Tobias v QDL Ltd

[1999] NSWCA 343

CITATION:	Tobias & Anor v QDL Ltd & Ors [1999] NSWCA 343
FILE NUMBER(S):	CA 40708/97
HEARING DATE(S):	24 August 1999
JUDGMENT DATE:	29 September 1999
PARTIES :	Aitan Ian Tobias Aitan Trading Pty Ltd v QDL Ltd Gregory Hall GW Hall and PP Carter
JUDGMENT OF:	Mason P at 1; Meagher JA at 2; Giles JA at 3

LOWER COURT JURISDICTION:	Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S) :	1995/96
LOWER COURT JUDICIAL OFFICER:	Simos J

COUNSEL:	A: L Aitken, D Raphael 2-3R: D Officer QC, J Sexton
SOLICITORS:	A: David Landa Stewart, Broadway 2-3R: Price Waterhouse, Sydney
CATCHWORDS:	BILLS OF SALE - Bills of Sale Act 1898, ss3, 4, 5 - Whether trader's bill of sale invalid - Whether, if it was, there could be rectification of the non-compliance - Whether, if it was not, the equitable charge was consequentially invalid - Statutory declaration as part of the same document - Whether trader's bill of sale set forth the usual name or style under which the business was carried on - Meaning of "set forth".
ACTS CITED:	Bills of Sale Act 1898
DECISION:	Appeal dismissed with costs

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40708/97
ED 1995/96
MASON P
MEAGHER JA
GILES JA

Wednesday, 29 September 1999



Aitan Ian TOBIAS & Anor v QDL Limited & Ors

JUDGMENT

1    MASON P: I agree with Giles JA. 2    MEAGHER JA: I agree with Giles JA. 3    GILES JA: At the conclusion of argument in this appeal the Court ordered that the appeal be dismissed with costs, with reasons to be delivered later. These are my reasons for joining in the order. 4 Mr Aitan Tobias carried on a pharmacy business at Roselands Shopping Centre under the business name Tobias Health & Beauty. His company Aitan Trading Pty Limited (“Aitan Trading”) held the lease of the premises at Roselands. Mr Tobias owned the pharmaceutical stock of the business and Aitan Trading owned the non-pharmaceutical stock, the fixtures and the fittings. 5 Mr Tobias obtained his pharmaceutical supplies from QDL Limited (“QDL”) on credit. QDL required security, and on 11 May 1995 Mr Tobias gave to it a trader’s bill of sale and a mortgage of his home unit and Aitan Trading gave to it an equitable charge. Each of these securities was expressed to be collateral to the others. 6 Mr Tobias did not pay QDL as required by the credit terms. On 16 February 1996 QDL appointed an agent under the trader’s bill of sale and receivers and managers under the equitable charge, and the goods the subject of the trader’s bill of sale and the assets the subject of the equitable charge were sold. What happened to the home unit is unclear, and does not matter. 7 In proceedings brought by Mr Tobias and Aitan Trading they contended that the trader’s bill of sale was invalid because there had not been compliance in a particular respect with s 5C(2) of the Bills of Sale Act 1898 (“the Act”), and that the equitable charge was also invalid because of the collateralisation. Relief was sought which it is unnecessary to detail, broadly intended to reduce or postpone Mr Tobias’ liability to pay QDL on the ground that the sales of goods and assets had been wrongful (because of the invalidities) and to his detriment. 8 QDL resisted these contentions, and for its part contended that, if the trader’s bill of sale was invalid, it was entitled to rectification of the non-compliance pursuant to s 4B of the Act. 9 Simos J held that the trader’s bill of sale was not invalid. In his Honour’s view, if it had been invalid there would not have been power to rectify the non-compliance, but also there would not have been consequential invalidity of the equitable charge. 10 Mr Tobias and Aitan Trading appealed. The issues on appeal were -

(a) whether the trader’s bill of sale was invalid;
(b) if it was, whether there could be rectification of the non-compliance; and
(c) again if it was, and if there could not be rectification of the non-compliance, whether the equitable charge was consequentially invalid.

