THE COMMISSIONER OF INLAND REVENUE v RICHARD DALE AGNEW AND KEVIN JAMES BEARSLEY & ANOR [1999] NZCA 227 (14 October 1999)

IN THE court of appeal of new zealand

ca50/99

IN THE MATTER OF

BRUMARK INVESTMENTS LIMITED (In receivership)

	between	the commissioner of inland revenue
		Appellant

	AND	richard dale agnew and kevin james bearsley
		First Respondents

	and	official assignee for the estate in bankruptcy of bruce william birtwistle and mark leslie birtwistle
		Second Respondents

Hearing:	1 September 1999
Coram:	Elias CJ Gault J Anderson J
Appearances:	C B Cato and S C Bolland for Appellant R B Stewart for First Respondents
Judgment:	14 October 1999

judgment of THE COURT DELIVERED BY GAULT J

[1] The dispute to be resolved on this appeal is between the Commissioner, a preferential claimant in respect of PAYE and GST and the first respondents as receivers for a secured creditor (Westpac Banking Corporation) under a debenture issued by Brumark Investments Ltd (the Company).The outcome turns on whether the charge secured by the debenture over book debts constituted a fixed or a floating charge. It is to be noted that this long troubling distinction between fixed and floating charges will disappear from our law when the Personal Property Securities Act 1999 comes into force.Until then it must be grappled with.

[2] In the realisation of the assets of the Company the point has been reached where the book debts uncollected at the time the receivers were appointed remain the only assets available for distribution.They are expected to yield net proceeds of $157,000.The commissioner claims $178,875 as a preferential creditor as do employees for unpaid wages of $2,220.There is outstanding under the debenture $292,018.If the charge was a fixed charge the bank has priority and there will be nothing to meet the preferential claims.If it was a floating charge which crystallised only on receivership the bank is postponed in priority behind the preferential claimants.That is the effect of s30 of the Receiverships Act 1993 when read with the Seventh Schedule to the Companies Act 1993, s167 of the Tax Administration Act 1994 and s42(2) of the Goods and Services Tax Act 1985.The second respondents appear to have been served but have taken no part in the proceeding.

[3] The debenture deed is dated 9 August 1995.It likely was drafted with a view to taking advantage of the decision of the English Court of Appeal in Re New Bullas Trading Ltd [1994] 1 BCLC 485.That case will need careful consideration.But first the crucial provisions of the debenture must be set out.The company charged to the bank all its present and future assets and undertakings as a first charge up to $500,000.The material parts of cl 2.1 read as follows:

Nature of charge: The charge created by this Deed operates as follows:

(a) It is a fixed charge as regards all present and future:

...

(xi) accounts and deposits with Westpac where there is some restriction on the right of the Company to withdraw or use the funds in those accounts or deposits;

(xii) all book debts owed to the Company not included in the above which arise in the ordinary course of trading, and the proceeds of those book debts, but not proceeds of those debts which are received before the first to occur of Westpac requiring such proceeds to be paid into an account or deposit of the type mentioned in sub-paragraph (xi), and the charge created by this Deed crystallising or being enforced (Westpac may require proceeds to be paid into such an account at any time);and

(xiii) all other debts owed to the Company including the proceeds of those debts.

(b) Subject to clause 2.3, it is a floating charge as regards all other assets charged.

All sub-paragraphs of paragraph (a) are to be construed independently.None limits the generality of any other.

[4] Clause 2.3 provides for crystallisation of the floating charge.Clause 5.2(b) and (d) also have relevance:

2. Undertakings Relating to Charged Property:The Company promises Westpac as follows, except to the extent that Westpac consents or as expressly permitted in a Bank Document:

...

(b) (Disposal of Assets):It will not in any other way dispose of, create or allow any interest in, or part with possession of, any Charged Property.However, while an asset is subject to the floating charge, the Company may do any of those things with the asset in the ordinary course of the Company's ordinary business, except where a Bank Document provides otherwise.

...

(c) (Book Debts):Without limiting any of the above paragraphs and notwithstanding the proviso to paragraph (b), it will not create or allow to exist a Security Interest over, or dispose of, create or allow any interest in, any book debts owed to the Company.

[5] The object of the drafter is plain enough.It was the intention to create a fixed charge over the company's book debts but, although it could not dispose of the uncollected debts, there was no restriction on the ability of the company to collect them, subject only to the right of the bank to require the proceeds to be paid into an account over which the company's access and use were restricted.That right was not exercised by the bank prior to the charge crystallising.Until the bank chose to intervene the book debts, once collected, would be extinguished, and therefore no longer subject to the fixed charge, but the proceeds then would be assets subject to the floating charge.

[6] Mr Stewart for the receivers, submitted that the distinction between a fixed charge over book debts and a floating charge over their proceeds is new and represents a commercially sensible and workable balance between the interests of the lender who wants the best level of security available, and the needs of the company to trade and to utilise the receipts of its trade in the normal course of business.

[7] On the other hand Mr Cato, for the Commissioner, argued that consistent with long-standing authority the true nature of the arrangement is to be characterised as creating only a floating charge over the book debts.

[8] Fisher J in a careful and closely reasoned judgment delivered on 16 February 1999, took up the challenge presented by irreconcilable decisions and conflicting opinions expressed by distinguished commentators on the issue of the correct characterisation of charges over book debts.He identified the two lines of cases which he called respectively "pro-floating" and "pro-fixed". The first category is typified by Re Brightlife Ltd [1987] Ch 200, Supercool Refrigeration & Air Conditioning v Hoverd Industries Ltd [1994] 3 NZLR 300 and (though the result was that the charge was fixed) Siebe Gorman & Co Ltd v Barclays Bank Ltd [1979] 2 Lloyd's Rep 142. Decisions reflecting the different approach, said to be underpinned by freedom of contract, are Re Atlantic Computer Systems plc (No 1) [1992] Ch 505, Re Atlantic Medical Ltd [1993] BCLC 386, Re CCG International Enterprises Ltd [1993] BCC 580 and Re New Bullas Trading Ltd.The last of these cases sparked livelycommentaries from Professor Roy Goode, Charges Over Book Debts: A Missed Opportunity (1994) 110 LQR 592 and Alan Berg, Charges Over Book Debts: A Reply [1995] JBL 433.There followed a note on Royal Trust Bank v National Westminster Bank plc [1996] BCC 316 by Sarah Worthington, Fixed Charges over Book Debts and Other Receivables (1993) 113 LQR 562.The judgment of Fisher J also attracted the interest (and approval) of New Zealand commentators Associate Professor PG Watts, Fixed Charges Over Book Debts [1999] New Zealand Law Review and Professor DW McLauchlan, Fixed Charges Over Book Debts: New Bullas in New Zealand [1999] 115 LQR 365.

[9] Such amplitude of disparate views, though surely exciting for academics, does little to light the way for busy first instance Judges.Fisher J resolved to return to first principles.Against the accepted background that it is the true nature of the arrangement established in the documents not the labels the parties choose to apply that determines whether a charge is fixed or floating, the Judge considered the meaning of "fixed" and "floating".He said:

The central feature of a floating charge is that pending crystallisation or contrary direction the chargor has a general licence to dispose of the charged property in the ordinary course of its business.Other characteristics, and in particular the ambulatory application of the charge to a class of property the specific membership of which circulates in the ordinary course of business, would seem normal rather than critical.Conversely, the central feature of a fixed charge is that without specific consent the chargor is prohibited from conferring upon others interests which might otherwise take priority over the charge.

By footnote to the final sentence the following citation is given:

... what you do require to make a specific security is that the security whenever it has once come into existence, and been identified or appropriated as a security, shall never thereafter at the will of the mortgagor cease to be a security.If at the will of the mortgagor he can dispose of it and prevent its being any longer a security, although something else may be substituted more or less for it, that is not a `specific security'.Re Yorkshire Woolcombers Assn Ltd, [1903] 2 Ch 284, 294 per Vaughan Williams LJ.

[10] In passing the Judge noted that the argument that fixed charges too can be associated with a power of disposition in the ordinary course of business may have been well founded in history but could no longer be reconciled with "countless twentieth century authorities to the contrary".There then follows a passage critical to the Judge's conclusions:

The essential distinction between floating and fixed, then, is the presence or absence of a power of disposition to others.

A power of disposition to others is not to be confused with a power to consume the charged asset or to convert it into a form which no longer attracts the application of the charge.The latter are not inconsistent with a fixed charge.The common practice of taking a fixed charge over unpaid share capital is an example of a fixed charge over an asset defeasible at the will of the chargor.Another is a lien over sub-freights exercisable only while the sub-freight remains unpaid.The fact that the chargor may control or influence realisation of the asset itself does not remove the point of making the charge a fixed one in the meantime.The point is that until realisation, the chargor will be precluded from conferring interests upon others in priority to the original charge.

