumayne Property Group Pty Ltd[9] (Balanced Securities) summarised the relevant principles in determining whether a subsequent agreement amends an earlier agreement or brings it to an end and replaces it. Particularly drawing upon the High Court authorities of Federal Commissioner of Taxation v Sara Lee Household & Body Care Australia Pty Ltd[10] (FCT v Sara Lee) and Concut Pty Ltd v Worrell[11] (Concut v Worrell) and the New South Wales Court of Appeal decision of Hillam v Iacullo[12] and the Victorian Court of Appeal decision of Schreuders v Grandiflora[13], the Court of Appeal summarised the relevant principles as follows[14]:
“(1)    The relevant issue is whether the subsequent agreement amends the earlier agreement or brings it to an end and replaces it (FCT v Sara Lee).
(2)     The earlier agreement may be brought to an end either expressly or by implication (Tallerman and FCT v Sara Lee).
(3)     The issue is to be resolved by ascertaining the manifest intention of the parties (FCT v Sara Lee and Concut v Worrell).
(4)     The manifest intention of the parties is to be ascertained objectively by the construction of the subsequent agreement, having regard to the relevant context of that agreement where it is permissible to do so in accordance with the ordinary principles of contractual construction (Concut v Worrell, Hillam v Iacullo, Schreuders v Grandiflora).
(5)     A potentially critical factor militating in favour of a conclusion that the manifest intention of the parties, objectively ascertained, was to bring the earlier agreement to an end and replace it, is where the terms of the two relevant agreements deal with the same subject matter in different and inconsistent ways (Hillam v Iacullo).”
[9](2017) 53 VR 14; [2017] VSCA 61.
[10](2000) 201 CLR 520; [2000] HCA 35.
[11](2000) 176 ALR 693; [2000] HCA 64.
[12](2015) 90 NSWLR 422; [2015] NSWCA196.
[13][2016] VSCA 93.
[14]At [78].
The decision of Balanced Securities involved the question of whether a facility agreement was supplanted by a later second facility agreement provided after the parties had fallen into dispute.
There is no express reference to the VCA in the Deed of Settlement, save in the recitals and the calculation of the amount of the settlement sum.
For the purposes of this argument assuming that the plaintiff acquired ownership rights of the Vessel, I do not consider those rights were superseded by the Deed of Settlement unless it was relevantly performed.
The Deed of Settlement was premised on the plaintiff being the owner of the Vessel and the necessary party to transfer title in the Vessel as well as holding security interests that were required to be released. That is clear from cl 3.1.3 of the Deed of Settlement, which required the plaintiff to release securities and transfer the title but only upon the Initial Payment being paid (and cleared) to the plaintiff. While it is true that the Deed of Settlement did not provide for the plaintiff to have any specific rights in relation to the Vessel that does not manifest an intention that such rights ceased to exist upon entry into the Deed of Settlement because it the Deed of Settlement preserved those rights until performance. The Deed of Settlement provided for the rights of ownership of the plaintiff in the Vessel and its registered PPSR security interests to be affected upon performance of cl 3.1.1.1, not upon the signing of the Deed of Settlement. If the Deed of Settlement was not relevantly performed, those rights were not lost. Similarly, pursuant to cl 4 the mutual releases only operated “[s]ubject to [the plaintiff] receiving the Settlement Sum in cleared funds”.

The Deed of Settlement did not provide for accrued rights of ownership to be otherwise affected as is evident from cl 3.1.6. While providing for rights that the plaintiff would have upon there being default in relation to the instalment payments, including a right to terminate, and/or damages in accordance with contractual principles, it expressly provided that it was “without prejudice to any other rights” the plaintiff may have against the first defendant. Properly construed that demonstrates that the rights are additional to those under the VCA rather than in derogation of them. The rights in 3.1.6 applied only upon default of the Deed of Settlement and provided for rights in respect of non-compliance with the Deed. That does not suggest that they are new rights which supersede any rights under the VCA, particularly given they are expressly stated not to be to the prejudice of such rights. The rights in relation to the guarantor in cl 17 only arose upon default by the first defendant under the Deed of Settlement.
The above informs the content of the words “In consideration of the mutual covenants and releases contained in this Deed …” in cl 3.1.
While the defendants contend that the Deed of Settlement, and particularly cl 3.1.6, provides for the plaintiff to sue for an agreed liquidated sum against the first defendant, cl 3.1.6 in fact refers to one of the rights being to recover damages.[15]
[15]Although that does not exclude claiming a right for a debt and there was such a right under the terms of the guarantee.
While cl 9 provided that the Deed of Settlement was “the entire Deed and understanding between the Parties on everything connected with the subject matter of this Deed” and “supersedes any prior Deed or understanding on anything connected with that subject matter” it is broad in its terms and must be construed in the context of the Deed of Settlement as a whole. Notably, it only makes reference to superseding “any prior Deed”. The Undertaking was in the form of a deed, and is also referred to in cl 3.1.5 of the Deed of Settlement, whereas the VCA is not a deed and not referred to in the Deed of Settlement. The express reference to the Deed and not to a prior agreement is consistent with the “subject matter” of the Deed of Settlement being the dispute between the plaintiff and first defendant in relation to the construction of the Vessel, as identified in recital E, not all the rights and obligations under the VCA, even though the dispute arose out of the performance of the VCA.
On its proper construction, cl 9 and the “subject matter of the Deed” does not extend to all rights and obligations under the VCA. Such a construction would be inconsistent with cl 3.1.6 which does not limit the rights of the plaintiff against the first defendant being rights under the Deed of Settlement. It is also inconsistent with the provision of performance of the Deed of Settlement as a precondition to any release of the other party and transfer of title. That supports the fact the Deed of Settlement was only intended to affect rights under the VCA if the Deed of Settlement was actually performed, at least insofar as it had any effect upon the plaintiff’s ownership of the Vessel.
Given the above I do not find that there was a manifest intention by the terms of the Deed to bring the VCA to an end and replace it with the terms of the Deed of Settlement. At best it manifested an intention to vary the accrued rights of the parties under the VCA and discharge future rights and obligations only upon performance of the terms of the Deed of Settlement. For example, obviously upon the sale and transfer of ownership of the Vessel, the obligations to construct the Vessel and pay for stages of construction upon certification would be rendered nugatory.
The actions of the plaintiff in suing on the Deed of Settlement in the Supreme Court does not assist in terms of the proper construction of the Deed of Settlement and the manifest intention of the parties in relation to it. The Deed of Settlement on its face provided for remedies upon default.[16] Whether there is any question of offset arising from the sale of the Vessel is a matter raised in the Defence of the defendants, although denied by the plaintiff. It is not a matter for determination by this Court.[17]
[16]Nor is there any question of election.
[17]The fact possession of the Vessel was not sought by the plaintiff is consistent with such rights not being affected by the terms of the Deed of Settlement rather than an admission that any such right no longer existed.
Given the conditional nature of the Deed of Settlement, which relied upon the performance of at least some of the promises, particularly the payment of the initial payment, there could be no accord and satisfaction which could operate to discharge any rights under the VCA until performance occurred. Relevantly, the present case would be the second type of case discussed by Dixon J in McDermott v Black[18] where his Honour stated that:
“An executory promise or series of promises given in consideration of the abandonment of the claim may be accepted in substitution or satisfaction of the existing liability. Or, on the other hand, promises may be given by the party liable that he will satisfy the claim by doing an act, making over a thing or paying an ascertained sum of money and the other party may agree to accept, not the promise, but the act, thing or money in satisfaction of his claim. If the agreement is to accept the promise in satisfaction, the discharge of the liability is immediate; if the performance, then there is no discharge unless and until the promise is performed.”
[18](1940) 63 CLR 161 at 184-5.
Given the lack of performance of the Deed of Settlement by the first defendant, the Deed of Settlement did not extinguish or vary the parties’ accrued rights under the VCA.
Is the plaintiff’s ownership of the Vessel a security interest in the Vessel under the VCA?
The defendants contend that the plaintiff’s interest in the Vessel arising under the terms of the VCA is properly characterised as a security interest under the PPSA and therefore the plaintiff takes the security interest subject to the provisions of the PPSA.
