Whites Hill (SA) Pty Ltd v All Commodities Pty Ltd (No 1) - [2016] SADC 156

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
WHITES HILL (SA) PTY LTD v ALL COMMODITIES PTY LTD (No 1)
[2016] SADC 156
Decision of His Honour Judge Slattery
15 December 2016
ADMINISTRATIVE LAW - JUDICIAL REVIEW
Minor Civil Review
At the time of the hearing of the applicant’s claim against the respondent in the Magistrates Court, the respondent was aware that three claims had been made against a fund held by the respondent which the applicant sought to be paid to it. The applicant’s claim arose following an assignment of the benefit and burden of contracts of supply of agricultural products. Having discharged the burden of those contracts, the applicant sought payment under the assigned contracts. The respondent refused to make payment. In the Magistrates Court, the learned Magistrate upheld the correctness of that decision.
At the time National Australia Bank also sought payment of that sum through receivers appointed to the assignor and under the terms of an earlier assignment agreement. Also, Mr Anthony Matthews claimed an interest in the fund as an administrator, or alternatively, a deed administrator of the assignor.
The respondent actively defended the claim of the applicant instead of defending and interpleading having regard to the number of claims made against the fund held by the respondent.
The learned Magistrate dismissed the claim of the applicant but without resolving the competing claims against the fund by giving orders and directions for a form of interpleader process. At least to that extent, the learned Magistrate fell into error.
Held
1. The respondent may properly be treated as being in the position of an interpleader.
2. Directions to the parties and the non-parties to establish an interpleader process in the event that the non-parties (NAB and Anthony Matthews) contend for an interpleader process and the determination of their claims against the fund.
3. Order for the respondent to pay into court the contract sum plus interest.
4. Orders for the disposal of the action in the event that the non-parties do not participate in an interpleader process.
Magistrates Court Act s 38; Law of Property Act (SA) 1936 s 15; Magistrates Court Civil Rules R 36, R 92, referred to.

WHITES HILL (SA) PTY LTD v ALL COMMODITIES PTY LTD (No 1)
[2016] SADC 156

In this action, the applicant applies for a review of the decision of a Magistrate in a Minor Civil Review under s 38 of the Magistrates Court Act (“MCA”). The claims of the applicant, the plaintiff in the proceedings, are for payment by the respondent, the defendant in the proceedings, of the contract price for almond hulls delivered in 2014. The defendant, All Commodities Pty Ltd resists the claim of the plaintiff Whites Hill Pty Ltd trading as River City Grain Co because it says that its contracts were made with Sapphire Pty Ltd trading as River City Grain Co.
A Mr Strauss was at the material time in March 2014 a director of Sapphire and a senior executive of Whites Hill and he may be understood at all times to be the guiding hand and mind of both companies. Whites Hill claims that the contract between Sapphire and All Commodities for the supply of product under both contracts was assigned to it on 6 March 2014 under an absolute assignment: viz s 15 Law of Property Act (SA) 1936. All Commodities rejects that assertion; for reasons which are not clear it has actively defended the claim of the applicant when, properly considered, its position is usually described as being in an “interpleader” situation. It has entered a contract for the supply of the product, it has received the product, it is in a position to make payment but a number of claims have been made against the fund to be used for that payment. All Commodities resisted the claim of Whites Hill by relying on the doctrine of privity of contract.
The product the subject of the two contracts was “delivered” from the wholesaler’s site on 5 March 2014 (NSW) and 11 March 2014 (Queensland). Whites Hill paid for the product. The best evidence before the Court is that the product left the site of Almond Co (the bulk supplier) on both of those days through a carrier, Bozzi, which was retained and paid its contract price by Whites Hill. The product under both contracts was delivered some two to three days after dispatch from the silo.
On 6 March 2014, Sapphire executed an assignment agreement for both the NSW and Queensland contracts. The assignor was Sapphire and the assignee was Whites Hill. The assignment agreements appear intended to operate so that the benefit and the burden of the contracts was transferred to Whites Hill. The burden of the contracts was then discharged by Whites Hill and so it contends that All Commodities is required to pay to it the contract price under them.
All Commodities is in the position of interpleader for reasons that are set out below. On the evidence before the Court the previous financier of Sapphire, the National Australia Bank (NAB), played no direct part in the provision of credit to any entity accepting the burden of the contract. The cost of fulfilling Sapphire’s assigned contractual supply obligations was met by Whites Hill as contemplated under the assignment agreements. On the question of the intention of the parties to the assignment, Mr Strauss was a director of Sapphire and was the general manager of Whites Hill. Viewed in the background of the known objective facts, the discharge of the contractual liabilities by Whites Hill appears to have been the intention of the contracting parties.
