Heath's Emu warfare division is in tatters with the highest levels of the Australian Defence Force in disagreement over the military application of emus. This leaves Heath with several hundred emus to feed and put to work. Heath has followed political events and has noticed a criticism of security firms in relation to hotel quarantine. Human security guards are 'on the nose' and Heath believes there is an opportunity to secure lucrative security contracts using his emus as a workforce. He registers the company Heath's Emu Security Force and Petting Zoo Pty Ltd (HESFPZ) and transfers the farm, emus, and other property to the company.

Using his contacts at the AFL, he is able to secure a security contract at all AFL venues for the final's series. This poses a problem for Heath as his emus, whilst reliable, are known to have about a 5-beer limit before becoming unreliable and violent. This ordinarily would not be cause for concern, however patrons are known to offer security staff several beers throughout the game to win them over. Heath believes the emus will need a tolerance of at least 7-8 beers to be able to handle their roles for the whole game. Heath embarks upon a rigorous training regime including perimeter control, advanced self defence techniques, and several drinking games. The emus are now well equipped to handle the rigours of sporting event security. Owing to their training, they are far stronger and quicker than normal emus (plus they can hold their liquor).

All is well for the first week of finals. The emus sort out any troublemakers and the alcohol consumption is within expected levels. In the second week of AFL finals, the Geelong Cats play the Brisbane Lions at the Gabba. As natural predators of the emu, the combined cat and lion jerseys have the emus on edge. Late in the first quarter, the Brisbane Lions are 2 goals in front when star player Charlie Cameron kicks another goal. The home crowd erupts in applause for their team. The loud noise startles several of the emus leading them to storm the ground and attack several players. Geelong's star player, Rodney Dangerfield, is among the worst injured, and requires many stitches. The game descends into farce, and for reasons unknown to Heath, his security contract is terminated.

Without any income coming in, HESFPZ collapses and a receiver is appointed by Pestwac on the 1st October 2020. Pestwac took security over the farm, the emus, and all other property in the possession of HESFPZ. The details of Pestwac are included in the loan agreement and are provided to the receiver, Dave. Dave is not a big fan of paperwork and just gets down to business. He herds up the emus and many bites later, gets them into a truck and hauls them away. Over the following weeks, he takes the following action:

He advertises the emus at auction. The commercial value of emus is at times difficult to ascertain. Conservationists have been known to place a high value on emus on sentimental grounds, but they yield far less if used at petting zoos. For the rare few that are capable, emu racing can increase their value tenfold. Dave just wants to get rid of the beasts as they have attacked him relentlessly during daily feeding time. The auction is advertised widely in local, state, and national newspapers. The auction proceeds on the 10^th October. The animals are listed as being 'regular emus farm raised and bred, and all are healthy and normal in every way.' Despite some local interest, the emus sell at a value similar to their petting zoo value. A few suitors were disappointed by the sale. One conservationist group noted they did not have enough time to raise enough donations to bid on any of the emus. Interest from the racing scene was a non-event and no one from the industry attended the auction.

The farm is sold at auction. With the emu sales out of the way, Dave is able to set a date at auction of the 15^th November. Dave sought a valuation of the land from several real estate agents with the average value being $1.2 million. The auction is advertised widely. In the listing, it notes the prospect of running a homebrew business as the sale includes a variety of brewing equipment. As it turns out, Heath was unwilling to subject his emus to beer from commercial breweries and brewed his own beer. Amongst the materials in Heath's Garage/ brewery were:

Several large vats. Given their enormous weight, they only needed to be secured with several screws into the wall. The screws left several small holes, but did not affect the structural integrity of the wall and were not overly noticeable.

A variety of handheld equipment - e.g a large 'stirrer' as well as several air compressors and industrial grade cleaning equipment. Dave asks Heath about this equipment. Heath produces a contract documenting a leasing arrangement of 12 months. Dave checks the PPS register and cannot find a mention of the equipment. Deeming it as unregistered, Dave includes them as part of the land sale.

Various raw materials to produce beer - barley, hops, purified water, etc. As it turns out, the supplier includes a provision in all of its contracts that states 'despite physical possession, ownership does not pass until the goods are paid in full'. Dave notes that this agreement was only in place a few days ago and therefore pays no attention to it.

The floor was upgraded with a steel overlay. This made it much easier to clean and sterilise the equipment. It would also be appropriate for other agricultural purposes such as dairy farming. The flooring could be removed, but the concrete underneath would likely be damaged due to the installation.

Even with the additions in the garage, the property only sells for $1,000,000. Heath is outraged and threatens to sue Dave.

Advise Dave of any liability he might have in relation to the sale of any of the property. Was there any actions Dave could have taken in order to protect himself from liability?

ILAC Layout for any liability that Dave might have and remedies.