Vickers v Challenge Australian Dairy Pty Ltd

Derrick Craig Vickers and Kathryn Guinivere Warwick, acting as receivers and managers of Challenge Australian Dairy Pty Ltd, brought an application to the court to clarify their obligations and liabilities towards employees who remained employed after their appointment as receivers. The primary concern was whether the receivers were required to pay certain employee entitlements, such as annual leave, long service leave, superannuation contributions, superannuation guarantee charges, and other post-appointment leave benefits. These issues arose because the receivers had not paid these entitlements, which were estimated to amount to approximately $660,000. The court was asked to determine whether these payments were to be made as priority payments under the Corporations Act 2001 or if the receivers were personally liable for such payments.

The court addressed two key legal questions. Firstly, whether section 558(1) of the Corporations Act, which entitles employees of a company in liquidation to payment for services under section 556, applies to companies in receivership. Secondly, whether receivers are personally liable under section 419 of the Corporations Act to pay superannuation contributions, superannuation guarantee charges, annual leave, or long service leave to employees who continue in employment after the appointment of receivers. The court considered the nature of the receivers' appointment and the continuity of employment contracts, accepting that the receivers were not personally liable for these employee entitlements and that section 558 does not apply to companies in receivership.

The court found that the receivers were not personally liable to pay the aforementioned employee entitlements and that section 558 did not apply in the context of a company under receivership. This conclusion was based on the distinction between liquidation and receivership, and the specific provisions of the Corporations Act concerning these scenarios. Consequently, the receivers were not required to pay the outstanding entitlements to the employees as priority payments or under their personal liability. The court also ordered that the plaintiffs' costs be paid out of the assets of the first defendant on an indemnity basis and that the costs of the second defendants be costs of the voluntary administration of the first defendant, to be paid from the assets of the first defendant and taxed if not agreed.