Scandi International Pty Ltd v Larkfield Industrial Estate Pty Ltd
[2018] VCC 584
•4 May 2018
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised (Not) Restricted Suitable for Publication |
GENERAL LIST
Case No. CI-16-02981
| SCANDI INTERNATIONAL PTY LTD and ANOR | Plaintiffs |
| v | |
| LARKFIELD INDUSTRIAL ESTATE PTY LTD | Defendant |
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JUDGE: | HIS HONOUR JUDGE ANDERSON | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 21-24 & 27 November 2017 | |
DATE OF JUDGMENT: | 4 May 2018 | |
CASE MAY BE CITED AS: | Scandi International Pty Ltd & Anor v Larkfield Industrial Estate Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2018] VCC 584 | |
REASONS FOR JUDGMENT
Catchwords: Contract – Storage of outdoor furniture at commercial storage facility – Occupancy agreement in the name of company in liquidation – Occupancy later terminated for non-payment of storage charges – Other companies claimed ownership and entitlement to the return of the stored furniture – Whether outstanding storage charges must first be paid – Equitable lien – Relationship between individual who arranged the storage and companies claiming return of the stored furniture – Whether operator of the storage facility entitled to dispose of the stored furniture – Part 4.2 Australian Consumer Law and Fair Trading Act 2012 (Vic).
APPEARANCES: | Counsel | Solicitors |
| For the plaintiffs and for the first, second & fourth defendants by counterclaim | Mr A T Schlicht | Simon Nixon & Associates |
| For the defendant and for the plaintiff by counterclaim | Mr M A J McKillop | HWL Ebsworth Lawyers |
For the third defendant by Mr J Guss (in person)
counterclaim
HIS HONOUR:
1 On 1 October 2013, Joseph Guss signed an occupancy agreement with Larkfield Industrial Estate Pty Ltd (“Larkfield”) providing for the storage of goods at Larkfield’s storage facility in Somerville Road, West Footscray (“the occupancy agreement”). The stored goods were primarily outdoor furniture (“the stored furniture”). Rental in respect of the occupancy agreement was paid up to and including May 2015.
2 In September 2015, Larkfield refused to release the stored furniture until the outstanding storage charges were paid. An attempt by Larkfield to sell the goods pursuant to the Australian Consumer Law and Fair Trading Act 2012 (Vic) (“the uncollected goods legislation”) was restrained by interlocutory injunction.
3 The plaintiffs are two companies, Scandi International Pty Ltd (“Scandi”) and Casualife Furniture International Ltd (“CLF Hong Kong”). They claim that they are the owners of the stored furniture; Scandi as a purchaser and CLF Hong Kong through a debenture charge over LHV Pty Ltd (“LHV”), another purchaser. The plaintiffs seek orders that they be permitted to retake possession. Evidence was given on their behalf that the landed cost of the stored furniture was about $338,000.
4 Larkfield, by its counterclaim, seeks an order for the sale of the stored furniture and to recover outstanding rental, other charges and costs totalling over $476,000.
5 There are a number of issues in dispute between the parties:
a. whether, the contracting party with Larkfield for the storage of the stored furniture was, or became:
i. Casualife Furniture International Pty Ltd (“CLF International”), the party named in the occupancy agreement as the “tenant”. However, CLF International was deregistered on 3 November 2013 after having been wound up in 2004;
ii. Mr Guss, who negotiated and executed the occupancy agreement. Mr Guss said that he had never intended that CLF International should be the tenant and he signed the occupancy agreement without noticing that the agreement was in the name of CLF International;
iii. LHV, which Mr Guss said was the company which traded as Casualife Furniture in Australia. LHV paid the monthly rental payments under the occupancy agreement and Mr Guss said that LHV was intended by him as the contracting party with Larkfield;
iv. Scandi, which Mr Guss proposed as the entity that would execute a replacement licence agreement when Larkfield discovered, in about November 2014, that CLF International had been deregistered;
b. whether the stored furniture is owned by Scandi and CLF Hong Kong;
c. whether Scandi and CLF Hong Kong were entitled to retake possession of the stored furniture, or whether they were only entitled to do so if unpaid rental and other charges were first paid to Larkfield;
d. whether Larkfield was, or became:
i. a bailee of the stored furniture;
ii. entitled to retain the stored furniture as “uncollected goods” under the uncollected goods legislation;
iii. entitled to sell the stored furniture by public auction pursuant to the legislation
e. the amount of the “relevant charge” pursuant to the uncollected goods legislation;
f. whether Mr Guss had represented to Larkfield that CLF International was appropriate to be named as the tenant in the occupancy agreement and would be bound by it. It was alleged that these circumstances constituted:
i. breach of warranty of authority;
ii.misleading and deceptive conduct (including conspiracy with Scandi and CLF Hong Kong which “involved” them in the contravention by Mr Guss);
iii. unconscionable conduct;
g. whether Larkfield is entitled to:
i.payment of rental and other charges arising from the storage of the stored furniture from Mr Guss, or alternatively LHV;
ii.damages from Mr Guss;
h. if Larkfield were so entitled, in what sums should these matters be assessed, and by whom should they be paid?
6 In my view, the issues in dispute between the parties should be determined as follows:
a. in relation to the occupancy agreement:
i. CLF International had been in liquidation since 2004 and could not be bound to
the occupancy agreement by Mr Guss;
ii. LHV, although it made rental payments, was never suggested by Mr
Guss to Larkfield as the contracting party;
iii. Scandi was proposed by Mr Guss as the contracting party on 7 December 2014, but never entered into contractual relations with Larkfield;
iv. Mr Guss only purported to act as an agent on behalf of other parties and not to
bind himself as a principal;
b. it is not possible on the evidence to be satisfied that Scandi or CLF Hong Kong is the owner of the goods each claims or is otherwise entitled to recover possession;
c. in any event, Scandi and CLF Hong Kong would only be entitled to take possession of the goods if they first paid to Larkfield the unpaid rental and other charges, by reason of an equitable lien in favour of Larkfield or the application of section 59 of the uncollected goods legilsation;
d. in relation to the uncollected goods legislation:
i. Larkfield became an involuntary bailee of the stored furniture, not later than
when it terminated the occupancy arrangement in September 2015 or moved
the goods into secure storage in Shed 37 in November 2015;
ii. in the absence of payment of outstanding rental or storage charges, Larkfield
was entitled to retain the stored furniture as “uncollected goods” under
the uncollected goods legislation;
iii. Larkfield had satisfied the requirements of section 66 of the uncollected goods
legislation by service of the notice dated 14 October 2015 on Mr Guss, and of
section 68, by the issue and service of its counterclaim;
iv. Larkfield is be entitled to an order for the sale of the stored
furniture by public auction pursuant to the uncollected goods legislation;
e. a declaration will be made pursuant to the uncollected goods legislation
specifying the amount of the relevant charge payable to Larkfield;
f. Mr Guss warranted that he had authority from CLF International to enter into
the occupancy agreement although he had no authority to bind the company. However, no loss or damage had resulted because CLF International had no capacity to comply with the agreement and as Larkfield had continued to accept rent and store the furniture;
g. the alternative claims against Mr Guss, based on misleading and deceptive conduct and unconscionable conduct, would fail for similar reasons. No “conspiracy” between Mr Guss with Scandi and/or CLF Hong Kong, in regard to this matter, has been established;
Witnesses and issues relating to credit
7 Scandi and CLF Hong Kong relied upon the oral evidence of its Marketing Manager, Marilla Guss. Larkfield called three witnesses; its Group CEO, Robert Ades, its Supervisor and Maintenance Officer for the Somerville Road facility, Harry Ewald, and a subpoenaed witness Henry Gilbert, who had been Mr Guss’s accountant. Mr Guss gave evidence on his own account.
8 Two principal issues were raised in relation to the oral evidence called by the parties:
a.the failure by Larkfield to call its former Property Manager, Kathryn Grainger, who had negotiated the occupancy agreement with Mr Guss, and Jaffat Ali, the sole director of LHV from 1 September 2009. Mr Ali had apparently been subpoenaed by Larkfield to give evidence;
b. the credibility of the evidence given by Mr Guss.
9 Failure to call Ms Grainger: Ms Grainger resigned her employment with Larkfield in February 2017. Between 2014 and 2016, Ms Grainger had suffered ill-health which affected the performance of her responsibilities. In about December 2016, Ms Grainger informed Larkfield’s solicitors that because of her ill-health, she did not intend to give evidence in the proceeding. By reason of Ms Grainger ’s personal circumstances, Larkfield “decided not to ask Ms Grainger to give evidence at this trial”.
10 Ms Grainger’s evidence would have likely had some significance in the proceeding. She had negotiated the occupancy agreement with Mr Guss. She prepared the agreement naming CLF International as the “tenant”. She was later involved, including when it was discovered that CLF International was a deregistered company and arrangements were made to have Scandi execute a replacement licence agreement.
11 These were matters which had some relevance, particularly in relation to the misleading and deceptive conduct and unconscionable conduct claims. These claims were only introduced into the counterclaim by an order made on 10 October 2017.
12 At the time the trial commenced, Larkfield was not aware of Ms Grainger’s address or how to contact her and apparently no efforts had been made to speak to her since the time Larkfield contemplated amending its counterclaim. Larkfield’s investigations during the course of the trial revealed that Ms Grainger was overseas.
13 It is necessary to consider whether Larkfield has provided a reasonable explanation for Ms Grainger’s absence as a witness at the trial in circumstances where it was to be expected that Larkfield would have called her as a witness and that she would be able to give evidence of important matters in issue between the parties. The amendments sought by Larkfield to its counterclaim in October 2017 were of such a nature that the evidence of Ms Grainger was likely to be critical, particularly in relation to the authority representation and Larkfield’s reliance, or continued reliance, upon it.
14 The affidavit of Mr Ades sworn on 24 November 2017 provided details of the background to Ms Grainger leaving her employment with Larkfield and her health issues. I do not intend to canvas these matters further in these reasons and I will order that the affidavit be sealed and marked, “Not to be opened except upon order of this Court or the Supreme Court”. However, there is no recent evidence as to Ms Grainger’s willingness to give evidence. In these circumstances I must regard Larkfield’s explanation for her absence as a witness as unsatisfactory.
15 Accordingly, I have therefore assumed that, if Ms Grainger had given evidence, her evidence would not have assisted Larkfield’s case. I would ordinarily have found it easier to accept the contrary evidence advanced by the opposite parties where Ms Grainger ’s evidence had not been received. However, the contrary evidence was given by Mr Guss, and it will be necessary to discuss the doubts raised about the credibility of his evidence.
16 Failure to call Mr Ali: Mr Jaffat Ali was apparently present in Court during part of the trial. He is a director of LHV, the fourth defendant to counterclaim. That party was represented by Mr Schlicht at the trial. Although Larkfield had subpoenaed Mr Ali to give evidence, it is not clear whether he had attended court to answer the subpoena or for other reasons. Any party could have called him to give evidence, including Mr Guss or the parties for whom Mr Schlicht appeared. I am entitled to assume that his evidence would not have assisted any party in the trial.
17 Credibility of Mr Guss’s evidence: Larkfield’s counsel, Mr McKillop, submitted that Mr Guss during his evidence had “obfuscated or evaded questions when he perceived his answers threaten his interests…In the course of the business in which he is involved, the evidence shows Mr Guss has been shown to have a lack of commercial morality”.