11 For the reasons which follow, in my opinion Simos J was correct in holding that the trader’s bill of sale was not invalid. 12 The Act regulates the giving of bills of sale and trader’s bills of sale, the latter being a sub-class of the former. Formalities of various kinds are to be complied with, and the bills of sale or trader’s bills of sale are to be registered. In default, the bills of sale or trader’s bills of sale are partially or wholly invalid as securities. 13 “Bill of sale” for the purposes of the Act is widely described. By the definition in s 3 it of the Act -

“ … includes bills of sale, assignments, transfers, declaration of trusts without transfer, and other assurances of personal chattels, and also powers of attorney, authorities, or licences to take possession of personal chattels as security for any debt and also any agreement, whether or not intended to be followed by the execution of any other instrument, by which in equity any charge or security is conferred over personal chattels to be acquired after the date of the agreement, but shall not include the following documents, that is to say: Deeds of assignment under Part XI and Bankruptcy Act 1924-1933; marriage settlements; transfers or assignments of any ship or vessel, or any share thereof; transfers of goods in the ordinary course of business of any trade or calling; bills of sale of goods in foreign parts or at sea; bills of lading; India warrants; warehouse-keeper’s certificates, warrants, or orders for the delivery of goods; or any other documents used in the ordinary course of business as proof of the possession or control of goods, or authorising, or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented.”

14 By its definition in s 3 of the Act a trader’s bill of sale is, in brief, a bill of sale given by way of security by a trader the subject of which is trade goods. Also in brief, with exceptions not presently material, a trader is a person engaged or about to engage in selling goods, wares and merchandise by retail, and trade goods are that person’s plant, fixtures and fittings and goods, wares and merchandise. 15 By s 5C(1) of the Act a trader’s bill of sale will not “be operative or have any validity at law or in equity” until it has been registered. By s 5C(2) no trader’s bill of sale given after a date now long past -

“ … shall be so registered or be operative or save as provided by subsection (4) of section 5B have any validity at law or in equity:
(a) unless the same sets forth:
(i) the full name and the business or occupation of the grantor and grantee of the trader’s bill of sale, and the place of business and residence of the grantor and the place of business or residence of the grantee, and the usual name or style under which the grantor carries on or intends to carry on business ;
(ii) a description of the personal chattels comprised in or made subject to the trader’s bill of sale; and a description shall be sufficient for the purposes of this subparagraph if it is a particular description of specified personal chattels mentioned or enumerated in the trader’s bill of sale or in a schedule or inventory annexed to or referred to in the trader’s bill of sale or a general description of the personal chattels comprised in or made subject to the trader’s bill of sale (whether such personal chattels are owned and used or intended to be used by the grantor at the time of the making or giving of the trader’s bill of sale in or in connection with the business in which he is engaged or about to engage or are personal chattels to be acquired after the date of the trader’s bill of sale over which, in equity, any charge or security is conferred by the trader’s bill of sale) by reference to the nature, type, quality, purpose or mode of user or other distinguishing features sufficient to render such personal chattels reasonably capable of identification, or partly such a particular description and partly such a general description;
(iii) the situation at the time of the making or giving of the trader’s bill of sale of so much of such personal chattels as are then owned and used or intended to be used by the trader in or in connection with the business in which he is engaged or about to engage;
(iv) the consideration for the trader’s bill of sale, specifying the amount of past debt (if any), the advance (if any) made at the time of making or giving the trader’s bill of sale, and (if such is the case) that future advances are secured by the trader’s bill of sale; and
(v) an address to which notices of any caveats which may be entered against the filing or recording of such trader’s bill of sale may be posted to the grantor; and
(b) unless within 15 days after it is made or given it is lodged for registration in the General Register of Deeds.”

I have underlined the part of this provision with which it was said there had not been compliance.

16 The effect of the saving as provided by s 5B(4) is that in certain circumstances a trader’s bill of sale registered otherwise than as a trader’s bill of sale may have force and effect with regard to personal chattels not being trade goods. 17 The argument of Mr Tobias and Aitan Trading was that the trader’s bill of sale was invalid because it did not set forth the usual name or style under which Mr Tobias carried on the pharmacy business, Tobias Health & Beauty. QDL accepted that, subject to rectification pursuant to s 4B of the Act, non-compliance with s 5C(2) in this respect would bring invalidity (see Black v Zevenboom (1880) 6 VLR 473; Anderson v Watson (1891) 17 VLR 263; Altree v Altree (1898) 2 QB 267; Colley v Clements (1936) 55 CLR 697). The response to the argument was that the trader’s bill of sale did set forth the usual name or style under which Mr Tobias carried on the pharmacy business because Tobias Health & Beauty was printed on a page part of the document.
18    The trader’s bill of sale was expressed to be given by -

