Carrafa, Gountzos & Lofthouse (as liquidators of Relux Commercial Pty Ltd (in liq)) & Anor v Doka Formwork Pty Ltd

Federal Court of Australia|2023-06-26|Before: Mr J, Cheeseman J

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Solicitors for the plaintiff Mr J Scarcella and Ms E Barrett of Johnson Winter Slattery

ORDERS NSD 133 of 2022 IN THE MATTER OF CUBIC INTERIORS NSW PTY LTD (IN LIQUIDATION) ACN 099 127 330 SIMON CATHRO IN HIS CAPACITY AS LIQUIDATOR OF CUBIC INTERIORS NSW PTY LTD (IN LIQUIDATION) ACN 099 127 330 AND OTHERS Plaintiff

order made by: CHEESEMAN J DATE OF ORDER: 26 June 2023

Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) 2016 that Simon Cathro, in his capacity as the Liquidator of Cubic Interiors NSW Pty Ltd (In Liquidation) ACN 099 127 330, Bigmig Pty Limited (In Liquidation) ACN 142 135 966; Cubic Interiors Sydney Pty Ltd (In Liquidation) ACN 623 496 391, and Cubic Contracting NSW Pty Ltd (In Liquidation) ACN 141 502 178 is justified in not seeking relief under s 588FM of the Corporations Act 2001 (Cth) in respect of the time for registration of the security registered on the Personal Property Securities Register with the registration number 202112090008705 (the Security Interest).

To the extent necessary, pursuant to s 588FM(1) of the Act that the registration time in respect of the Security Interest be fixed as 9 December 2021 for the purposes of s 588FL(2)(b)(iv) of the Act.
The plaintiff's costs of and incidental to this application be paid out of the assets of Cubic Interiors NSW Pty Ltd (in liquidation) ACN 099 127 330, Bigmig Pty Limited (In Liquidation) ACN 142 135 966; Cubic Interiors Sydney Pty Ltd (In Liquidation) ACN 623 496 391, and Cubic Contracting NSW Pty Ltd (In Liquidation) ACN 141 502 178. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 The plaintiff, Simon Cathro, is the liquidator of Cubic Interiors NSW Pty Ltd (in liquidation) (CINSW), Bigmig Pty Limited (In Liquidation); Cubic Interiors Sydney Pty Ltd (In Liquidation) (CIS); and Cubic Contracting NSW Pty Ltd (In Liquidation) (CCNSW) (collectively, the Companies). 2 I have previously made orders pursuant to s 477(2B) of the Corporations Act 2001 (Cth) approving the liquidator's entry, in his capacity as liquidator of the Companies, into a Loan Agreement and general security deed (GSD) with 33-37 Egerton Street Pty Ltd as trustee of the Egerton Street Trust (the Agreements). I made those orders when sitting as Commercial and Corporations Duty Judge having regard to the liquidator's affidavit and exhibit SC-1. On the basis of the evidence led by the liquidator, I was satisfied that it was appropriate to do so on the basis of the matters put forward in [2] to [27] of the plaintiff's written submissions, a copy of which is on the electronic court file. 3 These reasons address the remaining relief sought by the liquidator that has not yet been determined. The liquidator seeks: …. 3 A direction pursuant to section 90-15 of the Insolvency Practice Schedule (Corporations) 2016 that the Liquidator is justified in entering into the Loan Agreement and the General Security Deed and is authorised to carry its terms into effect. (Loan Agreement and GSD Declaration) 4 A direction pursuant to section 90-15 of the IPS that the Liquidator is justified in not seeking relief under section 588FM of the Act as registration no. 202112090008705 on the Personal Properties Security Register, which is in respect of securities granted after the critical time referred to in section 588FL(7)(a), is not covered by section 588FL(2). (Registration Declaration) 5 Alternatively, an order under section 588FM of the Act, in respect of registration no.202112090008705 on the Personal Properties Security Register, fixing 9 December 2021 as the later time for the purposes of sub-section 588FL(2)(b)(iv). (Extension of Time Order) 6 The Plaintiff's costs of and incidental to this application be paid out of the assets of the Companies. … (Definitions in bold added) 4 The liquidator's application which is described as the "Loan Agreement and GSD Declaration" relates to a debt restructure effected by the liquidator which paid out the senior secured creditor and resulted in the removal of receivers who had been appointed by that senior creditor. 5 The liquidator's application in respect of the "Registration Declaration" and the "Extension of Time Order" is made in the context of a security registered on the Personal Property Securities Register (PPSR) with registration no. 202112090008705 which was granted to Egerton (Egerton Security) after the liquidator's appointment, which is the "critical time" referred to in s 588FL(7)(a) of the Act. The Egerton Security was registered on the PPSR on 9 December 2021, which was within 20 business days of the day on which it was granted but was after the "critical time". 6 The liquidator frames his claims for relief in respect of the Egerton Security in the alternative. The primary relief sought is a direction pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) 2016, Sch 2 to the Act (IPS) that the liquidator is justified in not seeking an extension of the time for registration of the Egerton Security under s 588FM of the Act. The alternative claim for relief is for an order under s 588FM of the Act extending the time for registration to 9 December 2021, being the date on which the Egerton Security was registered on the PPSR. 7 The liquidator's application in respect of the Egerton Security raises an issue in relation to the construction of s 588FL of the Act in respect of which there has been a divergence in the approach taken in decisions of various judges sitting at first instance. In short, the issue is whether s 588FL of the Act applies to Personal Property Securities Act 2009 (Cth) (PPSA) security interests which are granted after the "critical time" in s 588FL(7) of the Act. There is no intermediate appellate authority which has decided the point.

