FRANCIS v GROSS [2023] NZHC 1107

FRANCIS v GROSS [2023] NZHC 1107 [10 May 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-2292[2023] NZHC 1107IN THE MATTER OF Podular Housing Systems Limited (inliquidation)BETWEEN BENJAMIN BRIAN FRANCIS andSIMON DALTON as liquidators ofPodular Housing Systems Limited (inliquidation)ApplicantsAND ILAN GROSSFirst respondentLUMEN BUSINESS SOLUTIONSLIMITEDSecond respondentContinued overleafHearing: 4 May 2023Appearances: B D Gustafson and K K Kommu for applicantsR J Latton for sixth, twelfth, thirteenth, nineteenth and twenty-first respondentsL H Mau and R G Judd for eighth respondentFourteenth respondent abiding, granted leave not to attendH K Mackenzie for twenty-third respondentDate of judgment: 10 May 2023JUDGMENT OF JAGOSE JThis judgment was delivered by me on 10 May 2023 at 3.00pm.Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarAND COMMISSIONER OF INLANDREVENUEThird respondentAND MATTHEW PASLEY and JULIE PASLEYFourth respondentsAND LYNLEY ANNE OLSENFifth respondentAND ANDREW DOUGLAS BLOODSixth respondentAND ADAM CHARLES CUNNINGHAM andKEVIN GRAEME HALESSeventh respondentsAND DAVID PIROTTA and KATY PERCIVALEighth respondentsAND ASHLEY JAMES RONALD HARTNinth respondentAND JULIA MARY MCAULEYTenth respondentAND JEANNIE FRIEDRICH and FELIXSCHOLZ as TRUSTEES OF THESTOKEVENTURES FAMILY TRUSTEleventh respondentsAND LOUISE JAEGARTwelfth respondentAND ANDREW VAN STADENThirteenth respondentAND JESU BOANIFACEFourteenth respondentAND LEIGH HUCKERFifteenth respondentAND LOUISE KELVIN and HELEN O'HARASixteenth respondentsAND ALEX WILLIAMSSeventeenth respondentContinued overleafAND GERAINT EDWARDS and KRISTINAMCCALMANEighteenth respondentsAND CONVIVIUM LIMITEDNineteenth respondentAND ELI THOMASTwentieth respondentAND BRETT WATERSON, MARIEWATERSON and LEGAL BEAGLETRUSTEES LIMITEDTwenty-first respondentsAND LEANE WATKINSTwenty-second respondentAND KAY DRADERTwenty-third respondentAND MASTERTON DISTRICT COUNCILTwenty-fourth respondentAND EMPLOYEES OF PODULARHOUSING LIMITEDTwenty-fifth respondent[1] The liquidators of Podular Housing Systems Limited (the company) seekdirections under s 284 of the Companies Act 1993 to inform their dealings with thecompany's former customers as creditors, and to obtain the liquidators' reimbursementand remuneration from the company's assets.Background[2] The company contracted with customers to construct and install bespokearchitecturally-designed modular buildings, styled 'pods', for residential occupation.The company's activities were intended to be conducted first at its leased facilities inHamilton and Christchurch and then at each customer's identified property.[3] The liquidators, appointed as such by this Court on 12 December 2022,1contend the company was "clearly insolvent", with an estimated deficit by thenapproaching $5.3 million. They allege in excess of $2.0 million taken as deposits fromthe company's customers "do not appear to have been spent for the purposes for whichthey were paid".[4] I apprehend I am being asked only partially to determine the liquidators'application, which extends to issues relating to classification of the pods as 'inventory'or 'work in progress', and the scope of each a general security granted by the companyin respect of some $1.42 million advanced by the first and second respondents andstatutory preferential claims by the Commissioner of Inland Revenue and thecompany's employees. Those parties did not participate in the hearing before me andI do not decide any priority of their claims. The liquidators intend also to examine acompany director, whose prospective evidence thus also is not before me.[5] At issue now is if the company owns 13 pods under construction at its Hamiltonfacility (and three pods at its Christchurch facility) for which customers have madestaged part-payments of their purchase prices and, if so, if those customers nonethelesshave an equitable lien over 'their' pod.2 The customers otherwise (and principally)contend title transferred to them to the extent their payments equal or exceed the valueof the goods and materials comprised by the particular incomplete pod, and claimpurchase money security interests (PMSI) accordingly under the Personal PropertySecurities Act 1999 (the PPSA). If so, again, the liquidators assert the priority of theirremuneration and expenses as an equitable lien over the pods on salvage principles.3[6] My decision urgently is sought because the company's lease on its Hamiltonfacility expires on 31 May 2023, and at least those pods' disposition in the interest ofeither the liquidator or customer before then is said desirable to maintain their value.1 Francis v Gross [2022] NZHC 3354.2 Another 20 customers have paid deposits in relation to which no pods have begun construction.3 In reliance on Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15, (2014) 252 CLR 307 andRe Arcabi Pty Ltd (in liq) [2014] WASC 310, (2014) 288 FLR 236 and argued consistently withFinnigan v Yuan Fu Capital Markets Ltd (in liq) [2013] NZHC 2899.Relevant contract provisions[7] Standard form contracts (styled 'building agreements') between the company(defined as "the Builder") and each customer (defined as "Owner") specified for anindividualised dwelling to be erected on the particular customer's property, from abase of one of the company's standard module designs.