“THE PERSON whose full name, residence and occupation is set forth in Item 2 of the Schedule hereto (hereinafter referred to as ‘the Mortgagor’) and who conducts or proposes to conduct the business described in Item 3 of the Schedule hereto (hereinafter referred to as ‘the said business’) at the place described in Item 4 of the Schedule hereto (hereinafter referred to as ‘the said premises’) … “

19    Item 2 of the schedule gave Mr Tobias’ name and home address and the occupation of “Pharmacist”. Item 3 of the schedule described the business as “Pharmacy”, but did not refer to Tobias Health & Beauty. Item 4 of the schedule gave the place of business of the mortgagor as “Shop 125, Roselands Shopping Centre, Roselands”. 20    Following the execution page of the trader’s bill of sale, and physically part of the same document, were a statutory declaration and its annexure. The statutory declaration was expressed to be made on 11 May 1995. 21    The body of the statutory declaration read -

“I, AITAN IAN TOBIAS OF Unit 25, 122 Carrington Road, Randwick in the State of New South Wales do solemnly and sincerely declare:
1. That I am the person giving the attached Trader’s Bill of Sale of even date herewith and therein referred to as ‘the Mortgagor’.
2. That I am the person engaged in the business of selling by retail, goods, wares and merchandise.
3. That the attached Trader’s Bill of Sale is a Trader’s Bill of Sale.
4. That the property and effects assigned in such Trader’s Bill of Sale are at the time of my giving the said Trader’s Bill of Sale this day are [sic] my absolute property (except as stated in Clause 7 of this declaration and except goods supplied under any Romalpa clause).
5. That no money is owing to any person or company in respect of the purchase or upon the security of the said property and effects assigned or any of them (except as stated in Clause 8).
6. There is not any legal process or execution issued against me or against the said property and effects in or out of the Supreme Court of the said State or in or out of any District or Small Debts or any Local Court or other Court whether against me solely or in any way jointly with any person or persons and that I have never been bankrupt or insolvent or assigned by [sic] Estate for the benefit of creditors.
7. At the time of my giving the said Bill of Sale this day I am the owner of the personal chattels comprised therein subject to the prior mortgage referred to in Clause 26(a) of the attached Traders [sic] Bill of Sale.
8. As at the 31st day of March 1995 money was owing to on [sic] the property and effects to the person or persons set out in Annexure “A” on the security of the sale personal chattels.
AND I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act 1900 as amended.”

22 Annexure A to the statutory declaration comprised six pages. The first page was a printed letterhead. At its top was the prominent name “Tobias Health & Beauty”, beneath which were the words “So much more than a fabulous pharmacy”. At its bottom was the address “Roselands Shopping Centre, Roselands, NSW 2196” followed by telephone and fax numbers. The typing on the page gave totals for outstanding creditors, excluding QDL, as at 31 March 1995, categorised in various ways. The following five pages listed the creditors. Some were described as “stock” creditors, some as “non stock” creditors. 23 It is plain that the statutory declaration was intended to bring compliance with s 5A(1) and s 5B(1) of the Act. 24 By s 5A(1), the grantor of a bill of sale had to -

“ … furnish a statutory declaration:
(a) stating that the personal chattels comprised in the bill of sale at the time of the making or giving of the bill of sale are the absolute property of the grantor, and that no money is owing to any person in respect of the purchase or upon the security of such personal chattels; or
(b) specifying the property or interest of the grantor in the personal chattels comprised in the bill of sale at the time of the making or giving of the bill of sale and stating that in respect of the purchase or upon the security of such personal chattels money is owing to a specified person.
For the purpose of any such statutory declaration money which is payable under any negotiable instrument given in respect of the purchase of such personal chattels shall be deemed to be money owing in respect of such purchase.”

This requirement explains paras 4 to 8 in the statutory declaration. Section 5A(7) provides that s 5A does not apply to or in respect of a trader’s bill of sale. However, the property subject to the trader’s bill of sale given by Mr Tobias was expressed in wide terms, extending beyond trade goods, and operation of the trader’s bill of sale in relation to personal chattels other than trade goods pursuant to s 5B(4) of the Act must have been contemplated.

25    By s 5B(1), the grantor of a trader’s bill of sale had to -

“ … furnish a statutory declaration stating:
(a) that he is a person engaged or about to engage in the business of selling by retail goods, wares or merchandise;
(b) that the bill of sale is a trader’s bill of sale.”


This requirement explains paras 1 to 3 in the statutory declaration.