18 There were a number of examples of these matters referred to in Mr McKillop’s submissions. I generally accept the submissions but will limit my comments at this point to the following matters:
a. notwithstanding Mr Guss’s association with Scandi since its incorporation, and his accountant’s belief that the beneficial owners of Scandi were Mr Guss and his family, Mr Guss was not able, or prepared, to provide a coherent account of his relationship with Scandi either at the time of incorporation or later;
b. Mr Guss stated that he did not knowingly execute the occupancy agreement with CLF International as the “tenant”. His explanation was that he was “busy” with other matters and did not notice or give significance to the fact that the tenant named in the agreement was CLF International, a company he knew had been liquidated. This was not a credible explanation, particularly as he offered no real explanation for writing the name “Casualife Furniture International” below his signature on behalf of the “tenant” on the occupancy agreement;
c. in his evidence, Mr Guss described the occasion when Scandi and CLF Hong Kong exercised “self-help” by attending the Somerville Road storage facility with a truck to pick up stored furniture. Mr Guss however, underplayed his own role saying he was only there to pick up personal files of his and a personal item owned by his son. Mr Guss did not address the evidence of Mr Ewald, that Mr Guss had tried to avoid detection in the storage shed when Mr Ewald came to investigate;
d. according to Mr Guss, LHV had for many years traded under the business name “Casualife Furniture”. Mr Guss said that there was no requirement for LHV to disclose that it had used the business name for over 12 years before it registered its use of the name in 2017. Mr Guss appeared to be unaware of the requirements of the relevant Victorian and Commonwealth business names legislation or of section 153 of the Corporations Act 2001. Section 153 requires a company to include its name and ABN on all its “public documents”, which, by section 88A(1), include “a business letter, statement of account, invoice, receipt, order for goods …”.
19 In the circumstances, I do not consider that Mr Guss’s evidence should be accepted, unless it is supported by other evidence including contemporaneous documents, or his evidence is at least consistent with other evidence providing some support for Mr Guss’s account. I shall return to examine in some detail the evidence of Mr Guss and his relationship with a number of entities associated with “Casualife Furniture”.
The occupancy agreement with Larkfield
20 The occupancy agreement was executed on 1 October 2013 between Larkfield as “landlord” and CLF International as “tenant”. The agreement was negotiated and executed on behalf of the tenant by Mr Guss. He said in evidence that the entity upon whose behalf he was acting was “Casualife Furniture” which, he said, was a business name which LHV used in Australia.
21 Prior to October 2013, the stored furniture had been located in Shed 52 at the Larkfield facility. The tenant of Shed 52 was TNN Transport (“TNN”), a transport company which apparently transported and stored furniture on behalf of Casualife Furniture. When TNN proposed moving from the Larkfield facility, Mr Guss sought to have the stored furniture moved to another shed at the facility. Larkfield required a new occupancy agreement to be entered into.
22 Mr Guss spoke with Ms Grainger from Larkfield and the stored furniture was moved to Shed 43A at the Larkfield facility. Mr Guss said he told Ms Grainger that the tenant would be “Casualife Furniture”. He said that Ms Grainger did not ask him for the full name or ABN of that entity.
23 Mr Guss said that Ms Grainger sent him the proposed agreement in late September 2013. Mr Guss said he did not take any notice of the name of the tenant or give it any significance. He said in evidence, “I frankly either didn’t notice it or didn’t take any significance about it”. Mr Guss said is relation to entering into the occupancy agreement that, “I just wanted to get it off my plate”. He said that he “formalised” the agreement on behalf of LHV and sent Ms Grainger two cheques drawn on LHV’s account, one for one month’s rent and the other as a security deposit.
24 On 27 September 2013, Ms Grainger sent Mr Guss, the occupancy agreement for execution. Mr Guss said in evidence, “so, that was the arrangement and as far as I was concerned, it was clearly on behalf of Casualife Furniture, per se”.
25 Mr Guss agreed that, “The invoices were made out to Casualife Furniture International Pty Ltd” and that the “first” invoice was received on “2 October” 2013, and that he “received similar invoices in subsequent months…all made out to Casualife Furniture International Pty Ltd”. Mr Guss said, “I saw how [the invoices] were addressed but I didn’t do anything about it”. He said, “It didn’t enter my head” to tell Larkfield or Ms Grainger that the invoices were addressed “to the wrong company” or that “they should be addressed to LHV”. He said that, “in the proper order [having LHV’s name on the lease] should have probably happened”.
26 When Larkfield’s solicitors wrote to Mr Guss on 24 November 2014, after Larkfield’s discovery that CLF International had been deregistered, Mr Guss did not respond by informing the solicitors that it had been intended that LHV would be the tenant. Instead, he proposed that the new licensee would be Scandi.
27 Mr Guss said that the only words he used in late September 2013 in relation to the proposed tenant were “Casualife Furniture”, and he had no idea how Ms Grainger came to use “Casualife Furniture International Pty Ltd” or its ABN in the description of the tenant. Mr Guss gave evidence that he told Ms Grainger that the tenant “would be Casualife Furniture…She didn’t enquire of me concerning the tenant’s name, she didn’t ask me for an ABN, she didn’t ask me anything, and she sent me a proposed agreement …on 27 September”.
28 Mr Guss said that, “Casualife Furniture [were] the only words I ever used to Kate Grainger, and I think that’s the only words she used to me, and how come she put Casualife Furniture International Pty Ltd and an ABN in the document, I have absolutely no idea. I didn’t give it to her, and frankly I just omitted to either notice it or say…anything to her about it”. Mr Guss agreed that “the only information Kate Grainger was equipped with to determine the proper tenant was the two words ‘Casualife Furniture’ [and] that’s the only information you had given her”. Mr Guss was asked that there was no way Ms Grainger “could have found out, just from the words ‘Casualife Furniture’, that LHV was the intended tenant could she?” Mr Guss responded, “She could’ve asked”.
29 Mr Guss said in his affidavit sworn 22 July 2016 that he advised Ms Grainger that the occupant would be “Casualife Furniture which was a trade name then being used with the permission of [CLF Hong Kong] by LHV”. Mr Guss said, “I didn’t notice that she had styled the occupant with ‘Pty Ltd’…or check the ABN number she had inserted. I have no recollection of her asking me for an ABN number and if she had I would have given her LHV’s”.
30 Although Mr Guss said in evidence that he had failed to notice the description of the tenant in the occupancy agreement as “Casualife Furniture International Pty Ltd” the words “Casualife Furniture International” were written under his signature when he executed the occupancy agreement. Mr Guss said that the writing did “bear some semblance to some of my writing…and I don’t recall, but I could have written those words”.
31 Mr Guss said that when he signed the occupancy agreement he was “extremely busy” with his legal practice and, “I just didn’t pick it up or deal with it”. Mr Guss said, “I should’ve probably, if I had noticed it properly, said something but I didn’t”.
32 Mr Guss wrote to Ms Grainger on 1 October 2013 in a letter signed with the contact details of “Casualife Furniture International” printed at the foot of the letter. The letter confirmed a number of matters negotiated with Ms Grainger in relation to the occupancy agreement. These included the amendment of the “rent commencement date” which Mr Guss had initialled, the non-provision of an evacuation plan referred to in the recitals and the responsibility of the tenant for repairs to the premises. Mr Guss described the occupancy agreement in his evidence as seeming “simply enough”. These actions suggest a reasonably careful examination of the document by Mr Guss in circumstances where he would be unlikely to overlook the description of the tenant.
33 As regards the effect of execution of a document such as the occupancy agrement, the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at paragraph 47 stated:
“Legal instruments of various kinds take their efficacy from signature or execution. Such instruments are often signed by people who have not read and understood all their terms, but who are nevertheless committed to those terms by the act of signature or execution. It is that commitment which enables third parties to assume the legal efficacy of the instrument. To undermine that assumption would cause serious mischief”.
34 Mr Guss said that Ms Grainger asked for a “certificate of currency of insurance” which he obtained. Mr Guss said, “I believe that I sent it to her, but I have been unable to find any written record of that”. Mr Guss had written to Ms Grainger on 1 October 2013, stating, “We are arranging Certificate of Currency from our insurance broker re contents/public liability and will forward this to you in the next few days when to hand”. The certificate of currency of insurance is dated 4 October 2013 and is addressed to LHV at a St Kilda South post office box. It records “the insured” as Casualife Furniture International Ltd; J, A & M Guss; Scandi International Pty Ltd; Gusto Corp Pty Ltd; Holy [May Pty Ltd]. The attached “Schedule of Insurance” records the “Insured Name” as Casualife Furniture International Ltd, and Larkfield Pty Ltd, as an “Interested Party”.
35 The “tenant” pursuant to the occupancy agreement could clearly not be CLF International, as that company was shortly to be deregistered following a lengthy liquidation and receivership.
36 Mr Guss said that the only entity he referred to was “Casualife Furniture”, although he had been acting on behalf of LHV. He denied that he had been acting directly on behalf of Scandi or CLF Hong Kong, although he said that he had told Marilla Guss that he had arranged the storage of Scandi’s furniture at the Larkfield facility. Mr Guss said that he had had no discussions with CLF Hong Kong at that time.
37 Mr Ades said that the occupancy agreement in the form signed by Mr Guss was intended as an interim arrangement only, until a specific agreement drawn up by Larkfield’s solicitors could be prepared. The occupancy agreement provided, immediately above where the parties were to execute the agreement, that;
“We hereby offer to lease the above described premises upon the terms and conditions herein above set out, and to sign a formal lease in like terms to the above and the draft lease attached as prepared by the landlord’s solicitors and approved by the tenant’s solicitors”.
There is no evidence that there was a “draft lease” in existence. The “Term of Lease”
was stated in the occupancy agreement as “3 months. Expires 31 December 2013”.
38 On 24 November 2014, Larkfield’s solicitors wrote to Mr Guss advising that a search had revealed that CLF International was deregistered and asking what entity should be named as the licensee in an agreement to be drawn by the solicitors.
39 In his email response on 7 December 2014, Mr Guss did not mention that it had originally been his intention that LHV should have been named as the tenant and did not propose LHV as the tenant in the new arrangement. Instead, he “proposed that a new licence agreement be entered into with Scandi International Pty Ltd”.
40 An agreement was drafted by Larkfield’s solicitors naming Scandi as the licensee, and sent to Scandi on 23 February 2015. An executed document was never returned. The rental payments, when made, continued to be paid by LHV cheques or by electronic transfer from LHV. The last payment was made by electronic bank transfer by LHV on 11 June 2015, bringing the rental up to date to 31 May 2015.
41 Mr Guss said that, “because I was administering [the occupancy agreement] on behalf of LHV, no other person or company to my knowledge paid any rental or other amounts of money to Larkfield”. Later in cross-examination, Mr Guss was asked whether he “had arranged payments to Larkfield by EFT transfer?” He responded, “Well, LHV did…I may have done some, or their accountants may have done others”.
42 However, Mr Guss did not explain how these payments could have been made in circumstances in which LHV had been deregistered on 18 May 2014 and the ASIC search noted that LHV’s status from 6 March 2014 was “strike-off action in progress”.
43 The occupancy agreement variously uses the terminology of a lease or a licence of the premises. The parties are described as “landlord” and “tenant” and reference is made in the side headings to “leased area”, “lease commencement”, and the “term of lease”. “Rent” is to be paid rather than a licence fee. The agreement purports to give the tenant a “licence to occupy” on the basis of “the terms and conditions outlined in the landlord’s standard licence agreement”, which is said to “have been provided with the occupancy agreement”, although there is no evidence that it had been.
44 The “essential terms or special conditions” forming part of the occupancy agreement refer to “lease commencement”, to the “lessor” interchangeably with the “landlord”, to the “expiration of the lease” and “termination of the lease” On the final page of the occupancy agreement, the tenant stated, “we hereby offer to lease the above described premises…” All of these provisions related to the basis upon which the “tenant” occupied the premises.
45 As to the “use of premises”, the occupancy agreement states that the tenant is only “allowed to use the premises for the permitted use”, which is stated to be “storage”. What is to be stored is not referred to in the occupancy agreement, although by special condition 10, “If rent remains unpaid for 60 days, the landlord reserves the right to repossess the premises, and dispose of all stored materials at the tenant’s cost”.
46 The plaintiffs and Mr Guss submitted that “there was no bailment” effected by the occupancy agreement because the “delivery of goods into shed 43A did not constitute the transfer of possession”, that Larkfield “had no right to exclusive possession of the goods” and Larkfield had not accepted “the responsibility to keep the goods safe”. Further, Mr Ades gave evidence that other than providing assistance when requested and attending to maintenance or services, Larkfield did not enter the premises.