[8] The price of that base unit, and the attributed cost of specified variations fromor additions to its design, were disclosed for the purposes of establishing the contractprice. The contracts then established milestones for the price's part-payments byreference to an initial deposit, subsequent inspections and local authority approvals,practical completion and finally on issue of the local authority's (as building consentauthority) code compliance certificate under s 95 of the Building Act 2004.[9] Two standard form contracts were in use.4 Given the liquidation, I am given noevidence for their distinctions and unable therefore to construe them in any differentialcontext.5 The earlier specified at its cl 7.2:The legal, equitable and beneficial ownership and title to any goods ormaterials brought onto the property by the Builder shall remain vested inthe Builder until such time as the Owner has paid the Builder all monies dueand payable to the Builder pursuant to this Agreement.and the later specified at its cl 7.2:The legal, equitable and beneficial ownership and title to any goods ormaterials used for the Works by the Builder shall remain vested in the Builderuntil such time as the Owner has paid the Builder all monies due and payableto the Builder pursuant to this Agreement in relation to each respective goodand/or material.(Emphases added to identify distinctions between the two cls 7.2.)[10] The contracts' cls 7 were titled "Materials on Site". Both cls 7.1 read:If any materials specified are not reasonably procurable, the Builder maysubstitute other materials of similar quality and nature as are reasonablypracticable. the Builder will consult the Owner before making a substitution.4 The contracts exhibited by the liquidators were incomplete. The eighth and fourteenth respondentsexhibited respectively their particular earlier and later full versions.5 Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [19].Any difference in the cost of such substituted materials shall be treated as anextra or a deduction and constitute a variation to the Contract Price.including the lower case 't' commencing the second sentence.[11] Both contracts defined 'Works' as "Construction of a residential dwelling onthe Site in accordance with the Plans and Specifications".6 The earlier contract defined'Site' as "The property on the Land"; the later contract as "The Land". Both contractsdefined 'Land' by the customer's chosen street address.[12] Also, the earlier contract provided:6. Possession and Risk6.1 The Owner may take possession of the new dwelling on or after PracticalCompletion of the Work if the Owner has paid all the Progress Paymentsand all other amounts then due to the Builder.76.2 The Works will be at the risk of the Builder until the date the Owner entersinto possession subject to the other provisions in this Agreement under abuilder's risk insurance policy.6.3 The Works will be at the risk of the Owner once Owner takes possessionpursuant to clause 6.16.4 The Builder will keep and maintain Public Liability insurance in respectof the Works.and the later contract provided:6. Possession and Risk6.1 The Owner may take possession of the new dwelling when the final CodeCompliance Certificate has been issued for the Works and the Ownerhas paid all the Progress Payments and all other amounts then due to theBuilder.6.2 The Works will be at the risk of the Builder until the date the Owner entersinto possession subject to the other provisions in this Agreement under abuilder's risk insurance policy.6.3 The Works will be at the risk of the Owner once Owner takes possessionpursuant to clause 6.1.6.4 The Builder will keep and maintain Public Liability insurance in respectof the Works. 86 Both contracts defined 'Plans and Specifications' as "The plans and specifications supplied by theArchitect". Neither contract defined 'Architect'.7 Both contracts defined 'Practical Completion' as "The Works have been completed except forminor defects and minor omissions (which do not prevent the Works being used for the intendedpurpose)".8 The contracts do not define 'Code Compliance Certificate' or 'Progress Payments' or 'PublicLiability', which may be thought self-explanatory despite appearance as contractually-defined(Emphases added to identify distinctions between the two cls 6.1.)