All Commodities is genuinely in the position of an interpleader because it acknowledges receipt of the almond hulls and thus the contractual liability to make payments. For reasons that are not clear, it has assumed the burden as a litigating party to defend any claim made against it for payment by Whites Hill. The material facts before the Court show that apart from Whites Hill, there are potentially two further claimants upon that fund. They are NAB under a claimed assignment and Mr Tony Matthews as the administrator or deed administrator of Sapphire.
Although these facts have not been confirmed in evidence or in any documentary form, NAB appears to have been a secured creditor of Sapphire. It appointed receivers and managers to Sapphire and the claims of NAB to the fund has been made through those receivers and managers. In the ordinary course, if the security of NAB was partly fixed and partly floating, then usually, the amount claimed by NAB in respect of this sum would arguably fall upon the floating charge aspect because it is a receivable. However, that depends upon the crystallisation of the charge, the wording of the charge and the terms of the security. There is no evidence of any of these things before the Court.
And NAB have made a claim under an alleged assignment, a copy of which has not been disclosed to the Court. It is not clear what form this assignment may take: whether it is a separate standalone agreement or whether it forms part of the security documents.
I have deliberately described the position of NAB and Mr Matthews as only claimants. There is no material before the Court relating to the position of Mr Matthews. The only information before the Court about the NAB is a letter in which NAB contends that Sapphire has assigned to it the whole of the benefit of its receivables presumably in consideration for the ongoing provision of credit facilities. This assignment agreement is claimed to operate to relate to all debts owed to Sapphire, in circumstances where NAB was the secured creditor of Sapphire and had registered a charge over the assets of Sapphire under which it had appointed receivers to the assets of Sapphire.
The terms of the assignment claimed by NAB are not disclosed, including: whether there is an obligation to make over a receivable; whether that obligation is dependent upon the ongoing provision of credit; and whether such agreement could be terminated by either party at any time. The paucity of material before the Court means that, on an interpleader basis, it is not currently possible to finally resolve the issues before it, including those arising as a result of the claim raised by NAB in its letter. For the same reason, it is not possible to resolve any interest claimed by Mr Matthews. In order to finalise these claims and to ensure that there is an end to this litigation, the Court is required to make orders that one way or the other bind the position of NAB and Mr Matthews vis a vis the fund.
This discussion defines the difficulties facing both All Commodities and the applicant Whites Hill. The most efficient approach to the disposal of this issue in this action was for All Commodities to have pleaded an interpleader as a stake holder under MCCR 36 and 92 (viz s 8 MCA). Any interpleader must be in respect of “property” which is defined in MCCR 2 to mean any real or personal property and that expression is therefore to be given a broad definition. There is no doubt that the debt payable by All Commodities is “property” for the MCCR.
In light of that background it is necessary to consider the current position in this action and the risks to the parties of findings by the Court in the absence of all interested parties. I turn now to those risks.
The risk for All Commodities presently is that the Court directs all or any part of the contract sum is to be paid to someone other than NAB (for example) then such an order does not strictly bind NAB as it is not party to the action. This is very unsatisfactory at a number of levels. It is inappropriate for NAB to have laid claim to the “property” and then not to have pursued its rights. There is no explanation why the receivers did not pursue in the Court the rights that they contended for in the letter of 19 March 2014. The same situation pertains to the position of Mr Matthews. I consider that the position of All Commodities must be completely protected by any order made by this Court. There must be an end to the proceedings from its point of view. The only way that intention can be achieved is to require a form of interpleader process to be put in place. I also do not consider that it is reasonable for this Court to place any burden upon All Commodities in that process. The appropriate way to proceed is to require a Notice to be prepared by the applicant and then sent to NAB and Mr Matthews in terms which are set out below. Also it is appropriate that All Commodities be required to observe an order of the Court that the contract payments are to be paid into Court to abide the event of this matter. This means that, at least at this juncture, All Commodities will not need to incur further costs in the resolution of this interpleader issue.
I order that the fund and interest at the rate of six dollars per centum per annum from 11 March 2014 to date be paid into Court. Once this interpleader issue is resolved the Court will then consider orders for the final disposition of this matter together with any orders for costs. Those matters must await the resolution of the above issues.
The content of the Notice ordered to be sent to NAB and Mr Matthews makes clear NAB and Mr Matthews have been given until 27 January 2017 to notify this Court whether they or either of them make any claim to the monies paid into Court. If such a claim is made, then at a directions hearing to be held on Wednesday 8 February 2017 at 8.45am, directions will be given by the Court preparatory to an early trial of such a claim or claims.
If no such claim is received, then the Court will proceed to deliver judgment in this matter on 3 February 2017.
I make the following orders:-
1That by close of business on 19 December 2016, the applicant Whites Hall Pty Ltd shall deliver to the National Australia Bank at its head office at Level 1, 800 Bourke Street Docklands Melbourne Victoria 3008, a Notice in the form annexed to these reasons.