The plaintiff contends however that its interest in the Vessel is not a security interest within the meaning of s 12(1) of the PPSA. Rather, it contends it was the legal owner of the Vessel since 5 October 2017 under the terms of the VCA until it was sold to a third party on 15 September 2021 and that no security interest in the Vessel arose in favour of the plaintiff securing performance by the first defendant of its obligations.
As noted by the plaintiff by reference to Warehouse Sales Pty Ltd (in liq) & Lewis and Templeton v LG Electronics Australia Pty Ltd[19] (Warehouse Sales), the “PPSA provides for a priority regime, not a title regime. Under s 273 of the PPSA ownership or title to personal property is not determinative…” However, as Mirzai and Harris point out, the PPSA is not a complete code and title is not irrelevant.[20] Caution must however be exercised in considering cases prior to the introduction of the PPSA.
[19](2014) 291 FLR 407; [2014] VSC 644 at [37].
[20]Nicholas Mirzai and Jason Harris, The Annotated Personal Property Securities Act 2009 (Cth) (Wolters Kluwer, 4^th ed, 2020) at [273.5].
“Security interest” is defined in s 12(1) of the PPSA. It is an “interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation…”
Thus, four elements must be satisfied in order for an interest to constitute a security interest, namely:[21]
(a)there must be an outstanding existing monetary or non-monetary obligation;
(b)there must be an “in substance security” to support the performance of that obligation;
(c)the security interest must amount to an “interest” in personal property; and
(d)the interest must arise out of a transaction.
[21]Dura (Australia) Constructions Pty Ltd (in liq) (recs and mgrs apptd) v Hue Boutique Living Pty Ltd (formerly SC Land Richmond Pty Ltd) (2014) 49 VR 86; [2014] VSCA 326 at [107].
Examples of security interests are given in s 12(2) of the PPSA. That includes s 12(2)(k), a transfer of title.
The central point of contention is the second element, namely whether the Vessel constitutes in substance security to support the performance of the obligations under the VCA, which included the construction of the Vessel after the transfer of ownership in the Vessel.
In General Motors Acceptance Corp Australia v Southbank Traders Pty Ltd[22] the Court considered the phrase “security interest” in the context of a registered security interest under the Chattels Securities Act 1987 (Vic). In the course of that consideration the Court considered the meaning of “securities” in a wider context, noting that the potential width of the term “security” is reflected in the meaning given in Stroud’s Judicial Dictionary[23] as “anything that makes the money more assured in its payment or more readily recoverable”.[24]
[22](2007) 227 CLR 305; [2007] HCA 19.
[23]Daniel Greenberg, Alexandra Millbrook (eds), Stroud’s Judicial Dictionary of Words and Phrases (Sweet & Maxwell Ltd, 6th ed, 2000) at p. 2390.
[24]At [21].
According to the plaintiff, the transfer of ownership in the Vessel did not make the performance of the obligations under the VCA more assured. The plaintiff contends that the VCA should be construed as providing for the sale of the Vessel, which involved the plaintiff making an upfront payment[25] prior to construction commencing in return for ownership of the Vessel being transferred and thereafter it was in the nature of a contract for the supply of boatbuilding services where payment was made upon the certification that a certain stage of works had been reached, unconnected with the ownership of the Vessel by the plaintiff. According to the plaintiff no security interest was created in either case. In effect, the plaintiff’s interest in the Vessel did not serve as collateral to secure the performance of the defendant’s obligations under the VCA.
[25]The first instalment.
The plaintiff contends that after the transfer of the Vessel, the first defendant had possession of the Vessel under a gratuitous bailment until the Vessel was completed in accordance with the VCA or was terminated by the plaintiff.
The defendants however contend that at the time of the transfer of ownership there was no Vessel in existence that could be sold and the plaintiff had to make an upfront payment and continued to have to make payments in advance of the state of construction of the Vessel where the first defendant had outstanding obligations under the VCA to fulfil and the transfer of ownership under cl 15 provided security for that performance. In relation to the second and third stage payments, the VCA provided that they would be made at the same time, so the third stage payment was effectively made in advance. The defendants contend the four requirements set out by the Victorian Court of Appeal in Dura (Australia) Constructions Pty Ltd (in liq) (recs and mgrs apptd) v Hue Boutique Living Pty Ltd (formerly SC Land Richmond Pty Ltd)[26] (Dura (Australia) Constructions) were satisfied that the performance obligations were to continue until the completion of the Vessel and delivery as anticipated by the VCA. The defendants contend that there was in substance security to support the performance of the obligations by the first defendant, namely that the plaintiff would pay moneys to the first defendant at agreed milestones with the first payment due on the contract date and prior to any equipment or materials being purchased.
[26](2014) 49 VR 86; [2014] VSCA 326.
In further support of its argument, the defendants point to the fact that the plaintiff was at risk from the outset of the contract while the first defendant was in possession of the Vessel under construction and in respect of all equipment purchased for incorporation into the Vessel after October 2017. The plaintiff was exposed to increasing financial risk for failure to complete the Vessel as payments progressed, non-compliance with the VCA, and the potential insolvency of the first defendant. The risk of failure to complete and risk of insolvency existed at the time the VCA was entered into and continued. The defendants construe the VCA as the plaintiff agreeing to receive a transfer of title as set out in the VCA and thereby obtaining security for its exposure, as construction progressed in the vessel being constructed and in equipment purchased for the purpose of the construction of the Vessel. The defendants contend that the purpose and substance of cl 15 was to secure the performance of the first defendant and secure the ongoing risk of loss the plaintiff was exposed to under the VCA.
According to the defendants, “transfer of title” was identified as an example of a security interest in s 12(2) of the PPSA, which would usually be sufficient to satisfy the requirement.
The plaintiff’s response to the defendants’ contentions is that in reality, notwithstanding the different obligations identified by the defendants, the main obligation relied upon by the first defendant was its obligation to construct the Vessel. Payment for the performance of the obligations by the first defendant is secured by the fact that the VCA provided for the plaintiff to pay for the work as it is completed and certified by the first defendant. If payments were not made, there were remedies under the VCA. The first defendant was therefore not under an obligation to do something in respect of which the plaintiff’s ownership will better secure that to be done.
The plaintiff’s characterisation of the VCA, draws some support from the decision of Re Blyth Shipbuilding and Dry Docks Company, Limited[27] (Re Blyth), particularly in submitting the fact that the VCA provided for the sale of the Vessel yet to be constructed was not a legal impediment to there being a sale of the Vessel upon payment of the first instalment.
[27][1926] 1 Ch 494.
In Re Blyth the Court considered whether a Vessel and materials purchased were incorporated into the whole of the Vessel were owned by the purchaser or the defendant to whom receivers had been appointed. In particular, Romer J had to consider whether the contract provided the purchases with security or whether the contract provisions manifested an intention of the parties that property in an uncompleted vessel should pass. Romer J at first instance considered that the contract concerned was “a contract for the sale from time to time of a ship in its various stages of construction or of materials to be used in the construction of a ship, the seller, however, being under an obligation of working up the things sold into a complete ship for the purpose of putting them into a deliverable state.”[28] As the contract was for a sale of future goods, in determining whether the contract was for the sale from time to time of a ship in its various stages of completion or for the sale of a completed ship, Romer J noted it is a matter of intention of the parties whether it be expressed or inferred. Romer J concluded that according to the true construction of the contract, the clauses concerned demonstrated an intention that the property in the uncompleted Vessel should pass to the buyer. Romer J considered that that accorded with the natural meaning of the words used and was particularly supported by the fact that the ship was to be paid for by instalments, and that the purchaser was permitted to inspect the construction. Both of those matters are features in the present case. Clause 6 of the agreement considered by Romer J was not in dissimilar terms from cl 15.
[28]At 500.
The decision of Romer J was appealed, but only in relation to the question of whether the receiver was entitled to retain the worked material intended for, but not incorporated into the ship, not the finding that the buyer acquired an interest in the Vessel as it was constructed.
