Hamilton v Donovan Oates Hannaford [2007] NSWSC 10

This case involved a priority dispute between a voluntary administrator of the borrower and the lender pursuant to a registered mortgage. The administrator sought a declaration that it had a lien which ranked ahead of the registered mortgage.

The court noted that an administrator undoubtedly had a statutory lien pursuant to s.443F of the Corporations Act. However pursuant to s.443E(1) the priority of the statutory lien was limited to ranking over unsecured creditors and floating charges. Thus the statutory lien did not rank in priority to the registered mortgage. The mere fact that lender also had a fixed & floating charge did not assist the administrator.

The court then held that if an equitable lien existed which secured the same monies as the statutory lien it could not have better priority than the statutory charge. His Honour was concerned he might be wrong on that point and so considered whether there was an equitable lien in any event.

In considering whether there was an equitable lien the court had to consider whether some circumstance made it unconscionable for the lender to claim priority in accordance with the principles discussed by the Court of Appeal in Dean-Willcocks v Nothintoohard Pty Ltd [2006] NSWCA 311.

On the Dean-Willcocks argument the court held:

  1. Nothing the administrator did during its administration conferred an incontrovertible benefit on the lender. Even the insurance taken out was not assigned for the benefit of the lender.
  2. At no time did the lender tacitly cede priority to the administrator. There were some exchanges but they related to a future agreement – nothing regarding the present administration.

Click here to read the full judgment

Scroll to Top