2That by close of business on 19 December 2016 the applicant Whites Hill Pty Ltd shall deliver to Mr A Matthews at Anthony Matthews and Associates at 46 Fullarton Road Norwood South Australia 5067 a Notice in the form annexed to these reasons.
3The Notices referred to in paragraphs 1 and 2 hereof shall be accompanied by a letter from the solicitors for the applicant which explains the following matters:
a.The claim between the applicant and respondent;
b.The communications from NAB through receivers and from Mr Matthews;
c.The judgment in the Magistrates Court;
d.The minor civil review application;
e.The reasons published by the Court on 15 December 2016; and
f.The options available to the recipients thereof.
4The Notices and letters referred to in paras 1, 2 and 3 hereof shall be sent by registered post and on or before close of business on 20 December 2016, and the applicant shall file at Court an affidavit attesting to the postage of the Notice and the letters.
5On or before close of business 19 December 2016 the defendant shall pay into the District Court Suitors Fund the sum of $23,143.33 together with interest in the sum of $3,843.00, in total $26,986.37.
6This matter is adjourned to 8 February 2017.
7Liberty to any party or interested person to apply.
Notice
1In this proceeding, Whites Hill Pty Ltd trading as River City Grain Co claim against All Commodities Pty Ltd for payment of the sum of $23,143.37 for the supply of almond hulls in March 2014 under two contracts made between All Commodities Pty Ltd and Sapphire Pty Ltd trading as River City Grain Co.
2The two contracts for the supply of product that were made between Sapphire Pty Ltd trading as River City Grain Co and All Commodities Pty Ltd were dated in or about February and March 2014.
3The total purchase price payable under the two contracts by All Commodities Pty Ltd is in the sum of $23,143.37 (the receivable fund).
4By deeds of assignment both dated 6 March 2014, Sapphire assigned to Whites Hill, now trading as River City Grain Co the benefit and the burden of the two contracts.
5In March 2014 Whites Hill discharged the supply of product obligations under the two contracts at its own cost and then sought payment to it of the contract price from All Commodities which has, since that time, refused to make any payment to Whites Hill.
6By letter dated 19 March 2014, the receivers of Sapphire appointed by the secured creditor NAB gave notice of a claim to the benefit payable under the two contracts. The receivers allege that under certain financing arrangements between Sapphire and NAB, Sapphire had assigned to NAB the benefit of any present or future receivable owned by Sapphire.
7On 14 March 2014 Anthony Christopher Matthews was appointed company administrator of Sapphire. In or about April 2014 Mr Matthews informed the parties of his interest in the receivable funds as company administrator.
8The receivers and managers of Sapphire allege that the receivable payable by All Commodities is the property of NAB and that it should be paid to the receivers and managers.
9All Commodities refused to pay the contract price to Whites Hill and has not paid that contract price to any other person or entity.
10By action number ELCCI-14-13909 in the Magistrates Court in Elizabeth, South Australia, Whites Hill commenced a proceeding against All Commodities alleging that All Commodities was indebted to it in the amount of $23,777.00
11All Commodities defended the action and pleaded that it was not indebted to Whites Hill; that its contract had been made with Sapphire; that it had not received notice of any assignment of contract between Sapphire and Whites Hill; and that there was no privity of contract arising between it and Whites Hill.
12The Magistrates Court dismissed the claim of Whites Hill. Subsequently Whites Hill sought a review in this Court of the decision of the Magistrate.
13The District Court of South Australia has heard the application for a minor civil review brought by Whites Hill.
14NAB and Mr Matthews were not joined to the proceedings by any party and no application was made by them or either of them to be joined to these proceedings.
15NAB and Mr Matthews have not made any binding compromise in respect of any claims which they have or claim to have upon the sum of $23,143.37.
16All Commodities is in the position of an interpleader and disclaims any interest in the said sum.
17The Court has ordered that All Commodities pay into Court the sum of $23,143.37 together with the interest payable thereon at the rate of $6 per centum per annum from 11 March 2014 to date and continuing.
18The Court orders that:-
i.If so advised, by close of business on 27 January 2017, NAB, Mr Matthews or either of them shall inform the Court in writing of any claim for payment of the said sum made by them, the basis of such claim, the documents supporting such claim and their willingness to participate in a hearing before this Court to prove their entitlement to maintain such claim;
ii.In the event a response is received from NAB, Mr Matthews or either of them as prescribed in clause 8(i) hereof, the Court shall conduct a directions hearing on Wednesday 8 February 2017 at 8.45am at which time it shall make orders for the filing of points of claim, points of defence and other ancillary orders including for a hearing date as early as possible thereafter for the disposition of any such claims.
19In the event that NAB and Mr Matthews do not respond in writing by close of business 27 January 2017, or that alternatively they respond to the Court in writing and formally disclaim any entitlement to or any legal or equitable interest in the amount paid into Court, then this Court shall deliver judgment on the minor civil review on Friday 3 February 2017.