[13] Both contracts stipulated at cls 18.1:If the Owner fails to pay the Builder by the Due Date,9 the Builder shall beentitled to retake possession of the goods and materials that the Builder hasbrought onto the Site until payment is made by the Owner. the Builder shallbe entitled to retake possession of goods and materials whether or not thosegoods and materials have been fixed to or incorporated into any building onthe Site.[14] The contracts appear drafted as standard contracts for the construction of aresidential dwelling at the customer's property, without reference to the pod'sconstruction at the company's facility. Notably, the contracts' cls 2.1 define thecompany's warranties, and cls 3 and 4 the company's commencement and completion,with reference to "the Works"; and cls 5.2's conferral of customers' inspection rightsis confined to "the Site". The only possible contractual acknowledgment of the pods'construction off-site is cls 2.1 c.'s warranty by the company "[a]ll materials suppliedfor use in the Work [sic] will be new".Discussion—do the customers have title in their respective incomplete pod?[15] An initial issue is if any property in the incomplete pods has passed to thecustomers. Despite agreement between the liquidators and the relevant customers asto the later cl 7.2's effectiveness in transferring "ownership in the material attached tothose pods when the [customer] paid for the installation of those materials onto thepartially completed [p]ods",10 the later cl 7.2 does not provide a basis for such acontention.[16] That subclause plainly is intended to assert the company's reservation of titlenotwithstanding bringing goods and materials onto the customer's property. That isterms. A "code compliance certificate" is a defined term in the Building Act 2004; "progresspayment" is a defined term in the Construction Contracts Act 2002.9 The earlier contract defined 'Due Date' as "The date set out for payment of Progress" [sic]; thelater contract as "7 days from receipt of progress payment invoice".10 The eighth respondent argues its earlier contract is not materially distinguishable by the differencein wording.evident from the clause's title, "Materials on Site", and the contract's definition of'Works' "on the Site". But for an expansive reading of "goods and materials used forthe Works" to incorporate the company's construction of the pods at its facilities, thelater cl 7.2 has no present application because the customers' claims relate toincomplete pods remaining in the company's facilities, prior to any intendedtransportation to the customers' properties.[17] Even on that expansive reading, although each contract price was establishedby reference to specified variations from the modular base unit's design, neitherpart-payments nor those components were specified in sufficient granularity so as topermit allocation of aspects of the price partially paid to any particular good ormaterial. Instead, construction milestones determined partial payments of the contractprice, as part-payments of the whole price rather than enabling any such allocation.Clauses 7.2's references to "all monies due and payable" thus cannot be understood asreference only to part-payments as may have fallen due, but rather to full payment.[18] In the result, under either formulation of cl 7.2, title remains with the companyeven after transportation to the customer's site until the customer's full payment. Thatis consistent with cls 2.1 c's warranty to supply new material for use "in the Work"[sic];11 cls 6's provision for the customer's possession also only on such payment,respectively after either practical completion or code completion certificate; and cls18.1's provision "to retake possession of goods and materials brought onto the site"on any failure to pay, irrespective of their incorporation into "any building on the Site".Clauses 6 and 18.1's respective references to "possession" reinforce no title is intendedto be transferred until full payment, even although under the earlier cl 6 the customermay take possession after part-payment on practical completion.[19] As neither any of the subject pods were transported to the customers' sites norpaid for in full, title in the pods has not transferred to the relevant customer. Noquestion of any perfected PMSI arises. The liquidators' claim for an equitable lientherefore falls away, as "fees and expenses properly incurred by the liquidator and11 The singular but capitalised 'Work" presumably is intended to mean the defined "Works".the remuneration of the liquidator" may be paid out of "the assets of the company",12and the liquidator has no need to assert any lien against the customers.—do the customers have an interest in their respective incomplete pod?