47 By its second further amended counterclaim dated 10 October 2017, Larkfield alleged that, “On 1 October, Mr Guss deposited…goods in Shed 43A at the premises” (para. 37) and that Larkfield thereby “took possession of the subject goods” (para 48A(a)). Larkfield alleged that the occupancy agreement “was based on the misapprehension” that it was binding. However, because it was “void ab initio,” Larkfield had been “an involuntary bailee of the subject goods since 1 October 2013”.
48 In final submissions, in seeking an order for sale, Larkfield primarily relied upon the alternative allegations in the final version of its counterclaim based upon Larkfield having become an involuntarily bailee of the stored furniture after 10 September 2015, when written notice was given by Larkfield’s solicitors to Mr Guss that the licence to occupy shed 43A had been terminated.
49 The plaintiffs pleaded in paragraph 13B of their statement of claim that after Larkfield took possession of the goods on 10 September 2015, Larkfield “became an involuntary bailee” of the stored furniture. Neither Mr Schlicht nor Mr Guss sought to make submissions that, after 10 September 2015 or thereabouts, Larkfield had not become an involuntary bailee of the stored furniture. They, rather made submissions that Larkfield may have become a “gratuitous” bailee, by taking possession of Shed 43A where the furniture had been stored until November 2015.
Events following the termination of rental payments for the stored furniture
50 After the occupancy agreement was executed, the following events occurred:
a. monthly invoices for the rental payments were sent by Larkfield to Mr Guss by email to [email protected]. The invoices were addressed to “Casualife Furniture International Pty Ltd”;
b. on 24 November 2014, Larkifled’s solicitors wrote to Mr Guss advising him that Lakefield had become aware that CLF International “was deregistered in November 2013”. The letter stated that Larkfield “will withhold its right to retake possession of the premises and take legal action for trespass if a new licence agreement is entered into by Monday 8 December 2014”. The solicitors asked Mr Guss for “the name [and other details] of the entity or person to be listed as the licensee”, after which Larkfield would consider whether it “will grant a new licence and the terms upon which it will be granted”;
c. on 7 December 2014, Mr Guss sent an email from “Joe Guss <[email protected]>” to Larkfield’s solicitors proposing “a new licence agreement to be entered into with Scandi International Pty Ltd… office address: 106 Barkly Street St Kilda”;
d. Larkfield continued to send emails addressed to [email protected] enclosing invoices for rental payments addressed to “Casualife Furniture International Pty Ltd”;
e. on 23 February 2015, Larkfield’s solicitors sent a letter to Scandi at its registered office at 1-3 Winterton Road Clayton, enclosing a “Shed Licence Agreement” for execution and return;
f. in May 2015, rental pursuant to the occupancy agreement fell into arrears;
g. on 10 September 2015, Larkfiled’s solicitors sent a letter to Mr Guss demanding payment of “arrears of licence fees for the premises of $21,856.99” and giving notice that Larkfield “has terminated your right to occupy the premises”;
h. on 28 September 2015, Mr Guss sent an email to Ms Grainger from “[email protected]” stating that “we are in a position to immediately pay you half the amount outstanding, namely $10,897,32”. Mr Guss also made the following statements:
“…the business is very seasonal and there is very little activity over the winter months.
This coupled with economic factors, affecting customers and in turn the business had made for a particularly slow last 4-6 months.
However while commencing late the seasonal business is now starting and it is expected will enable us to bring rentals up to date over the next month or so.
We require urgent access to the shed to enable us to effect deliveries from goods stored there including third party goods, to enable us to pay you and get up to date with outstanding rental.
Also we require to utilise the shed for unpacking of orders being shipped from overseas pending deliveries in respect to orders for the new season which has just commenced”.
i. on 14 November 2015, a number of persons including Mr Guss and Marilla Guss attended the Larkfield storage facilities and commenced removing items of the stored furniture. They left when Mr Ewald intervened. Later, the stored furniture was moved by Larkfield to Shed 37 where is was secured.
51 Larkfield took the following steps in relation to the proposed auction sale of the stored furniture:
a. on 14 October 2015, Larkfield’s solicitors served a written notice on Mr Guss under section 66 of the uncollected goods legislation stating that it would dispose of the stored furniture;
b. Mr Guss sent the letter to CLF Hong Kong. Correspondence followed between CLF Hong Kong and LHV, and CLF Hong Kong and Larkfield’s solicitors;
c. on 13 November 2015, Larkfield’s solicitors gave a notice to CLF Hong Kong under the uncollected goods legislation;
d. on 8 July 2016, Larkfield’s solicitors on the company’s behalf gave notice to Scandi’s lawyers that Larkfield would sell the stored furniture by public auction on Tuesday, 12 July 2016, unless outstanding storage charges, auction costs and legal costs of $52,231.63 were paid. If the payment were made, the stored furniture would be released to Scandi;
e. on 8 or 9 July 2016, the auctioneers “first advertised the proposed auction on its internet site”.
52 By their statement of claim in the proceeding, Scandi and CLF Hong Kong sought an interlocutory injunction to prevent the auction set for 12 July 2016 going ahead. The pleading referred to a number of matters which challenged the veracity of the proposed sale, including that, in contravention of section 62(3)(a)(i) of the uncollected goods legislation, “the auction was not … advertised at least 7 days in advance”.
53 That contention was essentially not challenged at trial. However, Larkfield pursued its claim to be entitled to “a disposal order pursuant to section 68 of the Act against Mr Guss, Scandi, CFIHK [CLF Hong Kong] and LHV”.
Relationship between Mr Guss and the “Casualife” entities
54 Extensive evidence was given about the relationship between Mr Guss and the various entities which have been associated with the use, in Australia, of the business names “Casualife”, “Casualife Furniture” and “Casualife Furniture International”. The oral evidence was not particularly illuminating. However, the documentary evidence includes the documents the plaintiffs rely on to establish their ownership of the stored furniture at Larkfield’s facility. These documents date from 2008 and are apparently a comprehensive record of the commercial dealings involving all the relevant entities associated with Mr Guss which used the “Casualife” business names.
55 These documents show:
a. Mr Guss’s involvement with each entity and the commercial transactions by which “Casualife” furniture was imported into Australia and stored at the Larkfield facility;
b. the history of the use of the “Casualife” business names in Australia and the entities using those names.
56 Mr Guss stated that he had, over the last 10 to 12 years, used the names “Casualife Furniture” and “Casualife Furniture International” on behalf of LHV although LHV did not register the business names under the relevant legislation until 12 May 2017. The company had itself been deregistered for at least 2 years from 18 May 2014.
57 The use of the business names by Mr Guss is relevant to the following issues:
a. which entity was participating in the relevant commercial transactions including, in relation to the stored furniture, its purchase and importation into Australia and its delivery to and storage at the Larkfield facility;
b. whether, when Mr Guss executed the occupancy agreement on 1 October 2013, and later, it was intended that any particular entity was to be bound by the agreement.
58 It was necessary to examine in some detail the relationship of Mr Guss with the various entities associated with the name “Casualife Furniture” in Australia. In my view, the only conclusion that can be stated with any certainty, about the trading activities of each of the companies, businesses and individuals involved in the matters relevant to the storage of goods at the Larkfield facility, is that Mr Guss was the person consistently at the centre of the activities of each of the entities.
59 Mr Guss is the person who provided the connection between each of the relevant companies. The “corporate veil” must, however, be respected and the separate personality of the corporations must be given full force and effect. The issues requiring determination in this proceeding include:
a. whether, by the production of the relevant transactional documentation, Scandi and CLF Hong Kong have established that the goods stored at the Larkfield facility are owned by them or they are otherwise entitled to possession;
b. whether Mr Guss arranged for the storage of the stored furniture at the Larkfield facility from 1 October 2013 with the knowledge of Scandi, LHV and CLF Hong Kong in circumstances in which those companies understood that rental or storage charges were being incurred for the storage of the goods for which they claimed ownership.
60 It is appropriate to examine the evidence of the relationship between Mr Guss and the companies associated with him. This involves the following matters:
a.Mr Guss said that Casualife Furniture Pty Ltd was the licensee “running Casualife in Australia” at the time of the incorporation of Scandi on 30 April 1998. Mr Guss said that, “subsequently, Casualife Furniture International Pty Ltd was incorporated and that became the licensee of Hong Kong”. Mr Guss said that, “the stock at Shed 43A…originated even prior to Casualife Furniture International Pty Ltd”, although no transactional documents dated prior to 2008 were produced in evidence;
b. The former company address of CLF International was 1-9 Winterton Road, Clayton. CLF International was wound up on 18 May 2004. Mr Guss said that the business was sold “by the Hong Kong company’s [CLF Hong Kong’s] receiver” and manager in the liquidation of CLF International to Holy May. The sale of business agreement recorded that CLF Hong Kong had been owed money by CLF International secured by a debenture charge. The purchase money to be paid by Holy May for the business was offset in reduction of the debt to CLF Hong Kong which was secured by a debenture charge;
c. although Holy May had apparently purchased the business, Mr Guss said that “subsequently LHV Pty Ltd in some arrangement with Hong Kong [CLF Hong Kong] and Holy May, commenced to conduct the business of Casualife Furniture in Australia”. Mr Guss said, “I don’t think [Holy May] ever ran the business…The Casualife business is run by LHV”;
d. However, the various documents produced by the plaintiffs evidencing the purchase and importation of the furniture that was stored at the Larkfield facility detail the consignee or owner of the goods as:
i. Casualife Furniture;
ii. Casualife Furniture International;
iii. Casualife Furniture International Pty;
iv. LHV T/as Casualife Furniture;
v. Scandi;
vi. Mr Joseph Guss, or an unidentified entity associated with him.
61 Mr Guss’s legal practice:In relation to his professional life, Mr Guss said that he “had a busy legal practice”. In September 2013, Mr Guss said that he had “limited time” as a result of his legal commitments to assist the companies with the stored furniture. When he executed the occupancy agreement, Mr Guss said, “I was very much engaged in professional commitments…I was just terribly busy with Supreme Court appearances at the time …I had a number of heavy matters”. As for the provision of “business consulting services” for Scandi and LHV, Mr Guss said that he provides the services, “as I’ve got time, if I can handle those matters, I do”.
62 It is likely in my view that Mr Guss understated his involvement in the activities of the companies and the care with which he examined the occupancy agreement before he signed it. His evidence is not consistent with the large number of contemporaneous documents evidencing standard business transactions in the purchase and importation of furniture for the “Casualife” businesses. Further, in relation to the occupancy agreement, the extent of the matters he raised with Ms Grainger in relation to the draft occupancy agreement indicate that he made more than a cursory examination of the document.
63 Casualife Furniture International Pty Ltd (in liquidation): “Casualife Furniture” may be a name that is used internationally. However, in Australia, the names “Casualife”, “Casualife Furniture”, “Casualife Furniture International” or, on a number of occasions, “Casualife Furniture International Pty” would be identified, pursuant to the public records required to be kept by the relevant legislation, with Casualife Furniture International Pty Ltd (in liquidation). I shall discuss this legislation in more detail shortly.
64 CLF International went into liquidation on 18 May 2004. Its business was sold by the appointed receivers and managers to Holy May Pty Ltd on 23 December 2004. The company was deregistered on 3 November 2013. All of these matters were known to Mr Guss, and yet he continued to use the names “Casualife”, “Casualife Furniture” and “Casualife Furniture International”, including when he executed the occupancy agreement and wrote “Casualife Furniture International” immediately below his signature.
