You are aware that a sale is a pro-forma contract right? In which case my interpretation of s32.1(a) would indicate that the receiver takes liability for obligations under any sale contract entered into.
There are many good arguments that militate against that view. Section 32(1)(a) states that a receiver is personally liable "on a contract entered into by the receiver in the exercise of any of the receiver’s powers" IF "the receiver has expressly confirmed the contract". It's an enormous stretch, in view of lines and lines of common law authority generally treating advertisements as invitations to treat only, to suggest that somehow in advertising and ultimately the staff of DSE processing/confirming a sale, the receivers have expressly confirmed each of those sale contracts. Express confirmation in that clause really has to mean positive, explicit, and particularised confirmation.
In addition, unless you are in possession of an appellate court authority to the contrary, in view of simple concepts like separate corporate personality and commercial efficiency around not creating a chilling effect towards the right people accepting receivership appointments, the courts are likely to take a very dim view of an argument that would, in effect, potentially expose the receivers to unlimited CGA or Sales of Goods Act (amongst other statutes) claims for matters such as product failures as well. Your argument cannot logically somehow only hold the receivers liable to fulfil orders. Not to mention the fact that the Receiverships Act is clear in that the receivers are to primarily act in the best interest of the grantor/appointor, unsecured creditors, the company etc.
Regardless of the above, I go back to two of my original points: there is no evidence to support the OP's suggestion (at least he has provided none) that the receivers are personally guaranteeing "all transactions" (whatever that means) and, secondly, when it comes to complicated legal matters, it's best for non-lawyers to not spread speculative fires.
There are many good arguments that militate against that view. Section 32(1)(a) states that a receiver is personally liable "on a contract entered into by the receiver in the exercise of any of the receiver’s powers" IF "the receiver has expressly confirmed the contract". It's an enormous stretch, in view of lines and lines of common law authority generally treating advertisements as invitations to treat only, to suggest that somehow in advertising and ultimately the staff of DSE processing/confirming a sale, the receivers have expressly confirmed each of those sale contracts. Express confirmation in that clause really has to mean positive, explicit, and particularised confirmation.
All right, all valid points. I will admit, the "express confirmation" bit did give me pause.
In addition, unless you are in possession of an appellate court authority to the contrary, in view of simple concepts like separate corporate personality and commercial efficiency around not creating a chilling effect towards the right people accepting receivership appointments, the courts are likely to take a very dim view of an argument that would, in effect, potentially expose the receivers to unlimited CGA or Sales of Goods Act (amongst other statutes) claims for matters such as product failures as well. Your argument cannot logically somehow only hold the receivers liable to fulfil orders. Not to mention the fact that the Receiverships Act is clear in that the receivers are to primarily act in the best interest of the grantor/appointor, unsecured creditors, the company etc.
True, but it also is clear that the receivers must act in good faith and for a specific purpose. One could hold that if they are continuing to trade, then this clause requires them to do so in good faith. Selling product without actually intending to deliver (I'm not addressing the whole warranty return situation) does not, to me, indicate good faith. Further, I see no statement in the Receiverships Act 1993 which limits liability under the Sale of Goods Act and Fair Trading Act (which I suspect would be the two most applicable statutes). Absent any exemption from those laws or in those two laws, I would be reluctant to accept that there is any special exemption from those instruments at law for a company trading in receivership. My understanding is that the reason which gives them the ability to refuse pre-receivership claims relates to the special pseudo-entity that is created in order to segregate pre-receivership and post-receivership funds, and to then extend to say that the new pseudo-entity continues to trade exempt from legislation would be a terrifying concept indeed.
Regardless of the above, I go back to two of my original points: there is no evidence to support the OP's suggestion (at least he has provided none) that the receivers are personally guaranteeing "all transactions" (whatever that means) and, secondly, when it comes to complicated legal matters, it's best for non-lawyers to not spread speculative fires.
While true, this sort of discussion is also beneficial to assist people in understanding their rights and obligations, and the laws that affect them. It is somewhat infuriating that the law that binds society is framed in such a way that only a minority of the population can even read it, and anything that gets people interested in understanding it can only be a good thing.
Another Aussie site had the $390 million as the headline!
'Dick Smith chief executive Nick Abboud has quit the troubled electronics retailer, which has gone into into receivership with debts of about $390 million.
Receiver Ferrier Hodgson on Tuesday said Don Grover had been appointed as interim chief executive as it tries to restructure and sell the business as a going concern.
Mr Grover was formerly chief executive of Retail Fusion Brands and Dymocks.
The receiver, which took over running of the 48-year-old company last week, has begun advertising Dick Smith and has already received more than 40 initial expressions of interest in buying it.
Ferrier Hodgson said Dick Smith owes secured creditors about $140 million and unsecured creditors, which includes customers with unredeemed gift cards, another $250 million.
The consumer watchdog is speaking with the receivers at Dick Smith to find out how the electronics retailer's collapse will affect customers of its 393 stores across Australia and New Zealand.'
Wonder if Ferrier Hodgson will provide a break down of how much of the $250 million is gift cards? Surely a small small proportion?
