Australia: Mossgreen given red light by court for charging owners to collect their goods

Administrators' decision to charge owners for return of their items shut down by court in a recent case.

In brief:

In a recent decision, the Federal Court1 has held that the Administrators of well-known auction house Mossgreen Pty Ltd (in administration) (Mossgreen), were not entitled to charge the owners of the goods $353.20 per item to retrieve their unsold item from the auction house.

What you need to know:

  • If you're an insolvency practitioner and have doubts about the correct course of action, seek directions from the Court.
  • Insolvency practitioners need to consider their statutory duties when making decisions and, when acting as an Administrator, consider whether their actions are achieving an outcome for the company and its creditors.

The facts:

  • Mossgreen was a well-known auction house and held a large quantity of goods (not owned by Mossgreen) that were due to be auctioned or waiting to be collected an auction.
  • It has come to light that Mossgreen did not have a competent inventory control system in place. Despite there being 34,000 lots held by Mossgreen, staff were under the impression that there was only between 8,000 and 12,000 lots! This meant that it wasn't clear to the Administrators in many cases which lots belonged to who without further investigation. It was clear, however, that none of the goods belonged to Mossgreen.

The problem facing the Administrators:

Mossgreen had no interest in the goods it held, yet what should they do with the goods?

The options:

The Court set out the options as perceived by the Administrators:

  • Option 1: Giving notice under section 443B of the Corporations Act to the consignors of the goods giving notice that Mossgreen has no interest in the goods and outlining the location of the goods.
    • Under this option, the Administrators were concerned that they would be abandoning the goods to the lessor of the premises in which they were held. Whilst Mossgreen would have been potentially liable for the goods, the administrators would have no personal liability.
  • Option 2: The Administrators could have applied to the Court to be appointed receivers over the goods. The appointment of receivers is a flexible one and the process would have been under the supervision of the Court.
  • Option 3: The Administrators could take charge of the goods with a view to returning them. This is the option they chose despite there being no requirement to deal with the goods for the purpose of administering Mossgreen's property.
  • Option 4: The Administrators could approach the Court for advice as to which option was appropriate in the circumstances.

The Administrators' solution (Option 3):

The Administrators' opted for option 3 as follows:

  • They decided to take a full stocktake of the goods at a cost in excess of $1 million.
  • They sought to recover this cost by charging the owner of each lot $353.20 upon collection of the item.

The Court's decision:

The practicality of the approach taken by the Administrators meant that some people were required to pay more than their goods were worth to retrieve them.

For example, one person had goods worth between $52,180 and $89,170 held by Mossgreen and was being required to pay $104,194 for their goods to be released!

The Court found:

  • By demanding a payment of $353.20 per lot, the Administrators were asserting an equitable lien over the goods. They were not entitled to do so.
  • In dealing with the goods, the Administrators were not attempting to achieve any outcome for the company. It is the Administrators' role to manage Mossgreen's business, property or affairs – it is not their role to ensure the equal treatment of the disposition of the goods in an orderly fashion.
  • A stranger is not entitled to compensation when they carry out work or confer a benefit on another without a request to do so.
  • The Administrators are "entitled to a lien for disposing of goods which ultimately turn out to be unclaimed and they should be entitled to realise those goods and, subject to any claim, apply the proceeds for the purposes of the administration."


Insolvency practitioners are often faced with unique factual situations and difficult scenarios with many competing interests of different stakeholders.

In this case, the Administrators may have believed that their actions sat within the Universal Distributing2 principles. The Court held, however, that this case could be distinguished from those where administrators, properly performing their statutory duties, identify property owned by a third party in the process of ascertaining which goods held by the company belonged to the company. In this case, it was always clear that the property did not belong to Mossgreen and there was no outcome sought for Mossgreen.

This case is a timely reminder that seeking directions from the Court is often a prudent course of action. There is often reluctance from insolvency practitioners to seek directions from the Court. Practitioners are often concerned with the cost of the application or that the Court will see the question as a commercial decision and therefore not assist. As this case demonstrates, having the benefit of a Court order can save a lot of problems and costs in the long run.


1 White, in the matter of Mossgreen Pty Ltd (Administrators Appointed) [2018] FCA 471

2 Re Universal Distributing Co Ltd (In Liq) [1933] HCA 2; (1933) 48 CLR 171

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions