The Supreme Court of Victoria on 17 December 2014 delivered judgment in Lewis and Templeton as liquidators of Warehouse Sales Pty Limited (in Liquidation) (“Warehouse Sales”)  VSC 644 which is relevant to businesses which sell goods on retention of title terms.
The court found:
- A transfer of goods by a debtor to a related entity of the debtor was a transfer free of the retention of title security interest of certain suppliers over the goods.
- The supplier’s retention of title security interests over stock has priority over a claim of lay by sale customers of the debtor.
- All other sales by a debtor, even part paid sales, were free of any retention of title security interest of a supplier.
In light of this judgment, trade suppliers may better protect their retention of title rights over stock sold on credit terms by having a provision in their terms of trade prohibiting sales by their customers to related parties.