And an appreciative thanks to those people with real knowledge of the legal and commercial world who are posting in this topic. Most interesting to read. Thanks.
Final nail in coffin as far as I'm concerned - there is no point buying anything from the shop if you're going to be stuck with un-working product if it fails. Previous experience suggests that contacting manufacturers directly is usually a futile uphill battle. YMMV, of course.
Yeah good point. Why buy anything from them, unless you are getting a substantial discount, because it is likely they wont be there to help if something goes wrong with the product. I see the consumer NZ has also given a warning. I am not sure if the potential new owners will be legally required to help with a faulty product either, as effectively they will likely be an entirely new company, who is likely just buying the brand and assets. Whatever the case, it probably isn't get for consumers.
I am a corporate lawyer myself so I have a legal background (though like you not specifically in receiverships). Incidentally I work for a major supplier to Dick Smith.
All transactions authorised by the receivers (in our case these are primarily purchase orders etc) are backed by the receivers personally. I did extend that to pro forma contracts eg sales which in my opinion would be covered. I do agree with you that perhaps that is not 100% clear cut, so perhaps I should have qualified my original statement to that effect.
Certainly the CGA has provision for any manufacturer of imported to be liable with goods including private label. I'd say there is a god chance that somebody like NCP Group or Lacklands or Pudney & Lee are involved in the importation of Dick Smith branded goods. Certainly one of my other major retailers builds and imports private label product with NCP's assistance, and they are the importer for that purpose. I can't specifically speak to DS brand particularly especially as they have the Australian operations also, but I would hazard a guess there is more than just DSH themselves involved.
Ah though I have just read that FH have specifically said anyone with faulty private label product are now unsecured creditors of DSH, so perhaps they are truly importing it themselves.
Would be interesting to see how that would boil down.
I am a corporate lawyer myself so I have a legal background (though like you not specifically in receiverships). Incidentally I work for a major supplier to Dick Smith.
All transactions authorised by the receivers (in our case these are primarily purchase orders etc) are backed by the receivers personally. I did extend that to pro forma contracts eg sales which in my opinion would be covered. I do agree with you that perhaps that is not 100% clear cut, so perhaps I should have qualified my original statement to that effect.
Certainly the CGA has provision for any manufacturer of imported to be liable with goods including private label. I'd say there is a god chance that somebody like NCP Group or Lacklands or Pudney & Lee are involved in the importation of Dick Smith branded goods. Certainly one of my other major retailers builds and imports private label product with NCP's assistance, and they are the importer for that purpose. I can't specifically speak to DS brand particularly especially as they have the Australian operations also, but I would hazard a guess there is more than just DSH themselves involved.
It's hardly much of a surprise (even if one were to imagine that the Receiverships Act didn't exist) that the receivers are prepared to back purchase orders. They want to have a going concern to sell. It's still a pretty big conceptual leap from that to a few potentially helpful words in the Receiverships Act, then to the original post stating that "all transactions" are guaranteed by the receivers. Maybe I am just risk averse (I work for a big five bank in a compliance/complaints role - the heaviest/most controversial complaints, which occasionally involves us tipping entities into receiverships - are handled by yours truly/my team or my manager) but given how frequently people on the internet take things literally, it was... concerning :P
I agree with what you wrote about the private labels. There might be the practical issue of your average consumer being (un)able to find out who is the private label importer for the knick knack junk they got from DSE, however. Incidentally, are you (or anyone else) rather alarmed by some of the rather commercially aggressive acts of the receivers? For example, I see the following in Ferrier Hodgson's circular to NZ creditors:
I have paid for a product in full, however I have not collected the product. What happens now?If you have paid for the product in full, but not collected it, you can still collect the product subject to availability. You will need to contact the store to arrange collection.
Presumably in such cases they have already allocated the product to the customer. Whatever the rights and wrongs in law, given that they are in receivership and there's almost certainly nothing left after preferential and secured creditors are paid, if these guys are intending to sell DS as a going concern at the best possible price, information like this only serves to alarm customers and destroy what little brand value DS has left.
Edit: To answer my own question regarding the quoted/italicised bits from the receivers above, I just read DS' online sales terms and conditions. Unlike many other e-commerce sites, their T & C allows them to immediately charge you upon order. I gotta say, I personally would not buy anything too expensive from DS right now.
amiga500: Another Aussie site had the $390 million as the headline!
...
Wonder if Ferrier Hodgson will provide a break down of how much of the $250 million is gift cards? Surely a small small proportion?
...
The old piano tuners in Chicago chestnut eh?
Well, DSE has 393 stores. That's a hard fact.
We have to guess the rest.
There will be a lot of low value gift cards - below $100 - and a small number of larger ones - hundreds of dollars. So I will guess that $100 is a good quality estimate for the average value per card.
The substantially harder question concerns the number of outstanding cards per store. So we have to plug in an assortment of numbers and see what the results look like.
If there were ten gift cards per store then the total sum on cards would be $393,000. That is a tiny amount of money but also an unbelievably small number of cards per store.