DIVERGENCE IN SINGLE JUDGE AUTHORITIES 8 Section 588FL makes provision for when a "PPSA security interest" (as defined in s 51 of the Act) of a company which is being wound up, or is subject to administration or a deed of company arrangement (DOCA) or restructuring or a restructuring plan, will vest in the company for the benefit of creditors with the result that the secured creditor will lose the benefit of the security: In the matters of 4 in 1 Wyoming Pty Ltd & the companies listed in Schedule A to the Originating Process [2017] NSWSC 407; 120 ACSR 167 at [30]; Toll Energy and Marine Logistics Pty Ltd v Conlon Murphy Pty Ltd [2019] FCA 532,137 ACSR 328 at [28]. Central to the operation of s 588FL(2) is the definition of "critical time" in s 588FL(7). In the present case, the critical time is the date on which the liquidator was appointed - 22 November 2021. 9 The divergence in the authorities which is presently relevant is whether, for the purpose of s 588FL(1)(b) a PPSA security interest that is granted after the "critical time" is covered by s 588FL(2). As between the two lines of authority, it is common ground that s 588FL(2) may cover a security interest that arises after the critical time. The point of difference is as to whether s 588FL(2) can cover a security interest that is granted after the critical time. The first and earlier line of authority is to the effect that s 588FL(2) does cover securities granted after the critical time. No distinction is drawn between a security interest being "granted" and a security "arising". The second and more recent line of authority is that security interests that are granted after the critical time are not covered by s 588FL(2) because there is a distinction between the use of "granted" in s 588FL(1)(b) and "arises" in s 588FL(2)(a). Accordingly, a security interest which "arises" after the critical time will only be covered by s 588FL(2) if it was granted at or before the critical time. 10 The key decision illustrating the first line of authority is that of Davies J in K.J. Renfrey Nominees Pty Ltd (Trustee), in the matter of OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 325; 120 ACSR 117. Her Honour held that s 588FL(2) covered PPSA security interests which were granted after the critical time (at [24]). The practical effect of this construction of s 588FL, is that where a PPSA security interest is granted after the critical time, it will in every case be necessary to apply to the Court for an order extending the date by which registration must occur under s 588FM in order for the security holder to enjoy the benefit of the security (and to prevent it vesting in the company). That is because it is not possible for the security to be registered at the critical time (that is, at a time before it is granted). 11 The decision in K.J. Renfrey has been followed in Korda, in the matter of Ten Network Holdings Ltd (admins apptd)(recs and mgrs apptd) [2017] FCA 1144; 35 ACLC 17-044; Hill (admin) in the matter of Flow Systems Pty Ltd (admins apptd) [2019] FCA 35; and Dickerson, in the matter of McWilliam's Wines Group Ltd (admins apptd) (No 2) [2020] FCA 417. These decisions predate the decision in Re Antqip Pty Ltd (in liq) [2021] NSWSC 1122, which is the decision giving rise to the second line of authority. The approach taken in K.J. Renfrey was also followed in a further two decisions which post-dated the decision in Re Antqip but in which the Court was not referred to Re Antqip: Park (Administrator), in the matter of Ellume Limited (Administrators Appointed) v Evangayle Pty Ltd (Trustee) [2022] FCA 1102 at [38] to [41]; and Birch, in the matter of Geelong Fire Services Pty Ltd (Administrators Appointed) [2022] FCA 963 at [28] to [30]. 12 In Re Antqip Brereton JA held that s 588FL did not apply to PPSA security interests granted after the critical time. Accordingly, there was no need for, nor utility in, an order under s 588FM fixing a later time for the purpose of s 588FL(2)(b)(iv) of the Act. In his reasons for judgment, Brereton JA noted that if he was wrong in this regard then he would have made an order pursuant to s 588FM fixing a later time for the purposes of s 588FL(2)(b)(iv) of the Act. His Honour considered the K.J. Renfrey line of authority but departed from it. Re Antqip was followed in this Court in Revroof Pty Ltd (receivers and managers appointed) (administrators appointed) v Taminga Street Investments Pty Ltd [2023] FCA 543. 13 In this case, the plaintiff's alternate claims for relief are framed by reference to the decision in Re Antqip. 14 The construction issue is attended by significant practical ramifications if the construction of s 588FL is as per Re Antqip, it would remove the administrative burden liquidators, amongst others, face in having to seek relief under s 588FM in respect of PPSA security interests that the liquidator causes the company to grant which necessarily occur after the critical time, being the date of the liquidator's appointment. It can readily be seen that this will simplify an aspect of debt restructuring undertaken as part of the administration of a company after the events described in s 588FL(1)(a) of the Act. The liquidator, for example, will not have to apply to extend the time for registration in order to prophylactically forestall the vesting of the affected security interests in the company lest the purpose of the debt restructure be defeated. The procedural efficacy which follows from the approach in Re Antqip comes at a price - a layer of curial supervision is removed. The K.J. Renfrey approach requires the Court, in every case where a security interest is granted after the critical time, to be satisfied of the matters in s 588FM(2) before exercising the discretion to extend the time for registration. 15 As there was no interested party who sought to oppose the liquidator's application, the application was adjourned to enable a contradictor to be appointed to assist the Court. The Court is grateful for the careful and erudite submissions made by Mr Hynes of counsel who acted as contradictor on a pro bono basis. 16 The liquidator and the contradictor each submitted that as a single judge I should not depart from prior decisions of other single judges of this Court unless satisfied that the decisions are "plainly wrong". In my view, the principle to which reference is made is not limited to decisions of single judges within a Court - the principle is that single judges sitting at first instance should follow decisions of other single judges in co-ordinate courts in Australia on Commonwealth or uniform national law unless those decisions are plainly wrong. In Re Brashs Pty Ltd (1994) 15 ACSR 477 at 483, Hayne J, then a judge of the Supreme Court of Victoria, emphasised "the importance of uniformity in the interpretation of uniform national legislation such as the [Act]" and expressed reluctance to depart from decisions of other single judges in Australia on uniform national law, unless those decisions are plainly wrong. In Duckworth v Water Corporation [2012] WASC 30; 261 FLR 185 at [31], Edelman J, then a judge of the Supreme Court of Western Australia, observed that there was considerable authority supporting the approach of Hayne J in Re Brashs citing Valentine v Eid (1992) 27 NSWLR 615 at 622; La Macchia v Minister for Primary Industries & Energy (1992) 110 ALR 201 at 204; and Re York Street Mazzanine Pty Ltd (in liq) [2007] FCA 922 at [22] to [23]. 17 In this case I am confronted by a divergence in the single judge authorities in co-ordinate Australian courts on the interpretation of uniform national legislation. The competing approaches are best illustrated by the decisions in K.J. Renfrey and Re Antqip. Notwithstanding that there are more decisions in the K.J. Renfrey line of authority, there is not a preponderance of authority either way - in substance, although not numerically, on the particular point the single judge decisions are fairly evenly balanced, the critical analysis on the point being undertaken in K.J. Renfrey and Re Antqip. The emergence of two distinct lines of authority on the interpretation of s 588FL speaks to the opacity of the text of the section. That is particularly so when, if I may borrow from Brereton JA's observation, the competing decisions are made by learned judges well versed in Corporations law. 18 The issue which arises in deciding whether to grant the relief sought by the liquidator is whether the Court should now adopt the approach taken in Re Antqip and followed by this Court in Revroof to ensure uniformity of decision making in relation to the operation of s 588FL of the Act on PPSA security interests that are granted after the critical time specified in s 588FL(7)(a).

