DE BOURBEL PTY LTD (IN LIQ) [2024] SASC 33

Applicant: DE BOURBEL PTY LTD (IN LIQ) Counsel: MR M DOUGLAS WITH MR C BOURAS - Solicitor: MELLOR OLSSON LAWYERS Respondents: DISTILLERIA PTY LTD & GIULIANO MARIO URSINI Counsel: MR R ROSS- SMITH - Solicitor: PGC LEGAL Hearing Date/s: 16/10/2023 File No/s: CIV-20-000905 A SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. DE BOURBEL PTY LTD (IN LIQ) v DISTILLERIA PTY LTD & ANOR [2024] SASC 33 Judgment of the Honourable Justice Stein 8 March 2024 TORTS - INTERFERENCE WITH PROPERTY - INTERFERENCE WITH GOODS - CONVERSION AND DETINUE - REMEDIES - ACTION OF DETINUE EQUITY - EQUITABLE REMEDIES - GENERALLY STATUTES - ACTS OF PARLIAMENT - ENFORCEMENT OF STATUTORY RIGHTS AND REMEDIES - GENERALLY PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - PARTICULARS - FUNCTION TORTS - INTERFERENCE WITH PROPERTY - INTERFERENCE WITH GOODS - CONVERSION AND DETINUE - POSSESSION OR RIGHT TO POSSESSION PROCEDURE - STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY - DECLARATIONS - APPROPRIATE FORM OF RELIEF - DISCRETION OF COURT Following a trial in the Supreme Court, the Court sought further submissions concerning the orders to be made to give effect to the judgment. The most significant issue was whether the Court should make orders for delivery up of wrongfully distrained assets and assets found to have vested in the applicant (“assets”) pursuant to provisions of the Personal Property Securities Act 2009 (“PPSA”) or award damages. The applicant sought delivery up of the assets. The applicant contended it was open for the Court to find that the unlawful distraint constituted a detinue and that the Court could give judgment on any -- 1 of 35 -- cause of action open on the evidence. It submitted that the respondents were on express notice that delivery up orders were sought and the respondents would not suffer prejudice if the Court made such orders. As the Court found the assets were wrongfully distrained or vested in the applicant, the applicant submitted that limiting it to an award of damages would be an inadequate and unjust remedy and would result in the respondents receiving a windfall. While the PPSA does not contain an express statutory power for delivery up of the assets which vested in the applicant, the applicant contended the PPSA does not cover the field of remedies that may be ordered and s 269 of the PPSA does not operate as a statutory set off. In the alternative, the applicant sought damages, submitting that distrained assets should be identified by reference to the list of assets in the Hilco Global report and it was not necessary to prove that each individual asset was not a fixture. The respondents opposed orders for delivery up. The respondents contended the applicant must be limited to an award of damages on the basis of the case pleaded and run at trial. However, the respondents assert the applicants should receive no award of damages for whisky on the basis the applicant failed to prove its value. The respondents submitted that a claim in detinue or specific restitution was not expressly pleaded or notified, if they had been on notice they may have taken a different approach and they would be prejudiced by such orders which would give the applicant a "windfall". The respondents contended that distrained assets should be identified by reference to the auction list and the applicant had failed to prove that each asset listed in the Hilco Global report was the subject of the respondents’ capital expenditure and not a fixture. The applicant also sought declarations. The respondents objected to the Court making any declarations on the basis they would not decide any controversy about a right, duty or liability of a party. Held: 1. Orders for delivery up to be made. 2. The respondents were on notice that the applicant sought delivery up orders including by correspondence and express prayers for relief seeking orders for delivery up of the assets. The respondents would not suffer relevant prejudice. 3. The applicant did not expressly plead its case in relation to the assets in conversion or detinue but conversion and detinue were established on the evidence. 4. The PPSA does not cover the field of remedies and s269 of the PPSA does not operate as a statutory set off. 5. The distrained assets are identified in the auction list. The PPSA assets are identified in the Hilco Global report excluding distrained assets, fixtures, and whisky of private barrel owners. 6. The declarations sought in relation to the second respondent will not be made as they relate to claims which were dismissed at trial and do not finally determine any controversy regarding rights or liabilities as between the parties. Personal Property Securities Act 2009 (Cth) ss 8, 253, 254, 266, 267, 267A, 268, 269; Corporations Act 2001 (Cth) ss 483, 553, 553C; Supreme Court Act 1935 (SA) ss 27, 31; Uniform Civil Rules 2020 (SA) rr 142.6, 182.1, Ch 7 (Part 4), referred to. S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992); Cook v Flaherty [2021] SASC 73; Banque Commerciale SA (En liq) v Akhil Holdings Ltd (1990) 169 CLR 279; Williams v Australian Telecommunications Commission (1988) 52 SASR 215; Oztech Pty Ltd v Public Trustee of Queensland (2019) 269 FCR 349; Battye v Shammall (2005) 91 SASR 315; Kidd v Regional Skills Training Pty Ltd [2019] SASC 144; CHEP Australia Ltd v Bunnings Group Ltd [2010] NSWSC 301; ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd [2017] NSWSC 1583; Crowther v Australian -- 2 of 35 -- Guarantee Corporation Ltd (1985) Aust Torts Reports 80-709; Volvo Finance Australia Ltd v Waterfront Enterprises Pty Ltd (in liq) (No 2) [2020] NSWSC 262; Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 1 WLR 644; Re Gillie; Ex parte Cornell (1996) 70 FCR 254; McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303; Gwinett v Day [2012] SASC 43; Wade v Sawmill Pty Ltd v Colenden Pty Ltd (t/as Pilks Pine) [2007] QCA 455; Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279; Aristoc Industries Pty Ltd v RA Wenham (Buildings) Pty Ltd [1965] NSWR 581; Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591; Turner v Kostoglou [2009] SASC 204; Parramatta City Council v Sandell [1973] 1 NSWLR 151; Cufone v Cruse [2000] SASC 17; Plenty v Attorney-General (SA) [2013] SASC 35; Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, considered. -- 3 of 35 -- -- 4 of 35 -- DE BOURBEL PTY LTD (IN LIQ) v DISTILLERIA PTY LTD & ANOR [2024] SASC 33 Civil 1 STEIN J: Following delivery of judgment in this action, I sought further submissions from the parties to assist me in determining what orders I should make to give effect to my reasons. 2 The issues which required further consideration were as follows. 1. The orders required to give effect to my conclusion that De Bourbel was entitled to the proceeds of the sale of items sold by the liquidator at auction. 2. Whether the forced liquidation value determined by Mr Tonkin of Hilco Global could be applied to the list of goods to be auctioned by the respondents following the distraint to determine the quantum of unlawfully distrained goods (apart from whisky and items sold by the liquidator at public auction). 3. What powers the Court has to order delivery up of goods owned by De Bourbel which were unlawfully distrained. 4. What powers the Court has to make orders concerning the plant and equipment which I found vested in De Bourbel Pty Ltd pursuant to the provisions of the Personal Property Securities Act 2009 (Cth) (“PPSA”). 5. What orders the Court should make in relation to Distilleria’s claim for a set off. 6. What declarations, if any, the Court should make. 3 For the reasons below, I have concluded that the quantum of damages for the distrained assets (apart from whisky and items sold by the liquidator at public auction) can be determined by applying the forced liquidation value determined by Mr Tonkin to the items in the auction list. The quantum of damages for the assets vested in De Bourbel pursuant to the PPSA can be calculated by reference to the forced liquidation value determined by Mr Tonkin in respect of those assets. However, it is unnecessary to perform those calculations to determine quantum because I have concluded the Court has the power to order delivery up and should make orders for delivery up of the distrained assets and the assets which vested in De Bourbel. 4 In these reasons I use the same terminology and abbreviations I used in my reasons for judgment. Sale by auction 5 The respondents accept that the money paid into Court from the liquidator’s auction sale should be paid out into the insolvency administration and the -- 5 of 35 -- [2024] SASC 33 Stein J 2 respondents’ rights to set off do not apply to that money. The respondents say no additional damages for those items can be awarded. 6 By consent, I have made orders for the payment out to the insolvency administration of the amounts held in the Suitors’ Fund and Mellor Olssons’ trust account on account of the proceeds from the liquidator’s auction. No further orders are required in relation to the proceeds of the liquidator’s auction. Property of De Bourbel and its value 7 One issue at trial was how to identify which assets were owned by De Bourbel and which assets were owned by Distilleria. 8 I concluded that De Bourbel established a wrongful distraint of assets owned by De Bourbel and I accepted, with an exception, the forced liquidation value of assets in the Hilco Global report. I also concluded that assets described generically by the parties as “plant and equipment” were purchased and owned by Distilleria. I was unable to identify with particularity which assets were owned by De Bourbel at the date of the distraint and which assets were paid for and owned by Distilleria and leased to De Bourbel. I sought submissions from the parties as to whether the list of items to be auctioned by the respondents’ agent after the distraint could be used to identify the value of De Bourbel’s wrongfully distrained assets by applying Mr Tonkin’s forced liquidation valuation to the auction list. 9 I will refer to assets which were owned by De Bourbel and were the subject of the wrongful distraint as the “distrained assets” and assets which I have concluded were owned by Distilleria but vested in De Bourbel pursuant to the PPSA as the “PPSA assets”. I address the identification of distrained assets and PPSA assets together. De Bourbel’s submissions 10 De Bourbel agrees that Mr Tonkin’s forced liquidation value could be applied to the list of goods in Mr Tonkin’s report. However, De Bourbel also contends it is entitled to delivery up of the goods (in the alternative to damages). I address the submissions concerning delivery up separately below. 11 De Bourbel submits that the Rochfort Distillery premises were occupied and used by De Bourbel and, inferentially, all plant and equipment, chattels and other property located at the premises were De Bourbel’s property unless established otherwise. Consequently, De Bourbel’s position is that the Hilco Global report should be accepted as an accurate list of De Bourbel’s assets. 12 De Bourbel disputes the need to prove that every item was not a fixture beyond referring to the descriptions of the assets and pointed to examples such as stools, tables, lounge suite and kitchen furniture as items which were obviously not fixtures. -- 6 of 35 -- [2024] SASC 33 Stein J 3 Respondents’ submissions 13 The respondents accept that the appropriate reference for the distrained assets is the auction list and the appropriate reference for the value of the distrained goods is the forced liquidation value in the Hilco Global report. 14 The respondents’ position in relation to the PPSA assets is to rely on the values in the Hilco Global report, however, excluding whisky and fixtures. The respondents seek to limit which items are PPSA assets firstly, on the basis that De Bourbel failed to establish that each of the items in the Hilco Global report fell within Distilleria’s capital expenditure and were subject to the lease and, secondly, that De Bourbel failed to prove that each item was not a fixture. The respondents object to De Bourbel claiming damages for whisky when the Court concluded De Bourbel had failed to prove the value of the whisky. 