The defendants contend that the decision of Re Blyth has little relevance in light of the PPSA, which introduced a new regime for the determination of priorities to collateral following an insolvency event and replaced traditional ranking of interests according to who is the true owner and who is the ostensible owner through possession.[29]As Sifris J in the matter of Warehouse Sales however noted, “[i]t is important to appreciate that the PPSA is not a code. Section 254 of the PPSA provides that it is to operate concurrently with the laws of the Commonwealth, State and Territory law and the general law.”[30] While Re Blyth provides no assistance in terms of the operation of the PPSA, its consideration of the characterisation of the agreement in that case which bears similarities to the present VCA still has relevance and provides assistance.
[29]Bredenkamp v Gas Sensing Technology Corporation, Re Welldog Pty Ltd (In Liq) (Recs and Mgrs Apptd) [2017] FCA 1065 at [7] and [10].
[30]At [35].
There is nothing controversial about the approach of Romer J in Re Blyth to the construction of contractual provisions and transfer of future property and it supports the characterisation of the VCA by the plaintiff which shares a number of the features discussed by Romer J. Notwithstanding the changes introduced by the PPSA, it does not alter the fact that in determining whether the VCA in substance creates a security interest, the principles of construction of commercial contracts continue to apply. [31]
[31]See most recently Gold Valley Iron Pty Ltd (In Liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134 at [114]–[116].
The VCA does not expressly refer to the provision of title in the Vessel was for the purpose of providing a security interest in favour of the plaintiff. That of course does not preclude the interest being characterised in that way.
Under the VCA, the first defendant was to perform a number of obligations. However, the question is whether the interest in the Vessel provided by the transfer of the Vessel to the plaintiff in substance secured performance of any of those obligations. That requires the Court to consider the relationship between the obligations and whether any right against personal property generates a security interest.
The defendants submit that the plaintiff received a transfer of title from the first defendant to secure ongoing performance of the VCA and thereby obtained a security interest pursuant to s 12(1) of the PPSA, is supported by the fact that one of the examples of the security interest is the transfer of title.[32] However the example in s 12(2) to the transfer of title requires an analysis of the transaction to determine whether it is a security interest. While Beech J in National Australia Bank Ltd v Garrett[33] made reference to the instances set out in s 12(2) of the PPSA usually satisfying the requirement of “security interest”, the observation was a fleeting reference made in the absence of any analysis and does not suggest that was always the case. In that regard, his Honour noted that one considers matters of substance rather than form.[34]
[32]PPSA s 12(2)(k).
.[33] (2016) 340 ALR 532; [2016] FCA 714 at [29]
[34]At [29].
While the question has been the subject of some debate, it remains unresolved. In my view, as is stated in s 12(2) of the PPSA itself, the matters listed only serve as examples and do not in every case constitute a security interest. Everyday sales involve the transfer of title in a product in return for payment, but they could hardly have been intended without more to be characterised as a security interest.
In that regard Mirzai and Harris comment that the term “transfer of title”, like the reference to an “assignment”, is somewhat misleading as without additional conditions imposed, a mere transfer can never amount to a security interest.[35]
[35]Nicholas Mirzai and Jason Harris, The Annotated Personal Property Securities Act 2009 (Cth) (Wolters Kluwer, 4^th ed, 2020) at [12.5.2.11].

Given the open-ended nature of a transfer of title, that would not, without more, be enough to constitute a security interest.[36] As was said in Gold Valley Iron Pty Ltd (In Liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134 at [107]:
“Section 12(2) gives colour to the notion of a ‘transaction’ within s 12(1) by specifying examples of relevant transactions. Section 12(2) states, by way of example, that a security interest includes ‘an interest in personal property’ that is provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation.”
[36]Chelliah v NSW Police [2018] NSWSC 557.
In the present case, I consider that there is a disconnect between future obligations under the VCA that were to be performed by the first defendant and that the transfer of title in the Vessel pursuant to cl 15.1 did not secure the future performance of obligations. The payment under stage 1 is significant, namely $440,000, which was payable to the first defendant upon the signing of the VCA, in return for which the plaintiff received a transfer of ownership in the future property, namely, the Vessel in whatever state of construction, but where the first defendant had possession of the Vessel throughout the period of construction until completion.
The defendants submit is that the fact the plaintiff holds title as security is supported by it giving some protection in the face of the first defendant becoming insolvent as the plaintiff pays more money for the construction of the Vessel and carries financial risk particularly with a provision for registration of the interest. While that is to a certain extent true it is not sufficient in the context of the VCA to characterise it as a security interest.
I do not consider that it in substance the VCA provided a security interest, notwithstanding the Vessel was yet to be constructed. On its correct construction the VCA provided for the sale of the future goods, namely the Vessel, and thereafter for the construction of the Vessel. The contention of the defendants that the VCA was a contract for supply of labour and services, is not borne out by the terms of the VCA itself, particularly cl 2 of the VCA. Clause 2.1 provides for the plaintiff to buy the Vessel constructed by the first defendant. While the defendants plead that it was only a contract for the supply of labour or services, and that no Vessel was ever bought into existence, that is belied by the terms of cl 2.2, which refers to the first defendant being responsible for the “costs and provision of all labour, materials and expertise” in the construction of the Vessel, and the fact that the evidence shows that a Vessel was in fact built by reference to the plans drawn up for the plaintiff’s Vessel.
Future goods can be appropriated to a contract when they are purchased and delivered with the buyer’s assent in advance, even in the absence of markings[37]. The fact that there was such appropriation is supported by the terms of the invoice which reflects the terms of the VCA and that it was a bespoke vessel.[38] That is supported by the provision for the right of inspection by the plaintiff, which Mr Hombsch did on regular occasions. The plans on the Vessel in its incomplete state supported the fact that it was the Vessel appropriated to the plaintiff under the VCA.[39]
[37]Crouch v Adams [2006] NSWSC 1029 at [36]-[38].
[38]Exhibit 3, p 684.
[39]The second defendant in cross-examination conceded the Vessel in its incomplete she which is the subject of these proceedings did exist. The defendants did not press that there was no Vessel in existence.
In Re Blyth, Romer J placed particular weight on the terms of the contract in determining whether the purchaser had a security or whether clauses in that agreement indicated an intention of the parties that the property should pass, Romer J determined that the natural meaning of the words used indicated an intention that the property in the uncompleted vessel should pass.[40] He found that that natural meaning was supported by other provisions including the fact that the ship was to be paid for by instalments and was constructed under the inspection of the purchasers, as is the case here.[41] The fact the VCA provided for the transfer of ownership upon the payment of the first instalment is consistent with the fact that one of the commercial objects of the VCA was to provide for construction of a bespoke Vessel intended to meet the plaintiff’s requirements. While clause 3.1 of the VCA is open to be construed as providing for a sale of the completed Vessel, it provides on its terms supported by the context of the VCA as a whole for the obligation of the first defendant to construct a vessel to a particularly design which the plaintiff has agreed to buy. Clause 15 is specifically directed to the passing of title of the Vessel as future property which was appropriated to the VCA constructed in accordance with the agreed design and the material and equipment as they are purchased and or appropriated by the first defendant for the Vessel
[40]At 507.
[41]It contained a similar insurance clause to the present, although the present clause provides that the insurance is to be in the name of not only the first defendant but the plaintiff.
While the plaintiff had made the payment of the first instalment upon which it received the transfer of title in the Vessel, it then only made payments as each stage of work was certified, even though stages two and three were close together. Under the VCA, the first defendant was entitled to be paid upon certification that the first defendant had completed a particular stage as provided in Schedule 2, not in advance of the work being completed.[42] The plaintiff was then obliged to make payment to the first defendant within seven days of the first defendant receiving the staged payment invoice.[43] In the event payment was not made, the VCA provided that the first defendant could cease work and could subsequently terminate the agreement under cl 9. The obligation to carry out the work by the first defendant was secured by the payment regime, not by the plaintiff’s ownership.
[42]VCA at cll 3.1, 3.3.
[43]VCA at cl 8.4.
The plaintiff was entitled to inspect the progress of the construction of the Vessel and to take delivery of the Vessel after an acceptance trial.[44] If the buyer failed to take delivery of the Vessel, the first defendant was entitled to require the plaintiff to pay reasonable berthing and/or storage charges and any other expenses reasonably incurred by the builder.[45]
[44]VCA at cl 10.7.
[45]VCA at cl 10.8.