BACKGROUND 19 The Companies, as a part of the broader Cubic Group, conducted an interior fit out business in New South Wales and Western Australia. The main operating entities of the Cubic Group were CINSW and CIS. As a result of the COVID-19 pandemic, CINSW and CIS experienced financial and operational challenges resulting in sustained losses that ultimately led to the liquidations of the Companies in November 2021. 20 As at the date of the liquidator's appointment on 22 November 2021, members of the Cubic Group, including the Companies, were indebted to the National Australia Bank (NAB) for a total amount of approximately $9.2 million. NAB's debt was secured by a number of security interests including securities over the business and assets of CIS, CINSW, Bigmig and CCNSW (NAB security interests) as well as first ranking mortgages over a commercial property located in Silverwater NSW. On 24 November 2021, NAB appointed Jennifer Nettleton and David Osborne of KordaMentha as receivers. 21 Assetinsure, a creditor of the Companies, who had issued various bonds on behalf of the Companies and the Cubic Group, held a second ranking security in respect of its exposure pursuant to the bond arrangements. 22 On 3 December 2021, the liquidator caused the Companies to enter into a Deed of Settlement and Release with NAB in which the Cubic Group refinanced certain of the facilities held with NAB; NAB withheld from taking steps to progress the receivership; and upon repayment, the facilities and the NAB security interests were discharged and the receivers retired. At the same time, the liquidator caused the Companies to enter into the agreements which provided that Egerton would advance the funds necessary to fulfil the Companies' obligations under the Deed of Settlement and Release and the Companies would grant the Egerton Security which gave Egerton a second ranking "all present and after-acquired property" (ALLPAP) security interest in respect of all the collateral of the Companies. The ultimate effect of this refinance was that NAB was replaced by Egerton as a secured creditor of the Companies, Assetinsure was elevated to the position of first ranking security holder with Egerton becoming the second ranking security holder and the receivers retired. 23 Assetinsure has informed the liquidator that it does not wish to be heard in these proceedings.

RELEVANT PRINCIPLES 24 The relief sought by the liquidator in relation to his entry into the Loan Agreement and GSD and in relation to the registration of the Egerton Security is founded on s 90-15 of the IPS.