[11] After noting that there is no difficulty in principle over the recognition of fixed charges over present and future book debts, Fisher J set out to identify the criteria with a view to determining whether it is possible to have a fixed charge over uncollected book debts but not extending to the proceeds upon collection.He concluded, contrary to the view of Professor Goode (and, it would seem, Millett LJ in the Royal Trust Bank case), that there can be separate security interests in book debts and their proceeds and that there is good commercial sense in a fixed charge restricted to uncollected book debts.He summarised his legal conclusions as follows:

(a) The fixed or floating language used by the parties to describe their charge is not determinative.The question is whether, when the security document is construed as a whole and placed in its proper factual matrix, it so limits the company's power to deal with the charged asset that it satisfies the test for a fixed charge in substance.

(b) The critical difference between fixed and floating charges is that under the former alone the chargor is prohibited from alienating any interest in the charged property to third parties.

(c) The fixed or floating nature of a charge over uncollected book debts is determined independently of the existence and nature of any charge over their proceeds.There is no principle requiring the two to be addressed together.

(d) A charge which would otherwise be fixed is not rendered floating by the presence of a power in the chargor to convert the charged asset into proceeds which will then lie beyond the scope of the fixed charge.Consequently there is nothing incompatible between a fixed charge over book debts and a chargor's right of collection.

(e) A charge over book debts has real commercial value whether or not attaching to the proceeds once collected.The same applies to restrictions upon the alienation of book debts while uncollected.

(f) When construing debentures it will be relevant to note that restrictions on the alienation of unrealised book debts will not normally conflict with the need for a company to have continuing access to its own circulating capital. Consequently fixed charges over book debts, as distinct from their proceeds, will not normally conflict with implied commercial objectives.

[12] Applying these principles to the case before him he said:

On its face cl 2.1 of the present debenture creates a fixed charge over uncollected book debts and a floating one over proceeds.The nature of the charge over proceeds changes, of course, once there is either a bank direction limiting access to the proceeds or crystallisation of the charge.But pending such events the position is as I have indicated

There is no suggestion in the present case that the contractual prohibition against alienation of book debts while uncollected was anything other than genuine.Nor is there any inconsistency between the fixed nature of the charge over the book debts and provisions found elsewhere in the debenture or in the commercial realities to be inferred from the document as a whole.My conclusion is that the charge over book debts was, and always has been, a fixed one.At the time of its creation it was not a floating one for the purposes of s30 of the Receiverships Act.

[13] There are aspects of the Judge's reasoning that need examination in light of the authorities.In particular he has interpreted the cases as indicating that whether a charge over book debts is fixed or floating has usually been thought to turn on "the existence and nature of any charge over their proceeds" or "the control which the chargee would exercise over the proceeds if collected" i.e. after they have ceased to be subject to the charge.A contrary view is that the cases focus on the freedom which the chargor has to deal with the book debts while subject to the charge and in particular freedom to collect the book debts on the chargor's own account.That leads on to the key issue whether collection, and so extinguishment of the security, is to be distinguished from other dealing in the book debts as the Judge thought. Finally, there is the question of the relevance of the conflict of views as to whether book debts and their proceeds represent one security interest or two.

[14] Mr Stewart relied upon the freedom of contract line of cases and in particular Re New Bullas Trading Ltd which he said is indistinguishable from this case.Fisher J expressed some difficulty with the reasoning. Professor Goode said it was wrong.Alan Berg said it is probably correct though the brevity of Nourse LJ's judgment makes a concluded view difficult. Both Goode and Berg share the view that the reasoning in the Atlantic Computer Systems case cannot be supported thereby casting doubt also on the Atlantic Medical case which followed it.