[20] Turning to the PPSA, the Act in part enables determination of priority betweeninterests "in personal property created or provided for by a transaction that insubstance secures payment or performance of an obligation" (security interest).13Competing interests may be assessed by consideration:14(a) if the PPSA provides a rule to resolve the competition; or(b) if not, if another rule affords priority; and(c) if not, the order of attachment of the competing interests.Here, the issue is what interests there may be in the pods. Predominantly, that is theinterests of secured and preferential creditors to the company's assets.[21] The liquidators and the later contract customers agree those contracts are forthe sale of goods, "a contract by which the seller transfers or agrees to transfer theproperty in goods to the buyer for a money consideration".15 Although property hasnot transferred, both standard form contracts agree to transfer property in the pods tothe customers for money.[22] Section 53's grant of immunity to "[a] buyer of goods sold in the ordinarycourse of business of the seller" from "a security interest that is given by the seller"requires goods be 'sold'; that is, 'transferred', not merely agreed to be transferred: "theplain meaning of 'sold' and the tense used in s 53 requires completion or perfection ofthe sale for the section to apply".16 Here, 'sales' of the pods remained incomplete and12 Companies Act 1993, s 312(1) and sch 7, cl 1(1)(a).13 Personal Property Securities Act 1999, ss 4 and 17.14 Fisk v Attorney-General [2016] NZHC 479, [2016] NZAR 551 at [21], referring to Roderick JWood and Michael I Wylie "Non-Consensual Security Interests in Personal Property" (1992) 30Alta L Rev 1055 at 1072–1073.15 Contract and Commercial Law Act 2017, s 120.16 Maginness v Tiny Town Projects Ltd (in liq) [2023] NZHC 494 at [77]–[78], relying on Orix NewZealand v Milne [2007] 3 NZLR 637 at [49].unperfected. Section 53 does not enable the customers to take the incomplete pods freeof any security interest.[23] The reference to 'transaction' in the PPSA's definition of 'security interest'indicates the subject security interests are founded on agreements to secure "paymentor performance of an obligation"; they are 'consensual'. Recognising the potentialmultiplicity of parties to such agreements, the PPSA establishes rules for determiningtheir respective priorities. But the Act does not apply to "a lien (except as provided inPart 8), charge, or other interest in personal property created by operation of anyrule of law",17 which is non-consensual. Part 8 includes s 93, which gives priority to"[a] lien arising out of materials or services provided in respect of goods that aresubject to a security interest" over that security interest ( if "the materials or servicesrelating to the lien were provided in the ordinary course of business" and otherqualifications).[24] In Maginness v Tiny Town Projects Ltd (in liq) — concerning ownership ofbespoke transportable residential dwellings (tiny homes), only partly-constructed ontheir manufacturer's liquidation, intended for delivery to a customer's site on fullpayment — Venning J explained:18An equitable lien is an equitable right conferred by law upon the plaintiff tohave resort to a specific asset to secure the discharge of a liability owed by theowner of the asset to the plaintiff. An equitable lien arises as a matter of lawin respect of claims "which equity considers the other party is in consciencebound to perform in order to do justice between the parties". It survives theintervening insolvency of the owner of the property. The equitable lien holderis deemed to have acquired property rights in the assets subject to theobligation to transfer the property. In the case of a purchaser's lien, once thepurchaser has paid the purchase price the defendant's obligation to transferbecomes unconditional and equity will regard the transfer as having takenplace at the moment of payment. A person entitled to an equitable lien isregarded by equity as a secured creditor.[25] After hearing comprehensive argument — while acknowledging the issue wasdifficult, and there was force in dissenting views articulated in the principal authority17 Personal Property Securities Act, s 23(b).18 Maginness v Tiny Town Projects Ltd (in liq), above n 16, at [107] (footnotes omitted).relied on for imposition of an equitable lien in such circumstances19 — his Honourconcluded:20In the present case, an important feature is that the partly constructed tinyhomes are readily identifiable as having been applied to the separate contractswith the individual purchasers they relate to. While they remain the propertyof the company, in the normal course of its business and absent default by thepurchasers, the company could not, in any sensible commercial sense, havesold the tiny homes to anyone other than the identified