![handle is hein.journals/macqjbul4 and id is 1 raw text is: MqJBL (2007) Vol 4
'SQUEEZING THE LEMON DRY' - THE RECEIVER, THE
ADMINISTRATOR, AND THE SPECIFIC PERFORMANCE OF THE
COMPANY' S CONTRACT
LEE AITKEN*
In the apt metaphor of McPherson J (as he then was), a receiver of a company
appointed under a debenture charge is usually in the happy position of being able to
'squeeze the lemon dry in relation to the fulfilment by him of contractual
obligations owed by the company to other parties prior to its receivership. The
receiver stands in the shoes of the company as its agent,2 so that if the receiver fails
to perform an existing contract, 'the consequences of rendering the company liable
in damages are in practice felt only by the company and through it its unsecured
creditors not by the holder of the charge'.' In so acting, it would appear that a
receiver (even if invalidly appointed) is not guilty of any tortious interference with
the contractual rights of the third party so as to give it, or the company, a claim in
damages.4 But does interference with the existing contract represent some
'conversion' of it, odd as that concept first appears?'
However, this possibility conceals a number of very difficult questions of contract
law. First, and foremost, to what extent will the company be compelled to perform
the contract? To what extent is specific performance available? If the counterparty
is unlikely to be able to obtain a verdict against any exigible assets of the company,
Associate Professor, Faculty of Law, University of Sydney
1 Re Diesels and Components Pty Ltd [ 1985] 2 Qd R 456, 459.
2 The agency is of an unusual kind as many commentators have noted. While it is a 'real'
agency (Ratford v Northavon District Council [1987] 1 QB 357, 372) it has peculiar features.
It is the only example of a non-fiduciary agency and, in particular. the mortgagor cannot give
the receiver directions as to how he is to carry out his functions. Similarly. a sale by the
receiver to a party related to the mortgagee will not infringe the usual rule in equity in relation
to a mortgagee's self-dealing: Re Actwane Pty Ltd (2002) 42 ACSR 307; [2002] NSWSC 572;
White v Huxtable; Re Lake Federation Pty Ltd (ACN 099 611 453) (recs and mgrs appt)
(2007) ALR 388, 395 per Young J at [36]-[37].
Per McPherson J in Re Diesels and Components Pty Ltd at 459.
4 See, generally, OBG Ltd v Allan and ors [2005] 1 BCLC 711. The receiver may. of course, be
guilty of trespass to the company's land or goods, or conversion of its property since he has no
right to immediate possession.
OBG Ltdv Allan [2005] 1 BCLC 711 (Court of Appeal); [2007] 2 WLR 920 (House of Lords)
(discussed below at text to notes).](ViewImageLocal?handle=hein.journals/macqjbul4&div=1&collection=&method=preview&ext=.png&size=3)
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