65 Mr Guss’s association with Scandi: In relation to Scandi and its relationship with Mr Guss , it is appropriate to record the following matters:
a. Mr Guss said that he “handled the incorporation of Scandi”. He asked his accountant, Mr Gilbert of Rundles “to arrange nominee shareholders”. Mr Gilbert gave evidence of his “recollection” that the beneficial owner of Scandi’s shares was “the Guss family”;
b. Mr Guss said that he did not “know who the beneficial owner” of the shares in Scandi was and, at the time of incorporation, “was never informed who would be the beneficial owner”. He said he was “instructed to arrange incorporation because…the Casualife Furniture operation…wanted to have the teak import separated”. Mr Guss could not “remember all their names” [of the persons who gave instructions to incorporate Scandi]. Mr Guss’s son Antony Guss “was the general manager of the Casualife operation in Australia at the time”;
c. Mr Guss said that, in relation to Scandi and LHV, “I have rendered legal advice to them on various occasions over the years and I have been a business consultant to them…[I was] not always available…[I assisted Scandi with] matters like leases, insurance, some financial [and] property aspects, from time to time, some shipping…and…administrative aspects”. Sometimes Mr Guss would “order goods for Scandi” and had “engaged in email correspondence with shippers and providers of goods etc. in that respect”;
d. Mr Guss said that “it wasn’t on a consistent basis [he was a business consultant to Scandi and LHV], it was as I had time to do the things for them and at particular request. Sometimes it would be weeks or even longer that I didn’t do anything, other times, if I had the time and I was requested to do so, I would undertake various tasks for them”;
e. Mr Guss said that, when he executed the occupancy agreement, “I spoke to Marilla [Guss] about the relocation to Shed 43A and told her what I’d arranged with TNN and Kate Grainger”. Mr Guss later received two keys for Shed 47A, “which I gave to Marilla”;
f. Scandi’s officers have, at times, included Mr Guss’s daughter, Marilla Guss, and his son, Antony Guss, as directors, and Mr Guss himself as a secretary;
g. on 1 September 2009, Jaffar Ali was appointed the sole director of Scandi (and LHV). He immediately gave Mr Guss a general power of attorney and Mr Ali signed a letter on Scandi letterhead advising that “J Guss is authorised to enter into any agreement and sign all documents of whatsoever nature on behalf of the company”. Mr Guss said in evidence that these documents were necessary because Mr Ali was “planning to go overseas”. The power of attorney, Mr Guss agreed, “would extend beyond his directorial powers of Scandi [and would include] entering into documents…on behalf of LHV”. There is no evidence that the power of attorney or the letter of authority were ever revoked;
h. during the course of the dealings Mr Guss had with Larkfield from September 2013, he presented as the person with the principal authority to act in regard to the storage of goods at the Somerville Road facility, and later in proposing Scandi as a replacement tenant;
i. as the occasion required, during all dealings with Larkfield, including in the litigation, Mr Guss acted as the primary point of contact or communication, whether as solicitor, as a “consultant”, or as agent. However, Mr Guss denied that either he or his family were the beneficial owners of the shares in Scandi or that he was similarly involved in CLF Hong Kong.
66 In the circumstances, I consider it likely that because of the authority Scandi had given for Mr Guss to act on its behalf, and/or by reason of the close collaboration between Mr Guss and the company, Scandi was aware of the arrangements being made for the storage of furniture at Larkfield’s facility. Mr Guss said that he had told Marilla Guss about the arrangement after the occupancy agreement had been entered into.
67 Mr Guss’s association with CLF Hong Kong: In relation to CLF Hong Kong, Mr Guss said, “I have rendered legal advice to them from time to time on international matters, trademark matters and, on a limited basis, handled some administrative [and financial] matters for them so far as Australia in concerned”.
68 In December 2016, Mr Guss said that he introduced Mr Yip of CLF Hong Kong to a commercial lawyer who had his practice on the same floor as Mr Guss’s legal practice. Between 17 February and 2 May 2017, Mr Guss said he was acting in the proceeding for both plaintiffs; Scandi and CLF Hong Kong. Their previous solicitor became unwell and Mr Guss said he “obtained instructions from the plaintiffs, pending instructing another solicitor”.
69 When Mr Guss signed the occupancy agreement, he said in evidence, “I certainly had no discussions with Hong Kong”. Mr Guss said that he “didn’t tell [CLF Hong Kong] until after [the goods] were moved” to Shed 43A, although he had later told the company.
70 When Mr Guss received the letter from Larkfield’s solicitors dated 14 September 2016 notifying him that Larkfield intended to dispose of the stored furniture, Mr Guss said he “informed Hong Kong”.
71 Mr Guss said that, between August 2013 and May 2014, LHV may have made some payments on behalf of CLF Hong Kong and “there may have been some payments by Hong Kong on LHV’s behalf”.
72 Mr Guss said that he “didn’t act” for CLF Hong Kong in relation to the 2004 sale of business agreement to Holy May.
73 Mr Guss swore affidavits on behalf of Scandi and CLF Hong Kong on 11 and 22 July 2016 and 9 October 2016, which are in evidence. In the affidavits, Mr Guss:
a. described himself as a “business consultant”;
b. said that he knew Scandi and CLF Hong Kong had goods stored in Shed 43A “as I visited the premises from time to time on behalf of the plaintiffs from October 2013 to 14 November 2015 and saw they had been stored there”;
c. said on 14 November 2015 that he was “in Shed 43A checking some items” as well as “also looking for some personal items”;
d. stated in a letter to Larkfield on 30 June 2015 in relation to electricity charges, “we have not used the lights and only used the power to raise and lower the roller shutter door. As the premises are not permanently manned this is done only when moving goods in and out which is intermittent”;
e. in evidence, when Mr Guss was asked whether Scandi was a profitable business, he replied “I don’t know …I don’t have the financial details. I don’t really know”. However, in an email to Ms Grainger on 28 September 2015, Mr Guss advised her of specific details of the business involved with the stored furniture, as has previously been referred to;
f. swore an affidavit on 9 October 2016 relating to the discovery of documents by Scandi and CLF Hong Kong in which he stated, “There are a quantity of documents that I have previously been conversant with, in my capacity as business consultant to the plaintiffs relating to goods stored at Shed 43A … I have been retained to review in consultation with their legal representatives [to] determine the requirement for discovery … There is no one else presently employed by Scandi and CLF Hong Kong who [is] sufficiently conversant with these documents to undertake the task of identifying and retrieving these documents”.
74 Mr Guss’s association with LHV: In relation to LHV, Mr Guss said that the company “manufactured Casualife furniture, firstly at Clayton and then at Hallam”. It “ran somewhat side by side [with Scandi] utilising the same premises by arrangement”. LHV “ceased manufacturing [in] approximately mid-2011”. From this time, Mr Guss made arrangements concerning the storage of “the stock of both Scandi and LHV, and that in which Hong Kong had an interest”.
75 Mr Guss said that he provides “the same consulting services to both” Scandi and LHV. Mr Guss’s son, Antony Guss “holds all the shares” in LHV, although Mr Guss said, “I don’t know what he’s done with the shares”.
76 Mr Guss gave evidence that LHV had operated under the business name, “Casualife Furniture”, since “2004 or 5; something like that” and did not become registered as the user of the business name until 2017. Mr Guss said that, “Casualife Furniture and LHV is the same entity…LHV traded, used the name Casualife Furniture”.
77 Mr Guss said that, “it was very common to use just the name, Casualife Furniture, as witness the shipping documents, bills of lading and everything else, just the words ‘Casualife Furniture’”.
78 Mr Guss gave evidence that “there was a provision in [the sale of business agreement by the receivers of CLF International (in liquidation) to Holy May in 2004] that the receiver was supposed to change the name of ‘CLF International’. The “business name Casualife Furniture and/or Casualife furniture International was used by LHV from I believe would’ve been in early 2005 when it commenced to trade”. “Speculating as to why the business name was not registered earlier [by LHV], its possibly because [the receiver of CLF International] had not effected the change of name of” CFL International, when the business was sold to Holy May in 2004.
79 Clause 9 of the sale of business agreement to Holy May provided as follows:
“ 9. POST COMPLETION
9.1 Vendor to change Name
As soon as possible after the Completion, the Vendor must change its name to a name not incorporating the name ‘Casualife’ and shall deliver to the Purchaser copies of the resolution of the Vendor so resolving together with a copy of a Notice of Resolution that must be filed by the Vendor with the Australian Securities and Investments Commission.
9.2 Vendor to change name
The Vendor agrees that subsequent to completion, if required by the Purchaser, at the Purchaser’s expense, it will do all things that may be reasonably required of it to ensure that the purchaser is able to change its name to include the word ‘Casualife’. Without limiting the generality of the foregoing, the Vendor agrees in the event that it believes that it is necessary to do so, it will instruct CFI’s solicitors to commence a proceeding in a court of competent jurisdiction (“the Proceeding”) to seek such Orders as would allow the Purchaser to include the word ‘Casualife’ in its name. The Vendor’s obligations under this clause are conditional upon the Purchaser meeting the Vendor’s legal costs (on an indemnity basis) in respect to the proceeding in respect of which it holds the Vendor indemnified against same”.
80 There is no evidence that any of the steps foreshadowed in the sale of business agreement were taken by Holy May, or any other related entity until LHV became registered with ASIC as the holder of the business name “Casualife Furniture” on 12 May 2017. There is no evidence that any entity was registered as the holder of that name either since 2011 when the Commonwealth Act came into force, or prior to that time when Victorian legislation was in operation.
81 The ASIC search of LHV in evidence was extracted on 25 July 2016. On that date, LHV had been deregistered since 18 May 2014 and no application to re-register the company is noted. It is assumed that the registration of the business name by LHV in May 2017 indicated that the company was re-registered at some time between July 2016 and May 2017.
82 There are very few contemporaneous documents tendered in evidence which directly relate the names “Casualife Furniture” or “Casualife” to LHV. Some of these documents are dated after 18 May 2014 when LHV was deregistered, or after 6 March 2014 when ASIC records the company’s “status” as “strike off action in progress”. The company was still deregistered on 25 July 2016, the date of the ASIC search in evidence and was not reinstated until a later date, prior to 12 May 2017, when it registered the business name “Casualife Furniture”.
83 The documents in evidence which link the “Casualife” business names to LHV are as follows:
a. Australian customs document at Court Book (“CB”) 376 document dated 25 November 2009 which notes as the “owner”, “LHV Pty Ltd T/as Casualife Fur”. The related bill of lading at CB 375 dated 11 November 2009 names “Casualife Furniture International” as the “consignee”. The related invoice at CB 380-382 dated 18 November 2009 is addressed to “Casualife Furniture International Pty” at the 9 Apollo Drive, 3803 Victoria (“the Hallam address”);
b. Iniciativa exterior 3i invoice at CB 461E dated 17 January 2013 is addressed to “Casualife (LHV Pty Ltd) at 106 Barkly Street St Kilda”;
c. Iniciativa exterior 3i invoice at CB 461A & B dated 6 June 2013 is addressed to “Casualife (LHV Pty Ltd)” of 106 Barkly Street St Kilda”;
d. an invoice dated 6 August 2013 at CB 1039 with a heading which includes the words “Casualife All Weather Furniture” and “LHV Pty Ltd 106 Barkly Street, St Kilda” is addressed to a redacted addressee and lists the “salesperson” as “Marilla Guss” and LHV’s ABN 52 112314502;
e. an invoice dated 28 August 2013 at CB 1040 with a heading which includes the words “LHV Pty Ltd Casualife Furniture 106 Barkly Street St Kilda” lists the “salesperson” as “Jan Klimes”;
f. Iniciativa exterior 3i invoice dated 8 May 2014 addressed to “Casualife (LHV Pty Ltd)” at 106 Barkly Street St Kilda;
g. Australian customs document dated 20 June 2014 at CB 487 noting the “owner” as “LHV Pty Ltd”;
h. Iniciativa exterior 3i invoice dated 29 September 2014 at CB 481A addressed to “Casualife (LHV Pty Ltd)” of 106 Barkly Street St Kilda;
i. Hartroudt shipping document dated 15 October 2014 at CB 485C which refers to “Casualife Furniture International LHV Pty Ltd” at 106 Barkly Street St Kilda;
j. arrival notice dated 18 November 2014 (part of Exhibit D7) naming the “consignee” as “Casualife Furniture 106 Barkly Street St Kilda” and the “Notify party” as “Joe Guss LHV Pty Ltd 106 Barkly Street PO Box 1283 St Kilda”;
k. Iniciativa exterior 3i invoice dated 18 December 2014 at CB 534A addressed to “Casualife (LHV Pty Ltd)” at 106 Barkly Street St Kilda;
l. Australian customs document dated 18 February 2015 at CB 534 noting the “owner” as “Casualife Furniture (LHV Pty L)”;
84 Six of these documents are dated during the period LHV was deregistered and at least 18 months before the company was reinstated.