Termination of the agreement was without prejudice to the rights of each party against any other in respect of anything done or omitted under the agreement prior to such termination or any debt obligation or liability which had accrued.[46] Under cl 16, the first defendant was exposed to being liable for liquidated damages if the Vessel was not delivered to the plaintiff by the date of delivery.
[46]VCA at cll 12–14.
While the VCA included a provision for registration of a security interest by the plaintiff under the PPSA, the inclusion of that provision does not advance the case of the defendants very far. As pointed out by the plaintiff, cl 17.2 provides that “[t]his clause applies to the extent that the Buyer’s rights and interests under this Agreement, including for the avoidance of any doubt, the Vessel in whatever state or form of construction as contemplated by this agreement…constitutes a security interest” (emphasis added). Clause 17.3 provides for the first defendant to acknowledge and agree that the plaintiff “may register its security interest in the collateral…in any manner that the Buyer considers appropriate”.
In effect, the VCA provides for the plaintiff to be able to hedge its bets, such that if the VCA was found to create a security interest in the Vessel, provision is made to register that security interest and for that to have been agreed to by the first defendant. However, the inclusion of the words “to the extent that” demonstrates that its inclusion is not an “admission” that the VCA creates a security interest, but provides a safety net if it was so characterised. Further, while the defendants rely on the fact that the notice under the PPSA to secure the interest under s 151 of the PPSA requires the person to have reasonable grounds that the person described in the statement as the secured party is or will become a secured party, that does not have any great relevance to the exercise which the Court must carry out in construing the VCA itself.
In the present case, I do not consider that the agreement created a security interest in favour of the plaintiff, as it did not make the performance of the obligations under the VCA more secure. Rather, as contended by the plaintiff the VCA provided for the Vessel to be appropriated to the VCA even though not fully constructed, as was the case in Re Blyth, as the Vessel was constructed and otherwise made provision for the staged construction of the Vessel. This construction is consistent with the words used in the VCA in the context of the VCA as a whole and the commercial purpose of the VCA for the plaintiff to acquire a bespoke vessel which had to be specially constructed by the first defendant.[47]
[47]Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [47]-[49].
I accept the plaintiff’s argument that the VCA was in the nature of a sale agreement where ownership of a chattel passed upon initial payment and thereafter was in the nature of a contract for the supply of boatbuilding services, which were paid for as each stage was completed. In neither case was there any interest in personal property provided for by a transaction that in substance secured payment or performance of an obligation. The transfer of title occurred at the same time as the first payment, and nothing was secured by the interest in the Vessel. Thereafter, the payments for the boatbuilding services did not provide for any interest in personal property because that had already passed to the plaintiff. As was contended by the plaintiff, if there was a security interest at all, the situation was almost a reverse security interest whereby the first defendant maintained possession of the Vessel in which title had passed to the plaintiff, pending the plaintiff’s payments and taking delivery of the Vessel. In the event that payment was not made the first defendant would have been able to exercise a workers’ lien over the Vessel until payment was made. That would not be a security interest required to be registered under the PPSA as the PPSA does not apply to such an interest.[48]
[48]PPSA s 8(1)(c).
I am also satisfied that the proper characterisation of the arrangement between the plaintiff and first defendant whereby the first defendant had possession of the Vessel as it was being constructed was one of bailment, consistent with the principles set out in Hobbs v Petersham Transport Co Pty Ltd; Petersham Transport Co Pty Ltd v ASEA Electric (Australia) Pty Ltd[49] where it was stated:
“A bailment comes into existence upon a delivery of goods of one person, the bailor, into the possession of another person, the bailee, upon a promise, express or implied, that they will be redelivered to the bailor or dealt with in a stipulated way.”
[49](1971) 124 CLR 220 at 238.
The contention by the defendants that there could be no bailment because there was no delivery of possession cannot be accepted. Constructive delivery is sufficient. As Mason CJ in Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd[50] stated delivery of possession can be effected by constructive or symbolic delivery. In particular, Mason CJ also relevantly observed that the definition of “possession” did not refer to meaning actual custody, but in its legal or technical sense, and referred to the example of a commodity or chattel incapable of actual physical delivery, except perhaps at great inconvenience and cost such as a yacht, and found that must be capable of constructive or symbolic delivery falling short of actual delivery.[51]
[50](1987) 163 CLR 236 at 263.
[51]At 244, by reference to s 28(2) of the Sale of Goods Act 1923 (NSW); see also page 247.
In order to construct the Vessel, the first defendant took possession of it, that right arising under the general law of bailment. While the Vessel was in the first defendant’s possession, the first defendant maintained control over the Vessel with the plaintiff having a mere right of inspection.[52] For the first defendant to meet its obligations under the VCA, the plaintiff granted the first defendant the right to exclusive possession of the Vessel for the purpose of constructing it, and the first defendant as bailee voluntarily assumed possession of the Vessel and assumed obligations to keep it safe. Consistent with that obligation, cl 17.11 of the VCA provided that the risk in the Vessel remained with the first defendant until the delivery of the Vessel to the plaintiff. The provision for taking out insurance does not negate such an obligation to keep the Vessel safe. It is supported by the fact that the VCA provided for insurance to be in joint names. Unless the plaintiff failed to make payment, the first defendant would be obliged to deliver the Vessel to the plaintiff upon demand, given the plaintiff maintained ownership of the Vessel.
[52]C.f. Bredenkamp v Gas Sensing Technology Corporation, Re Welldog Pty Ltd (In Liq) (Recs and Mgrs Apptd) [2017] FCA 1065 at [64].
The existence of such a bailment arising under general law is consistent with the fact that the VCA did not explicitly provide for the first defendant having possession of the Vessel until the plaintiff accepted delivery. Such a gratuitous bailment would not be a security interest to which the PPSA applies. Pursuant to s 8(1)(c) of the PPSA, interests such as those arising out of the operation of bailment under the general law are outside the PPSA.[53]
[53]Dura (Australia) Constructions at [127].
In the circumstances, I do not find that the VCA created a security interest in the plaintiff’s favour that it was required to register on the PPSR. In my view after title was transferred to the plaintiff on or about 5 October 2017, the relationship between the plaintiff and the first defendant in terms of the Vessel was one of bailment which arose under general law, while the Vessel was constructed in accordance with the VCA.
For the reasons set out above, the Deed of Settlement did not supersede or vary the plaintiff’s accrued rights under the VCA. As a result, I do not need to consider the third issue of whether the plaintiff’s registration of a security interest was ineffective although for the sake of completeness I will comment on it briefly below after I consider the fourth issue in relation to s 46 of the PPSA.
Did the plaintiff take the Vessel free of any other security interests pursuant to s 46(1) of the PPSA?
The NAB had a registered security interest in 2012 over all present and after acquired property.
The defendants denied that the plaintiff would, if found to have owned the Vessel, taken free of the NAB’s security interest because the Vessel was sold in the ordinary course of the first defendant’s business of selling property of that kind such that s 46 of the PPSA applied. It was not the subject of submission underpinned by evidence from the Defendants. Nor does it appear the NAB contended, otherwise although the meaning of their correspondence was the subject of some disagreement between the parties.
Regardless, I am satisfied that the plaintiff presented evidence as to the first defendant’s business which satisfies s 46 of the PPSA,[54] including Mr Hombsch’s evidence of his dealings with the first defendant’s business and how the first defendant portrayed its own business on the website
[54]There are similarities with the business considered in the Canadian decision in Spittlehouse et al v Northshore Marine Inc 18 O.R. (3d) 60; [1994] OJ No. 809 where title was withheld until full payment for sale of a boat but the contract was in the ordinary course of business.
I am satisfied that the Vessel was sold in the ordinary course of the first defendant’s business of selling boats constructed by the first defendant of the kind purchased by the plaintiff and s 46 of the PPSA applies.
Is the plaintiff’s registration ineffective?
On 13 March 2019, the plaintiff registered on the PPSR such interest that it might have had that constituted a “security interest” in the Vessel by way of two registrations:
(a)one which contemplated the fully constructed Vessel which is registered in the “watercraft” category. It is agreed between the parties that this category would only apply if the Vessel had been fully constructed and therefore this does not need to be considered further; and
(b)one which contemplated the partially constructed Vessel in all of its iterations which is registered in the “other goods” category.
