Throughout the course of the global pandemic and into the present day, we have seen severe
supply chain disruption, significant backlogs and delays in freight, stevedoring and logistics
and the grounding and long-term warehousing and storage of passenger aircraft (among other
things). Each of these challenges have created fertile ground for personal property disputes.
The focus of this paper will be on one category of such disputes – lien claims –
which arise through contractual arrangements, largely governed by the Personal Property
Securities Act 2009 (Cth) (PPSA) and/or through statute or common law, such as
warehouseman / storage liens, maritime liens and Universal Distributing liens.
Broadly speaking, a lien claim involves a creditor taking or maintaining possession of property,
or seeking priority over proceeds of property, to secure payment or performance of a debt
obligation. The debt obligation will generally arise in the ordinary course of the debtor's
business (eg. regular supplies of goods or services on credit terms). Lien claims over key plant
and equipment can be extremely disruptive to the debtor's business (and will therefore, usually
require immediate attention and renegotiation of existing arrangements, a speedy commercial
resolution or urgent court intervention through directions, declarations or injunctive relief).
Understanding the usual pressure points in a lien dispute can assist in separating the strong,
legitimate lien claims from the weak (eg. ransom claims), renegotiating from good positions and
out of bad ones and making a quick assessment on whether court intervention will be required.
Most lien disputes will boil down to overlapping considerations of:
Timing (ie. identifying the date from which the lien rights were asserted, the prior-in-time
property interests that are already in play and the priority positions of those interests).
Scope (ie. identifying what property is subject to the lien, identifying the costs and
charges that are secured by the lien and determining whether there is alignment between the
lien scope and the costs and charges that are being claimed by the creditor).
Quantum (ie. considering the value of the lien property, understanding where value will
break in a priority dispute, identifying how much the creditor is owed and (again) how much
of that amount is secured by the lien).
This paper looks to expand on those considerations and provides a summary of: (1) contractual,
statutory and common law liens; (2) how they arise; (3) the impact of the PPSA upon them; (4)
how they can be resolved by debtors faced with a lien claim; and (5) some practical
considerations for creditors who might seek to rely on liens (as one device, of many, to reduce
exposures, mitigate non-payment risks and recoup losses).
Some examples to get us started
Before we unpack the elements of various contractual, statutory and common law liens, it is
worth noting the following case examples which illustrate the circumstances in which lien
disputes can arise and how they have been resolved by the courts:
In NCO Finance Australia Pty Ltd v Australian Pacific Airports (Melbourne) Pty Ltd 
FCCA 2274, Melbourne Airport claimed a lien over a vehicle in respect of which parking fees
and charges were due. Melbourne Airport's parking terms and conditions purported to give it
possessory lien rights to secure parking charges. The Court confirmed that the lien rights,
being consensual, were covered by the PPSA and Melbourne Airport had perfected its security
interest through actual (c.f. constructive) possession of the vehicle.
In Cribb (As Liquidator of Bullion Bourse Pty Ltd (In Liquidation)  WASC 340, the
liquidator was appointed over an insolvent bullion broking, trading and storage business.
Numerous parties had stored their bullion with the company, but company records were in
disarray and the liquidator needed to resolve competing ownership claims to bullion on hand
(by piecing together company records and otherwise asking customers (ie. creditors) to
substantiate ownership claims). Unsurprisingly, the Court considered that the liquidator's
remuneration, costs and expenses associated with the identification of true owners were
claimable ahead of and in priority to the owners' return of their bullion. The notable
aspect of this case is the form of orders used to allow the liquidator to recover that
remuneration, costs and expenses – in the form of a costs levy payable by each of the
creditors who had proven ownership of specific goods before those goods would be released to
Fearnley v Finlay  QCA 155 is a good example of a successful challenge to a statutory
storage / warehouseman's lien. In that case, the respondent was in the business of agistment
– taking possession of the appellant's cattle for grazing. The respondent argued that
they had a statutory lien claim arising from the operation of the Storage Liens Act 1973
(Qld). The case turned on the proper construction of the statute. The appellant acknowledged
that a contract to agist cattle may constitute a contract of bailment for reward, as
required by the statute, but submitted that the arrangement did not constitute an
arrangement where "goods [are] deposited with the storer for storage". The case highlights
the various angles from which statutory lien claims can be challenged (eg. analysing the
scope of claimed charges, the scope of parties who can claim the lien and the scope of the
arrangement / whether it comes within the statute).
In The Ship "Sam Hawk" v Reiter Petroleum Inc  FCAFC 26, the Sam Hawk was arrested in
Australian waters on the basis that a fuel supply contract, which was said to be governed by
the laws of the United States, purportedly gave the supplier the right to assert a US
maritime lien over the vessel (c.f. Australian maritime law which does not afford that right
to a fuel supplier). The Full Federal Court held that Australian law was applicable and the
US maritime lien claims were dismissed.
In April 2020, the Virgin Australia Group was placed into voluntary administration. Over the
following months, as the Voluntary Administrators negotiated with stakeholders and
interested parties for the successful restructure of the companies' business they also
encountered and overcame a number of operational challenges. One such challenge were the
lien claims made by numerous airports around Australia against Virgin's property (including
aircraft and aircraft engines). In some cases, lien claims were sought to be enforced by
parking forklifts / bobcats on the tarmac in front of Virgin aircraft (preventing them from
Some commercial arrangements will involve third parties taking extended possession of property
(a common scenario is for repairs and maintenance). Such ongoing business arrangements will
normally be governed by a contract containing provisions on whether contractual liens can or
cannot be asserted, the outstanding amounts that can be secured by any such lien and the
procedures in maintaining / resolving any disputes.