Section 90-15 of the IPS 25 The liquidator seeks a declaration pursuant to s 90-15 of the IPS that he is justified in not seeking relief under s 588FM of the Act in relation to the Egerton Security on the basis that s 588FL(2) does not apply to the Egerton Security because it was granted after the critical time specified in s 588FL(7)(a). 26 Section 90-15 of the IPS relevantly provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. A liquidator has standing to bring an application under s 90-15 by virtue of s 9-20(d) of the IPS. 27 The matters which the Court may take into account when making orders under s 90-15(1) are set out in an inclusive list in s 90-15(4): (a) whether the liquidator has faithfully performed, or is faithfully performing, the liquidator's duties; and (b) whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and (c) whether an action or failure to act by the liquidator is in compliance with an order of the Court; and (d) whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and (e) the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group. 28 The principles governing the exercise of the s 90-15 power were summarised by Stewart J in Krejci, Re Union Standard International Group Pty Ltd (admins apptd) (No 2) [2020] FCA 1111 at [7] to [11] as follows: 7. A court is empowered by s 90-15(1) of the Insolvency Practice Schedule to "make such orders as it thinks fit in relation to the external administration of a company". The power conferred by s 90-15(1) is "very broad": Kelly (in the matter of Halifax Investment Services Pty Ltd (in liquidation) (No 8) [2020] FCA 533; 144 ACSR 292 at [51] (Gleeson J). It includes a power to make orders determining any question arising in the external administration of a company: s 90-15(3)(a). An administrator of a company may apply for such an order: s 90-20(1)(d), read with s 9 of the Act (paragraph (d) of the definition of "officer"). 8. The court's power under s 90-15(1) includes a power to give directions about a matter arising in connection with the performance or exercise of an administrator's functions or powers: Reidy, in the matter of eChoice Ltd (Administrators Appointed) [2017] FCA 1582 at [26]-[27] (Yates J). In this respect, s 90-15(1) confers a power to give directions that was previously conferred by ss 447D(1) and 479(3) of the Act concerning administrators and liquidators, respectively: see Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; 93 ALJR 807 at [166] (Gordon J); Reidy at [27] (Yates J); and Kelly (liquidator), in the matter of Australian Institute of Professional Education Pty Ltd (in liq) [2018] FCA 780 at [30] (Gleeson J). The principles governing directions to administrators and those governing directions to liquidators are relevantly analogous: Re Ansett Australia Ltd (No 3) [2002] FCA 90; 115 FCR 409 at [43] (Goldberg J). 9. The function of a judicial direction of this kind is not to determine rights and liabilities arising out of a particular transaction, but to confer a level of protection on the administrator. An administrator who acts in accordance with a judicial direction, having made full and fair disclosure to the court of the material facts, has "protection against claims that they have acted unreasonably or inappropriately or in breach of their duty in making the decision or undertaking the conduct" proposed: Ansett at [44]. 10. A court may give a direction on an issue of "substance or procedure" or "of power, propriety or reasonableness": Ansett at [65]. Although a court will not give a direction on a decision that is purely commercial, a direction may be provided where there is a "particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought": Ansett at [65]. As Black J observed in In the matter of RCR Tomlinson Ltd (administrators appointed) [2018] NSWSC 1859, a decision may have a "commercial character" but nonetheless be amenable to judicial direction. His Honour said (at [14]) of the application before him (which sought a direction as to whether a company should borrow loan funds): The Court has been prepared to give directions of this kind, where the decision is a complex one, and where it has to be made, as here, under circumstances of time pressure, in respect of a very large corporate group, and by balancing different interests. The Court's preparedness to grant such a direction in those circumstances reflects the intrinsic unfairness of leaving a voluntary administrator to be at risk of liability, in respect of a complex decision of that kind, where any decision that is made, including making no decision, will have inevitable risks for some or all of the affected constituencies. 11. Because the effect of a direction under s 90-15 is to exonerate the liquidator or administrator if full disclosure is made, it will usually necessitate consideration by the court of the liquidator's or administrator's reasons and decision making process: see Re ONE.TEL Ltd [2014] NSWSC 457; 99 ACSR 247 at [36] per Brereton J (referring to former s 511 of the Act). (emphasis in original)