[15] Before dealing with these cases it is desirable to look at the background of decided cases.Mr Stewart acknowledged that until "the law relating to fixed charges over book debts took a new turn" in the New Bullas case, most of the authorities recognised that to leave the debtor company in control of the book debts and at liberty to apply them in the ordinary course of business was fatal to a fixed charge characterisation.That acknowledgement was entirely justified on the decision of the House of Lords in Illingworth v Houldsworth [1904] AC 355.The speeches of Lord Halsbury LC and Lord Macnaghten are to be read with the judgments at first instance (Farwell J) and in the Court of Appeal (Vaughan Williams, Romer and Cozens-Hardy LJJ) and reported sub nom In Re Yorkshire Woolcombers Assn Ltd [1903] 2 Ch 284. At issue was an assignment subject to redemption, by a company of present and future book debts to a trustee for the benefit of guarantors of company indebtedness.Construction of the deed in light of its commercial purpose showed that though there was reference to "specific security" it was the intention of the parties that until the trustees gave notice of the assignment to the debtors the company was to be free to "receive all or any such debts, or to deal with the same or their proceeds" in the ordinary course of its business.Farwell J said:

If the assignment is to be treated as a specific mortgage or charge or disposition, then the company had no business to receive one single book debt after the date of it;but if, on the other hand, although not so called, the company was intended to go on receiving the book debts and to use them for the purpose of carrying on its business, then it contains the true elements of a floating security.It is of the essence of a charge of that kind that it remains dormant until the person in whose favour the charge is created intervenes (288).

...

A charge on all book debts which may now be, or at any time hereafter become charged or assigned, leaving the mortgagor or assignor free to deal with them as he pleases until the mortgagee or assignee intervenes, is not a specific charge, and cannot be.The very essence of a specific charge is that the assignee takes possession, and is the person entitled to receive the book debts at once.So long as he licenses the mortgagor to go on receiving the book debts and carry on the business, it is within the exact definition of a floating security (289).

[16] In the Court of Appeal all three Judges agreed with Farwell J.Vaughan Williams LJ said (294):

I do not think that for a "specific security" you need have a security of a subject-matter which is then in existence.I mean by "then" at the time of the execution of the security;but what you do require to make a specific security is that the security whenever it has once come into existence, and been identified or appropriated as a security, shall never thereafter at the will of the mortgagor cease to be a security.If at the will of the mortgagor he can dispose of it and prevent its being any longer a security, although something else may be substituted more or less for it, that is not a "specific security".

[17] Romer LJ said (295):

I certainly do not intend to attempt to give an exact definition of the term "floating charge", nor am I prepared to say that there will not be a floating charge within the meaning of the Act, which does not contain all the three characteristics that I am about to mention, but I certainly think that if a charge has the three characteristics that I am about to mention it is a floating charge.(1).If it is a charge on a class of assets of a company present and future;(2) if that class is one which, in the ordinary course of the business of the company, would be changing from time to time;and (3) if you find that by the charge it is contemplated that, until some future step is taken by or on behalf of those interested in the charge, the company may carry on its business in the ordinary way as far as concerns the particular class of assets I am dealing with.

In the present case those three characteristics do in my opinion distinguish the charge we have to consider.In the first place, the charge is one upon all the debts of the company present and future, not even limiting them (though I do not think it makes any difference) to the trade debts, present and future. In the second place, it obviously contemplates a class of asset which, in the ordinary course of the life of the company, must continually, and of necessity, change;and, thirdly, in the present case, if I look at the deed which created the charge here, to my mind it is clearly contemplated that until some step is taken by or on behalf of those who are to have the benefit of the charge, the company would be able to receive the debts due to the company in its ordinary course of business, and to deal with them for the ordinary purposes of the business.

[18] In the House of Lords, in the two speeches delivered, the judgments below were fully approved.Lord Halsbury said (358):

...it seems to me that the whole purport of this instrument is to enable the company to carry on its business in the ordinary way, to receive the book debts that were due to them, to incur new debts, and to carry on their business exactly as if this deed had not been executed at all.That is what we mean by a floating security.

[19] In none of the judgments is there reference to the distinction drawn by Fisher J between the company's freedom to receive the debts thereby extinguishing the charge on the one hand and to dispose of the debts to third parties on the other.

[20] The principle affirmed by the House of Lords (though not without its critics) continued to be applied as appears from cases such as Siebe Gorman, Re BrightLife Ltd, Supercool and the decision of the Supreme Court of Ireland in Re Keenan Bros [1986] BCLC 242.In each case the outcome depended upon the freedom of the chargor to deal with the book debts in the normal course of business.In Siebe Gorman Slade J construed the debenture as sufficiently restrictive of dealing with the book debts to justify characterising the charge as fixed.That has attracted criticism (Berg contends it is unsound, Tompkins J in Supercool declined to follow), but his statement of the principle (159) followed the House of Lords.Similarly in Re Kennan Bros, the Court held that the restrictions on the company's ability to deal with the book debts or proceeds were such as to create a specific charge.While the company was to collect the book debts the proceeds were to be paid into designated bank accounts, withdrawals from which could be made only with the consent of the chargee.