The description of the Vessel on the registration in the “other goods” category was as follows:
“Aluminium Power Catamaran (Hull No. MECY20) (the Vessel) in whatever state or form of construction as contemplated by Agreement dated 27.09.17, all equipment in respect of the Vessel whether supplied by the Buyer or the Builder and any other arrangement under or contemplated by the Agreement”
The defendants contend the description is seriously misleading within the meaning of s 164 of the PPSA and is therefore ineffective. Section 164 relevantly of the PPSA provides:
“164 Defects in registration—general rule
(1) A registration with respect to a security interest that describes particular collateral is ineffective because of a defect in the register if, and only if, there exists:
(a) a seriously misleading defect in any data relating to the registration, other than a defect of a kind prescribed by the regulations; or
(b) a defect mentioned in section 165.
(2) In order to establish that a defect is seriously misleading, it is not necessary to prove that any person was actually misled by it.
(3) A registration that describes particular collateral is not ineffective only because the registration is ineffective with respect to other collateral described in the registration.”
The defendants contend there were no goods on the site of the first defendant’s premises that fit that description, as there was no vessel which contained the hull number “MECY20”. The defendants further contends that the “free text words” inserted by the plaintiff described the Vessel as being constructed from September 2017 (more than three years before the second defendant’s appointment as liquidator).
According to the defendants, the Vessel as at November 2020 was no more than a shell and it contained plans taped to an inside wall on 27 January 2021 which Mr Lack examined and took photographs of. The description in the plans was “MEC Robson 525” not MECY20, which is not the description which accords with the description used in the PPSR registration.
The PPSA provides for an online system of registration.
The purpose of the registration under s 164 was described by Brereton J in Future Revelation Ltd v Medica Radiology & Nuclear Medicine Pty Ltd[55] (Future Revelation) where his Honour held as follows:
“…The question then is whether it is “seriously misleading”. That term is not defined in the PPSA, nor is there any guidance in respect of its meaning in the explanatory memorandum or the second reading speech. However, as is well-known, the PPSA is modelled on and derived from similar legislation in Canada and New Zealand and, as was observed in Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd [2013] NSWSC 852, the Commonwealth Parliament in enacting legislation that was modelled on the New Zealand and Canadian legislation should be taken to have intended approaches and interpretations applied by the courts of those countries to their legislation to apply in Australia. A similar view has been taken in New Zealand.
Canadian case law suggests that the test for whether a defect is “seriously misleading” is whether it will result in the registration not being disclosed on a search [see Re Lambert (1994) 7 PPSAC (2d); GMAC Leaseco Ltd v Moncton Motor Home & Sales (2003) 227 DLR (4th) 154 at [58]]. That makes sense, as the purpose of registration is to enable the existence of the security interest in the collateral to be searched and ascertained. A person searching in the PPSR is likely to be concerned with the identity of the grantor and/or the collateral. In terms of searching the PPSR, while there is facility to search by reference to the identity of the grantor and the collateral, there is no facility to search by reference to the identity of the secured party.”
[55](2013) 283 FLR 122; [2013] NSWSC 1741 at [5]-[6].

In Seaman v Silvia[93] Justice Derrington followed the decision of the Full Court in Macks. The Full Court referred with approval to the decision of Barrett J in Hausmann v Smith[94] where his Honour stated that “duties owed by administrators and liquidators are not duties owed to shareholders or to creditors.”[95] More recently Rees J in Aardwolf Industries LLC v Riad Tayeh[96] (Aardwolf) considered the question of whether liquidators owed duties to third parties. In that case the core allegation was said to be that if the liquidators did not exercise due care and skill in ascertaining what the assets of the companies were when appointed as liquidators of two companies related to the plaintiffs,[97] then the liquidators may purport to sell assets which they thought the companies were entitled to sell, but in fact the companies were not so entitled.[98] It was alleged the liquidators had breached the duty by selling trademarks to which the plaintiff was entitled to use, to their trade rivals.[99]
[93][2018] FCA 97.
[94](2006) 24 ACLC 688; [2006] NSWSC 682.
[95]Macks at [207], citing Hausmann v Smith (2006) 24 ACLC 688; [2006] NSWSC 682 at [12].
[96][2020] NSWSC 299.
[97]At [1].
[98]At [101].
[99]At [2].
Her Honour did not consider there was any real prospect that the plaintiffs would be able to establish a duty of care as they lacked the vulnerability which they contended formed the basis of that duty,[100] noting that the plaintiffs’ vulnerability was different from that in Mills or McGoldrick and refused leave to sue the liquidator.[101]
[100]At [104].
[101]Upheld in terms of the decision as to the duty of care and not granted leave upon appeal: Aardwolf Industries LLC v Tayeh [2020] NSWCA 301 at [58]-[63].
As recognised by the plaintiff in the present case, they seek to establish a duty of care which is a novel one. Although Counsel for the plaintiff referred to the cases of Sydlow, Maelor and Pace to demonstrate that the Courts have been prepared to go some way towards imposing a duty of care upon a liquidator, the present case extends beyond those cases and is in some respects is more analogous to a duty of care to an individual creditor which to date has not been found to be owed by a liquidator.[102] While that may be accepted, the further authorities to which I have referred to above demonstrate that the decisions do not support the imposition of a duty to individual creditors or third parties such as those considered in Aardwolf.
[102]Or a director.
The salient features by which to assess whether a legal duty to take reasonable care to avoid harm or injury exists were helpfully set out by Allsop P in Caltex Refineries (Qld) Pty Ltd v Stavar:[103]
[103](2009) 75 NSWLR 649; [2009] NSWCA 258 at [102]-[103].
“…If the circumstances fall within an accepted category of duty, little or no difficulty arises. If, however, the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the “salient features” or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.
These salient features include:
(a)the foreseeability of harm;
(b)the nature of the harm alleged;
(c)the degree and nature of control able to be exercised by the defendant to avoid harm;
(d)the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself;
(e)the degree of reliance by the plaintiff upon the defendant;
(f)any assumption of responsibility by the defendant;
(g)the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant;
(h)the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff;
(i)the nature of the activity undertaken by the defendant;
(j)the nature or the degree of the hazard or danger liable to be caused by the defendant’s conduct or the activity or substance controlled by the defendant;
(k)knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff;
(l)any potential indeterminacy of liability;
(m)the nature and consequences of any action that can be taken to avoid the harm to the plaintiff;
(n)the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one’s own interests;
(o)the existence of conflicting duties arising from other principles of law or statute;
(p)consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and
(q)the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law.”
As was emphasised by Allsop P and the other members of the Court, the above features are not exhaustive of the universe of considerations and nor do all have to be present for the Court to conclude a duty of care is owed.[104]
[104]At [104].
In the present case, there are a number of features which favour the imposition of a duty of care, namely:
(a)the imposition of a duty would not give rise to the opening of floodgates. The scope for liability would be reasonably confined to persons who had claims of ownership to property in the possession of the company to which the liquidator was appointed;
(b)the decision whether or not to shift the vessel was not a complex decision although I accept the liquidator had to consider the allocation of resources in making his decision;
(c)the second defendant knew of the risk and its magnitude to the Vessel if it was not stored properly, as he knew the Vessel was half complete, was aware there was timber inside the Vessel and that there were large holes in the Vessel, and had been informed by the plaintiff of the potential damage that could be caused to the Vessel when shifted outside and exposed to the inclement weather, in particular rain;
(d)given the state of the Vessel it was reasonably foreseeable that the Vessel would be damaged internally if exposed to the weather, particularly rain, and could cause the plaintiff loss;
(e)as to proximity, it is not a feature which is generally regarded as providing a test for the imposition of a duty of care although regard may be had to it. In the present case, given the second defendant had been put on notice as to the claim by the plaintiff of ownership of the Vessel, the second defendant knew that if the Vessel was damaged that could reduce the value of the Vessel;
(f)a liquidator could have disclaimed the Vessel under s 568 of the Corporations Act, which permits a liquidator to disclaim property that is not readily saleable or might give rise to liability to pay or some other onerous obligation or where the costs, charges and expenses that would be incurred in relation to realising the property could exceed the proceeds of realising the property;
(g)as to whether there were inconsistent duties between the statutory duties the second defendant owed to protect and preserve assets, but also not be exposed to the risk of costs where there are not sufficient available assets to meet the expenses, in the latter instance the second defendant would be protected by s 545 of the Corporations Act.