Sections 588FL and 588FM 29 The relief sought by the liquidator in relation to the Egerton Security requires consideration of, and interpretation of s 588FL, and s 588FM, which is the related remedial provision. 30 Section 588FL relevantly provides: 588FL Vesting of PPSA security interests if collateral not registered within time Scope (1) This section applies if: (a) any of the following events occurs: (i) an order is made, or a resolution is passed, for the winding up of a company; (ii) an administrator of a company is appointed under section 436A, 436B or 436C; (iii) a company executes a deed of company arrangement under Part 5.3A; (iv) a restructuring practitioner for the company is appointed under section 453B; (v) a company makes a restructuring plan under Division 3 of Part 5.3B; and (b) a PPSA security interest granted by the company in collateral is covered by subsection (2). Note: A security interest granted by a company in relation to which paragraph (a) applies that is unperfected at the critical time may vest in the company under section 267 or 267A of the Personal Property Securities Act 2009. (2) This subsection covers a PPSA security interest if: (a) at the critical time, or, if the security interest arises after the critical time, when the security interest arises: (i) the security interest is enforceable against third parties under the law of Australia; and (ii) the security interest is perfected by registration, and by no other means; and (b) the registration time for the collateral is after the latest of the following times: (i) 6 months before the critical time; (ii) the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier; (iii) if the security agreement giving rise to the security interest came into force under the law of a foreign jurisdiction, but the security interest first became enforceable against third parties under the law of Australia after the time that is 6 months before the critical time - the time that is the end of 56 days after the security interest became so enforceable, or the time that is the critical time, whichever time is earlier; (iv) a later time ordered by the Court under section 588FM. Note 1: For the meaning of critical time, see subsection (7). Note 2: For when a security interest is enforceable against third parties under the law of Australia, see section 20 of the Personal Property Securities Act 2009. Note 3: A security interest may become perfected at a particular time by a registration that is made earlier than that time, if the security interest attaches to the collateral at the later time (after registration). See section 21 of the Personal Property Securities Act 2009. Note 4: The Personal Property Securities Act 2009 provides for perfection by registration, possession or control, or by force of that Act (see section 21 of that Act). Subsection 3 appears to have been immediately repealed after s 588FL was inserted. Vesting of security interest in company (4) The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of section 588FN: (a) if the security interest first becomes enforceable against third parties at or before the critical time - immediately before the event mentioned in paragraph (1)(a); (b) if the security interest first becomes enforceable against third parties after the critical time - at the time it first becomes so enforceable. Note: For the meaning of critical time, see subsection (7). … (7) In this section: critical time, in relation to a company, means: (a) if the company is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day under section 513A or 513B; or (b) if the company is under administration or is subject to a deed of company arrangement - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company; or (c) if the company is under restructuring or is subject to a restructuring plan - when, on a day, the event occurs by virtue of which the day is the section 513CA day for the company. 31 Since the decisions in K.J. Renfrey and Re Antqip, subsections 588FL(1)(a), (5)(b) and (7) have been amended such that from 1 January 2021 s 588FL also applied to the appointment of a restructuring practitioner or the company making a restructuring plan. The relevant operative provision in s 588FL(2)(b)(ii) however was not amended and remains in the form as it was considered in Re Antqip and K.J. Renfrey. 32 Section 588FM is a remedial provision: Section 588FM - Extension of time for registration (1) A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv). Note: If an insolvency-related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company. (2) On an application under this section, the Court may make the order sought if it is satisfied that: (a) the failure to register the collateral earlier: (i) was accidental or due to inadvertence or some other sufficient cause; or (ii) is not of such a nature as to prejudice the position of creditors or shareholders; or (b) on other grounds, it is just and equitable to grant relief. (3) The Court may make the order sought on any terms and conditions that seem just and expedient to the Court. 33 It is not necessary to set out the principles in relation to the making of a remedial order under s 588FM in the circumstances of the present application. The appropriate test is set out in K.J. Renfrey at [28], cited in Re Antqip at [68], and need not be repeated.

CONSIDERATION 34 I will first address the liquidator's application under s 90-15 of the IPS in respect of the Loan Agreement and the GSD.

Section 90-15 of the IPS: Entry into Loan Agreement and GSD 35 Having regarding to the factors listed in s 90-15(4) and the evidence led by the liquidator, I accept the plaintiff's submissions that: (1) the liquidator is faithfully performing his duties; (2) on the evidence before me, there is no suggestion that the liquidator has acted in breach of the Act or the IPS; (3) the liquidator's conduct in entering into the Loan Agreement and GSD was to the benefit of the Companies and its creditors where: (i) the receivers had been appointed by NAB, and the costs of the receivership were being passed onto creditors; (ii) the terms of the refinance were commercial in the liquidator's view as an experienced liquidator and not more onerous than NAB's terms; (iii) Egerton as the new lender had agreed not to appoint receivers and to absorb the receiver's costs so as not to burden the unsecured estate; (iv) the absence of the additional layer of external involvement in the form of the receivers increased the prospect of higher returns to the creditors; and (v) Assetinsure had agreed to forbear from enforcing its position. 36 Accordingly, I am satisfied that it is appropriate to grant relief under s 90-15, substantially in the form sought by the liquidator.