[21] It must be accepted then, as it was by Fisher J, that at least in England (and Ireland) contentions that a licence to dispose of book debts in the ordinary course of business need not be incompatible with a fixed charge have long been excluded.

[22] It is that background the legislature would have had in contemplation when using the term "floating charge" in the Companies Acts provisions (e.g. s101 Companies Act 1955) the predecessors of s30 of the Securities Act.

[23] The increasing frequency with which these issues have been brought to the courts reflects repeated attempts by lenders by careful drafting to secure the greater security of a fixed charge while allowing the company to carry on its business using the proceeds of its book debts.That such objective would seem impossible after the House of Lords decision in Illingworth v Houldsworth has not deterred the drafters.

[24] In the New Bullas Trading Ltd case the debenture charged the book debts and other debts due to the company both present and future as a fixed charge.The clause on which it was said the outcome of the case mainly depended (with numbers added by Nourse LJ to aid construction) reads:

During the continuance of this security the Company shall: -

(A)[(i)] pay into a current account or a separate designated account (as 3i may require) of the Company with the Bank all moneys which it may receive in respect of the book debts and other debts hereby charged and (subject to any rights of the Bank in respect thereof) pay or otherwise deal with such moneys standing in such account in accordance with any directions from time to time given in writing by 3i;[ii] prior to any demand being made under condition 8 hereof or to the provisions of condition 9 hereof becoming operative in the absence of any directions from 3i any moneys received by the Company and paid into such account in respect of the book debts and other debts hereby charged shall upon such payment in stand released from the fixed charge on such debts hereinbefore by this Debenture created and shall stand subject to the floating charge hereinbefore by this Debenture created over the other property and assets of the Company;[iii] any such release shall in no respects derogate from the subsistence and continuance of the said fixed charge on all other book and other debts of the Company for the time being outstanding.

This would have been the reason for the comment earlier in his judgment (487):

In each of the previous authorities the draftsman treated book debts indivisibly, the question being to which form of charge they had, as such, been subjected.Here, for the first time in a reported case, the draftsman has deliberately and conscientiously set out to subject them to a fixed charge while they are uncollected and a floating charge on realisation.The essential question, as it has emerged in this court, is whether the law allows them to be treated in that fashion.

[25] Disregarding the deliberateness and conscientiousness of the drafter, we have difficulty in seeing any real novelty.In Re BrightLife Ltd and in the Supercool case the effect seems to have been precisely the same.In the former the debenture purported to create a specific charge over all present and future book debts and a floating charge over all other property assets and rights.Hoffman J held that because the company was free to collect the book debts in the ordinary course of business (with the result that the security would be extinguished and the proceeds would become "other assets" so as to be subject to the separately created floating charge), the charge over the book debts could only be a floating charge.The position in the Supercool case was the same.

[26] The essential reasoning in the New Bullas decision is found in the passage dealing with argument based on Re Yorkshire Woolcombers Assn Ltd. Nourse LJ said (492):

The short answer to these submissions is that here the asset does not cease to be subject to the fixed charge at the will of the company.It ceases to be such because both parties, not the company alone, have determined that if the proceeds of a book debt are paid into the specified account at a time when no directions have been given it shall thereupon be released.The matter is governed by a clear agreement of the parties.Unless there is some authority or principle of law which prevented them from agreeing what they have agreed, their agreement must prevail.

[27] If there is to be drawn a distinction between those cases in which the parties expressly agree that after collection and deposit the charge over the book debt is released and those where the charge ceases to apply because the security is extinguished by collection on account of the chargor, then the case presently before us is to be distinguished from the New Bullas Trading case.Nowhere in the debenture with which we are concerned is there express agreement that the fixed charge is released once the company has collected a debt.