15 The respondents’ position is that the claim for damages for the distrained assets might be allowed at $20,335 subject to a set off in the insolvency administration in which they assert De Bourbel’s unpaid rent will be offset against the damages, resulting in no amount to be paid after the set off. Consideration Auction list 16 The first question for consideration is whether the auction list prepared by Mr Eglinton1 can be used to identify the distrained assets. 17 De Bourbel did not prove at trial that all items listed in the Hilco Global report were assets owned by De Bourbel. I found that some assets were owned by De Bourbel and some assets were owned by Distilleria,2 or other entities associated with Mr Ursini, and leased to De Bourbel. The Hilco Global report which listed all assets present on the property at the date of inspection could not be used to identify ownership of assets. I did not accept the accounting records of De Bourbel necessarily correctly recorded ownership of plant and equipment.3 18 The inventory of assets present on the premises at the time of distraint was prepared by Mr Eglinton and attached to the first version of the statement of claim as Schedule A. During cross-examination, Mr Naudi said that Schedule A to the statement of claim was meant to be a list of the distrained goods. He understood that the inventory identified all assets on the property and said that was the same as the list of things distrained against. Mr Naudi also agreed that Schedule A was a list of unsecured creditors and that the list did not give any assistance about the distrained goods. Mr Naudi described Mr Eglinton’s inventory as a list of distrained goods which was not complete and the auction list as a list prepared after taking into account any declarations under s 22 of the Landlord and Tenant Act 1 Exhibit A1 – Applicant’s Tender Book A at 1079-1083. 2 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [383]-[384]. 3 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [372]. -- 7 of 35 -- [2024] SASC 33 Stein J 4 1936 (SA). Mr Naudi agreed that the inventory was reduced to a list of items for auction and that the auction list should only contain items which the landlord maintained could be, and ought to be, sold pursuant to the distraint process. Mr Naudi also agreed it would be wrong for the landlord to insist that items not owned by the tenant go up for auction and agreed that the distraint was actioned by the auction process through the auction list. Mr Naudi was subsequently asked a series of questions which were described as questions to establish with certainty the scope of De Bourbel’s claim. The following exchange occurred.4 Q. … Where does one find on the list of the things within the first category 'It's mine not yours, Mr Naudi, it's the things owned by De Bourbel'. Where do I go to get, with certainty, a list of those things. A. You would have that, that's what you referred to as the auction list. 19 Mr Naudi said that plant and equipment was identified in various correspondence from Mr Ursini. He would not expect plant and equipment constructed into the distillery building, claimed by Distilleria, to be included on the auction list. Later during cross-examination, Mr Naudi referred again to Mr Eglinton distraining over all of the plant and equipment and that, just because Mr Ursini was a landlord, you could not assume that he would not distrain over plant and equipment related to him. 20 Mr Naudi’s evidence about the inventory list prepared by Mr Eglinton was thus somewhat ambiguous. However, at the end of the cross-examination, taking into account the evidence as a whole, I understood Mr Naudi’s position was that the assets De Bourbel claimed it owned and which were unlawfully distrained were the assets listed in the auction list. 21 I accept the distrained assets are identified in the auction list. 22 In my reasons, with the exception of whisky, I accepted the forced liquidation value in the Hilco Global report was the appropriate quantum for the calculation of damages. 23 If I were to award damages for the distrained assets, I would derive the amount by taking the items listed in the auction list and applying to each such item the forced liquidation value ascribed by Mr Tonkin to that item as set out in the Hilco Global report (with the exception of whisky, as I did not accept Mr Tonkin’s valuation of whisky). Which assets constituted plant and equipment subject to the lease? 24 The next issue for consideration is which assets were PPSA assets. 25 I found that plant and equipment (not comprising fixtures) leased by Distilleria to De Bourbel was the subject of a PPS lease within the meaning of the 4 T747.10-15. -- 8 of 35 -- [2024] SASC 33 Stein J 5 PPSA and vested in De Bourbel as at the date of its liquidation by reason of s 267 of the PPSA. The PPSA does not apply to an interest in a fixture by reason of s 8(1)(j) of the PPSA.5 26 I do not accept the respondents’ submission that De Bourbel failed to establish that each individual asset was part of capital expenditure and leased to De Bourbel. As set out above, given the state of the accounting records and other records of De Bourbel, it was not possible to determine which assets on the premises were paid for and owned by De Bourbel. However, De Bourbel exclusively occupied the premises. There was no suggestion that any of the assets located on the premises and listed in the Hilco Global report, other than private barrel owner (“PBO”) whisky, were owned by any entity other than De Bourbel or Distilleria. There was no suggestion any assets the subject of third party s 22 Landlord and Tenant Act 1936 declarations following the distraint remained on the premises and were included in the Hilco Global report list. The assets on the property must therefore have been either assets purchased by Distilleria for use by De Bourbel (and which were leased to De Bourbel), or assets purchased by De Bourbel. The former assets (which did not comprise fixtures) were the PPSA assets and the latter were the distrained assets. 27 I have accepted that the auction list comprises the distrained assets. I therefore conclude that the assets listed in the Hilco Global report comprised the PPSA assets (apart from fixtures, PBO whisky and distrained assets). 28 If damages should be awarded in relation to both distrained assets and PPSA assets, or if both classes of assets should be delivered up, the identification of the distrained assets by reference to the auction list has no practical ramifications. Fixtures 29 I do not accept the respondents’ submission that De Bourbel failed to prove that each and every item contained in the schedule to the Hilco Global report was not a fixture. In my reasons I accepted that De Bourbel bore the onus of proving items were personal property, not fixtures.6 Mr Lachlan Rochfort and Mr Tonkin were cross examined about “plumbing in” of distillery equipment.7 In my reasons, I observed that the respondents’ submissions and cross-examination focussed on the distillery manufacturing plant and equipment. I concluded I was not reasonably satisfied on the balance of probabilities that the manufacturing distillery equipment was personal property within the PPSA.8 30 While De Bourbel had to prove items were personal property within the PPSA, it was not necessary for De Bourbel to take the Court through each and every item on the asset list to establish the nature of each as personal property. It is self-evident from the description of many items that they were freestanding 5 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [435]. 6 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [436]-[438]. 7 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [439]. 8 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [442]. -- 9 of 35 -- [2024] SASC 33 Stein J 6 chattels.9 The respondents did not cross examine witnesses as to whether any assets other than large manufacturing distillery equipment constituted fixtures and I did not understand the respondents to have put the question of fixtures in issue in relation to other items.10 In my reasons I excluded from the PPSA assets only the large scale manufacturing equipment (stills, fermenter and mash tun).11 I accept all other goods are personal property within the PPSA. 31 If I were to order damages for the PPSA assets, I would derive the amount by taking the PPSA assets listed in the Hilco Global list and applying to each such item the forced liquidation value ascribed by Mr Tonkin to that item. Orders in relation to plant and equipment the subject of vesting and power to order delivery up of distrained goods 32 For convenience, I will address delivery up of PPSA assets and distrained assets together. De Bourbel’s submissions 33 De Bourbel contends that the respondents’ submissions mischaracterise the claim for relief as a claim for delivery up pursuant to the provisions of the Corporations Act 2001 (Cth) (“Corporations Act”). De Bourbel does not submit it is entitled to delivery up pursuant to the Corporations Act. De Bourbel accepts s 483(1) of the Corporations Act deals with a claim made directly by a liquidator for delivery up but contends that statutory right, which is vested solely in a liquidator, does not cover the field or otherwise curtail the Court’s power to grant delivery up orders as appropriate. De Bourbel submits that the remedial orders were merely drafted to refer to the liquidator of De Bourbel as the practical recipient of the property on behalf of the insolvent applicant. 34 De Bourbel’s claim sought delivery up orders for the distrained property as an alternative to damages. De Bourbel does not accept that the Court lacks jurisdiction to make an order for delivery up of distrained goods as otherwise that would require De Bourbel to incur further costs of bringing a separate proceeding to seek delivery up of its property from a party which is not legally entitled to that property. 35 De Bourbel’s position is that the Court has power to order delivery up because it is open to find the unlawful distraint constituted a detinue and it relevantly pleaded each material fact underlying a detinue claim. 36 De Bourbel also contends that a failure to plead detinue it is not fatal to a delivery up remedy on the basis the Court can give judgment upon any cause of 9 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [439]. 10 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [439]. 11 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [439]-[442]. -- 10 of 35 -- [2024] SASC 33 Stein J 7 action open on the evidence irrespective of how the applicant’s case was pleaded or argued. 37 De Bourbel contends that the evidence tendered at trial shows the respondents were put on notice on multiple occasions that De Bourbel objected to the respondents’ dealing with De Bourbel’s property contrary to its interests, the respondents confirmed having possession of the distrained goods, made an offer that De Bourbel take possession of the items pending the outcome of the proceeding12 and the prayer for relief expressly seeks return of the goods as a remedy. There is no suggestion that De Bourbel abandoned the claim for delivery up orders. De Bourbel’s position is that at all times the respondents faced a claim for unlawful distraint, a component of which was an order in the broadest term seeking delivery up of property and the respondents assumed the risk of decisions taken in the face of that notice. There was no attempt to strike out the pleading. 38 De Bourbel denies that the respondents would suffer prejudice. De Bourbel submits the affidavit of Mr Ursini does not address the status and location of distrained goods, that any prejudice is not made out on the respondents’ “opaque” evidence and, if any prejudice at all arises, it is a result of decisions made by the respondents while on express notice that De Bourbel would seek delivery up. De Bourbel says the respondents have been on express notice from at least 19 June 2020 that there was a risk the respondents may be required to deliver up the distrained goods at the conclusion of the trial so the liquidator could sell the goods as one job lot to maximise the financial recovery of those goods.13 39 If the goods are not delivered up, the first respondent will retain them and be able to sell them to offset any damages awarded. De Bourbel points out that if any sale had occurred prior to trial, s 37 of the Landlord and Tenant Act 1936 would have entitled De Bourbel to double damages and solicitor/client costs. De Bourbel disputes there is a requirement to demonstrate that the goods are unique to obtain an order for delivery up of distrained assets at common law and submits the common law remedy for distraint simply recognises a proprietary right to return of the goods. 