Relief under s 90-15 of the IPS or under s 588FM of the Act in respect of the Egerton Security 37 I now turn to the relief that the liquidator seeks under s 90-15 of the IPS in respect of the Egerton Security. 38 The Egerton Security was granted under the GSD. The liquidator was appointed on 22 November 2021. The GSD was executed on 3 December 2021. The GSD was part of the debt restructuring of the Companies that took place after the liquidator's appointment to the Companies. 39 Under the GSD, each grantor granted a security interest to Egerton pursuant to cl 3 which included an ALLPAP security interest under cl 3.2. In addition to the Companies, the following were grantors under the GSD: Cubic Interiors Pty Ltd (formerly known as Cubic Interiors Western Australia Pty Ltd); Cubic Access Floors Pty Ltd; Cubic Services Pty Ltd (formerly known as Cubic Joinery Pty Ltd); Cubic Equipment Pty Ltd; and Avoca Nominees Pty Ltd as trustee for the Avoca Trust. The "notice details" recorded against these additional grantors in the GSD are to Robert Migliorino, whereas the Companies' notice details contain Mr Cathro's details. As part of the GSD, the parties each acknowledged and agreed that the security interest(s) granted in the GSD "will not vest in the Liquidation Companies (or any one of them) under section 588FL of the Corporations Act, as such security interest(s) are being granted after the "critical time" (as that term is defined in section 588FL of the Corporations Act), and such security interest(s) are not arising after the "critical time"". 40 The Egerton Security was registered on the PPSR on 9 December 2021 which was within 20 business days of the day on which it was granted (that is, 3 December 2021). However, it was not registered before the date of the liquidator's appointment being the relevant critical time under s 588FL(7)(a) of the Act. Accordingly, if s 588FL(2) covers PPSR security interests that are granted after the critical time, the Egerton Security will be treated as having vested in the Companies because it was registered on 9 December 2021, which is a time after 22 November 2021, being the date on which the liquidator was appointed, and the relevant critical time specified in s 588FL(7), unless an order is made under s 588FM extending the registration time to 9 December 2021.

K.J. Renfrey 41 In K.J. Renfrey, OneSteel was placed into administration on 7 April 2016 and this was the critical time for the purposes of s 588FL. At the time of administration, OneSteel had hired various plant and equipment from K.J. Renfrey under an equipment hire services agreement dated July 2013. Shortly thereafter, K.J. Renfrey registered its security interest on the PPSR. That registration erroneously identified Arrium Limited, OneSteel's parent company, as the grantor. That error was not identified until after OneSteel was placed into administration. 42 A dispute between the administrators of OneSteel and K.J. Renfrey arose over whether the registration was effective under the PPSA. The dispute was resolved by the administrators and K.J. Renfrey agreeing to enter into a new equipment hire agreement pursuant to which K.J. Renfrey would be granted new security interests. The equipment hire agreement was entered into on 25 November 2016 and effective from 1 September 2016. The security interests were registered on the PPSR on 12 December 2016, within 20 business days of the security interest arising. 43 Her Honour held that s 588FL, read as a whole, extended to PPSA security interests that are granted after a relevant s 588FL(1)(a) event: (K.J. Renfrey at [15]). 44 At [20], her Honour observed: The express provision in s 588FL(2) that the subsection covers a security interest "arising after the critical time", being an expression defined by reference to the events prescribed in s 588FL(1)(a), is a powerful textual and contextual reason against OneSteel's construction of s 588FL(1) that the "granting" of that interest must have already occurred at the time of the triggering event under subparagraph (a). A security interest that "arises after the critical time" is congruent to a security interest "granted" by the company after the relevant event prescribed in s 588FL(1)(a) that "is covered" by s 588FL(2). Read in that way, the different tenses in s 588FL(1)(a) and (b) do not connote that it is necessary that the security interest be "granted" by the company before the relevant event "occurs", that is, as a requirement to be satisfied as a past event before the relevant s 588FL(1)(a) event occurs. 45 Critically, her Honour then determined (at [24]): …Contrary to the submissions of the parties, I do not think that the word "when" imports the requirement that a security interest must meet the requirements of both subparagraphs of s 588FL(2)(a) at the time that the security interest arises. The word "when" includes, in ordinary meaning, the meaning of "upon or after which; and then": Macquarie Dictionary 7th edition. Read in that way, the word "when" does not convey a requirement that the security interest be enforceable and perfected at the time that it arises but, rather, upon or after arising, the two requirements of enforceability and registration be met. Such a construction gives effect to the ordinary meaning of the word and has a coherence with the section as a whole, avoiding the anomalous result pointed out by Renfrey that s 588FL would only apply to security interests arising after the critical time but registered before they arise (if that be possible) and not to security interests arising after the critical time but registered after they arise. The section plainly contemplates that security interests arising after the critical time, which are thereafter registered, are within its scope and no logical reason is apparent for construing the provision in a way that would exclude from the scope of the section, security interests that arise after the critical time but which are only registered after they arose. 46 With respect to the operation of s 588FL on the newly granted security interests her Honour then concluded at [26]: The provision in issue is s 588FL(2)(b)(ii). The language employed is that it is the earlier of the time frames of 20 business days after the security interest arises, or the critical time. The earlier of those time frames, in turn, is the latest of the times stipulated by s 588FL(2)(b). On this construction, where a security interest is registered after the commencement of the winding up or appointment of administrator (as the case may be), the security interest would vest in the grantor company on creation, even if registered within 20 business days after the security agreement came into force, unless an order was made under s 588FM extending the time for registration. The security interest granted by OneSteel to Renfrey is in this category as the registration was effected after the critical time, albeit within 20 business days of the security arising. I have therefore concluded that s 588FL(2) would cover the security interest granted by OneSteel to Renfrey, absent an order under s 588FM fixing a later registration time for the purposes of s 588FL(2)(b) and, thus, s 588FL(4) would be engaged, but for an order under s 588FM of the Corporations Act.