purchasers. Theindividual purchasers, both fully paid and partly paid, have paid moneystowards the purchase of those specific and identifiable (but not yet completed)tiny homes. There exists readily identifiable subject matter to which the lienscan attach. In those circumstances I consider equity's response should be tosupport an equitable lien over the partly completed homes in favour of thepurchasers to the extent of the value of the purchase moneys paid by theindividual purchasers.The important features of the present case are the ability to precisely identifythe tiny homes and that they have been appropriated to the contract. and held:21[T]he individual purchasers are entitled to equitable liens for the extent of thevalue of the purchase moneys paid by them and that their equitable liens sitoutside and are not affected by the provisions of the PPSA.[26] The customers here, being without possession,22 claim accordingly. Theliquidators resist, on grounds the Judge erred in not having regard for (or not hadbrought to his Honour's attention) policy arguments against conferral of an equitablelien in such circumstances, fundamentally as indeterminately elevating unsecuredcreditors' interests above the security interests protected by PPSA priorities andaccordingly rendering those security interests less certain (and therefore of less utilityin obtaining and maintaining security over a borrower's assets).[27] But that is the objection to any non-consensual lien.23 Equitable liens, "betteranalysed as a form of equitable charge":2419 At [108], referring to Hewett v Court (1983) 149 CLR 639 (HCA).20 At [110]–[111], citing Palette Shoes Pty Ltd v Krohn (1937) 58 CLR 1 (HCA) at 27.21 At [119].22 Trustee of the property of F Lord (a bankrupt) v Great Eastern Railway Co [1908] 2 KB 54 (CA)at 60, citing Morris v Delobbel-Flipo [1892] 2 Ch 352, and 74.23 Re Spotten & Co, ex parte Provincial Bank [1877] 11 Ir Eq 412 (Ch).24 Gavin Edmondson Solicitors Ltd v Haven Insurance Co Ltd [2018] UKSC 21, [2018] 1 WLR 2052at [3] and [4]; similarly, In re Peak Hotels and Resorts Ltd (in liq); Candey Ltd v Crumpler [2022]UKSC 35, [2023] 1 WLR 342 at [2]. See also Lord Napier and Ettrick v Hunter [1993] AC 713(HL) at 723–724 and Equity Trust (Jersey) Ltd v Halabi (Investec Trust (Guernsey) Ltd v Fort [arise] naturally from the application of equitable principles, in whichequitable interests may be enforced in personam against anyone whoseconscience is affected by having notice of them, either to prevent him dealinginconsistently with them, or by holding him to account if he does.And, if "something of a themeless rag-bag",25 equitable liens nonetheless are "adynamic legal concept, not one which is hard-edged, circumscribed by immutablerules and incapable of further development",26 but "only if there is a coherent principlewhich justifies that development".27 Thus focus must be on the particularcircumstances in which they may arise.[28] I am directed to take a "cautious approach" in recognising any lien arising:28[A]n expansive approach to the recognition of liens would be inconsistent withthe intentions of Parliament in enacting the PPSA. The Select Committeereported that the Bill was needed because the existing law relating to personalproperty securities was "overly complex, inconsistent and inaccessible". Thelaw was not integrated nor was there a comprehensive single register. Inresponse, the proposed Act was designed to create certainty and therebyreduce commercial costs. This objective was to be achieved "by setting outpriority rules for determining disputes between holders of competing interestsand creating a single register of security interests in personal property."Section 93 of the PPSA may be viewed as a limited exception to the broadintention to codify the law of security interests in personal property. While theexistence of common law liens was accepted by s 93 as an exception to thisgeneral intention, anything other than a cautious approach to the recognitionof common law liens is not justified.But that s 93 is not an exclusive exception is made out by s 23(b).29[29] A primary plank of the liquidators' opposition was the unfairness theyperceived in any equitable lien afforded to customers under the earlier contractcompared to the possessory interest obtained by contended transfer of title to thoseunder the later contract. That concern is rendered moot by my finding no titleTrustees Ltd) [2022] UKPC 36; [2023] 2 WLR 133 at [72]–[77], citing Hewett v Court, above n19, at [9].25 Bott & Co Solicitors Ltd v Ryanair DAC [2022] UKSC 8, [2022] 2 WLR 634 at [78], citingDonovan Waters, "Where is Equity Going? Remedying Unconscionable Conduct" (1988) 18University of Western Australia Law Review 3 at 24, and referring also to John Phillips, "EquitableLiens—A Search for Unifying Principle" in Norman