40 De Bourbel contends that the legal wrong established by the unlawful distraint should of itself entitle De Bourbel to an order for specific restitution of the distrained goods and specific restitution is not limited to unique property. De Bourbel’s asserted entitlement to specific restitution of the distrained property is said to arise because it has an immediate right to possession, there is no basis to establish equitable defences such as unclean hands and if the Court is in difficulty or doubt as to the value of the distrained property, it would cause injustice to De Bourbel to limit it to a remedy in damages or no remedy if damages for the whisky cannot be properly quantified. De Bourbel contends that an award of damages would be inadequate or unjust because it would prejudice De Bourbel’s 12 Exhibit A1 – Applicant’s Tender Book B, documents 7, 10, 13 and 17. 13 Affidavit of Krystie Rae Miller sworn 18 September 2023, exhibit KM1 (chronology). -- 11 of 35 -- [2024] SASC 33 Stein J 8 rights to sell the goods, detrimentally impact the financial recovery for the creditors, and result in a windfall to the respondents. 41 De Bourbel contends that while the Court found the value of the whisky was not sufficiently proved, that does not derogate from the uncontested fact that the whisky was produced by and was the property of De Bourbel (excluding whisky sold to private barrel owners). De Bourbel disputes the respondents’ contention that they should keep De Bourbel’s whisky which they possess only due to seizing it as part of an unlawful distraint because De Bourbel failed to prove its value. De Bourbel submits there is no authority suggesting that it is at the discretion of the tortfeasor to elect to return items or pay for them and it is not open to the tortfeasor to unlawfully retain another person’s assets against their will and only pay the owner for the goods if it proves their value. 42 The primary remedy De Bourbel seeks is the delivery up of the distrained assets so the liquidator may realise their value. The liquidator asserts the right to bear the risk of taking possession of the assets and selling them to achieve a higher value than the forced liquidation value in the Hilco Global report. De Bourbel observes that the respondents’ submissions do not raise practical impediments to the delivery up of the distrained assets. 43 While De Bourbel accepts there is no express statutory power in the PPSA to compel return of goods, De Bourbel submits the PPSA does not cover the field of remedies and De Bourbel’s greater possessory title as a result of the assets vesting under the PPSA justifies a delivery up order. 44 De Bourbel contends the asserted prejudice is not supported by evidence and the respondents’ submissions during the hearing trespassed beyond Mr Ursini’s affidavit, could not be received, and were directly inconsistent with Mr Ursini’s evidence in the trial. De Bourbel contends that the whisky distillery is run by Cut Hill Wall Pty Ltd, not the respondents, and accordingly there is a discontinuity of identity between the entity engaged in the distillery operation and the parties to the action. Respondents’ submissions 45 The respondents oppose orders for delivery up. The respondents submit that detinue or a remedy in equity was not pleaded or notified, they are prejudiced by that failure and the Court is entitled to find that De Bourbel did not intend to maintain a claim in detinue or for specific restitution. The respondents contend that De Bourbel did not lead any evidence concerning the Court’s discretion in a detinue claim or in the equitable jurisdiction nor open or close on those claims, as a consequence of which the respondents did not address factors relevant to the Court’s discretion. The respondents do not agree that the only relevance to finding the unlawful distraint constituted detinue is to fashion a remedy and contend that De Bourbel pleaded and ran a claim in conversion in respect of which the only remedy is damages. The respondents say that if no damages are awarded, it is because De Bourbel did not prove them and the outcome is not unjust because -- 12 of 35 -- [2024] SASC 33 Stein J 9 De Bourbel failed to prove its case. The respondents contend there is no case law suggesting equity will assist a party which has not notified a case other than conversion, not led evidence to prove damages, not led evidence relevant to the Court’s discretion and failed to lead any evidence about the uniqueness of any of the distrained goods. 46 The respondents point to the form of the order sought in the prayer for relief, say the terms of the order sought had to be deliberate and an order for delivery up to the liquidator cannot be made as the liquidator is not a party to the action. The respondents observe that De Bourbel did not respond to the respondents’ closing submissions concerning the Corporations Act or make any submissions about delivery up. 47 The respondents contend that procedural fairness will ordinarily demand that the Court confine itself to the relief available on the pleadings; a party is obliged to plead all causes of action explicitly; and it is not sufficient to plead elements only of a claim without connecting those elements to a notified cause of action. The respondents say the material facts pleaded were material to the conversion claim and contend the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings is limited to that in which the parties have deliberately chosen a different basis for determination of their rights and liabilities in the way the trial was conducted. 48 The respondents point to prejudice as described in the affidavit of Mr Ursini. The respondents observe that the measure of damages for conversion is the value of the goods at the date of the conversion and say if a respondent satisfies a judgment for damages for conversion, the applicant’s title to the goods is transferred to the respondent. The respondents submit that because they did not know of a claimed cause of action or remedy to sustain an order for delivery up, they knew an adverse judgment was limited to damages in conversion and they assessed the evidence about what damage might be proved. As Distilleria was defending only a conversion claim for damages, it could nurture the whisky at its expense at Distilleria’s premises and increase the value of the whisky without detriment because it knew damages are fixed at the date of conversion. If they had known of the detinue or specific restitution claims, the respondents contend they could have considered a different commercial approach, such as negotiating an arrangement with the liquidator to auction the distrained whisky and possibly bid for it. Further, the respondents contend they were deprived of the opportunity to lead evidence about discretionary elements including matters such as the cost of holding the whisky at the Distilleria premises, the increase in the value of the whisky and the costs associated with sale. The respondents assert they would have cross-examined Mr Naudi about such discretionary matters. 49 Counsel for the respondents put to me that the respondents were deprived of the opportunity to make any assessment about risk in a claim for delivery up because it was not pleaded or notified and there was a gross unfairness for the respondents to be faced with a possibility of that order when not confronted with -- 13 of 35 -- [2024] SASC 33 Stein J 10 it when making their commercial decisions. The outcome of the respondents’ position is the respondents would retain the property of De Bourbel without having to account in any way for the value of the whisky. While agreeing that the Court should strive to find the appropriate remedy, counsel for the respondents put to me that the Court ought not do so in this case as the claim was not notified and the respondents did not have an opportunity to make decisions about what to do. Counsel gave a working example as follows.14 That is, Mr Ursini, you remember, was always intending to have this distillery business and in order to have a distillery business he needed to have the land, he needed to install a distillery on that property and he needed to buy spirit - which seems to be easy enough - and he needed to get hold of barrels, which is not so easy but was achieved, and then what's needed after that is time. Then the claim is made and my client resists the claim for wrongful distraint and the reason that your Honour's found is, off the mainstream reasons if one likes, because there was a lease for example for most of the time. So there's this, could I put it this way, a quirkier reason why my client failed in that distraint claim and then the PPSA outcome might be described as a bit out of mainstream as well as a consequence of regulation. … Therefore not alarming that my client would maintain a defence. When they - it's really Mr Ursini - know that the claim is brought in conversion and not [in detinue] nor in equity, it follows that he's not at risk that there will be an order for delivery up. Then what he knows is that he may, if he loses, have to pay damages in an amount fixed by the court and he keeps the goods. To interrupt myself, it is settled law in conversion claims that if the respondent to the claim - I'll call them defendant - is guilty of conversion then when they pay the damages awarded they keep the goods. So Mr Ursini knows that might be the outcome. So it will be a money claim. So what he needs in order to maintain a distillery business is some whisky to sell out of a whisky cellar door. And because he knows that the worst result for him is going to be a damages claim, he doesn't make any effort to source whisky barrels and older whisky from anywhere else. He has got a product and he might have to pay for it and the damages that your Honour fixes, and he pays that award amount, after which he will have the whisky, and the whisky which is occupying his distillery and maturing to the point where it can be retail sold is that same whisky, and because he is not facing a detinue claim, he is not sourcing his whisky, which he needs for his distillery business, from anywhere else, one of the commercial decisions you would expect him to make. And then the consequence of the court contemplating an order for delivery up is that his business will be lost because all that whisky which he has been supporting, nurturing, for all of this time will no longer be his; it will be carted away, pursuant to a delivery up order, and Mr Ursini and Distilleria Pty Ltd will be denuded of their business. My contention, respectfully put, is that is a result which is intolerably unfair and if the consequence is that Mr Ursini has got some whisky that he should have at least paid for at a reasonable value, that is occasioned by the gross failure of this applicant to prove its damages. So, it's visited on the applicant by its failures, not on anything my client has done 14 AT73.11-75.31 (a reference to “indemnity” has been corrected to a reference to “in detinue”). -- 14 of 35 -- [2024] SASC 33 Stein J 11 or failed to do, it's its failures. It has not proved a loss. It has not given attention to the bleedingly obvious topic of how do I prove the worth of this whisky spirit? 50 Counsel continued to submit that if delivery up orders are made De Bourbel “gets the windfall of delivery up of a product worth significantly more than when this action started or when we had the trial” when it had not pleaded or notified its case or proved the value of the whisky and the respondents’ benefit of not having an order against them should be balanced against the severe consequences of the Court making a delivery up order. 51 The respondents submit that the decisions made by Mr Ursini included who operates the distillery and the prejudice thus travels with Distilleria or a new entity. 