Other single judge decisions following K.J. Renfrey 47 This approach was followed by Besanko J in Mentha, in the matter of Arrium Finance Limited v National Australia Bank Limited [2017] FCA 818 at [21]. In Arrium Finance, security interests arose and were registered after the grantor was placed into administration. In considering whether an order should be made pursuant to s 588FM(2)(b), his Honour had regard to the effect that the order would have on unsecured creditors, including having regard to the objects of Part 5.3A of the Act. Similarly, Markovic J in Ten Network at [58] to [64] summarised and adopted the analysis of Davies J in K.J. Renfrey concluding that s 588FL applied to security interests granted after the critical time. Her Honour then proceeded to consider whether an order should be made pursuant to s 588FM(2)(b) on just and equitable grounds (at [65] to [69]). Similarly, Greenwood J in Flow Systems at [65] considered and accepted the reasoning of Davies J and Markovic J in the cases cited above. In that case, his Honour accepted that s 588FL applied to security interests, that had been granted when the company was under the control of an external administrator (at [65]). Finally, in McWilliam's Wines, Gleeson J said at [35] that it was "now well established" that s 588FL applied to the grant of security interests when a company is under external administration relying on the judgments of K.J. Renfrey, Ten Network Holdings and Flow Systems. 48 As noted at paragraph 11 above, the decision in K.J. Renfrey has also been followed in two decisions which post-date the decision in Re Antqip. In Geelong Fire at [30], Moshinsky J cited with approval Gleeson J's observations in McWilliam's Wines at [34] to [37] and considered it appropriate to make an order under s 588FM extending the time for registration. In Ellume, Downes J made an order under s 588FM extending the time for registration in respect of security interests created under a general security deed which was granted after the critical time. In both Geelong Fire and Ellume, the construction derived from the decision in K.J. Renfrey was applied, relying on McWilliams Wines. However, as mentioned above, in neither case was the Court referred to Re Antqip.

Re Antqip 49 I turn now to the decision of Brereton JA in Re Antqip, which has recently been followed in this Court by Jackman J who observed that Brereton JA's analysis was compelling: Revroof at [17]. Like Re Antqip, Revroof was concerned with a security interest granted after the critical time. 50 Re Antqip concerned two companies that went into voluntary administration in February 2014 and subsequently entered deeds of company arrangement. The critical time under s 588FL(7)(a) was 3 February 2014, the date on which the administration began: Re Antqip at [39]. Thereafter, the companies refinanced their existing debt and granted an ALLPAP security interest in favour of the incoming financier. The security interest was registered in October 2014, but erroneously identified the end date to be three years after registration. In April 2019, the financier, having become aware that the registration had lapsed, re-registered its ALLPAP security interest on 23 April 2019. The companies went into voluntary liquidation on 27 May 2019. The financier subsequently applied seeking an extension of time under s 588FM to prevent its interest vesting in the grantor under s 588FL. Without deciding the precise date on which the security interest was granted, Brereton JA found that it must have been granted, and arose, after the critical time, pursuant to the relevant deed of charge of 26 October 2014: at [40]. 51 In concluding that s 588FL did not apply on the facts before him, Brereton JA distinguished between two different scenarios. The first scenario was where the security interest was granted after the critical time, in which case s 588FL did not apply. The second scenario was the situation where the relevant security interest was granted before the critical time but arose after it, in which case s 588FL did apply. 52 His Honour declined to follow the earlier decisions of this Court, which I have described as the K.J. Renfrey line of authority, which held or assumed that s 588FL applied to security interests granted after the critical time because in his view those cases do not reflect the significance of the use of "granted" in s 588FL(1)(b) as compared to the use of "arises" in the chapeau of s 588FL(2)(a). At [47] his Honour said: I agree with Davies J that s 588FL(2) can cover a security interest that arises after the critical time; as her Honour emphasised in K J Renfrey, the second limb of s 588FL(2)(a) expressly refers to the circumstance where "the security interest arises after the critical time". However, in my respectful opinion, there are difficulties in the reasoning in K J Renfrey which extends that to a security interest granted after the critical time, in the following respects (which relate to the portions emphasised in the above extracts from [20] and [24] of her Honour's judgment): (1) the reference to an interest that arises after the critical time does not indicate, textually or contextually, that that encompasses one that is granted after the critical time. Textually and contextually, the use of the past tense "granted" in s 588FL(1)(b) connotes a security interest that has already been granted when the relevant insolvency event in s 588FL(1)(a) occurs; (2) the concepts of "grant" in s 588FL(1)(b) and "arises" in s 588FL(2)(a) are not congruent, but distinct - as too is the concept of the time "the security agreement that gave rise to the security interest came into force" in s 588FL(2)(b)(ii); (3) if "when" is construed as it was, this would mean either that it had a different meaning in respect of security interests arising after the critical time, or that in respect of security interests arising before the critical time it permitted them to be perfected after the critical time, which is inconsistent with PPSA, s 267, for the reasons explained in OneSteel; (4) the suggested anomaly that s 588FL would only apply to security interests arising after the critical time but registered before they arise, and not to security interests arising after the critical time but registered after they arise, is in fact not anomalous, but is congruent with PPSA, ss 267 and 267A; and (5) the provision does not contemplate that security interests arising after the critical time can thereafter be registered, but that they are already registered when the security interest arises. (emphasis in original) 53 At [48], Brereton JA concluded, for the reasons given in detail at [49] to [59], that: the effect of the words "if the security interest arises after the critical time" in s 588FL(2)(a) is to capture a case in which a security interest granted before the critical time, and perfected by registration, does not arise (by attachment, upon which it also becomes enforceable against third parties) until after the critical time, whereupon it vests in the grantor. (emphasis original) 54 I will not extract the whole of the detailed reasons given by his Honour in those reasons. By way of summary only, his Honour's conclusion was supported by a textual analysis which honed in on the distinction between the use of "granted" and "arises" in the particular subsections and was further supported by the interrelationship between s 588FL of the Act and the broader relevant legislative framework including s 468 of the Act and ss 267 and 267A of the PPSA. 55 Having considered the two competing lines of authority, I have respectfully reached the conclusion that s 588FL does not cover security interests granted after the critical time. Like Jackman J in Revroof, I find the analysis in Re Antqip compelling. The approach accords with the well-established principles of statutory construction. The starting, and finishing, point must be the text of the relevant provisions in the context of the legislative scheme. The relevant principles which inform the task of statutory construction require consideration of the text, context and purpose: see, in particular, s 15AA of the Acts Interpretation Act 1901 (Cth); Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; 153 ALR 490; [1998] HCA 28 at [69] (McHugh, Gummow, Kirby and Hayne JJ); Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; 293 ALR 257; 91 ACSR 359; [2012] HCA 55 at [39] (the Court); Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross (2012) 248 CLR 378; [2012] HCA 56 at [25]-[26] (French CJ and Hayne J); SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14] (Kiefel CJ, Nettle and Gordon JJ); Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (2020) 282 FCR 1; [2020] FCAFC 192 at [4] (Allsop CJ).