One hundred cards per store sounds a lot more likely and that would give an outstanding sum of just $4M. That is still a tiny sum in the whole mess.
One thousand cards per store and you are up to $40M but that is just too much.
I have two reasons to say that.
First of all, most cards are redeemed within a very short time so for there to be 1000 cards outstanding per store then each store would probably have had to have sold 2000 cards in the month before the receivership. That assumes that half of the cards sold in that month would already have been redeemed. So each store would have been selling 70 cards a day, one every few minutes. That didn't happen.
The second reason is that, if they had pulled in $40M on gift cards, then they would have been awash with cash and would not have been in breach of banking covenants and the banks would not have called in the receivers.
amiga500: Another Aussie site had the $390 million as the headline!
...
Wonder if Ferrier Hodgson will provide a break down of how much of the $250 million is gift cards? Surely a small small proportion?
...
The old piano tuners in Chicago chestnut eh?
Well, DSE has 393 stores. That's a hard fact.
We have to guess the rest.
There will be a lot of low value gift cards - below $100 - and a small number of larger ones - hundreds of dollars. So I will guess that $100 is a good quality estimate for the average value per card.
The substantially harder question concerns the number of outstanding cards per store. So we have to plug in an assortment of numbers and see what the results look like.
If there were ten gift cards per store then the total sum on cards would be $393,000. That is a tiny amount of money but also an unbelievably small number of cards per store.
One hundred cards per store sounds a lot more likely and that would give an outstanding sum of just $4M. That is still a tiny sum in the whole mess.
One thousand cards per store and you are up to $40M but that is just too much.
I have two reasons to say that.
First of all, most cards are redeemed within a very short time so for there to be 1000 cards outstanding per store then each store would probably have had to have sold 2000 cards in the month before the receivership. That assumes that half of the cards sold in that month would already have been redeemed. So each store would have been selling 70 cards a day, one every few minutes. That didn't happen.
The second reason is that, if they had pulled in $40M on gift cards, then they would have been awash with cash and would not have been in breach of banking covenants and the banks would not have called in the receivers.
To me, $4M looks like a fair enough answer.
I'm not sure I go with that. No doubt the bank issue has been ongoing for some time. Quite possibly they had insights into cashflow. A sudden influx due to card sales changes nothing, its not free cash, and its offset by a liability for purchases. For a smaller business those sales can push out the angry bank date, but I'm not sure that would carry any weight in this issue.
could some body please help me,im a 69yr old pensioner and on the 2nd of january i brought a laser blu-ray player bd3000 from dick smith in masterton and it needs fixing,i have been into the store and all they will do is give me a phone number to ring,what else can i do to get it fixed?
happyone65: could some body please help me,im a 69yr old pensioner and on the 2nd of january i brought a laser blu-ray player bd3000 from dick smith in masterton and it needs fixing,i have been into the store and all they will do is give me a phone number to ring,what else can i do to get it fixed?
thanks for any reply's i get.
If you are confident with your technology, consider ringing the 0800 number. The manufacturer may be able to talk you through a quick fix.
Dick Smith return policy: https://www.dicksmith.co.nz/shopping-with-us/our-returns-policy-nz Section 2b says "You may bring your product to the sales/service counter at any of our stores to have your product assessed" "if you do not wish to contact the manufacturer". You could print that out and highlight it when going back to the store.
If you are a confident 69 year old, go back to Dick Smith and don't take no for an answer (politely but firmly of course). If (like one of my parents) your confidence is not what it used to be, take a friend or relative who can help you stand your ground. Make sure you have the receipt, or if this cannot be found, evidence of the purchase (e.g. bank statement showing the EFTPOS transaction). Good luck!
"4 wheels move the body. 2 wheels move the soul."
“Don't believe anything you read on the net. Except this. Well, including this, I suppose.” Douglas Adams
happyone65: could some body please help me,im a 69yr old pensioner and on the 2nd of january i brought a laser blu-ray player bd3000 from dick smith in masterton and it needs fixing,i have been into the store and all they will do is give me a phone number to ring,what else can i do to get it fixed?
thanks for any reply's i get.
If you are confident with your technology, consider ringing the 0800 number. The manufacturer may be able to talk you through a quick fix.
Dick Smith return policy: https://www.dicksmith.co.nz/shopping-with-us/our-returns-policy-nz Section 2b says "You may bring your product to the sales/service counter at any of our stores to have your product assessed" "if you do not wish to contact the manufacturer". You could print that out and highlight it when going back to the store.
If you are a confident 69 year old, go back to Dick Smith and don't take no for an answer (politely but firmly of course). If (like one of my parents) your confidence is not what it used to be, take a friend or relative who can help you stand your ground. Make sure you have the receipt, or if this cannot be found, evidence of the purchase (e.g. bank statement showing the EFTPOS transaction). Good luck!
And more importantly get a receipt from DSE that they have taken possession of the item for repair. That way if they loose it or anything else silly you have a huge amount of standing to get it back to get a new one.
Are you subscribed to our RSS feed? You can download the latest headlines and summaries from our stories directly
to your computer or smartphone by using a feed reader.
Trusted