Palmer and Ewan McKendrick (eds),Interests in Goods (1993) 635 at 637, reprinted in 2nd ed (1998) 975 at 977.26 At [104].27 At [104].28 Toll Logistics (NZ) Ltd v McKay [2011] NZCA 188, [2011] 2 NZLR 601 at [60] (footnotesomitted), cited also in Maginness v Tiny Town Projects Ltd (in liq), above n 16, at [104].29 See [23] above at n 17.transferred. No relevant distinction is open to being drawn between customers underthe earlier or later contracts and no inequity therefore arises.30[30] The other policy concerns are as applicable to s 93's conferral of priority to alien arising out of provision of material or services in respect of secured goods, as towhich the Judge reasoned:31The equitable liens in the present case are in some ways, the other side of thesame coin of the lien for materials or services provided in respect of goodswhich s 93 relates to. The purchasers have supplied money to the company inthe ordinary course of the company's business. There is no evidence they wereaware of any security interest provided by the company. The tiny homes themoney was provided for have either been largely, or at least partially,completed and in all cases can be identified as having been appropriated to therespective contracts. While the equitable liens fall outside the process of thePPSA by reason of s 23(b), and to that extent could be said to have priorityover security interests under the PPSA, any such priority is consistent with oranalogous to the priority provided the other types of non-consensual lien bys 93.[31] There are distinctions to be drawn between the facts before Venning J and thosebefore me. The 'tiny homes' in issue before Venning J were wholly to be constructedat the company's facility and only delivered to the customer's site on payment in full,32which three of the six customers had paid for tiny homes then 95 per cent complete(and the other three partly-paid customers' 40 to 50 percent complete).33 Conversely,while the pods here also are in various degrees of incomplete construction at thecompany's facilities, the contracts include the company's substantial works totransport and install them at the customer's site, and none of the customers had paidanything like the full purchase price.[32] Indeed, to the extent the evidence permits my assessment, the company'scosting supporting the eighth respondents' $777,433 purchase price suggests roughlyone-third of that purchase price was made up of the cost of each the standard unitdesign (and possibly initial feasibility work), its bespoke construction at thecompany's facility ($243,941) and works at the customer's site ($242,567), in respect30 Re Gold Exchange Ltd (in rec): Kensington v Liggett [1994] 3 NZLR 385 (PC) at 409, referringto Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986]1 WLR 1072 (PC).31 Maginness v Tiny Town Projects Ltd (in liq), above n 16, at [118].32 At [44].33 At [8]–[9].of which the eighth respondents had paid $557,626 as the first three of six paymentsdue under the contract. Quantity surveyors engaged by the liquidators assess that podonly partially is constructed at the company's facility where it remains: in its 2 separate sections. The units are structural[ly] complete with RABboard and cavity battens installed. Window joinery is installed but some unitsrequire g[l]azing. Roofing is assumed complete as preline inspection was due.External wall cladding is in progress. Internally internal framing is complete,ceiling and wall insulation is installed. Electrical first fix and internal liningsare in progress. All other works to be commenced. Note there is a largequantity of materials stored in these units.and requires further construction work valued at $273,033 prior to transportation tothe customer's site. (All figures include GST.)[33] The company's costing supporting the 14th respondent's $192,149 purchaseprice is differently allocated between 'pre-build' costs of consents, research andengineering ($14,704) and 'build' costs indistinguishably between the company'sfacility and the customer's site ($177,445), in respect of which the liquidators calculatethe 14th respondent had paid $96,111 (but the 14th respondent contends to have paid$137,432 as the first three of six payments due under the contract).34 The quantitysurveyors assess that pod "is complete externally less rainwater goods. Internal floorfinishes are to [be] installed along with plumbing fixtures", and requires furtherconstruction work valued at $27,600 prior to transportation to the customer's site. (Allfigures include GST.) Perhaps notably,35 the company's costing allocates the 14threspondent's part-payments to aspects of works at both its facility and the customer'ssite, meaning some costs seemingly incurred with respect to the base unit'sconstruction remain to be recovered and costs anticipated in site works already areaccrued (excluding the cost of transportation to the customer's site).