26    As to each of the provisions, by s 5A(2) and s 5B(2) respectively -

“(2) The statutory declaration referred to in subsection (1) shall, for the purposes of this Act, be taken as part of the bill of sale, and shall be annexed to or indorsed on the same paper on which the bill of sale is written at the time the bill of sale is made or given.”

27 The statutory declaration and annexure A were not only physically part of the trader’s bill of sale. By force of the Act, they were to be “taken as part of” the trader’s bill of sale, in relation to para 8 of the statutory declaration and annexure A because the paragraph was part of furnishing a statutory declaration in compliance with s 5A(1). I do not accept the faint submission that there was purported but ineffective compliance with s 5A(1) because para 8 of the statutory declaration spoke as at 31 March 1995, not 11 May 1995, since when read with para 5 of the statutory declaration para 8 was a statement that the position as at 31 March 1995 held good as at 11 May 1995. 28 It follows, in my view, that there can be regard to para 8 of the statutory declaration and annexure A in determining whether the trader’s bill of sale set forth the usual name or style under which Mr Tobias carried on the pharmacy business. Despite their initial submissions, this was all but conceded by Mr Tobias and Aitan Trading in the course of argument. 29 In the end Mr Tobias and Aitan Trading submitted that there had nonetheless not been compliance with s 5C(2) of the Act because the letterhead was not a setting forth of the required information: there was neither a statement of nor sufficient direction of the reader’s mind to the fact that the name Tobias Health & Beauty was the usual name or style under which Mr Tobias carried on the pharmacy business. It was said that the words “sets forth” in s 5C(2) required that the particulars in that subsection be immediately seen, and that the mere name on the first page of annexure A was insufficient for compliance. 30 No authority was cited on the meaning or application of “sets forth” in the Act or cognate legislation. Mr Tobias and Aitan Trading referred to one of the meanings of “set forth” in the Oxford English Dictionary, “to express in words, give an account of, present a statement of, esp in order, distinctly, or in detail; to declare, expound, relate, narrate, describe …”. The Macquarie Dictionary gives a meaning “to give an account of; expound”. I do not think these are of much assistance. 31 Mr Tobias and Aitan Trading referred to the observation by Blackburn J in Larchin v The North Western Deposit Bank (1875) LR 10 Ex 64 at 64-5 that the object of the cognate English legislation “is to give notice to all who are likely to deal with the grantor of the bill of sale; not to enable a person who is curious on the matter to trace him out, but to enable one who is asked to give him credit to know at once, by looking at the register, whether the person he is asked to give credit to has executed a bill of sale”. The object may be accepted, but the question remains whether, in the present case, the trader’s bill of sale set forth the usual name or style under which Mr Tobias carried on the pharmacy business. 32 There is no doubt, in my view, that the bill of sale informed the reader that Mr Tobias carried on the pharmacy business under the name Tobias Health & Beauty. That was plain from the connection between the place of business in item 4 in the schedule and the address on the letterhead page, the description of the business as a pharmacy and the words following the name Tobias Health & Beauty “So much more than a fabulous pharmacy”, and the fact that para 8 of the statutory declaration and annexure A provided information about the creditors of what must have been Mr Tobias’ business carried on under the name Tobias Health & Beauty at the top of the letterhead page. 33 One reason for requiring that a trader’s bill of sale be registered, and that the particulars in s 5C(2) of the Act, including the usual name or style under which the grantor carries on business, be set forth, is that persons contemplating extending credit on the security of the grantor’s trade goods can more readily find out whether the trade goods are already the subject of a bill of sale. But it does not follow that the words “sets forth” call for formality, or anything more than informing the reader on a fair reading of the document as a whole. The Act does not prescribe any form for a trader’s bill of sale, and the definition of a bill of sale shows that it encompasses a great variety of documents for many of which formality could not be expected. The sheer range of matters required to be set forth by s 5C(2) also negates the submission that a particular can only be set forth if it is formally stated or flagged in some manner. 34 In my opinion, a trader’s bill of sale will set forth the usual name or style under which the grantor carries on business if that information is to be found on a fair reading of the document as a whole. It was not necessary, for example, that the trader’s bill of sale in the present case should include a statement of the name under which Mr Tobias carried on the pharmacy business as part of the description of the grantor, or as part of the descriptions of the business and the place of business, earlier set out. In the manner I have indicated, the trader’s bill of sale informed the reader that Mr Tobias carried on the pharmacy business under the name Tobias Health & Beauty. 35 It follows that there was compliance in the relevant respect with s 5C(2) of the Act. It also follows that it is unnecessary to deal with the other issues in the appeal.

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