52 While maintaining detinue is not pleaded, the respondents submit there are important distinctions between conversion and detinue; De Bourbel did not lead any evidence whether damages would not be a just remedy, there was no evidence that any of the personal property is unique and they say it is not. 53 In relation to the PPSA assets, the respondents contend that if the grantee does not recognise the personal property vesting, then the grantor will have a claim in conversion depending on the pleaded or notified case which converts to a common law claim and not a statutory PPSA claim. The respondents thus contend there should only be an award of damages with the respondents having an asserted statutory set off pursuant to the PPSA. I address the question of set off separately below. Authorities Pleadings and notice 54 Section 27 of the Supreme Court Act 1935 (SA) provides that in every matter pending before it, the Court shall have the power to grant and shall grant either absolutely or on reasonable terms and conditions all such remedies as any of the parties may appear to be entitled to in respect of every legal or equitable claim properly brought forward by them so that as far as possible all matters in controversy between the parties may be completely and finally determined and a multiplicity of legal proceedings avoided. Rule 182.1 of the UCR empowers the Court to give judgment for relief that differs from the relief sought by the applicant and to make any order necessary or desirable to give effect to the terms of a judgment. 55 The function of pleadings is to state the case to be met with sufficient clarity. Pleadings serve to define the issues for decision and ensure the basic requirement of procedural fairness to enable a party to meet the case against them.15 Achieving these objectives requires the pleading to express the factual basis of each claim. 15 Banque Commerciale SA (En liq) v Akhil Holdings Ltd [1990] HCA 11 at [18]-[19]; (1990) 169 CLR 279 at 286-7 (Mason CJ and Gaudron J); Williams v Australian Telecommunications Commission [1988] SASC 1173 at 1; (1988) 52 SASR 215 at 216 (King CJ). -- 15 of 35 -- [2024] SASC 33 Stein J 12 While it is often convenient to do so, it is not necessary to plead the legal conclusions that follow from the allegations of fact required to establish each element of each cause of action.16 The pleading should, however, be clear about the facts and claims relied on.17 56 In S P Hywood Pty Ltd v Standard Chartered Bank Ltd (“S P Hywood”),18 Perry J addressed an appeal from an order of a Magistrate dismissing third party proceedings. The defence to the third party proceedings was based on conversion. Justice Perry considered it unnecessary to resolve whether the evidence disclosed a cause of action in conversion because there were other causes of action upon which the appellant was entitled to succeed in the third party claim and it was not to the point that the matter was argued on the basis of conversion.19 Justice Perry stated it was necessary for the Magistrate to give relief on whatever cause of action entitled the party to relief having regard to the facts established by the evidence.20 His Honour said that alleging a particular cause of action in a pleading will draw the attention of the opposing party to the principal cause of action relied upon. However, such a plea would not circumscribe the nature of available relief. Justice Perry continued to say:21 The trial judge is free to give judgment on any available cause of action whatever, irrespective of any mention of particular causes of action in the pleadings. Of course, it must be observed that the pleading of the material facts will often operate to confine the evidence in such a ways as to have the practical effect of limiting the options of the trial judge in fashioning relief at the end of the trial. But what must be kept steadfastly in mind is that all causes of action are at large at the end of the trial, in the sense that judgment maybe given upon any cause of action open on the evidence as proved, irrespective of the manner in which the plaintiff’s case has been presented, or argued. Notwithstanding these observations, it is true that there may be cases where the suggestion that a particular cause of action is available might catch a party by surprise, and if it had been adverted to earlier, might have affected the course of the trial. 57 Justice Perry observed there was no reason to think the third party claim fell to be resolved only by reference to conversion because there was no allegation of any particular cause of action in the third party pleadings and the reference to misappropriation of money was not apt to define any particular cause of action.22 16 Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; (2019) 269 FCR 349. 17 Oztech Pty Ltd v Public Trustee of Queensland [2019] FCAFC 102; (2019) 269 FCR 349. 18 S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992). 19 S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992) at 13. 20 S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992) at 15. 21 S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992) at 19-20. 22 S P Hywood Pty Ltd v Standard Chartered Bank Ltd (Supreme Court of South Australia, Perry J, 21 December 1992) at 20. -- 16 of 35 -- [2024] SASC 33 Stein J 13 58 In Battye v Shammall,23 Gray J cited S P Hywood, stating that the rules of pleading require material facts to be pleaded and it is strictly unnecessary to plead causes of action. 59 In Cook v Flaherty,24 Livesey J said a trial judge is not limited to considering the particular cause of action identified by the pleadings and “is free to give judgment on any available cause of action”, irrespective of those pleaded.25 60 In the absence of an amendment to the pleadings, procedural fairness will usually require the court to confine itself to the relief available on the pleadings.26 In Cook v Flaherty,27 in addressing procedural fairness in the context of litigation, Livesey J said those rules require parties to be bound not only by their pleadings but also by their conduct at the trial and pleadings are a means to an end, not an end in themselves. If parties disregard or restrict or enlarge the pleading during the conduct of the trial, they cannot then treat the pleadings as governing the area of contest.28 Distraint, detinue and specific restitution 61 Remedies for wrongful distraint include an action to recover damages for the wrong, to recover back the distrained goods, or an injunction to prevent continuance of a wrong.29 Where the distress is wrongful, the owner can seek damages on the ground of trespass or conversion or bring an action to recover the goods distrained on the basis of detinue.30 62 An action in detinue is based on the wrongful refusal to return goods on demand to a person with immediate right to possession of the goods.31 There is some authority for the proposition that, absent express demand, detinue can be established if the intention to not deliver up is proved in other ways such as the defendant by his or her conduct demonstrating the goods would not have been 23 Battye v Shammall [2005] SASC 138; (2005) 91 SASR 315. 24 [2021] SASC 73 at [89] (Livesey J). 25 Cook v Flaherty [2021] SASC 73 at [89] (Livesey J) quoting S P Hywood Pty Ltd v Standard Chartered Bank Ltd (unreported, Supreme Court of South Australia, Perry J, 22 December 1992) and Battye v Shammall (2005) 91 SASR 315 at [51] (Gray J). 26 Kidd v Regional Skills Training Pty Ltd [2019] SASC 144 at [53] (Hinton J). 27 [2021] SASC 73 at [87] (Livesey J) quoting Gould v Mount Oxide Mines Ltd (In Liq) [1916] HCA 81; (1916) 22 CLR 490, 517 (Isaacs and Rich JJ). 28 [2021] SASC 73 at [87] (Livesey J) quoting Gould v Mount Oxide Mines Ltd (In Liq) [1916] HCA 81; (1916) 22 CLR 490, 517 (Isaacs and Rich JJ). 29 Cyril Dodd and T J Bullen, Bullen on Distress (Butterworths, 2nd ed, 1899) at 219-221; Arthur Oldham and Arthur La Trobe Foster, The Law of Distress (Wentworth Press, 1886) at 290- 291; 295. 30 Cyril Dodd and T J Bullen, Bullen on Distress (Butterworths, 2nd ed, 1899) at 219-21; Arthur Oldham and Arthur La Trobe Foster, The Law of Distress (Wentworth Press, 1886) at 290-1, 295. 31 CHEP Australia Ltd v Bunnings Group Ltd [2010] NSWSC 301 at [183] (McDougall J); ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd [2017] NSWSC 1583 at [109]- [110] (Slattery J), citing General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 2 All ER 314; [1963] 1 WLR 644 at 648-9 (Devlin LJ); Bellinger v Autoland Pty Ltd [1962] VicRp 72; [1962] VR 514. -- 17 of 35 -- [2024] SASC 33 Stein J 14 returned.32 A refusal by a defendant in possession of goods to comply with a demand for delivery up made by a person entitled to possession of the goods may also amount to conversion.33 63 A judgment in detinue can take the form of the value of the chattel and damages for its detention or for return of the chattel or recovery of its value and damages or return of the chattel and damages for its detention.34 In General & Finance Facilities Ltd v Cooks Cars (Romford) Ltd Diplock LJ said:35 A judgment in the first form is appropriate where the chattel is an ordinary article in commerce, for the court will not normally order specific restitution in such a case, where damages are an adequate remedy. A judgment in this form deprives the defendant of the option which he had under the old common law form of judgment of returning the chattel; but if he has failed to do so by the time of the judgment the plaintiff, if he so elects, is entitled to a judgment in this form as of right. ... A judgment in the second form gives to the defendant the option of returning the chattel, but it also gives to the plaintiff the right to apply to the court to enforce specific restitution of the chattel by writ of delivery, or attachment or sequestration as well as recovering damages for its detention by writ of fieri facias. This is an important right and it is essential to its exercise that the judgment should specify separate amounts for the assessed value of the chattel and for the damages for its detention, for if the plaintiff wishes to proceed by writ of delivery for which he can apply ex parte he has the option of distraining for the assessed value of the chattel if the chattel itself is not recovered by the sheriff. He would be deprived of this option if the value of the chattel were not separately assessed. A judgment in the third form is unusual, but can be given. Under it the only pecuniary sum recoverable is damages for detention of the chattel. Its value need not be assessed and the plaintiff can only obtain specific restitution of the chattel by writ of delivery, attachment or sequestration. He has no option under the writ of delivery to distrain for the value of the chattel. (citations omitted) 64 A claim in detinue previously did not as a matter of right entitle a plaintiff to return of the goods wrongly detained and the defendant could elect to pay for the 32 See, eg, Crowther v Australian Guarantee Corporation Ltd (1985) Aust Torts Reports 80-709 at 69, 102 (Bollen J) in which his Honour said he did not think it an immutable rule that there must be a demand and refusal to return as a person may demonstrate an intention not to deliver goods no matter what. See also Volvo Finance Australia Ltd v Waterfront Enterprises Pty Ltd (in liq) (No 2) [2020] NSWSC 262 at [44], [230]-[232] (Cavanaugh J). In Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342; (2011) 82 NSWLR 420 in light of counsel’s acceptance of the necessity of a demand, Allsop J (with whom Macfarlan JA agreed and Giles JA relevantly agreed) did not address prior authorities referred to by the trial judge in support of the proposition that a formal demand is not required. 33 ACN 116 746 859 (formerly known as Palermo Seafoods Pty Ltd) v Lunapas Pty Ltd [2017] NSWSC 1583 at [110] (Slattery J). 34 General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 2 All ER 314; [1963] 1 WLR 644 at 650 (Diplock LJ). 