85 Addresses referred to in contemporaneous documents: The addresses to which documents are addressed are as follows:
a. 106 Barkly Street, St Kilda or PO Box 1283, St Kilda South;
b. Level 40, 140 William Street, Melbourne;
c. 1-9 Winterton Road, Clayton, and occasionally, 1-3 Winterton Road, Clayton;
d. 9 Apollo Drive, Hallam or PO Box 5058, Hallam.
86 106 Barkly Street, St Kilda was apparently Mr Guss’s residence or a business address. In the occupancy agreement, Mr Guss is recorded as the tenant’s “contact person” at 106 Barkly Street, St Kilda. Correspondence is addressed, or copied, to Mr Guss at 106 Barkly Street as the representative of Casualife Furniture or Casualife Furniture International or LHV Pty Ltd. In an email dated 24 November 2014, Mr Guss proposed 106 Barkly Street to Larkfield’s solicitors as the office address of Scandi, and himself as the contact person. Larkfield’s solicitors also wrote to Mr Guss personally at 106 Barkly Street, including on 10 September 2015 to terminate his “right to occupy the premises” and, on 14 October 2015, giving notice of intention to dispose of the stored furniture.
87 Level 40, 140 William Street, Melbourne is Mr Guss’s professional address. It is the address he used when he swore affidavits on 11 and 22 July 2016 in the proceeding, which are in evidence. It is the address to which ASIC forwarded notification of Charge No 1863196 dated 6 October 2009 between LHV as mortgagor and Holy May and CLF Hong Kong as mortgagees.
88 1-3 Winterton Road, Clayton was the registered address of Scandi. 1-9 Winterton Road, Clayton was the former address of CLF International (before liquidation) and of LHV before deregistration. Mr Guss’s accountant, Mr Gilbert, addressed a letter to “Mr J Guss Scandi International Pty Ltd 1 Winterton Road Clayton” in relation to “your company review for year 2010”. An invoice in December 2008 was addressed to Scandi at 1 Winterton Road, Clayton;
89 9 Apollo Drive, Hallam was the address on Scandi letterhead dated 1 September 2009 advising that Mr Guss “is authorised to enter into any agreement and sign all documents of whatsoever nature on behalf of” Scandi. In September and November 2008, invoices were addressed to “Casualife Furniture International Pty” at this address. The associated bills of lading were addressed to “Casualife Furniture” at the same address. Other invoices and bills of lading were addressed to “Casualife Furniture” and “Casualife Furniture International” at the Hallam address and on occasions, to the post office box at Hallam.
90 Mr Guss’s dealings with Larkfield: In regard to Mr Guss and his dealings with Larkfield:
a. the goods had been stored at the Larkfield facility since about February/March 2013 pursuant to an arrangement Mr Guss had made with Larkfield’s tenant, TNN. TNN has “been providing logistic services to LHV and Scandi by means of moving containers from the wharf on imports bringing it to Hallam”, and later to Shed 52 at the Larkfield facility where they would be unpacked and recorded;
b. Mr Guss negotiated and executed the occupancy agreement dated 1 October 2013;
c. Mr Guss attended the Larkfield facility from time to time when stored furniture was removed or delivered;
d. Mr Guss arranged for the rental charges to be paid;
e. Mr Guss advised Larkfield on 7 December 2014 that Scandi would enter into the replacement licence agreement with Larkfield. Mr Guss entered into negotiations with Larkfield’s solicitors about the terms of the replacement agreement;
f. Mr Guss disputed electricity charges made by Larkfield in respect of the continued occupation of the facility.
Use of the business names “Casualife Furniture” and “Casualife Furniture International”
91 The evidence establishes that in all but a handful of the documents generated in relation to the transactions arranged on behalf of “Casualife Furniture” or “Casualife Furniture International”, no connection was made to indicate that LHV was the person or entity which carried on business under the variants of that name in Australia.
92 Mr Guss, in his written submissions, stated that, “While the business name ‘Casualife Furniture’ was only registered by the fourth defendant to counterclaim (LHV) on 12 May 2017, it is permissible legally to use a business name although unregistered, and it is apparent from the evidence is [sic] that it has been used [for] many years as has the business name ‘Casualife Furniture International’ by LHV”. Mr Guss referred to the “many examples of the use of the name ‘Casualife Furniture’ only including bills of lading, customs entries, and invoices. Shipping documents also referred to ‘Casualife Furniture International’ and ‘LHV T/as Casualife Furniture’”.
93 Mr Guss listed to certain specific documents as examples of the use of the business names “Casualife Furniture” and “Casualife Furniture International” in the importation and purchase documentation. In his final submissions, Mr Guss said that, “There are many examples of the use of the name ‘Casualife Furniture’ see for example CB 330, 334, 396, 419, 434, 474 (Bills of lading), Customs Entries, CB 526 an invoice from Agility Logistics CB 524, Cape Umbrellas Invoice CB 438, and Vanguard Invoice re shipping thereof, CB 440, and documents exhibit D7, pages 270 and 272. Also see examples of shipping documents naming ‘Casualife Furniture International’ at CB 357, 375, 383, 401, 423a as well as at CB 430 customs entry to ‘LHV T/as Casualife Furniture’”.
94 I have examined each of those documents to determine whether there is any connection between the documents and LHV. In fact, the only documents listed by Mr Guss referring to LHV are at 376 (a related document to the document listed by Mr Guss at CB 375) and the arrival notice dated 18 November 2014, forming part of exhibit D7, although this latter document was dated after LHV had been deregistered.
95 The first document referred to by Mr Guss is at CB 330. In the court book index, pages 330-333 are described as “Copy bundle import documents OOCL Freedom”. At CB 330 is a bill of lading dated 5 September 2008. Pages 331 to 333 constitute the invoice relating to the bill of lading. The container numbered FSC4 - 7301134 is referred to on both pages 330 and 331. The bill of lading refers to “86 pcs of furniture”. Pages 331 to 333 list 86 pieces of furniture. The bill of lading is dated 5 September 2008. The invoice is dated 17 September 2008. Each of the pages of the invoice are addressed to “Casualife Furniture International Pty” at the Hallam address. This is the same address as for “Casualife Furniture” on the bill of lading.
96 From an examination of the document at CB 330, the related documents in the surrounding pages, and the other facts apparent from the ASIC searches, it is not possible to conclude that LHV traded as “Casualife Furniture” and that no other entity associated with Mr Guss used those names. The use of “Casualife Furniture International Pty” on the supplier’s invoice would suggest that the supplier believed it was dealing with a proprietary company of that name.
97 In September 2008, Casualife Furniture International Pty Ltd had been in liquidation for over four years, having been wound up on 18 May 2004. The registered office and principal place of business of Casualife Furniture International Pty Ltd between 21 November 2001 and 3 November 2013, and the principal place of business of LHV Pty Ltd between 23 December 2004 and 18 May 2014 was 1-9 Winterton Road, Clayton. The ASIC searches of the two companies do not refer to the Hallam address. The registered office of Scandi is listed as 1-3 Winterton Road, Clayton.
98 The remaining documents specifically referred to by Mr Guss are analysed in the following table:
CB page
Date of Document
Comment
330
5 Sep 08
Bill of lading refers to “Casualife Furniture International Pty” at the Hallam address
334
10 Nov 08
The bill of lading refers to “Casualife Furniture”, although the supporting pages of the invoice at CB 335 to 339 refer to “Casualife Furniture International Pty” at the Hallam address.
396
25 Feb 10
The bill of lading refers to “Casualife Furniture” at the Hallam address. The attached invoice at CB 397 is addressed to “Casual Life Furniture International” at the Hallam address
419
19 Oct 10
The bill of lading is addressed to “Casualife Furniture” at the Hallam address. The attached invoice at 420 is addressed to “Casual Life Furniture International” at the Hallam address
434
24 July 11
The Vanguard Logistics Service invoice at 434 and 435 is addressed to “Casual Life Furniture” at PO Box 5058, Hallam, Vic, 3803.
474
12 Jun 14
The bill of lading at CB 474 is addressed to “Casualife Furniture” at “106 Barkly Street, St Kilda, Victoria, 3182, Australia” with a telephone number and marked to the attention of “Joseph Guss”. This is the address and phone number for “Joe Guss” recorded in the occupancy agreement as the tenant’s “contact person”. At CB 475 and 476 is an attached email chain dated 19 and 20 June 2014 from “Joe Guss Casualife Furniture Tel: [as on the bill of lading]”. On 18 May 2014, LHV was deregistered and the ASIC search lists the company’s status from 6 March 2014 as “strike-off action in progress”.
526
524
14 Jan 15
CB 526 is a customs document naming the “owner” as “Casualife Furniture” with the address 106 Barkly Street St Kilda. The document is part of a bundle referred to in the CB index for pages 523-529 as “Bundle of documents OOCL Yokohama”. At CB 523 is an email from “Joe Guss Casualife Furniture”. At CB 524 is an Agility Logistics Pty Ltd invoice in which the “consignee” is “Casualife Furniture 106 Barkly Street St Kilda”. At CB 528 is a bill of lading in which the “consignee” is similary described. At CB 529 is an invoice dated 23 Dec 2014 of “Casualifr [sic] Furniture International Ltd” of Hong Kong addressed to “Casualife Middle East LLC” at Al Quoz [Dubai] which may or may not be related to the other documents.
438
9 May 15
This invoice is part of the bundle commencing at CB 434. It is addressed to “Casualife Furniture” at PO Box 5058, Hallam, Vic. 3803.
440
24 July 11
The Vanguard Logistics Service invoice at 440 is addressed to “Casual Life Furniture” at PO Box 5058, Hallam, Vic, 3803.
Ex D7
18 Nov 14
See the paragraph which follows this table.
270
272
These documents are not relevant and are part of an ASIC search.
357
22 Oct 09
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. The invoice at CB 358-360 is, according to the Court Book index, related to the bill of lading. The bill of lading and invoice refer to the same container number. The invoice is addressed to “Casualife Furniture International Pty” at the Hallam address.
375
11 Nov 09
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. Related documents (according to the Court Book index) are at CB 374-382. At 374 is a bill of lading naming “Casualife Furniture International” as the “consignee”. At 376 is an Australian Customs documents noting that the owner is “LHV Pty Ltd T/as Casualife Fur”. The shipping documents at 377-379 describe the items of furniture but do not identify to whom the goods were destined in Australia. The invoice at 380-382 is addressed to “Casualife Furniture International Pty” at the Hallam address.
383
12 Nov 09
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. The related invoice at CB 384 is similarly addressed;
401
31 May 10
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. The related invoice at CB 402-406 is addressed to “Casualife Furniture International Pty” at the Hallam address.
406
12 Aug 10
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. Related document at 407 describes the items of furniture but does not identify to whom the goods were destined in Australia.
415
15 Oct 10
Bill of lading addressed to “Casualife Furniture International” at the Hallam address. Related invoice at 416-418 addressed on each page to “Casualife Furniture International Pty”.
423a
12 Nov 10
Hanjin Shipping waybill naming as the “consignee” “Casualife Furniture International” of PO Box 5058 Hallam.
430
15 Dec 10
Page 1 of a 2 page invoice addressed on each page to “Casualife Furniture International Pty” at the Hallam address.
99 Mr Guss also referred to Exhibit D7. This exhibit is described as “email correspondence involving Mr Guss relating to shipping matters”. It includes an email dated 23 April 2015 from “Joe Guss Casualife Furniture” enclosing a number of documents relating to a particular “shipment” of a container which was to be delivered “as usual” at “Shed 43A (City Side) 400 Somerville Road West Footscray”.