For this example, assume that Party A has a logistics and freight business:
Party A has a maintenance and services agreement with Party B, who takes delivery of Party
A's trucks from time to time for maintenance work. The agreement states that Party B can
keep possession of Party A's property until any and all outstanding invoices are paid in
full (although Party B has never taken this approach with its customers to date).
Party A usually makes payment within 90 days of Party A being invoiced, but lately, Party
A's account is looking worse than usual (ie. payment in 120 - 150+ days, round payments that
do not match invoices and payment from other credit facilities). Party B suspects that Party
A is experiencing financial difficulties.
Party B has possession of five of Party A's trucks (which have already been repaired and
maintained by Party B). Party A unexpectedly appoints voluntary administrators and the
voluntary administrators demand the return of the trucks from Party B.
Importantly, contractual liens, like the example in sub-paragraph (a) above, and their
enforceability are governed by the PPSA. Broadly speaking, to have an enforceable contractual
lien, Party B will need to point to the maintenance and services agreement and show that its
contractual lien has been perfected by possession of the trucks or by registration of a security
interest on the Personal Property Securities Register before the appointment of voluntary
administrators over Party A.
There are a few points to note here:
If a contractual lien has been properly perfected by possession, then it will be a
"possessory security interest" under Corporations Act 2001 (Cth) section 51D. As a
consequence, the creditor can continue to maintain possession of the property even if a
voluntary administrator is appointed over the debtor.
Most creditors make the mistake of trying to take possession of property or failing to
properly register their contractual lien on the Personal Property Securities Register until
after the appointment of a bankruptcy trustee, voluntary administrator or liquidator.Scrambling to take possession of property after the appointment of a voluntary
administrator, or arguing that possession is deemed to exist under the contract (pursuant to
a contractual deeming provision) is likely to be ineffective. A creditor must have actual or
apparent possession of the property prior to that time (and cannot perfect by taking
possession through seizure or the appointment of receivers).
If the contractual lien has not been properly perfected, then the creditor will need to
return the property to the company and will likely only be left with an unsecured claim for
any outstanding moneys.
The rights granted by the relevant contract are important. Some contracts will only allow a
lien to be enforced against property for certain costs and expenses (ie. invoices relating
only to particular property). Other contracts will be very prescriptive about the way that
liens can be asserted. If a party frequently parts with possession of their property for any
reason, they may want their relevant contracts with third parties to include a clause
preventing the third party from asserting any liens altogether.
Statutory liens / general law liens
Statutory liens arise in many different contexts such as warehousing / storage;
under maritime laws; and in relation to the sale of
goods. Similarly, general law liens can arise when a
trustee incurs costs and expenses in administering a trust, when an external administrator
incurs costs and expenses in the care, preservation and realisation of property and in certain
other circumstances such as in favour of mechanics, solicitors or accountants to secured payment
of unpaid fees.
To illustrate, we can revisit Party A's logistics and freight business:
Similar to the example above, Party A has a maintenance and services agreement with Party B,
who takes delivery of Party A's trucks from time to time for maintenance work.
Under a separate arrangement, Party B agrees to provide long-term storage for some of Party
In addition to the overdue invoices for maintenance work, Party A has not been paying
separate invoices for storage of its trucks. Party B has five of Party A's trucks in storage
when Party A unexpectedly appoints voluntary administrators and the voluntary administrators
demand the return of the trucks from Party B.
In this example, Party B might be entitled to assert a warehouseman's lien under the
Warehousemen's Liens Act 1952 (WA) (WLA). Such a lien arises when a person is
lawfully engaged in the business of storing goods for hire or reward.
There are a few points to note here:
Similar to contractual liens, statutory liens / general law liens are "possessory security
interests" under Corporations Act section 51D – so again, a creditor can continue to
maintain possession of the relevant property even if a voluntary administrator is appointed
over the debtor.
Unlike contractual liens, statutory liens / general law liens are not consensual and are,
generally speaking, excluded from the operation of the PPSA.
Further, while contractual liens are subject to prior-perfected security interests,
statutory / general law liens will generally take priority over any other interest in the
property. That said, note that parties relying
on lien interests arising under statute or general law should be wary of the wording and
operation of PPSA ss 8(1)(b) and 8(1)(c). Broadly speaking, those sections state that the
PPSA does not apply to statutory or general law liens or charges "unless the person who owns
the property in which the interest is granted agrees to the interest". Accordingly, where a
creditor claims rights under contract and priority rights under (say) statute, they may be
faced with the argument that their contract converts all lien rights into being consensual
in nature and cuts across the priority normally afforded by the statute.
Statutory liens / general law liens usually do not have the same flexibility in scope that
contractual liens do. Statutory liens / general law liens will usually only arise in very
specific circumstances and will only secure payment of particular expenses. When considering
the timing, scope and value of a statutory lien, it is important to consider the exact
wording and proper construction of the statute. Turning back to the above example of the
warehouseman's lien above, Party B would need to establish that it is in the business of
storing goods for hire or reward. Further, even
though Party B has outstanding invoices for maintenance work, Party B can only enforce a
warehouseman's lien against outstanding invoices for warehouseman's charges relating to
storage / preservation, insurance, transportation, labour, weighing, packing, coopering and
reasonable charges for sale (where there is a default in paying any amounts secured by the
warehouseman's lien) – an incident of the wording of the statute.