[34] The quantity surveyors' assessment is all the pods at least partially arecomplete, and two almost are complete. They also assess customers' part-paymentsvary between being less and more than is required to complete the pod's constructionworks at the company's facilities. The liquidators provide no assessment of the34 Proof of payment appears inadvertently omitted from the copy of the 14th respondent's affidavithanded up during the hearing.35 See [17] above.remaining cost for transportation and installation at the customer's site. But nocustomer has come close to fully paying their purchase price.[35] Nonetheless, there is no room for distinction in the "important features" of thecases respectively before Venning J and me: the ability precisely to identify thebuildings at issue and appropriation to the respective customer's contract.36 Ifanything, the contractual scope, if only for 'Works' on the customer's 'Site', makessuch identification and appropriation of even more materiality in the case before me.Ultimately, I am drawn to the coherence of Venning J's characterisation of the lien asthe obverse of s 93's exception. The customer's payment, in whole or part, is not ofitself a sufficient basis on which to attach a lien over any of the company's assets.Rather the lien only is to the extent of payments attributable to identified goodsappropriated to the contract in question, as a charge against those particular goods.Whether it is so in any circumstance likely will be a question of fact and degree.[36] Deposit alone does not suffice,37 which addresses the liquidators' other concernfor unfairness in an equitable lien's attachment to incomplete pods (although noconstruction commenced for those 20 deposit-payers).38 Key is the degree to whichthe specific (and not unascertained or future) good, whether complete or incomplete,may be thought excluded from any 'commercially sensible' sale to another customer.Where payments in the ordinary course of business directly obtain the company'sdeveloped manufacture of goods custom-made for the customer, without thecustomer's knowledge of an existing competing interest (of which no knowledge hereis evidenced), equity can and should fasten on the goods in manufacture themselvesto the extent of the customer's payments.[37] The relevant customers all have paid money to the company attributabledirectly to identified goods appropriated to their respective contracts. Equitable liensattach accordingly, here subject only to a 'first in time' priority rule (although, if other36 Maginness v Tiny Town Projects Ltd (in liq), above n 16, at [111].37 Hewett v Court, above n 19, at 648.38 See n 2 above.circumstances required it, potentially "worthy of a carefully worked-out priority ruleof [their] own"),39 to which there is no other claimant.—may the liquidators have their claimed remuneration and reimbursement?[38] Given my conclusions, I am not prepared here to determine the contendedreasonableness of the liquidators' claimed remuneration and reimbursement. Theclaim was raised principally on the basis the liquidators had an equitable 'salvage' lienagainst the pods contended transferred to the customers, and opposed by the customerson the basis the liquidators' activities were not reasonable. Given I find no suchtransfer to have occurred, the liquidators' usual statutory indemnity suffices, subjectto the customers' equitable liens. Customers' opposition now may not be maintainedor material, but I have nothing from other respondents.Result[39] Under s 284(1)(a) of the Companies Act 1993, I direct each relevantrespondent has an equitable lien, over the partly-constructed pod relating to theirrespective contract for its construction and installation, to the extent of the purchasemoneys (including deposit) paid by them.Costs[40] I reserve costs for determination on short memoranda each of no more thanfive pages — annexing a single-page table setting out any contended allowable steps,time allocation and daily recovery rate — to be filed and served by the activerespondents (desirably jointly, and perhaps for a single set of hearing costs given therespondents' allocation or adoption of argument between them) within ten workingdays of the date of this judgment, with any response or reply to be filed within fiveworking day intervals after service.—Jagose J39 Equity Trust (Jersey) Ltd v Halabi (Investec Trust (Guernsey) Ltd v Fort Trustees Ltd), above n24, at [250].Counsel/Solicitors:Bret Gustafson Barrister, AucklandSean McAnally Barrister, AucklandRob Latton Barrister, AucklandChris Patterson Barrister Ltd, AucklandCrimson Legal, AucklandKeegan Alexander, AucklandMac & Co Lawyers Ltd, AucklandRussell McVeagh, AucklandRobertsons, AucklandLateral Lawyers Ltd, Auckland