However, there are factors which militate against the existence of such a duty of care, namely:
(a)the degree of reliance of the plaintiff upon the second defendant to exercise reasonable care and the assumption of responsibility by the second defendant was limited. While the plaintiff had sought to inform the second defendant’s solicitors of the potential risk and requested undertakings that Vessel would be protected from the weather, the solicitors for the second defendant said that they would pass the concern on but did not give any assurance steps would be taken to protect the Vessel;
(b)the liquidator is given statutory duties and powers under the Corporations Act when discharging his duty as an officer of the Court, including:[105]
(i)the liquidator was under a statutory duty to take into custody or control all the property which was, or which appeared to be property of the company, and applied to discharge the company’s liability;[106]
(ii)being subject to duties imposed by s 180 to s 182 of the Corporations Act;
(iii)not being obliged to incur expenses without sufficient available property under s 545 of the Corporations Act.
(c)there were competing claims in relation to the property of the first defendant and even with funds becoming available relatively limited funds;
(d)the plaintiff was not in a position of vulnerability as are creditors, shareholders, guarantors or subsequent security holders in relation to the sale of assets of a company in liquidation, which is within the total control of the liquidator. Although control of the Vessel had been taken by the second defendant, the plaintiff could have taken injunctive action to preserve the Vessel pending the litigation or .
[105]The defendant also mentioned s 479(4) of the Corporations Act. Section 479 was repealed in 2017.
[106]Corporations Act ss 474, 478.
In the circumstances specific to this case, I do not consider that the second defendant did owe a duty of care to the plaintiff to exercise reasonable care in the storage of the Vessel to avoid damage from inclement weather. Even though I do consider that the second defendant could have anticipated that there would be funds available to pay for the storage and that his decision to shift the Vessel outside with no protection and later to have it covered with a tarpaulin which still left the Vessel open to ingress by water is difficult to comprehend, the competing statutory duties to other creditors and parties asserting an entitlement to be paid from the company property and the fact that the plaintiff could have taken steps to protect themselves from the consequences of any want of due care by the liquidators militate against the existence of such a duty of care.
Breach of duty
Notwithstanding that I find there is no duty of care I set out briefly my findings as to whether, assuming there was such a duty of care to exercise reasonable care in moving the Vessel to avoid it being damaged, there was a breach of that duty. The alleged breach of duty is moving the Vessel into the open on or about 20 or 21 December 2020 and exposing it to the elements without any protection.
In considering whether there is a breach of duty, s 9 of the Civil Liability Act2003 (Qld) (CLA) applies.
At the time of the breach, the second defendant:
(a)knew the Vessel had openings that would allow rainwater to penetrate the interior;[107]
(b)knew through Mr Ascher, that the interior of the Vessel had a partial plywood fit out;[108]
(c)was put on notice by the plaintiff’s solicitor that the Vessel was “partially fitted out and that if it is not stored in watertight premises, significant damage will be sustained by water ingress which … could compromise certified works to date and the fit out”;
(d)knew the charge for storing the Vessel outside Shed H60 was $137.50 per day, whereas undercover storage was $225 per day, a difference of $87.50 per day;
(e)knew the first defendant would be receiving funds from the auction of various assets of the company by Global Business Auctioneers & Valuers sometime in January 2021 and $65,000 from a settlement with the owner of the Bossa Nova in December 2020;[109]
(f)received the $65,000 on 23 December 2020;
(g)knew that the NAB had a superior security interest to any security interest held by the plaintiff in the Vessel and had reserved its rights in that regard if the Vessel was part of the first defendant’s assets, although the NAB had indicated it had no claim if in fact the plaintiff owned the Vessel; and
(h)knew he had no agreement with the trustee of Shed H60 to store the Vessel in the shed after 31 December 2020, although the director of the first defendant had told the plaintiff’s director it could remain in Shed H60 free of charge until further arrangements could be made.
[107]T2-37/41, T2-38/19.
[108]T2-82/27-30; T2-38/4-14.
[109]T2-45/18-45, T2-45/1-10. I do not accept the second defendant’s evidence that it quite likely “arrived by surprise” insofar as he reasonably knew the funds were coming and a deed had been signed on 23 December 2020, which must have been negotiated beforehand.
The second defendant was obliged to act in the best interests of the first defendant and creditors in carrying out his duties. If the second defendant paid for storage costs of the Vessel, that would have been recoverable from the assets of the first defendant in liquidation and possibly on the basis of a lien. While I accept that the director of the first defendant indicated the Vessel could remain in Shed H60 pending further arrangements, I find that there was no longevity in any arrangements made with the trustees of Shed H60, making it reasonable for the second defendant to consider the Vessel had to be secured in alternative arrangements to retain possession and control of the Vessel.
The second defendant took no steps to prevent water ingress from the boat until late February 2021, which he knew did not fully protect the Vessel from water ingress.[110] However, the difference between the amount of undercover storage and storage on a hardstand outside was $87.50 a day. If the additional cost proved to be unsustainable due to the time the dispute remained unresolved, the liquidator could have taken steps to make alternative arrangements or seek directions from the Court. Further, even if it had been determined that the additional storage costs were not appropriately incurred by him in the circumstances, the second defendant could have taken reasonable steps to ensure the Vessel was properly covered to ensure it was watertight. The cost of obtaining and having the Vessel partially covered with one tarpaulin had been $2,329.28.[111] Even if one doubled that in the context of ensuring protection and minimising costs, that was not a significant amount compared to what the second defendant could reasonably anticipate receiving, even taking account of competing claims. The second defendant’s actions were somewhat cavalier in the face of a claim by the plaintiff asserting full ownership of the Vessel such that if it was upheld it would not form part of the assets of the first defendant. While he had some advice that the Vessel was worth scrap value it did not appear to be considered advice which could be reasonably relied upon.
[110]T2-43/19-25, T 2044/11-15.
[111]Exhibit 11.
In the circumstances:
(a)the risk of damage to the Vessel by leaving it exposed to the weather was foreseeable, which was known or in the circumstances set out above should reasonably have been known by the second defendant;
(b)the risk was not insignificant, as the Vessel was not waterproof, and was susceptible to damage, given that there was a partial fit out which included timber;
(c)in the circumstances, a reasonable person in the liquidator’s position would have taken precautions to ensure the Vessel was kept in a waterproof state, whether that was storing it undercover or placing tarpaulins over it that covered all of its exposed areas, such that no rainwater could enter the Vessel and cause damage to it;
(d)the probability and likely seriousness of the harm materialising was moderate given the exposure of the interior fit out; and
(e)the burden of taking precautions was relatively low in comparison to the damage that could have, and did, materialise. Further, the burden would have been mitigated by the second defendant being able to recover the reasonable storage and preservation costs pursuant to a lien.
If a duty of care had been owed by the second defendant, I consider it would have been breached by the second defendant in failing to take reasonable care to take precautions against the risk of harm to the Vessel when shifted from Shed H60.
Even if the assessment of a breach of duty was made having regard to the subjective assessment of the second defendant’s actions, as the defendants contended, which I do not consider is a correct statement of the law, my decision in the circumstances set out above would not be any different.
In final submissions the second defendant claimed the Court should grant him relief under s 1318 of the Corporations Act. That had not been pleaded by the second defendant and the plaintiff opposed it being raised in closings. The plaintiff contended it was prejudiced because one of the matters to be considered by the Court in assessing whether such relief should be given is whether advice was taken and relied upon in the exercise of the Court’s discretion,[112] and that was not the subject of the evidence, notwithstanding the considerable amount of correspondence between the plaintiff’s solicitors and defendants’ solicitors, nor was it the subject of disclosure. Honest action alone is not sufficient to justify relief.[113] In my view the plaintiff’s contention is well founded and I would decline to allow the second defendant to raise the defence in closings absent a proper pleading and disclosure.
[112]Australian Securities and Investments Commission (ASIC) v Vines (2005) 65 NSWLR 281; [2005] NSWSC 1349 at [57].