100 The attached documents in Exhibit D7 are:
a. arrival notice dated 18 November 2014 naming the “consignee” as “Casualife Furniture 106 Barkly Street St Kilda” and the “Notify party” as “Joe Guss LHV Pty Ltd 106 Barkly Street PO Box 1283 St Kilda”. As from 18 May 2014, LHV had been deregistered;
b. packing declaration dated 8 January 2012 referring to the consignee as “Scandi International Pty Ltd Melbourne Australia CTC: Joe Guss”;
c. bill of lading dated 26 December 2014 referring to the consignee as “Casualife Furniture 106 Barkly St, St Kilda, Vic, 3182, Australia Joe Guss [with his telephone number]”;
d. email dated 3 July 2008 to “Joe Guss” relating to “shipment from Kingsley Bate, Virginia, USA”;
e. Kingsley Bate invoice dated [ an unreadable day in] December 2008 addressed to “Scandi International Pty Ltd 1 Winterton Rd Clayton Vic 3168”;
101 Relevant business names legislation: In his final submissions, Mr Guss submitted that:
a. “it is permissible legally to use a business name although unregistered”;
b. “arguably” LHV, as the entity which Mr Guss asserted had used the business names for many years prior to registration, “should have complied with” section 153 of the Corporations Act 2001 (Cth).
102 The relevant business names legislation governing the use of business names in Victoria was:
a. prior to 3 November 2011, the Business Names Act 1962 (Vic) (“the 1962 Act”);
b. after 3 November 2011, the Business Names Registration Act 2011 (Cth) (“the 2011 Act”).
103 Section 5(1) of the 1962 Act made it an offence for a person to “carry on business” in Victoria “under a business name” unless “the business name is registered under this Act in relation to that person”. However, section 5(5) provided that, “Notwithstanding anything in this Act a contravention of or failure to comply with any provision thereof shall not operate to avoid any agreement transaction act or matter”. In Australian Marketing Development Pty Ltd v Australian Interstate Development Pty Ltd [1972 ] VR 219 at paragraph 225, Menhennitt J said that section 5(5) points “strongly to the conclusion that non-compliance with the Business Names Act would result in penalty only and not affect civil rights”. The 2011 Act does not have such a provision.
104 The evidence establishes that:
a. “Casualife”, “Casualife Furniture” and “Casualife Furniture International” are relevant business names under the Act;
b. a “person” (which includes a corporation) had “carried on business in Victoria” under those names without the names being registered under the 1962 Act.
105 From 3 November 2011, the operative provision was section 18 of the 2011 Act, which made it an offence where an “entity carries on a business under a name, and … the name is not registered to the entity as a business name on the Business Names Register”.
106 Section 19 of the 2011 Act makes it an offence for an entity which carries on business under a business name and “communicates in writing with another entity” in “a business document connected with carrying on the business under the name”, if the entity fails to “include clearly legible business names information in the document”. This information must include the entity’s ABN if the document is “a statement of account (including an invoice)”, “a receipt”, “an order for goods or services” or “a cheque”.
107 Section 16 of the 2011 Act provides that the objects of the legislation include :
a. “to ensure that if an entity carries on a business under a business name, those who engage or propose to engage with that business can identify the entity and how the entity may be contacted” (section 16(1)(a));
b. “to avoid confusion by ensuring that business names that are identical or nearly identical are not registered” (section 16(3)(a)).
108 As a consequence, section 25 of the 2011 Act provides that an entity might only register an “available” business name, which is a name “not identical or nearly identical to … a business name registered to another entity; or … a name that is reserved or registered under the Corporations Act 2001 for another body”. The evidence is that at all relevant times prior to its deregistration on 3 November 2013, Casualife Furniture International Pty Ltd (in liquidation) was the entity in Australia whose name included the words “Casualife Furniture” and “Casualife Furniture International”.
109 The Corporations Act 2011 also makes provision as to how a corporation must use its name and ACN on public documents. Section 153 of the Corporations Act provides that, “A company must set out its name on all its public documents and negotiable instruments … followed by the company’s ACN”. Section 88A(1) of the Act provides that a “public document of a body corporate” means and includes:
“(b) an instrument of, or purporting to be signed or issued by or on behalf of, the body that is signed or issued in the course of, or for the purposes of, a particular transaction or dealing; or
(c) without limiting paragraph (a) or (b), a business letter, statement of account, invoice, receipt, order for goods, order for services or official notice of, or purporting to be signed or issued by or on behalf of, the body”.
110 In my view, the emails and other documents sent by Mr Guss were public documents within the meaning of section 88A, and therefore each was a “public document” for the purposes of section 153(1) of the Act. In those circumstances, LHV or any other corporation, if it wished to transact business, was required to “set out its name” and ACN on all such documents.
111 This means a company’s whole name, including the words “Pty Ltd”, if it were a proprietary company. Otherwise, members of the public transacting business with a company may not know with whom they are dealing and the nature of the entity.
112 Mr Guss, although a very experienced solicitor and businessman, claimed ignorance of these matters. What resulted was precisely the vice that the legislation was designed to avoid; the confusion that arises when a person does not identify the entity through which they are purporting to conduct business and that the name of existing businesses, including corporations, are used without registration, and probably in circumstances where their registration would not have been permitted because of an existing company with an identical or nearly identical name.
113 Whether or not Mr Guss deliberately or inadvertently failed to comply with the provisions of the relevant business names legislation or the Corporations Act, the effect has been that it is almost impossible from an examination of the business and other transactional documents relied upon by the plaintiffs and Mr Guss in this proceeding to discern which particular entity Mr Guss was purporting to act on behalf of or which was otherwise involved in a particular transaction. This comment has particular relevance when considering the issues in this proceeding in respect of which the plaintiffs bear the onus of proof and specifically those documents relied upon by Scandi and CLF Hong Kong as evidencing their ownership of the stored furniture.
Claim by Scandi and CLF Hong Kong for the return of the furniture
114 Scandi and CLF Hong Kong allege in their statement of claim that each of them is the owner of, or are otherwise “entitled to demand and recover in its name”, separate identifiable parts of the stored furniture. They say that, as a consequence of their ownership, they are entitled to an order giving them “access to [Larkfield’s] premises to enable [Scandi and CLF Hong Kong] to collect [their respective] goods”.
115 The relief sought by Scandi and CLF Hong Kong went beyond declarative orders and claimed access to premises to collect the goods. Larkfield, by its defence, did not admit the allegations of ownership or entitlement to recover the stored furniture.
116 Mr Guss stated in his affidavit sworn 22 July 2016 that the landed cost value of Scandi’s goods was $187,532 and of CLF Hong Kong’s was $150,989, the wholesale value was, Scandi - $300,054 and CLF Hong Kong - $245,981 and the retail value was Scandi - $601,046 and CLF Hong Kong - $483,164. Ms Guss gave evidence that the landed cost of the stored furniture was $338,521.
117 By its defence, Larkfield admitted certain allegations in the statement of claim. These agreed facts included:
a. the storage of goods at Shed 43A from 1 October 2013;
b. the removal and replacement of certain goods;
c. its solicitors sending letters to Mr Guss dated 24 November 2014 and 10 September 2015;
d. receiving a letter from CLF Hong Kong dated 13 November 2015;
e. its solicitors sending a letter to CLF Hong Kong dated 1 December 2015;
f. receiving a letter from Scandi’s solicitors dated 7 July 2016.
118 Larkfield made no further positive allegations in the defence, apart from the concluding paragraph 31A which stated, “It says further that it relies on the matters disclosed in its counterclaim as a complete answer to the plaintiffs’ claim, and incorporates them in the defence as if pleaded in it”.
119 The claim by Scandi and CLF Hong Kong seems to be an action in detinue constituted by the wrongful refusal by Larkfield to return the goods following the demands made:
a. by letter from CLF Hong Kong to Larkfield dated 13 November 2015; and
b. by letter from Scandi’s solicitors to Larkfield dated 7 July 2016.
Whether the stored furniture is owned by Scandi and/or CLF Hong Kong
120 There is disputed evidence as to whether the stored furniture has a separate identifier for each piece of furniture. Larkfield claimed in its opening written submissions that the stored furniture bore marks “such as serial numbers, box numbers, pallet numbers or the like”. No evidence was given by Larkfield’s witnesses of these “identifiers”. Ms Guss said that the boxes containing the stored furniture “have a model number on the outside”. However, there was no “differentiation between the stock with the various deliveries that are made of that stock” There are, however, a number of different styles or types of furniture which were stored at the Larkfield facility over a number of years, both prior to October 2013, when it was stored by TNN at Mr Guss’s request, and through to the present day.
201 Larkfield made an alternative submission that it had a “possessory lien”. It was submitted that this lien arose as a consequence of special condition 10 of the occupancy agreement which provided that, in the event of a default in the payment of rental, Larkfield might, after a period of time, repossess the premises, sell the stored furniture and, by legal action, recover the money owing to it together with legal costs.
202 The special condition gave Larkfield possessory rights in respect of the stored furniture, so that by sale of the goods and legal action it could recover what was owing to it. I consider that the legal principles that apply in this regard will have a similar basis and application as those I have discussed in relation to an “equitable lien” These matters provide a further reason why the plaintiffs should not recover the stored furniture without first paying the charges outstanding to Larkfield.
Section 59 of the uncollected goods legislation
203 Larkfield also relied upon section 59 of the uncollected goods legislation as requiring Scandi and CLF Hong Kong to first pay the outstanding rental and storage charges before they could expect delivery of the stored furniture.
204 By section 59, “The provider, the owner of the uncollected goods or any other person with an interest in the goods is entitled, on payment of the relevant charge, to delivery of the goods at any time before their disposal”.
205 The question arises as to whether the section provides an additional remedy for a person coming within the categories described to recover uncollected goods, or whether the section exhaustively covers the circumstances in which such goods may be recovered, that is, only after the payment of the “relevant charge”.
206 In my view, the section has the latter meaning, by reason of the following matters:
a. section 59 refers to concepts which have specific defined meanings under the uncollected goods legislation, namely, “the provider”, “uncollected goods”, “relevant charge” and “disposal”;
b. the section includes all the categories of persons who may seek delivery of “uncollected goods”;
c. “uncollected goods” are defined in section 54 by reference to a default by “the provider”; either by the provider’s lack of directions, unavailability or non-payment of the relevant charge. A “relevant charge” may therefore not be payable in all cases where a person of a description or category set out in section 59 seeks delivery of uncollected goods;
d. whilst there may be circumstances in which a person entitled to delivery of uncollected goods would not, apart from section 59, be required to pay the charges the provider would need to pay in order to take delivery, it is likely that such cases would be very limited;
e. although the section does not expressly exclude an entitlement to delivery in the case of a person who might otherwise have had a right to recover possession without payment, the general nature of the provision, in the context of the uncollected goods legislation, is likely to have been intended by the legislature to have had that effect;
f. section 71, which is in similar terms to section 59 but applies, “If a court order has been made for the disposal of uncollected goods”, confirms the view that the legislation (and particularly section 59) is intended to have general application.
207 In the circumstances, even if the plaintiffs were otherwise entitled to recover the stored furniture to which each was entitled, the section would require payment of the “relevant charge” before there would be an entitlement to deliver up the goods.
Disposal order under the uncollected goods legislation
208 History of the legislation: Part 4.2 of the uncollected goods legislation is titled “Disposal of uncollected goods”. The uncollected goods legislation was first introduced as Part 2D of the Fair Trading Act 1999 by the Consumer Affairs Legislation Amendment (Reform) Act 2010 (Vic) (“the Amending Reform Act”). The Amending Reform Act was introduced following a review in 2009 of the law relating to the disposal of uncollected goods.
209 The Explanatory Memorandum for the Amending Reform Act noted that Part 2D was intended to apply:
“to all uncollected goods under bailment that are uncollected, rather than just uncollected goods left for repair or treatment [and that the] Part also replaces Part IVA of the Landlord and Tenant Act 1958, which deals with the disposal of uncollected goods left behind by tenants at the end of tenancies not covered by the Residential Tenancies Act 1997”.