[28] As Fisher J pointed out, agreement at the time the charge is created that the chargor may unilaterally secure release of the charge by collecting the debts on its own account is no answer to the previous authorities.If a charge over uncollected book debts is a specific or fixed charge despite agreement in the charge document that the chargor is free to extinguish or release the security by collection of the book debts, all of the prior cases including Illingworth v Houldsworth would seem to have been wrongly decided.We do not read the judgment in the New Bullas case as deliberately changing the law to that extent.Rather it reflects a perception that the particular facts of that case distinguished it from the general line of cases.We are unable to accept that they did so.

[29] We consider that the general principle remains that if the true nature of the arrangement is that the chargor is free to deal with the charged books debts the charge cannot be a fixed charge.That does not involve (as Fisher J suggests) characterising the charge over the book debts by reference to what may be done with the proceeds.It involves determining whether or not the charged book debts are under the control of the chargee.We do not accept that there is any distinction between dealing in the uncollected debts by disposal to third parties and dealing by collection.We find no basis for such a distinction in the authorities or in logic.

[30] Fisher J supported his distinction by reference to the recognition of fixed charges over uncalled capital, defeasible at the will of the chargor.It is common enough to take a fixed charge over unpaid capital but it is usual also to restrict the company in what it may do in relation to unpaid capital. The debenture in the present case, which creates a fixed charge on unpaid capital, expressly provides (cl 5.2(j)) that the company "will not call up, or receive in advance of calls, any unpaid capital and it will apply unpaid capital, when paid, only towards payment of the secured money".

[31] The Judge also referred to liens over sub-freights seemingly with reference to Re Welsh Irish Ferries Ltd [1986] Ch 471.But there is nothing in that case suggesting that the owner's lien constituted a fixed charge.That case did, as Fisher J said, distinguish between the uncollected debts which were the subject of the charge and their proceeds which were not, but that is unremarkable if the charge was a floating charge.Upon collection, the proceeds of a book debt are not within the security of a floating charge over book debts.The proceeds are available to the chargor and may be offered as separate security.The important difference in the case of a fixed charge is that proceeds, even if theoretically capable of being a separate security interest, are not (on the authorities) accessible to the chargor.Accordingly we cannot see how the debate on whether book debts and their proceeds constitute separate security interests offers any new aid in determining whether a particular charge is fixed or floating.

[32] In Re Atlantic Computer Systems plc the Court of Appeal held that charges over the income stream from sub-leases of computer equipment were fixed charges.The Court said (534):

We have in mind that in practice sums payable by the end-users under these subleases were paid to the company and utilised by it in the ordinary course of business.In so far as this is relevant, it may well be that this was what the parties intended should happen.The company was to be at liberty to receive and use the instalments until AIB chose to intervene.We are unpersuaded that this results in these charges, on existing and defined property,becoming floating charges.A mortgage of land does not become a floating charge by reason of the mortgagor being permitted to remain in possession and enjoy the fruits of the property charged for the time being.This is so even if the land is leasehold and the term is very short, and as such the asset charged is of a wasting character.So here:the mere fact that for the time being the company could continue to receive and use the instalments does not suffice to negative the fixed character of the charge.

This is difficult to reconcile with Illingworth v Houldsworth cited on the preceding page of the judgment.The Court's reasoning has been criticised on other grounds arising from the emphasis on "existing and defined property" but for present purposes, we simply record that we consider the passage set out inconsistent with the established authorities.

[33] Accordingly, attractive though it is, the reasoning of Fisher J cannot be upheld once it is accepted (as it was by the Judge) that it is too late to contend that it is not a badge of a floating charge and inconsistent with a fixed charge that the chargor is free to deal with the charged book debts in the ordinary course of business.That is how the term "floating charge" was understood when the relevant legislation was passed.

[34] In the present case, by excluding from the purported fixed charge created by the debenture (until intervention by the bank) proceeds of book debts, the bank and the company were merely emphasising the freedom of the company to collect the book debts on its own account.That is the usual manner of dealing with book debts.That the company was contractually bound not to dispose of, create or allow any interest in the uncollected debts does not detract from that.As created this was a floating charge over book debts.

[35] For the reasons given we allow the appeal and substitute for the declaration made by the Judge a declaration that the debenture in favour of Westpac Banking Corporation created a floating charge over book debts and that s30 of the Receiverships Act applies accordingly.

[36] We award costs of $5,000 against the receivers in favour of the Commissioner together with disbursements including the travel and accommodation expenses of counsel approved, if necessary, by the Registrar.

Solicitors

Crown Solicitor, Auckland, for Appellant

Simpson Grierson, Auckland, for First Respondents