[113]Williams (as liquidator of Scholz Motor Group Pty Ltd) (in liq) v Scholz [2007] QSC 266 at [72]-[74].
Damages
The measure of damages for conversion is the value of the Vessel, which is normally the market value of the Vessel, to be assessed at the time of conversion.[114] Consequential loss may in appropriate circumstances be awarded. However, the overriding principle in tort is that the injured party should receive compensation in a sum which, so far as money can do so, will put them in the same position as if the tort had not been committed.[115]
[114]Brybay at [25], [29] and [33].
[115]Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185 at 191-192.
The Vessel was sold in its incomplete state for $530,000 on 15 September 2021.
Although the pleaded claim is for $570,000 based on a market value of $1,100,000[116] less the sale price of the Vessel, the plaintiff in its submissions contends it is entitled to damages in the sum of $210,207.60 plus GST, which is $231,228.36.[117] That is based on the estimate of costs of repair by Mr Billett to put the boat back into the condition it was before it was damaged. Mr Lack provided a report recording the damage observed to the Vessel by water when he inspected it on 27 January 2021. The plaintiff contends that was supported by Mr Seiffert insofar as he stated there was a $225,000 difference between the damaged Vessel and the undamaged Vessel.
[116]Which was not the subject of any probative evidence
[117]In addition to the monies from the sale price for the Vessel.
The defendants claim the value of the Vessel at the date it was moved out of Shed H60 was at best $550,000 according to what they say is the only evidence on that issue. It was eventually sold for $530,000 so that the maximum claim for damages that could be sought is the shortfall of $20,000. As to the contention that the defendants are liable for the costs of repairs, the defendants further contend that the priming and fairing had to be redone in any event because they were outside the 90 day warranty, and those costs therefore cannot be attributed to the ingress of water, notwithstanding Mr Lack in his report noted that the epoxy primer (which had a 90 day warranty) and fairing had been damaged as a result of being stored outside, requiring that the coat be sanded back and re-done. This was the subject of objection as it was not a matter that had been pleaded.

Evidence was called from Mr Lack, Mr Billett and Mr Seiffert.
Mr Lack is a Marine Surveyor who inspected the Vessel on 27 January 2021 at the request of the plaintiff. He observed the state of the Vessel, and the areas open to water ingress, took photographs and noted damage by water. In his evidence he stated that he had driven past the Vessel when it was raining and could see rain entering through the side window that was open. In addition to Mr Lack identifying the damage to the epoxy primer and fairing in his survey report of 28 January 2021, he found that as a result of the exposure to rain the internal plywood and timber would all have to be removed. He noted that as a result of adhesive fastening it was likely during removal the timber/plywood fit out would be largely destroyed. Photos taken by him show significant ponding of water in the deck store, saloon and flooding in the engine room.
Mr Lack was a straightforward witness and I accept his evidence.
Mr Billett estimated rectification costs. He was a professional Marine Captain and then qualified as a Marine Engineer. He inspected the Vessel on 24 February 2021. He prepared an estimate of costs. Based on his review of the report prepared by Mr Lack, he noted he had not included any cost for welding off the keel welds to transport the Vessel by road. He noted the repairs could not be done to the Vessel without it being shifted. He estimated the costs to restore the Vessel to the condition it was in before it was moved was between $202,046.40 to $210,207.60 plus GST. Mr Billett agreed that he differed from Mr Lack insofar as he considered that fairing had been done to 75 per cent of the Vessel whereas Mr Lack considered it was only 10 per cent.
Mr Seiffert, a valuer who holds a certificate in Vessel Valuation from Lloyd’s Maritime Academy, also gave evidence. He was originally instructed by the plaintiff but called by the defendants to give evidence. According to his report, if the Vessel had been sold in the state it was in as at the date of inspection in June 2021 the estimated fair market value would have been $325,000. If it had not been removed from indoor and watertight premises its estimated value would have been $550,000. When told of the price for which the Vessel had sold for in September 2021, namely $530,000, he stated that the market at that time was particularly strong and considered the price to be a premium price. He agreed that the difference in value between the Vessel in its current state and in its undamaged state was $225,000.
A condition report of Mr Cummings, a Marine Surveyor, who commented on the condition of the Vessel and the reports of Mr Lack and Mr Billett was admitted into evidence.[118] Other than confirming water damage when he inspected the Vessel in July 2021 and that the Vessel had openings where rain entered the Vessel, his report provided little assistance.
[118]Exhibit 10.
While Mr Seiffert’s fair market value had a difference of $225,000 between the Vessel in its damaged state as opposed to what its value would otherwise have been if it had been kept watertight, I am not satisfied that the fair market value of the Vessel was more than $550,000. Mr Seiffert had a logical and feasible explanation as to why he considered the price the Vessel sold for in September 2021 was a premium price rather than reflecting fair market value. While the plaintiff points to the difference being similar to the estimated value for repairs by Mr Billett, the difficulty with that argument is Mr Billett’s report values the repairs that he considers had to be done as well as relocation costs to carry out such repairs, but does not equate the cost of repairs to market value, nor on the evidence before me was that established as being a proper measure for the fair market value in the undamaged state.
I therefore find that the value of the Vessel at the date of conversion was $550,000. The price the Vessel sold for was $530,000 leaving the amount of damages to be paid to be $20,00.
The parties should provide orders to reflect the payment of monies maintained in trust accounts of the plaintiff and defendants’ solicitors after the sale of the Vessel and the difference of $20,000.
Lien
The second defendant does not claim a lien arises if the Court finds ownership in the Vessel passed to the plaintiff.[119] This issue only arose for determination in the event that I determined that the plaintiff did own the Vessel and declined the declarations sought in that regard. As the plaintiff has been successful the second defendant is not entitled to a lien. It is unnecessary for the Court to address the question of a lien further.
[119]Further Amended Defence at [39(d)]; T1-12/10-15.

Conclusion

The plaintiff has been generally successfully in establishing the relief sought in its Further Amended Claim.
In answer to the issues that have to be determined:
(a)the plaintiff did have an interest in the Vessel notwithstanding the entry into the Deed of Settlement;
(b)the plaintiff’s ownership of the Vessel was not a security interest within the meaning of s 12(1) of the Personal Property Securities Act 2009 (Cth) (PPSA);
(c)if I am wrong as to issue (b) the plaintiff’s ownership is a security interest:
(i)its registration was effective; and
(ii)the plaintiff’s security interest is subject to the NAB’s registered present and after acquired property security interests ;
(d)the plaintiff take the Vessel free of any other security interests pursuant to section 46(1) of the PPSA; and
(e)the defendants liable in damages for conversion being the amount of $20,000 which is the difference between the value of the Vessel at the date of conversion and the amount received on the sale of the Vessel in September 2021;
(f)the second defendant is not entitled to a lien.
Prima facie costs should follow the event, but I will allow the parties to provide submissions as to costs.

Orders that should be made

I consider the Court should make the following orders:
(a)The plaintiff has leave to proceed against the second defendant;
(b)A declaration that the plaintiff was until 15 September 2021 the owner of the Vessel;
(c)A declaration that the plaintiff had until 15 September 2021 the right to immediate possession of the Vessel;
(d)A declaration that no interest in the Vessel or its sales proceeds has vested in the first defendant pursuant to s 267 of the PPSA;
(e)The defendants are liable to pay damages for conversion to the plaintiff in the amount of $20,000 being the difference of the value of the boat of $550,00 at the date of conversion less the price for the sale of the Vessel in September 2021;
(f)The parties are directed to provide orders for the payment of monies maintained in trust accounts of the plaintiff’s solicitors and defendants’ solicitors after the sale of the Vessel, damages for conversion or otherwise to give effect to the declarations made, in accordance with these reasons and as to interest by 2pm on 16 December 2022;
(g)The parties are to provide submissions in relation to orders of costs by email to the Associate for Brown J by 4pm on 20 December 2022.