210 In 2012, the provisions in Part 2D of the Fair Trading Act 1999 were legislated as Part 4.2 of the uncollected goods legislation. The replacement of Part IVA of the Landlord and Tenant Act 1958, was reflected in section 56 of the uncollected goods legislation.
211 Larkfield sought to rely upon the uncollected goods legislation:
a. to justify the proposed auction sale of the stored furniture which was planned for 12 July 2016, but which was prevented by injunction from going ahead;
b. alternatively and primarily, as the basis for the disposal order and associated orders sought by the counterclaim in the proceeding.
212 Relevant provisions of the legislation: Section 68(1) of the uncollected goods legislation provides that, “A receiver may apply to a Court for an order to dispose of uncollected goods”. To determine whether Larkfield is entitled to a disposal order under section 68, it is necessary to consider whether the uncollected goods legislation applies.
213 The definition section, section 3 of the uncollected goods legislation, provides that:
a. “receiver” means “the person who takes possession of goods under a bailment”;
b. “provider” means “the person who gives possession of goods under a bailment (whether or not the person is the owner of the goods)”;
c. “bailment” is defined as including “bailment for reward, bailment in the course of business, gratuitous bailment, involuntary bailment and any sub-bailment”;
d. “uncollected goods” has the meaning given by section 54 of the legislation.
214 Section 54 (1)(d) provides that: “Goods under bailment are uncollected goods if the provider has not paid the relevant charge payable to the receiver in relation to the goods within a reasonable time after being informed by the receiver that the goods are ready for delivery”.
215 “Relevant charge” is defined in section 55 as: “the amount payable by the provider to the receiver for goods under bailment and payment of which entitles the provider to take the delivery of the goods”. According to section 55 (2), the amount payable is the sum of the amount for the “carriage or storage of the goods”, being “the amount agreed the provider and the receiver” or, “in the absence of an agreement, an amount that is reasonable”, together with the amount of “costs for any storage, maintenance or insurance of the goods incurred by the receiver” from the giving of notice of its “intention to dispose of the goods until the disposal of the goods” or, “the making of an application for a court order… until the disposal of the goods”.
216 Section 57 of the Act provides that:
“The common law relating to the bailment of goods remains in force to the extent to which it is not affected by this Part and a person is entitled to exercise any rights that the person may have at common law in relation to the recovery of goods or compensation for the loss of or damage to goods except to the extent to which this Part otherwise provides”.
217 Application of the legislation: In order to bring itself within the Act, Larkfield must establish that:
a. it has taken possession of goods under a “bailment”;
b. the goods are “uncollected goods”;
c. the requirements of section 68 of the Act, contained in subsections (2) and (3), which are a precondition to the grant of a disposal order by the Court, have been satisfied.
218 The stored furniture first came into the possession of Larkfield when some of the goods were stored prior to 1 October 2013 by the transport company TNN. After 1 October 2013, the goods were stored in Shed 43A at the request of Mr Guss and upon the execution by him of the occupancy agreement naming CLF International as the “tenant”, although clearly without its authority.
219 At common law, the depositing of the goods by Mr Guss with Larkfield and the movement of the stored furniture to Shed 43A shortly prior to 1 October 2013 would have constituted a bailment if the physical possession of the stored furniture had been transferred by Mr Guss to Larkfield.
220 During the period the stored furniture was in Shed 43A after 1 October 2013, Mr Guss and others through him had access to the stored furniture by arrangement with Larkfield. Mr Ades said in evidence, that other than providing assistance when requested and attending to maintenance, security or services, Larkfield did not enter the premises. In these circumstances it was submitted by Mr Guss that possession had not been given to Larkfield, and no bailment had been effected.
221 In the occupancy agreement, the parties are described as “landlord” and “tenant”, Shed 43A as the “premises” leased, “rent” was to be paid and the premises were to be used for “storage”. Pursuant to clause 10 of the “Essential terms or special conditions” of the occupancy agreement:
“if rent remains unpaid for 60 days the landlord reserves the right to repossess the premises and dispose of all the stored material at the tenant’s cost. The landlord will pursue recovery of all debts including legal fees through the legal system”.
222 On 7 December 2014, Mr Guss proposed Scandi as the party which would execute a fresh agreement when it was discovered that CLF International was a deregistered company. After May 2015, the rent payable for the storage of the goods was no longer paid. Following the attempt by Mr Guss and others on 14 November 2015 to retake possession of part of the stored furniture, the balance of the furniture was moved by Larkfield to secure storage in Shed 37 at its Somerville Road facility.
223 I agree with the submissions of Larkfield’s counsel, Mr McKillop, that: “There is no requirement in the Act that the goods must have been under bailment for the entirety of the time in which they have been in the physical possession of the person seeking to invoke the Act”.
224 The plaintiffs pleaded in paragraph 13B(b) of their statement of claim that Larkfield “became an involuntary bailee” of the stored furniture when it took possession of the goods shortly after 14 November 2015 and transferred the goods to Shed 37. Accordingly, Larkfield submitted, there was no dispute by the parties that “at present the goods are in the possession of Larkfield under an involuntary bailment”.
225 Larkfield submitted that, whether or not a bailment came into existence on 1 October 2013, upon Larkfield moving the stored furniture to secure premises after the default in the payment of rental and the attempt to remove the goods by “self-help”, an involuntary bailment arose. In circumstances in which Mr Guss had entered the occupancy on behalf of an entity in respect of which he did not have authority to do so, the occupancy (whether by Mr Guss or as he asserted by LHV pursuant to a “tenant at sufferance”) was determined by notice given by Larkfield. In the circumstances, an involuntary bailment had arisen.
226 As to whether the stored furniture is uncollected goods, Larkfield relies upon section 54(1)(d). By letter dated 14 October 2015, Larkfield’s solicitors gave notice to Mr Guss of Larkfield’s intention to dispose of the stored furniture, unless the goods “are collected and the outstanding licence fee is paid to our client”. This letter was sufficient to bring Larkfield within the requirements of section 54(1)(d) of the uncollected goods legislation.
227 Larkfield submitted that the “provider” in the present case was Mr Guss as he had “purported to deposit the goods, or caused them to be deposited in Shed 43A at its premises on 1 October 2013. He purported to do so in the name of [CLF International] with no authority to do so, and so delivered the goods in his own capacity”.
228 It is likely that Mr Guss had remained “the provider” since he entered into the occupancy agreement on behalf of a disclosed, but unauthorising principal and, as no replacement agreement had been subsequently entered into.
229 Part IV of the Landlord and Tenant Act 1958 (“L&T Act”) provided for the disposal of goods left at premises at the end of a lease. Part 4.2 of the uncollected goods legislation was intended to replace Part IV of the L&T Act, save for “goods left behind at the end of a tenancy to which the Residential Tenancies Act 1997 applies” (section 56(2)(a) of the uncollected goods legislation). In the present case, the Residential Tenancies Act 1997 (Vic) does not apply because, if it were a tenancy, it was “commercial” rather than “residential”.
230 In my view, the issue and service of Larkfield’s second further amended counterclaim satisfied the requirements of section 68 of the uncollected goods legislation and Larkfield is entitled to a disposal order under the legislation.
Determination of the “relevant charge”
231 By their statement of claim, the plaintiffs sought “an order pursuant to section 69” of the uncollected goods legislation “determining the amount of the relevant charge (if any) payable to” Larkfield.
232 It is necessary for the Court to determine, “the amount payable by the provider [Mr Guss] to the receiver [Larkfield] for goods under bailment and payment of which entitles the provider to take delivery of the goods”.
233 Larkfield claims to be entitled to recover the following sums from Scandi, CLF Hong Kong, Mr Guss and/or LHV:
a. $21,794.64: total unpaid rent at termination;
b. $115,435.07: cost of storage space occupied by the goods after termination, as set out in the following table;
Location
Monthly Cost
Dates in Location
Months in Location
Total Cost
Shed 43A
$5,448.66
1/10/15 to 31/12/15
3
$16,345.98
Shed 43A
$5,500.00
1/1/16 to 15/4/16
3.5
$19,250.00
Shed 37A
$5,500.00
16/4/16 to 31/8/16
4.5
$24,750.00
Shed 37A
$3,750.00
1/9/16 to 21/11/17
14.66
$55,089.09
Shed 37A
$3,750.00
22/11/17 onward
Total
25 months 21 days
$115,435.07
c. $5,929: cost of Larkfield’s attempt to auction the goods, described as “Disposal Fees”;
d. $320,586.42: Larkfield’s legal costs, including costs incurred prior to the issue of proceedings, “up to 30 October 2017”.
234 I consider that:
a. the sum of $21,794.64, representing 4 months unpaid rental from June to September 2015 inclusive, is a reasonable amount for storage of the furniture, being calculated at the monthly rate of $5,448.66 included as the “rental” in the occupancy agreement;
b. the sums totalling $115,435.07 to 21 November 2017 and a further sum calculated at the rate of $3,750 per month ($123.28 per day) to the date of judgment, which I calculate as a further $20,352.64 to 4 May 2018, is a reasonable amount for the further storage of the furniture, and reflects the reasonable efforts of Larkfield to mitigate its loss by moving the stored furniture to Shed 37;
c. the sum of $5,929 comprises the costs of the proposed auction on 12 July 2016, and includes:
| Item | Cost |
| Advertising | $1,925 |
| Catalogue and brochure | $825 |
| Labour-11 days | $2,662 |
| e-marketing | $407 |
| Mobile toilet hire | $110 |
| Total | $5,929 |
The auction sale was restrained by interlocutory injunction. It appears that insufficient notice of the auction was given. In the circumstances, I propose to disallow this sum as part of the “relevant charge”;
d. the sum of $320,586.42 is claimed as Larkfield’s legal costs. These include, apparently, part of the costs of the proceeding. These costs, if allowed, will be part of a further order made in the proceeding. As for the costs incurred prior to the issue of the proceeding, I do not consider that these costs should otherwise be allowed unless they are considered as part of the costs of the proceeding, if such costs are later ordered. The only evidence of Larkfield’s costs is the one line entry in the table forming part of Mr Ades’s affidavit sworn 17 November 2017 stating that the legal costs “up to 30 October 2017” were $320,586.42 and an entry in the table attached to letters dated 19 July 2016 from Larkfield’s solicitors to the plaintiffs stating that the solicitors’ “legal costs as at 28 June 2016” were “$14,953.69”. The proceeding was commenced by writ filed 12 July 2016. Even if I were persuaded that any earlier costs might properly form part of the “relevant charge”, in the absence of appropriate evidence, it is impossible to quantify the costs. An order that the pre-action costs be assessed by the Costs Court would not be appropriate, in this instance, as it is foreshadowed by section 71 that the opportunity must be offered for the relevant charge to be paid before Larkfield sells the stored furniture by public auction.
Breach of Warranty of Authority
235 In summary, Mr Guss’s evidence on the issue of the execution of the occupancy agreement was as follows:
a. the only name he mentioned as the tenant was “Casualife Furniture”;
b. he did not mention LHV to Ms Grainger;
c. Ms Grainger must have ascertained the name “Casualife Furniture International Pty Ltd” and its ABN number herself;
d. he was very busy professionally when he signed the occupancy agreement;
e. he did not notice the reference to CLF International as the “tenant”;
f. he probably placed the words “Casualife Furniture International” below his signature when he executed the agreement.
236 Prior to executing the occupancy agreement, Mr Guss:
a. was fully cognisant that CLF International had been wound up in 2004;
b. apparently considered that all the goods stored at the Larkfield facility at that time had been purchased by Scandi or LHV and knew that LHV had given a charge over its assets to CLF Hong Kong;
c. had made certain observations to Ms Grainger before the occupancy agreement was executed, which reflected more than a cursory examination of the draft document.