35 General and Finance Facilities Ltd v Cooks Cars (Romford) Ltd [1963] 2 All ER 314; [1963] 1 WLR 644 at 650-1 (Diplock LJ). -- 18 of 35 -- [2024] SASC 33 Stein J 15 goods rather than return them.36 The common law position was ameliorated in a number of ways including by statutory modification.37 In Gwinett v Day,38 referring to the 2006 Rules, Stanley J concluded that statutory modification was replicated in South Australia and, in proceedings for detention of goods, the Court may order judgment for delivery of the goods or the value of them, such power being a discretionary one. In my view, the provisions of the Uniform Civil Rules 2020 (“UCR”) do not alter that conclusion.39 65 In an action in detinue, the Court’s power to order the return of particular property is discretionary.40 Considerations against the exercise of the discretion may include that the property is an ordinary article, or it has no special value to the plaintiff, and the justice of the case will be considered in determining whether to make an order for the return of property.41 66 The Court in its equitable jurisdiction may decree specific restitution of personal property instead of damages if an award of damages would be inadequate or unjust.42 Whether property is unique, rare or of sentimental value is a relevant factor, however, a lack of such features does not necessarily preclude an order for specific restitution.43 Where property has peculiar value to the particular business in its circumstances, an order may be made.44 In order to obtain specific restitution, the applicant must have an immediate right to possession of the property.45 An order for specific restitution can be made on a conditional basis, such as providing an allowance for monies owing for work performed on the property.46 Is there a basis for delivery up orders? 67 To address whether there is a basis for making delivery up orders in relation to the distrained assets and/or the PPSA assets, it is necessary to consider what was 36 Re Gillie; Ex parte Cornell (1996) 70 FCR 254 at 257; (1996) 150 ALR 110 at 114-5 (Finn J); McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 at 307 (Young J); Gwinett v Day [2012] SASC 43 at [56] (Stanley J). 37 Re Gillie; Ex parte Cornell (1996) 70 FCR 254 at 257 (Finn J); Gwinett v Day [2012] SASC 43 at [56]- [57] (Stanley J). 38 Gwinett v Day [2012] SASC 43 [58]-[59] (Stanley J). See also Wade v Sawmill Pty Ltd v Colenden Pty Ltd (t/a Pilks Pine) [2007] QCA 455 at [23]-[24] (Keane J). 39 UCR r 142.6 enables the entry of default judgment on non-monetary claims which includes claims seeking orders for delivery up of property; UCR Ch 17, Part 4 enables enforcement of a judgment for delivery up; UCR r 182.1 enables the Court to make any order necessary or desirable to give effect to the terms of a judgment. 40 Gwinett v Day [2012] SASC 43 at [59] (Stanley J). 41 McKeown v Cavalier Yachts Pty Ltd (1988) 13 NSWLR 303 at 307-8 (Young J). 42 Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279 at 284 (Selborne LC); Aristoc Industries Pty Ltd v RA Wenham (Buildings) Pty Ltd [1965] NSWR 581 at 588-9 (Jacobs J). 43 Aristoc Industries Pty Ltd v RA Wenham (Buildings) Pty Ltd [1965] NSWR 581 at 588-9 (Jacobs J); Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 597 (Hope J). 44 Wilson v Northampton and Banbury Junction Railway Co (1874) LR 9 Ch App 279 at 284 (Selborne LC); Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 597-8 (Hope J) 45 Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591. 46 Doulton Potteries Ltd v Bronotte [1971] 1 NSWLR 591 at 597 (Hope J). -- 19 of 35 -- [2024] SASC 33 Stein J 16 pleaded by De Bourbel, of what matters, if any, the respondents were on notice, and what, if any, prejudice may have been suffered by the respondents. Pleading and conduct of trial 68 In the section of the statement of claim revision 2 entitled “Legal basis of claim – causes of action/statutory claims”, De Bourbel states that the claim is brought pursuant to the common law and specified provisions of the PPSA. The claim pleads that on 25 March 2020 Distilleria purportedly distrained over goods; the distraint was unlawful; the unlawful distraint included the plant and equipment; Distilleria did not have an entitlement to De Bourbel’s property seized pursuant to the distraint as the distraint was invalid; on 1 July 2020, Distilleria, via its agent, Mason Gray Strange, gave notice it intended to sell the property seized by the distraint; and on 10 June 2020, the liquidator discovered the proposed auction and commenced the proceedings to prevent the auction proceeding. 69 In the claim, De Bourbel pleads, in the alternative to the plea that De Bourbel owned plant and equipment, that the plant and equipment vested in De Bourbel pursuant to s 267 of the PPSA; the plant and equipment was personal property within the meaning of the PPSA; was subject to a deemed security interest and it vested in De Bourbel. De Bourbel sought a declaration that the plant and equipment was subject to a deemed security interest and was incapable of perfection or, in the alternative, that the security interest vested in De Bourbel immediately prior to liquidation pursuant to s 267 of the PPSA. In paragraph 31.18 of the claim, De Bourbel sought an order that “the respondents deliver up the plant and equipment to the liquidator of the company”. 70 There was no express pleading of detinue and there was no reference to detinue during the trial. However, there was also no express pleading of conversion concerning the distrained assets or the PPSA assets. The only reference to conversion in that context is in paragraph 30H in which De Bourbel pleads that the respondents had been put on notice that dealing with the distrained assets and PPSA assets amounts to conversion. In the case of the distrained assets, the claim was articulated as a claim of wrongful distraint. In the case of the PPSA assets, the claim was expressed by reference to the provisions of the PPSA. Both the originating claim and the amended claims included express prayers for relief seeking orders by way of delivery up for both the distrained assets and the PPSA assets. 71 The conversion plea in the claim expressly relates to the whisky of PBOs. In paragraph 30 of the claim, De Bourbel pleads that despite warnings by the liquidator, Distilleria released some of the PBO’s whisky without the consent of the liquidator, which conduct was conversion. 72 While De Bourbel did not refer at trial to a claim in detinue, counsel for De Bourbel consistently referred to the claim as a claim for wrongful distraint (in respect of the distrained assets) and a claim under the PPSA (for the PPSA assets). The language of conversion was used by the respondents. The -- 20 of 35 -- [2024] SASC 33 Stein J 17 respondents’ counsel consistently characterised and addressed the claim as a claim for conversion. 73 In my reasons I observed the following:47 De Bourbel framed its claims in relation to plant and equipment as claims based on unlawful distraint rather than conversion. De Bourbel did not expressly plead conversion of plant and equipment. Paragraph 30H of the statement of claim, revision 1, pleaded that the respondents had been put on notice that dealing with plant and equipment which Mr Naudi asserted had vested in De Bourbel amounted to conversion but the pleaded relief for damages for conversion related only to MVD and/or Rochfort Distillery PBO barrels. De Bourbel sought a declaration that the plant and equipment was owned by De Bourbel and an order for delivery up of the plant and equipment. In closing submissions, the quantification of damages was described by reference to “damages for unlawful distraint” and “damages for conversion (ADC assets and PBO barrels)”, consistent with plant and equipment being included in the unlawful distraint claim. Further, the closing submissions concerning the quantum of conversion addressed only the ADC assets and the PBO barrels, not plant and equipment. 74 I continued to explain that the respondents addressed the claims in relation to plant and equipment as claims in conversion and I quoted from Turner v Kostoglou48 in which Gray J (with whom Layton and Bleby JJ agreed) stated that characterising a claim as conversion and not as distress or trespass is a distinction without a real difference.49 75 Given the way De Bourbel framed its case, I did not address distrained assets and PPSA assets by reference to the tort of conversion.50 I addressed damages for conversion of PBO barrels and ADC equipment in accordance with the manner in which De Bourbel framed its case and I addressed remedies in relation to unlawful distraint and PPSA assets separately, noting that De Bourbel had sought orders for delivery up of distrained goods and PPSA assets. 76 This is not a case in which there is a clear pleading of a cause of action in conversion and silence in relation to a cause of action in detinue. This is also not a case in which there is no pleaded relief seeking delivery up orders. The case is thus analogous to S P Hywood in that the claim was pleaded by reference to an unlawful distraint and vesting of PPSA assets without directly pleading conversion or detinue in relation to either category of goods and delivery up and damages were both expressly sought. Notice 77 De Bourbel objected to aspects of Mr Ursini’s affidavit and the respondents objected to parts of Mr Naudi’s affidavits. I have determined to receive the 47 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [336]. 48 Turner v Kostoglou [2009] SASC 204 at [16] (Gray J; Layton and Bleby JJ agreeing). 49 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [337]. 50 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [461]. -- 21 of 35 -- [2024] SASC 33 Stein J 18 affidavits for the purposes only of the remedies argument but not as evidence in the trial. 78 In his affidavit, Mr Ursini said he never understood that he or Distilleria were facing a claim in detinue or specific restitution but rather that De Bourbel was bringing a claim in damages and conversion. He stated there was nothing in the pleadings, De Bourbel’s opening or communications between solicitors that alerted him to a claim in detinue or a claim for delivery up on the basis of specific performance. Mr Ursini states that if he had known of that claim, he would have instructed his lawyers to lead evidence, make arguments defending against the remedy and put on evidence that the damages would not be inadequate or unjust and that the distrained whisky was not unique such that a monetary figure could not be assigned to it. 79 An affidavit sworn by a solicitor for De Bourbel included a chronology and attached some correspondence not tendered at trial. I have reviewed the documents referred to in the chronology contained in that affidavit and I have also considered the respondents’ observations in relation to that chronology which addressed the extent to which the respondents submit the chronology can fairly be described as addressing the distraint claim and giving notice of it. 80 I agree that the correspondence does not specifically mention “delivery up” or “request delivery up” or refer to detinue or specific restitution. However, it is abundantly clear that from the earliest correspondence, Mr Naudi asserted De Bourbel was entitled to the distrained assets and the PPSA assets. Further, he considered the return to creditors would be maximised by a sale of all of De Bourbel’s property (including the distrained assets and the PPSA assets); the proceedings were designed to achieve that end (that is, establish De Bourbel’s entitlement to the distrained assets and the PPSA assets and to obtain orders to enable the sale of all assets together) and, if successful, the liquidator would sell the assets in one process to obtain the maximum return for creditors. The respondents maintained the distraint was lawful, that assets did not vest in De Bourbel pursuant to the PPSA and consistently refused to countenance any suggestion the PPSA assets be sold. While the respondents did not oppose the sale of the distrained assets, and indeed at times proposed such a sale, that was on the basis of the sale only of the distrained assets and not the PPSA assets. 