CITATION:	Reel Action Sports Fishing Pty Ltd (ACN 092 732 888) v Marine Engineering Consultants Pty Ltd (in Liq) & Anor [2022] QSC 271
PARTIES:	REEL ACTION SPORTS FISHING PTY LTD ACN 092 732 888 (plaintiff) v MARINE ENGINEERING CONSULTANTS PTY LTD (In Liquidation) (first defendant) CHRISTOPHER JOHN BASKERVILLE (second defendant)
FILE NO/S:	BS 1377/21
DIVISION:	Trial Division
PROCEEDING:	Claim
ORIGINATING COURT:	Supreme Court of Queensland at Brisbane
DELIVERED ON:	13 December 2022
DELIVERED AT:	Brisbane
HEARING DATE:	11, 12 August 2022 and 5 September 2022.
JUDGES:	Brown J
ORDER:	The Orders of the Court are: 1. The plaintiff has leave to proceed against the second defendant; 2. A declaration that the plaintiff was until 15 September 2021 the owner of the Vessel; 3. A declaration that the plaintiff had until 15 September 2021 the right to immediate possession of the Vessel; 4. A declaration that no interest in the Vessel or its sales proceeds has vested in the first defendant pursuant to s 267 of the PPSA; 5. The defendants are liable to pay damages for conversion to the plaintiff in the amount of $20,000 being the difference of the value of the boat of $550,00 at the date of conversion less the price for the sale of the Vessel in September 2021; 6. The parties are directed to provide orders for the payment of monies maintained in trust accounts of the plaintiff’s solicitors and defendants’ solicitors after the sale of the Vessel, damages for conversion or otherwise to give effect to the declarations made, in accordance with these reasons and as to interest by 2pm on 16 December 2022; 7. The parties are to provide submissions in relation to orders of costs by email to the Associate for Brown J by 4pm on 20 December 2022.
CATCHWORDS:	CORPORATIONS — INSOLVENCY — WINDING UP — SECURITY INTEREST – where the plaintiff entered into a contract with the first defendant for the construction of a Vessel – where a dispute arose between the parties and the parties subsequently entered into a deed of settlement and guarantee – where the Vessel was incomplete at the time of the first defendant’s winding up – where the Vessel was subsequently sold to a third party – whether the plaintiff or first defendant is entitled to the proceeds of sale – where there are competing security interests – whether the plaintiff has any interest in the Vessel on the proper construction of the deed of settlement and guarantee – whether the plaintiff’s interest in the Vessel is a security interest within the meaning of s 12(1) of the Personal Property Securities Act 2009 (Cth) – whether registration was effective – whether plaintiff’s security interest has priority – whether the plaintiff took the Vessel free of any other security interests pursuant to section 46(1) of the Personal Property Securities Act 2009 (Cth) CORPORATIONS – WINDING UP – LIQUIDATORS – DUTIES AND LIABILITIES – NEGLIGENCE – where the second defendant was appointed to wind up the first defendant – where the second defendant’s position was that that the plaintiff did not have an effective security interest in the Vessel and detained the Vessel – where the Vessel was moved outside at the direction of the second defendant and damaged as a result of being stored outside – whether the second defendant owed the plaintiff a duty of care in respect of its dealings with the Vessel – whether the second defendant breached any such duty of care CORPORATIONS – WINDING UP – LIQUIDATORS – CONVERSION – where the second defendant denied the plaintiff’s entitlement to possession – where the Vessel was subsequently sold to a third party – whether the second defendant is liable for conversion Civil Liability Act 2003 (Qld) s 9 Corporations Act 2001 (Cth) ss 180, 182, 474, 478,479, 545, 530C, 568, 1318 Personal Property Securities Act 2009 (Cth) ss 8, 12, 46, 151, 164, 254, 267 Aardwolf Industries LLC v Riad Tayeh [2020] NSWSC 299, considered Aardwolf Industries LLC v Tayeh [2020] NSWCA 301, cited Auburn Shopping Village Pty Ltd v Nelmeer Hoteliers Pty Ltd (2017) 324 FLR 378; [2017] NSWSC 1230, considered Australian Securities and Investments Commission (ASIC) v Vines (2005) 65 NSWLR 281; [2005] NSWSC 1349, cited Balanced Securities Ltd v Dumayne Property Group Pty Ltd (2017) 53 VR 14; [2017] VSCA 61, considered Bredenkamp v Gas Sensing Technology Corporation, Re Welldog Pty Ltd (In Liq) (Recs and Mgrs Apptd) [2017] FCA 1065, cited Brookfield Multiplex Limited and Owners Corporation Strata Plan 61288 & Anor (2014) 254 CLR 185; [2014] HCA 36, cited Brybay Pty Ltd (in liq) & Ors v Esanda Finance Corp Ltd [2002] WASC 309, considered Butler v Egg and Egg Pulp Marketing Board (1966) 114 CLR 185; [1966] HCA 38, cited Caltex Refineries (Qld) Pty Ltd v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258, considered Chelliah v NSW Police [2018] NSWSC 55, cited Concut Pty Ltd v Worrell (2000) 176 ALR 693; [2000] HCA 64, cited Crouch v Adams [2006] NSWSC 1029, cited Crowther v Australian Guarantee Corp Ltd (1985) Aust Torts Rep 80-709, cited Dura (Australia) Constructions Pty Ltd (in liq) (recs and mgrs apptd) v Hue Boutique Living Pty Ltd (formerly SC Land Richmond Pty Ltd) (2014) 49 VR 96 [2014] VSCA 326, cited Federal Commissioner of Taxation v Sara Lee Household & Body Care Australia Pty Ltd (2000) 201 CLR 520; [2000] HCA 35, cited Flowfill Packaging Machines Pty Ltd v Fytore Pty Ltd (1993) Aust Torts Reports 81-244, cited Future Revelation Ltd v Medica Radiology & Nuclear Medicine Pty Ltd (2013) 283 FLR 122; [2013] NSWSC 1741, considered Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1987) 163 CLR 236; [1987] HCA 30, considered General Motors Acceptance Corp Australia v Southbank Traders Pty Ltd (2007) 227 CLR 305; [2007] HCA 19, cited Gold Valley Iron Pty Ltd (In Liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134, cited Hausmann v Smith (2006) 24 ACLC 688; [2006] NSWSC 682, cited Hillam v Iacullo, (2015) 90 NSWLR 422; [2015] NSWCA196, cited Hobbs v Petersham Transport Co Pty Ltd; Petersham Transport Co Pty Ltd v ASEA Electric (Australia) Pty Ltd (1971) 124 CLR 220; [1971] HCA 26, considered Macks v Viscariello (2017) 130 SASR 1; [2017] SASCFC 172, considered Maelor Jones Investments (Noarlunga) Pty Ltd & Ors v Heywood-Smith (1989) 54 SASR 285, considered Marsh v Baxter (2015) 49 WAR 1; [2015] WASCA 169, cited McDermott v Black (1940) 63 CLR 161; [1940] HCA 4, considered Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37, cited National Australia Bank Ltd v Garrett (2016) 340 ALR 532; [2016] FCA 714, considered Perpetual Nominees Limited v McGoldrick & Anor (No 3) (2017) 317 FLR 227; [2017] VSC 78, considered Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36, cited Re Blyth Shipbuilding and Dry Docks Company, Limited [1926] 1 Ch 494, considered Re Lambert (1994) 20 OR (3d) 108, cited Re Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd [2013] NSWSC 852, cited Re OneSteel Manufacturing Pty Ltd (Admin Apptd) [2017] NSWSC 21, cited Schreuders v Grandiflora [2016] VSCA 93, cited Seaman v Silvia [2018] FCA 97, considered Spittlehouse v Northshore Marine Inc. (1994) 18 O.R. (3d) 60; [1994] OJ No. 809, cited Sydlow Pty Ltd (in liq) v TG Kotselas Pty Ltd & Ors (1996) 65 FCR 234, considered Viscariello v Macks (2014) 103 ACSR 542; [2014] SASC 189, cited Warehouse Sales Pty Ltd (in Liq) & Lewis and Templeton v LG Electronics Australia Pty Ltd (2014) 291 FLR 407; [2014] VSC 644, considered Williams (as liquidator of Scholz Motor Group Pty Ltd) (in liq) v Scholz [2007] QSC 266, cited Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; [2004] HCA 16, cited
COUNSEL:	J W Peden QC with B Vass for the plaintiff P O’Brien for the first and second defendants
SOLICITORS:	Broadley Rees Hogan for the plaintiff Thynne + Macartney Lawyers for the first and second defendants