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An interesting case came across by desk last week In the matter of Renovation Boys Pty Ltd (Administrators Appointed) [2014] NSWSC 340.

This case involved a situation where there the Administrators made an application to the Supreme Court for directions concerning who had title to certain items of stock (being customers who had fully paid for items versus the ROT suppliers) and whether a levy could be imposed by the Administrators to pay for the costs associated with sorting, storing and generally making those stock items available for collection by the various owners.

It is important to note that the Administrators were not in funds to deal with the stock. Based upon the evidence submitted it appears that without the imposition of a levy (in this case – 31% of the retail value) to fund the costs of identifying, preserving and making the stock available the stock would otherwise be abandoned and would have become subject to a landlords lien.

The court made a number of determinations including that the title to the fully paid for stock, where it had been allocated to a customer, had passed to the customer in accordance with the Sale of Goods Act 1923 (NSW). The Court also confirmed that the Administrator was able to impose the levy upon all stock held (being both customer owned and PPSR secured) and that if the levy was not paid and stock not collected within 2 weeks, the Administrators would be justified in realising the stock and deducting the levy (and additional realisation costs) from the proceeds.

The Judge did note that whilst it was unfortunate that customers who had fully paid for stock would now have to pay an additional levy, this was probably preferable to the customer losing out entirely.

On balance, I think that the correct commercial balance was struck and that the impost of the levy, whilst not ideal from a consumer perspective, at least gave them the choice of either getting the stock or walking away….

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