81 While some of that correspondence was not tendered at trial, the evidence at trial in itself is sufficient to support De Bourbel’s position that the respondents were put on notice of the matters to which I have referred above. Without referring exhaustively to all references in the correspondence, the following examples are sufficient to illustrate that Mr Naudi put the respondents on notice of his position and intentions. By letter dated 11 September 2020 from Mellor Olsson to Minicozzi Lawyers, De Bourbel opposed the removal of any assets from the premises without its express consent.51 On 11 September 2020, Mr Naudi sent an 51 Exhibit A1 – Applicant’s Tender Book B at 37-38. -- 22 of 35 -- [2024] SASC 33 Stein J 19 email to Mr Galanti and Mr Ursini referring to Distilleria having been put on notice that no barrels were to move and he did not give consent to such movement and he asserted the barrels may have vested in De Bourbel pursuant to the PPSA.52 On 29 September 2020, Mellor Olsson by letter to Minicozzi Lawyers stated, among other things, that the respondents had no authority to deal with assets of De Bourbel including assets subject to the purported distraint.53 On 11 November 2020, Minicozzi Lawyers wrote to Mellor Olsson in relation to the liquidator’s draft Information Memorandum. In the letter, among other things, Minicozzi Lawyers stated that the liquidator was allowed to sell distrained goods, but that was all, and Distilleria did not permit the sale of the PPSA assets.54 On 20 November 2020, Mellor Olsson wrote to Minicozzi Lawyers, among other things, asserting conduct of Mr Ursini was prohibiting the sale of the distrained goods together with assets which the liquidator asserted vested in De Bourbel. The letter stated the only reason all of the assets had not been sold was due to the unlawful distraint and Mr Ursini’s inability to grapple with the application of the PPSA.55 On 8 December 2020, Mr Naudi wrote to the respondents to state his position that Distilleria had wrongfully distrained assets and assets the subject of unperfected security interests vested in De Bourbel pursuant to the PPSA. The letter stated that Mr Naudi always sought to realise the assets of De Bourbel as a whole to maximise potential return to creditors. The letter set out Mr Naudi’s opinion that the pool of assets of De Bourbel comprised assets wrongly distrained, assets financed by or owned by Distilleria and made available to De Bourbel and free assets not specifically identified either as distrained assets or PPSA assets. The letter continued:56 As you are aware, both the originating process and the statement of claim – revision 1, seek relief to allowing me to sell the Assets, in relation to the PPSA Assets, specifically: 1. The originating process seeks a declaration that the Assets are owned by De Bourbel Pty Ltd (in liquidation) with Assets being defined as all those chattels listed in the Distraint Inventory prepared by Mr Eglinton; 2. The statement of claim pleads at paragraph 28 that the PPSA Assets will have vested in the Company pursuant to s 267 of the PPSA in the event that the Registrar of the Personal Property Securities Registry determined that the Registrations were invalid, which has occurred. The letter continues to state: … it is clear from your response that you will not permit the sale of the PPSA Assets, but rather you suggest that I move to realise the distrained assets, together with a few other assets which are immaterial to the landlord moving forward. This has the effect of preventing me from realising all assets of the Company until such a time as the Court decides on these matters at trial and is completely contrary to my position as set out above. 52 Exhibit A1 – Applicant’s Tender Book B at 33. 53 Exhibit A1 – Applicant’s Tender Book B at 44-45. 54 Exhibit A1 – Applicant’s Tender Book B at 61-63. 55 Exhibit A1 – Applicant’s Tender Book B at 94-96. 56 Exhibit A1 – Applicant’s Tender Book B at 99-100. -- 23 of 35 -- [2024] SASC 33 Stein J 20 82 It is clear from the correspondence tendered at trial that the respondents were put on notice by Mr Naudi prior to trial that his view was the distrained assets and PPSA assets were assets of De Bourbel, the distraint was wrongful and Mr Naudi wished to effect a sale of all the assets in one process to maximise returns to creditors. 83 As set out above, the claim expressly incorporated references to orders for delivery up in respect of both the distrained goods and the PPSA assets. While the respondents assert that a reference to delivery up to the liquidator characterised the claim for relief as one under the Corporations Act, there is no reference to the Corporations Act in that paragraph of the prayer for relief in contradistinction to other parts of the pleading in which provisions of the Corporations Act were expressly pleaded. In my view, to limit the prayer for relief in the manner suggested by the respondent would be to impose too strict a reading on the pleading. Further, the respondents were on notice of Mr Naudi’s position and intention in relation to sale in the event De Bourbel succeeded in either or both of its claims in relation to the distrained assets and the PPSA assets. 84 The fact the respondents were on such notice is further supported by exchanges during the trial. Immediately after the applicant’s opening, counsel for the respondents submitted that it was appropriate and only fair for De Bourbel to be limited to its pleaded case. In the course of addressing complaints associated with the pleading of paragraphs 29 and 30 of the claim (which plead conversion of PBO barrels), counsel for the respondent referred to paragraph 31.3 which sought relief by way of declarations and orders for delivery up. Counsel stated the following:57 Might I refer your Honour to several paragraphs within the prayer for relief. The first one in which I'm interested is 31.3. … Your Honour, because it's unclear what that means for each of the three categories, at the moment my client, Mr Ursini, is confronting an order, that is what's being sought from your Honour, in the nature of a declaration, a delivery up order, in respect of, for instance, the plant and equipment but also whisky that at least the process started to distrain. It seems impossible to us that that order could ever be made, that is, for a person who hasn't distrained nonetheless confront an order for delivery up, but we have to, at the moment, in a way we suggest to your Honour is wasteful, prepare to answer that prayer for relief and that's because this pleading is unclear about who it's said converted and what acts they perpetrated, that is, individually, one respondent or the other, or both of them. So that's the dilemma that we suggest is occasioned by the inadequacy of the pleadings. (emphasis added) 85 It is thus clear that the trial commenced on the basis that the respondents were complaining about the pleading, but understood they were confronting an order in the nature of a delivery up in respect of the plant and equipment and whisky. 57 TT61.6-62.17. -- 24 of 35 -- [2024] SASC 33 Stein J 21 86 After further submissions on the topic of the pleading, counsel for De Bourbel clarified that only Distilleria (not Mr Ursini) could be liable for conversion of plant and equipment. In response to a question whether De Bourbel’s counsel had sufficiently clarified the claim for remedies as against both respondents in relation to conversion, counsel for the respondent indicated the clarification was sufficient. The issue of delivery up was not raised again until closing submissions. 87 In De Bourbel’s written closing submissions, it set out the orders it sought, which included declarations and orders for delivery up of distrained goods and the PPSA assets. While De Bourbel’s counsel did not address delivery up in oral closing submissions, De Bourbel did not abandon the claim for such relief. 88 In the respondents’ written closing submissions, the respondents submitted that there is no pleading of a conversion of the De Bourbel plant and equipment and criticised the inadequacy of the pleading of conversion in relation to the PPSA assets. In those submissions, the respondents referred to paragraph 31.18 of the prayer for relief (which seeks an order for delivery up to the liquidator of the company). The respondents’ written closing submissions contended that the conversion claims were common law claims, the only remedy the Court could give at common law is damages, there was no authority at common law, statutorily or otherwise for the relief sought, and the application for delivery up order was meritless. 89 The respondents were thus on clear notice prior to, and during, the trial that the claim in respect of distrained goods and PPSA assets was not framed by De Bourbel specifically as a claim in conversion and that De Bourbel sought delivery up orders in respect of both the distrained goods and the PPSA assets. Prejudice 90 In his affidavit, Mr Ursini states that he has made commercial decisions that are different to those he would likely have made had he been on notice. As an example, Mr Ursini says he might have proposed to De Bourbel that the whisky be sold at auction and the proceeds of sale be sold into court and he could have bid for the whisky which would have fixed the value of the whisky at a time when it was raw spirit. Mr Ursini states he would not have embarked on expensive and time consuming actions in nurturing the liquid and significantly increasing its value, referring to matters such as testing the spirit periodically to monitor the maturing process and moving barrels around the distillery. Mr Ursini states that his new business has made a lot of whisky; he has had to rent space at another bond store to store barrels and has lost the opportunity to store barrels at the premises; and had he been aware of De Bourbel’s claim in detinue and for specific restitution, it is unlikely he would have stored the barrels at cost to face an outcome of handing over the mature barrels. Mr Ursini’s affidavit does not provide any details about such costs or their quantum. 91 I do not accept the respondents’ contentions that they were unaware of the potential for De Bourbel to seek delivery up orders given the pre-trial -- 25 of 35 -- [2024] SASC 33 Stein J 22 correspondence, the prayer for relief, and the submissions to which I have referred. The respondents were on notice that De Bourbel intended to prosecute a claim that the distraint was unlawful, it was entitled to orders for delivery up of distrained goods and that, as an alternative to the primary position that it owned the plant and equipment, the plant and equipment vested in De Bourbel and it was entitled to orders for delivery up. The matters to which the respondents refer as prejudice could not have arisen from being taken by surprise. My view is supported by the respondents’ written submissions and the submissions made during the hearing to which I have referred above. I also note, in relation to Mr Ursini’s deposition to the effect he may have proposed to De Bourbel that the whisky be sold at auction, that the respondents did suggest the sale (only) of the distrained assets. Taking commercial decisions in the knowledge there is a claim for orders for delivery up, factoring in assessment of the likelihood of that relief being pursued or being successful, or endeavouring to limit a party to a claim in conversion, and thus to damages at the date of conversion, amounts to making strategic and commercial decisions factoring in potential risk. I accept De Bourbel’s characterisation of the asserted prejudice as a risk the respondents chose to take knowing De Bourbel sought the return of the goods. These matters do not relevantly constitute unfair prejudice in this case. 92 I also accept De Bourbel’s submissions that matters to which counsel referred during the hearing were inconsistent with Mr Ursini’s evidence at trial. In the trial, Mr Ursini deposed to not wanting to be responsible for owning and operating a distillery. Mr Ursini said he decided in early 2021 to incorporate Cut Hill Wall Pty Ltd, trading as Cut Hill Distillery, for the purposes of operating a distillery on the land because of the lack of any other real option. During cross- examination, Mr Ursini reiterated he had no intention of operating a distillery at his age and with his lack of knowledge of the industry. 93 I accept De Bourbel’s submission that matters referred to by Mr Ursini, such as incurring costs to move barrels and store barrels, would be costs of the distillery enterprise conducted by Cut Hill Wall Pty Ltd from the time of its incorporation, not Distilleria. Accordingly, such costs or expenses were not costs of the respondents and could not relevantly represent prejudice to the respondents. Delivery up 94 In my reasons I found the distraint was unlawful. As set out above, De Bourbel claimed unlawful distraint and remedies of damages and orders for delivery up without expressly basing the remedies upon conversion or detinue. 