237 Subsequent to the execution of the occupancy agreement:
a. Mr Guss received invoices from Larkfield for rental in the name of CLF International;
b. although paying the rental by LHV cheques or bank transfers, otherwise gave no indication to Larkfield that LHV was involved;
c. did not inform Larkfield that LHV had become subject to a “strike off action” from 6 March 2014 or was deregistered on 18 May 2014, although LHV continued to be the avenue for the payment of rental until the last payment on 11 June 2015;
d. apart from proposing Scandi as the appropriate replacement licensee on 7 December 2014, no mention was made by Mr Guss of that company’s interest in the stored furniture.
238 It is clear that the occupancy agreement dated 1 October 2013 was ineffective to bind CLF International, a company that had been wound up in 2004 and which, within weeks of the execution of the occupancy agreement, was to be deregistered. It is also apparent that Mr Guss was not intending to bind himself personally and that, as Scandi and LHV had not been mentioned in the discussions between Mr Guss and Ms Grainger, that neither of those companies could be considered as a contracting party.
239 In this regard, although Mr Guss had referred to “Casualife Furniture” in his discussions with Ms Grainger, CLF International might more appropriately be described as a “disclosed” principal, rather than a “named” principal. Larkfield would have known that Mr Guss was contracting as an agent but was probably only generally aware of the identity of the entity for whom Mr Guss was acting. In the absence of evidence from Ms Grainger as to how she came to include CLF International as the “tenant” in the occupancy agreement, it is as likely as not that Ms Grainger ascertained the full name and ABN of the company after a search of public records, as Mr Guss suggested had happened.
240 The occupancy agreement was to have a limited term of “3 months. Expires 31 December 2013” although, “if over-holding a minimum of 7 days must be provided by the Lessee” [Larkfield]. However, the stored furniture remained at the Larkfield facility and rental payments continued to be made for over 12 months until, in their letter dated 24 November 2014, Larkfield’s solicitors advised Mr Guss that Larkfield had become aware that CLF International “was deregistered in November 2013”.
241 On 7 December 2014, Mr Guss wrote to “propose that a new licence agreement be entered into with” Scandi. By 3 February 2015, Larkfield’s solicitors claimed that rental payments were two months in arrears. Mr Guss apparently satisfied the solicitors that this was not the case and, on 23 February 2015, the solicitors sent Scandi a “Shed Licence Agreement” to execute.
242 The Shed Licence Agreement was not executed by Scandi. Mr Guss, however, continued to make rental payments by bank transfers from LHV on 3 and 15 April and 11 June 2015 although the company had been deregistered on 18 May 2014. Four cheques, drawn on LHV’s bank account and one further electronic transfer by LHV, had also been made between June 2014 and February 2015.
243 By letter dated 10 September 2015, Larkfield’s solicitors gave notice to Mr Guss that Larkfield “has terminated your rights to occupy the premises”.
244 In these circumstances, the following conclusions seem appropriate:
a. Mr Guss purported to enter into the occupancy agreement on behalf of “Casualife Furniture International”. He executed an agreement naming the tenant as “Casualife Furniture International Pty Ltd”;
b. Mr Guss must be responsible for his actions. His explanations of inadvertence or mistake lack credibility;
c. Mr Guss warranted that he had the authority of CLF International to enter into the occupancy agreement on its behalf;
d. Mr Guss lacked that authority and he was aware that the company had been in liquidation for many years, and possibly, that it was shortly to be deregistered;
e. Mr Guss continued to ensure that rental payments were made to Larkfield through LHV up until 11 June 2015, notwithstanding receiving Larkfield’s rental invoices addressed to “Casualife Furniture International Pty Ltd”;
f. the payments continued to be made by cheques drawn on LHV’s bank account, and later by electronic transfers although LHV was deregistered on 18 May 2014 and subject to a “strike-off action” from 6 March 2014;
g. it is likely that Mr Guss was aware of the status of LHV during this period because of his level of involvement in the trading activity he said had been carried on for many years by LHV, and the references to him and his St Kilda address in many of the transactional documents;
h. apart from proposing Scandi as the appropriate contracting party for a new licence agreement, there is no evidence that Larkfield was informed of any other involvement by Scandi in the storage of the furniture at Larkfield’s facility;
i. in relation to LHV, the only way Larkfield would have been aware of LHV’s involvement with the stored furniture was the payment of four cheques in its name between October and December 2013 and four further cheques between June 2014 and February 2015. There may have been others, but there was no evidence produced apart from these 8 cheques;
j. it is not clear on the evidence that Larkfield would have been aware that electronic transfers had been made from LHV’s bank account. In any event, the only evidence produced related to 4 transfers between February and June 2015, long after the company was deregistered;
k. there is no evidence that Larkfield was informed by Mr Guss of CLF Hong Kong’s interest in the stored furniture, including after LHV was deregistered on 18 May 2014.
245 It is likely that some sort of relationship existed between Larkfield and Mr Guss personally either from:
a. 1 October 2013, when the occupancy agreement was entered into with an entity for which Mr Guss had no capacity or authority to act;
b. after 31 December 2013, when the occupancy agreement expired and there was an overholding;
c. in about November 2014, when Larkfield became aware that CLF International had been deregistered on 3 November 2013 and its solicitors advised Mr Guss of that fact in their letter dated 24 November 2014.
246 Whatever that relationship was between Larkfield and Mr Guss, it is likely that the letter from Larkfield’s solicitors to Mr Guss on 10 September 2015 terminating Mr Guss’s “right to occupy” the premises was sufficient to bring the relationship to an end.
247 Ordinarily, the measure of damages for breach of warranty of authority is “the amount that the claimant has lost by being unable, by reason of the falsity of the warranty, to sue the alleged principal” (McGregor on Damages, 19th edn. (2014) (“McGregor”), para 34-003).
248 As Mr Guss had executed the occupancy agreement on behalf of CLF International, the terms of the agreement would be relevant in determining the measure of damages Mr Guss should pay for breach of warranty of authority. The relevant provisions of the occupancy agreement for this purpose would include, most relevantly the identity of “the tenant”, but also the clauses relating to the term of the agreement, overholding, the payment of rental and default.
249 The terms of the occupancy agreement included as clause 10 of the “Essential Terms or Special Conditions”, clause 10 “Default”, which provided that, “If rent remains unpaid for 60 Days the Landlord reserves the right to repossess the Premises and dispose of all stored materials at the Tenant’s cost. The Landlord will pursue recovery of all debts including legal fees through the legal system”.
250 The letter dated 10 September 2015 from Larkfield’s solicitors to Mr Guss terminated Mr Guss’s “licence to occupy the premises” and demanded payment of four months “arrears of licence fees for the premises” by 18 September 2015 and noted that, if there were a failure to comply with this demand, “our client will commence legal proceedings against you for payment of the outstanding licence fees, interest and costs”. This would have been Larkfield’s right under clause 10.
251 An offer by Mr Guss to “pay you half the amount outstanding…by around end October” was not accepted and on 14 October 2015, Larkfield’s solicitors gave notice pursuant to the uncollected goods legislation that Larkfield would “dispose of the goods…after 28 days from the date of this letter unless they are collected and the outstanding licence fee is paid to our client”.
252 The letter dated 14 October 2015 sparked a reaction from CLF Hong Kong, after a copy of the letter had been sent to it by Mr Guss. Both CLF Hong Kong, and later Scandi, notified Larkfield’s solicitors of their respective interest in the stored furniture and a debate ensued as to whether CLF Hong Kong and Scandi should be required to pay the outstanding charges before being entitled to recover the stored furniture.
Breach of Warranty of Authority - conclusions
253 Notwithstanding the absence of evidence from Ms Grainger, it is appropriate to conclude that Mr Guss warranted to her that he had authority from CLF International to enter into the occupancy agreement. Mr Guss said in evidence that he only mentioned “Casualife Furniture”. However, Mr Guss went ahead and signed the occupancy agreement drafted by Ms Grainger which named CLF International as the “tenant”, noting below his signature the words “Casualife Furniture International”. Mr Guss had previously examined the draft agreement with some care, commenting on certain matters of concern or with which he had queries.
254 It is improbable, in view of these matters, that Mr Guss was not aware that he was executing the occupancy agreement, which named as the tenant a company that had been in liquidation for many years. Mr Guss said that he did not mention LHV to Ms Grainger. Subsequently, all invoices for the monthly rental payments were received by Mr Guss in the name of CLF International.
255 Mr Guss would ordinarily be liable for any losses suffered by Larkfield as a consequence of its entry into the occupancy agreement in circumstances in which Mr Guss warranted that he had authority to bind CLF International. However, the rental under the occupancy agreement was paid beyond the date Larkfield became aware that CLF International had been deregistered and Larkfield was prepared to allow the continuation of the storage of the furniture in these circumstances.
256 As a consequence, the claim against Mr Guss cannot succeed in an award of damages to Larkfield, for the following reasons:
a. Mr Guss’s liability would arise as a result of his execution of the occupancy agreement in the name CLF International. That company had been in liquidation for many years, and the following month would be deregistered. At most, what Mr Guss had “promised, was not that the principal will perform the contract but that he will be bound by it” (McGregor paragraph 34-003). Mr Guss had no authority to bind CLF International and breached his warranty of authority. However, as a company for many years in liquidation, CLF International would not have had the capacity to perform the obligations of the tenant under the occupancy agreement. In any event, this was not the warranty that Mr Guss made to Larkfield; he simply warranted that CLF International would be “bound by the occupancy agreement”;
b. by the time it became apparent to Larkfield that Mr Guss had misrepresented the position of the “tenant” under the occupancy agreement, there had been no loss suffered by Larkfield. The occupancy agreement had run its term and Larkfield’s right against the overholder was not compromised. In fact, Larkfield chose to continue the existing arrangement even when it was apparent that Scandi was unlikely to execute a replacement agreement. Larkfield continued to accept rental payments until the end of May 2015, and it is likely that it would have continued to do so if the payments had been offered by Mr Guss.
Misleading and deceptive conduct and Unconscionable conduct claims
257 The alternative claims against Mr Guss, based on misleading and deceptive conduct and unconscionable conduct, must also fail for similar reasons. Further, it is doubtful that the evidence establishes a “conspiracy” with Scandi and/or CLF Hong Kong which would involve them in any statutory contravention by Mr Guss, even if there were actionable consequences by reason of Mr Guss’s execution of the occupancy agreement in the name of CLF International.
Proposed orders
258 Accordingly, the following orders are appropriate:
1. Judgment for the defendant on the plaintiffs’ claim that the plaintiffs’ claim be dismissed.
2. Judgment for the plaintiff by counterclaim against the defendants by counterclaim, as follows:
a. an order pursuant to section 70 of the Australian Consumer Law and Fair Trading Act 2012 (Vic) (“the Act”), that the plaintiff by counterclaim is authorised to sell by public auction, to be conducted by 31 July 2018, the outdoor furniture formerly stored by it in Shed 43A at 400 Somerville Road West Footscray unless the relevant charge stated in paragraph 2(b) hereof is paid to the plaintiff by counterclaim on or before 31 May 2018;
b. a declaration pursuant to section 70(2)(c) of the Act that the relevant charge payable to the plaintiff by counterclaim is the sum of $157,582.35, calculated as follows:
i. $21,794.64, total unpaid rent pursuant to the occupancy agreement;
ii. $115,435.07, storage of the stored furniture from 1 October 2015 to 21 November 2017;
iii. an amount for the storage of the stored furniture from 22 November 2017 until the date of judgment calculated at the rate of $3,750 per month, (or $123.28 per day), a further $20.352.64 to 4 May 2018.
3. The affidavit of Robert Maurice Edward Ades sworn 24 November 2017 is to be sealed in an envelope marked, “Not to be opened except upon order of this Court or the Supreme Court of Victoria”.
259 I shall hear further submissions from the parties as to the form of the orders and on any other outstanding issues, including the question of costs.
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Certificate
I certify that these 87 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 4 May 2018.
Dated: 4 May 2018.
Zeinab Ali
Associate to His Honour Judge Anderson
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