95 While the claim does not expressly plead a demand and a refusal to comply with the demand, it does plead De Bourbel’s entitlement to the assets and the entitlement to delivery up orders. The respondents’ lack of opposition to Mr Naudi selling the distrained assets maintained the respondents’ entitlement to the distrained assets and did not relevantly amount to acceptance of a requirement to return the goods. While there is no tendered correspondence directly demanding -- 26 of 35 -- [2024] SASC 33 Stein J 23 the delivery up of distrained assets and/or the PPSA assets, it is plain from the totality of the tendered correspondence that Mr Naudi sought that outcome, the respondents did not accept De Bourbel’s entitlement to the distrained assets or the PPSA assets, the respondents maintained their entitlement to the distrained assets and the PPSA assets and the respondents’ opposed the sale of the PPSA assets and thus the sale of the distrained goods and the PPSA assets together. That is sufficient basis to establish that the respondents had no intention of returning the distrained assets and the PPSA assets or relinquishing claims to entitlement. 96 The evidence at trial is sufficient to establish conversion of the distrained assets and the PPSA assets. Seizing assets in the course of the unlawful distraint constituted an intentional act of dealing with the goods in a manner repugnant to the rights of De Bourbel as did the respondents’ assertion to rights or dominion over the PPSA assets, holding them and refusing to accede to the liquidator’s request to sell those assets. 97 Similarly, the evidence at trial is sufficient to establish detinue in relation to the distrained goods and the PPSA assets. De Bourbel had a right to immediate possession of the distrained goods and the PPSA assets. The respondents’ approach to dealing with the distrained assets and the PPSA assets sufficiently evidenced their assertion of their own entitlement, their refusal to return those goods to De Bourbel free of claims and to enable the sale in one lot of the assets. A formal demand would have been an exercise in futility given the respondents’ stated position. 98 Insofar as De Bourbel relied on an order for specific restitution, the evidence at trial establishes De Bourbel has an immediate right to possession of the distrained assets and the PPSA assets. 99 The same considerations are relevant to equitable and discretionary factors to which I now turn. 100 It is unlikely that an argument could successfully have been put at trial that the distrained assets (other than the whisky) and the PPSA assets were unique in their nature. However, the evidence in the trial was sufficient to establish that the whisky is unique. Mr Rochfort gave evidence of the whisky winning awards and Mr Ursini referred to the whisky winning awards after two and a half years of maturation. The Hilco Global valuation refers to the Rochfort whisky spirit in barrels by reference to specific casks with a cask history. For example, the item at section 3 number 1 is described as a Yangarra shiraz cask with a history of 15 individual vintages of Yangarra shiraz; section 3 number 2 refers to a Maxwell port cask second fill with a history of originally being filled by Hardy’s in the 1960s before Maxwell’s acquired and filled with tawny from 1980 until 2016; the item at section 3 number 15 is described as an original English ale barrel dating back 80 years, used for fortified wine for the last 40 years including rare tawny since 1992 and fortified grenache from 2008. Each barrel of Rochfort whisky contains reference to the cask type and its history. Mr Tonkin gave evidence that -- 27 of 35 -- [2024] SASC 33 Stein J 24 his descriptions came from the barrels. The fact that De Bourbel no longer makes Rochfort Distillery whisky could be said to render the remaining whisky unique. 101 Irrespective of that conclusion and while I agree that it cannot be said that the balance of the distrained goods and PPSA assets were unique, it is relevant that Mr Naudi consistently identified an intention to sell the distrained assets and the PPSA assets together to maximise the return to the creditors, making the distrained assets and PPSA assets together of value to De Bourbel in its liquidation. The correspondence, in particular of 8 December 202058 enables the inference the proceedings were commenced to achieve a sale of the assets together. Refusing an order for delivery up against the background history would frustrate that purpose of which the respondents were aware. 102 The respondents’ opposition to delivery orders included a submission that the respondents should be entitled to keep the whisky given De Bourbel’s failure to prove its value. I do not accept that submission. I have concluded there was no relevant prejudice. In any event, to accede to the respondents’ submission would be to enable the respondents to obtain a windfall as a consequence of their own wrongful conduct by allowing the respondents to retain the whisky which they do not own and in circumstances in which, if the auction had not been injuncted, De Bourbel would have been entitled to double damages and solicitor/client costs pursuant to s 37 of the Landlord and Tenant Act 1936. An award of damages would not be adequate or just in the circumstances which I have set out above, in particular the potential for the respondents to retain goods to which they have no entitlement without any recompense to De Bourbel. While I acknowledge that De Bourbel failed to prove the value of the whisky, I do not consider that disentitles De Bourbel to the return of the goods in the particular circumstances of this matter. 103 The PPSA does not contain any express power to order delivery up of goods. I do not consider that prevents an order for delivery up of the PPSA assets for the following reasons. 104 Part 4.2 of the PPSA contains general rules about rights and remedies available to a party to a security agreement for enforcing a security interest in personal property including that the parties can contract out of specified provisions of that chapter of the PPSA. Part 7.4 of the PPSA addresses the relationship between Australian laws, stating that the PPSA is not intended to exclude or limit the operation of any other law if capable of operating concurrently with the Act.59 Chapter 8 of the PPSA, entitled “Miscellaneous”, addresses among other things, the vesting of certain unperfected security interests. There are no specific provisions granting remedies in the event of a vesting of property pursuant to s 267 of the PPSA. Speaking generally, in the light of the way the provisions operate, 58 Exhibit A1 – Applicant’s Tender Book B at 99-100. 59 Personal Property Securities Act 2009 (Cth), s 253. -- 28 of 35 -- [2024] SASC 33 Stein J 25 it could be expected that in the ordinary case the assets vested pursuant to s 267 would be in the possession of the entity in which the assets are vested. 105 There is no suggestion that the PPSA purports to cover the field, especially in circumstances in which the PPSA contemplates concurrency of the PPSA with other laws and does not expressly provide for remedy in the case of property which is vested pursuant to s 267 of the PPSA. I do not accept that De Bourbel is limited to damages in the absence of an express statutory authority in the PPSA providing for delivery up. 106 Given the effect of s 267 is to vest property in a company in liquidation, the clear statutory intention is that the company in liquidation has the ownership and therefore the right to possession of those assets. It would be inconsistent with that statutory intention to limit relief to an award of damages or to conclude that it was necessary to establish the goods were unique or to limit relief to a claim by a liquidator under s 483(1) of the Corporations Act before an order for delivery up could be made of such assets. Mr Naudi’s consistently stated purpose of obtaining access to all of De Bourbel’s assets for one sale justifies an order for delivery up of all of the property to which De Bourbel was entitled, including the PPSA assets. 107 Rule 182.1 enables the Court to make any order necessary or desirable to give effect to the terms of a judgment. In my view, orders for delivery up are necessary and desirable to give effect to the terms of my judgment and it is appropriate to order the delivery up of the distrained goods and the PPSA assets. Set off 108 Section 269 of the PPSA provides, in certain circumstances, for compensation following a vesting of property pursuant to s 267. Respondents’ submissions 109 Distilleria’s primary contention regarding plant and equipment (which does not constitute fixtures) is that the compensation to which s 269 of the PPSA applies includes unpaid lease liabilities owed by De Bourbel to Distilleria. Distilleria submits that the lease payments for plant and equipment were agreed as 10 percent of the lessor’s capital expenditure which was $438,694, and the monthly lease liability for plant and equipment was $3,655.78, being the monthly amount of 10 percent of the plant and equipment capital expenditure of $438,694. Distilleria contends that the damages which Distilleria may recover as compensation under s 269 is the amount determined in accordance with the lease. Distilleria’s position is that it is entitled to a set off of the plant and equipment component of the lease arrangement being $58,492.48 ($3,655.78 multiplied by 16 months of unpaid liability). 110 The respondents contend that the compensation entitlement under s 269 operates as a set off against any liability to De Bourbel in relation to “PPSA vesting or conversion” and is not to be administered in the insolvency administration. -- 29 of 35 -- [2024] SASC 33 Stein J 26 This is said to follow from the language used in the PPSA. The respondents submit that the reference in s 269(1) to the section applying where security interests are vested means “part of a vesting claim” and point to s 269(2) providing for recovery of compensation from the grantor, not from the liquidator or in the insolvency. The respondents contend the means for recovery from the grantor must include a set off under well recognised principles of set off, being either a statutory or an equitable set off. Thus, the respondents contend the Court should order that the unpaid rent of $58,492.48 be set off against the PPSA assets damages award, which they quantify at $23,690, as a consequence of which they say no balance can be awarded to De Bourbel. 111 In the alternative to the claim to entitlement to set off, the respondents seek a stay of execution on any damages awarded to De Bourbel relying on the entitlement to compensation under s 269 of the PPSA and an asserted entitlement to costs. De Bourbel’s submissions 112 De Bourbel’s position is that the respondents’ claim to a right of set off pursuant to s 269 of the PPSA is misconceived. De Bourbel contends that if a PPS lease is extinguished for want of perfection upon the liquidation of the De Bourbel, Distilleria can claim damages by proving as an unsecured creditor in the liquidation. There is no Australian authority on the issue, however De Bourbel submits this analysis is consistent with commentary concerning the Canadian equivalent to s 269 of the PPSA. De Bourbel contends that at its highest, s 269 of the PPSA creates a right for Distilleria to assert a position as an unsecured creditor of De Bourbel in support of a proof of debt pursuant to the usual procedures under the Corporations Act. De Bourbel submits there is no authority that suggests the effect of s 269 of the PPSA is that the Court would step into the shoes of the liquidator and displace the adjudication of a proof of debt and the statutory procedure for review under the Corporations Act. Consideration 113 Section 269 of the PPSA provides as follows: 269 Certain lessors, bailors and consignors entitled to damages Scope (1) This section applies if either of the following security interests is vested in the grantor under section 267 or 267A: (a) … (b) a security interest of a lessor or bailor under a PPS lease (see paragraph 12(3)(c)). Entitlement to damages and compensation (2) The consignor, or lessor or bailor: -- 30 of 35 -- [2024] SASC 33 Stein J 27 (a) is taken to have suffered damage immediately before the time the security interest vests in the grantor under section 267 or 267A (as the case requires); and (b) may recover an amount of compensation from the grantor equal to the greater of the following amounts: (i) the amount determined in accordance with the lease, bailment or consignment; (ii) the sum of the market value of the leased, bailed or consigned property immediately before the time mentioned in paragraph 267(1)(b), and the amount of any other damage or loss resulting from the termination of the lease, bailment or consignment. Note: The lessor, bailor or consignor may be able to prove the amount of compensation in proceedings related to the bankruptcy or winding‑up of the grantor. 114 There are no equivalent provisions in the corresponding legislation in New Zealand, Ontario, or the United States. Counsel could not locate any authorities addressing s 269 of the PPSA. 115 In a text by Lionel Meehan: A Guide to the Personal Property Securities Act 2009 (Cth),60 the author states that if a PPS lease is extinguished on the liquidation of the grantor, the lessor can claim loss as damages by proving in the grantor’s liquidation as an unsecured creditor. 116 Section 269 of the PPSA appears in Chapter 8 of the PPSA which is entitled “Miscellaneous”. Part 8.2 is entitled “Vesting of certain unperfected security interests”. Section 266 is a Guide to the Part and provides that: This Part provides for the vesting of an unperfected security interest in the grantor in certain circumstances. In the event of the bankruptcy of an individual grantor, or the winding up or the entry into administration of a body corporate grantor, a secured party’s unperfected security interest vests in the grantor. However, some security interests are unaffected by this rule. Some secured parties are entitled to damages or compensation in relation to the vesting of unperfected interests under this Part. 117 Section 267 provides for the vesting of unperfected security interests in the grantor upon the grantor’s winding up. Section 267A provides for the vesting in the grantor of a security interest that attaches after winding up. Section 268 concerns security interests to which the vesting rule does not apply. Section 269 provides for the entitlement to damages and compensation in respect of lessors, bailors and consignors. 60 Lionel Meehan, The PPS guide: A guide to the Personal Property Securities Act 2009 (Cth) (Edwin Books, 2011) at 23.007-23.011. -- 31 of 35 -- [2024] SASC 33 Stein J 28 118 I am not persuaded by Distilleria’s submission that the consequence of the language used in s 269 is that the compensation entitlement operates as a set off or that it was intended that the compensation provisions would be addressed outside the insolvency administration. In contradistinction to other sections of the PPSA, s 269 does not use the phrase “set off”.61 The use of the word “grantor” in s 269 is consistent with the language in s 267 of the PPSA which provides for the vesting of the security interest in the grantor immediately before a resolution is passed for its winding up. Section 269 deems the lessor to have suffered damage immediately before the time the security interest vests in the grantor under s 267. There is therefore both a vesting of an interest and a creation of an entitlement to recover compensation immediately before the time the grantor is placed in liquidation. That may explain the absence of reference to the liquidator or the insolvency administration. 119 Set off requires as a prerequisite the existence of mutual claims, which can be set off to produce a net position. Inherent in the respondents’ submissions is an assumption that the grantor in whom the PPSA assets are vested has a claim against the lessor or bailor receiving the entitlement under s 269 to compensation. In this case there is a claim by De Bourbel against Distilleria as the PPSA assets were removed from De Bourbel’s possession prior to the assets vesting pursuant to s 267 of the PPSA. It will not necessarily always be the case that there will be a claim by the grantor against the secured party whose secured interest has vested in the grantor or that the quantum of any such claim will exceed the entitlement to any compensation under s 269. By way of example, if a bailor bailed goods and paid the fees, then assuming all other prerequisites to vesting were met, the bailor would have a claim against the grantor for compensation under s 269 of the PPSA on vesting of the bailed goods in the grantor. However, the grantor would not have a corresponding claim against the bailor which could be the subject of a set off. This supports a conclusion that s 269 does no more than provide for an entitlement to compensation which may be addressed in the ordinary way. Given the grantor is in liquidation, the ordinary way to address the claim for compensation is by a proof of debt in accordance with the provisions of the Corporations Act. 120 My conclusion is consistent with [8.11] of the Explanatory Memorandum which states:62 A secured party whose security interest vests in the grantor would be entitled to compensation which would entitle them to prove in the grantor’s insolvency (clause 269). 121 Section 254(1) of the PPSA provides that the PPSA is not intended to exclude or limit the operation of any law of the Commonwealth, State, Territory or the general law. If the intention underpinning s 269 was that a claim for damages or compensation was to be addressed other than as a claim provable in the winding 61 See for example s 75 which includes a reference to the provision not affecting rights of set off and s 80 which provides that certain rights are subject to the defence of set off. 62 Replacement Explanatory Memorandum, Personal Property Securities Bill 2009 (Cth). -- 32 of 35 -- [2024] SASC 33 Stein J 29 up pursuant to the provisions of the Corporations Act, the PPSA could have expressly provided some other mechanism. 122 I therefore reject the respondents’ submissions that s 269 operates as a set off. The claim for compensation under s 269 of the PPSA is properly to be addressed by Distilleria filing a proof of debt. Declarations De Bourbel’s submissions 123 De Bourbel seeks declarations in the following terms: (a) a declaration that the distraint effected by the first respondent in March 2020 pursuant to section 24 of the Landlord and Tenant Act 1936 (SA) was unlawful; (b) A declaration that the goods unlawfully distrained by the first respondent in March 2020 included the property identified in Annexure A (i.e., the list attached to these submissions), which consists of: (i) the Plant and Equipment (that do not constitute fixtures) that vested in the Applicant pursuant to section 267 of the PPSA; (ii) the PBO Barrels (sans the whisky); and (iii) the chattels identified in the Auction List. (c) a declaration that the property identified in Annexure A is lawfully owned by the Applicant; (d) [order in relation to delivery up] (e) [order in relation to damages] (f) a declaration that the Second Respondent while he was a director of the Applicant and the First Respondent, did the following: (i) issued to the Applicant the First Respondent’s rent invoices and statement of account for rent in February 2020 without the prior knowledge of the Rochforts; (ii) did not discuss the amount of rent claimed by the First Respondent in the rent invoices with the Rochforts; (iii) gave instructions for service of the First Defendant’s rent invoices, the notice of default, and the carrying out of the distraint; (iv) made the decision to carry out the distraint; (v) carried out the distraint as a director of the First Respondent after the Applicant failed to pay the rent amount set out in the First Respondent’s invoices; (vi) concealed the distraint in advance of it occurring; -- 33 of 35 -- [2024] SASC 33 Stein J 30 (vii) engaged with Mr Danny Galanti, the Applicant’s General Manager, in relation to some logistics about the distraint. (footnotes omitted) 124 De Bourbel submits the Court’s wide discretion to make a declaration is not fettered by absolute rules but various factors inform the discretionary exercise of the jurisdiction. De Bourbel relies on the fact that proceedings were brought by the liquidator only after obtaining judicial advice and directions authorising him to bring the proceeding and the relief sought by De Bourbel was directed at holding Mr Ursini, as director, and Distilleria, his related entity, to account. This is so there can be public confidence that the Corporations Act mechanisms operate to ensure errant directors and associated entities are held to account. De Bourbel contends the declarations inform the jurisdiction for compensation and delivery up of the distrained goods as well as aligning the public policy purpose of the liquidator seeking advice and directions and prosecuting the proceeding in discharge of the liquidator’s duties to police the conduct of directors of insolvent companies to which he is appointed. De Bourbel submits the Court has a broad discretion to make the declaratory orders because they have specific utility and advance the public policy sought to be prosecuted by the liquidator. Respondents’ submissions 125 The respondents contend no declarations should be made. The respondents submit the Court will not usually grant a declaration if it would be of no utility to do so and declarations should not be granted on steps in the reasoning process by which the Court reaches its decision on the substantive relief or on obvious issues or merely to give a party the comfort of a declaration. 126 The respondents submit the Court ought not grant the declarations sought about distraint and ownership of goods because what is sought is no more than findings of the Court constituting elements of the claim in conversion, there is no utility in the declarations and there is no separate controversy as to some immediate right, duty or liability to be established by the Court’s determination. 127 Mr Ursini contends there is no utility in, and it is an abuse of process, to seek the declarations against him as the damages claim against Mr Ursini for alleged breaches of fiduciary duties was dismissed. Consequently, there is no remaining legal controversy about rights, liabilities and interests connected to Mr Ursini’s conduct as director. Mr Ursini says it is obvious that it is the liquidator not De Bourbel seeking the declarations against Mr Ursini. Consideration 128 A declaratory judgment pronounces with finality the existence or non- existence of legal rights or obligations concerning parties to the proceedings.63 63 Parramatta City Council v Sandell [1973] 1 NSWLR 151; Cufone v Cruse [2000] SASC 17; Plenty v Attorney-General (SA) [2013] SASC 35. -- 34 of 35 -- [2024] SASC 33 Stein J 31 The Court has a wide power to make declarations.64 There must be a real controversy to be determined and the question raised must be real and not theoretical. The person raising it must have real interest and there must be a proper contradictor with a true interest in opposing the declaration sought.65 129 The declarations sought in paragraph (f) reflect findings I made in addressing De Bourbel’s claim for breaches of director’s duty by Mr Ursini. While I accept that liquidators perform an important public function, I concluded that De Bourbel failed to prove Mr Ursini breached his duties on the case pleaded by De Bourbel.66 The declarations sought by De Bourbel in relation to Mr Ursini do not finally determine controversies about rights or liabilities as between the parties. I therefore decline to make the declarations sought in (f). 130 The declarations sought in relation to the unlawfulness of the distraint and the ownership of property have purpose in declaring with finality the rights of ownership of De Bourbel in relation to the distrained assets and the PPSA assets. However, I cannot grant a declaration in the terms framed in (b) and (c) because, as worded, they do not strictly reflect my reasons. While it makes no practical difference in circumstances in which I have concluded that both distrained goods and PPSA assets are assets of De Bourbel, the declarations must reflect my reasons, including that the PPSA assets vested in De Bourbel immediately prior to the liquidation, two days after the distraint. Orders 131 I will make delivery up orders in relation to the distrained assets and PPSA assets. I will grant declarations in terms consistent with my reasons. 132 The parties are to produce draft minutes of order to give effect to these reasons. 133 I will hear the parties in relation to questions of costs. 64 Supreme Court Act 1935 (SA) s 31; Forster v Jododex Australia Pty Ltd [1972] HCA 61 at [8]-[11]; (1972) 127 CLR 421 at 437-438 (Gibbs J). 65 Ainsworth v Criminal Justice Commission [1992] HCA 10 at [23]-[24]; (1992) 175 CLR 564 at 596 (Mason CJ, Dawon Toohey and Gaudron JJ). 66 De Bourbel Pty Ltd (in liq) v Distilleria Pty Ltd & Anor [2023] SASC 88 at [588]. -- 35 of 35 --