Text 56 In addition to Brereton JA's analysis of the text of s 588FL in Re Antqip at [47], which is extracted above, I would add that if s 588FL applies to security interests granted after the critical time, it creates an odd result in that a security interest would vest in the grantor at a time prior to the creation of the security interest. As noted by the learned authors of Interpretation, (Thomson Reuters (Professional) Australia Limited, 2nd ed, 2020) at [9.30]: It is presumed that Parliament does not intend to enact legislation with consequences that can be described as … "anomalous," … "curious", … "impossible"…, if two constructions of a provision are open, the court will prefer that which avoids such consequences. 57 The observations of Brereton JA in Re Antqip at [70] as to s 588FM being a "very strange way" to effect a species of curial oversight of securities granted by companies following an insolvency event of the type described in s 588FL(1)(a) are apt in this regard: "…In the first case, the object is to require timely notification of the security interest, via the PPSR, so that those dealing with the company may ascertain that it has granted a security interest; this is achieved by vesting an interest that has not been the subject of a timely registration in the company if an insolvency event occurs, but in order to avoid injustice provision is made in s 588FM for an order immunising a security interest that has been perfected by registration before the critical time from vesting on account of not having been promptly registered by fixing a later time for registration. In the second case (on the relevant hypothesis), which is that presently relevant, the object is not to require timely notification, but to avoid the creation of security interests after the "critical date", regardless of whether and when they are registered; this is achieved by vesting the security interest in the company upon creation, but in order to avoid injustice, provision is made in s 588FM for an order validating the security interest, again by the (curious in this context) mechanism of fixing a later time for registration. In the presently relevant context of security interests that are granted after the critical time, s 588FM effectively provides a means for avoiding the vesting that would otherwise deprive them of practical effect, by permitting an order to be made which has the effect of validating what is otherwise a nugatory post-liquidation transaction, in a manner similar to a validating order under s 468(1). This difference in the operation of s 588FM in respect of a security interest granted after the critical time, and the fact that the mechanism of fixing a later registration time is a very strange way of achieving that result, in fact reinforces the view that s 588FL does not catch security interests granted after the critical date at all."

Context 58 The context in which s 588FL sits also indicates that the provision was not intended to apply to security interests granted after the critical time. 59 The Explanatory Memorandum to the Personal Property Securities (Corporations and Other Amendments) Bill 2010 (Cth) (EM) at [6.5] sets out four example scenarios and considers whether s 588FL(4) would or would not apply to those scenarios. Consistent with the purpose, as considered below, none of the scenarios contemplate the granting of a security interest after a company becomes insolvent. I note that this feature of the EM was considered by Davies J in K.J. Renfrey at [23] where her Honour did not consider it significant that all four examples provided concerned security given before s 588FL(1)(a) event because "nothing is said in the [EM] to indicate that Parliament did not intend s 588FL also to apply to security interests arising after a relevant event has occurred in relation to a grantor company". I do not put too much stock in the EM, but I do think it is another indication that s 588FL is not directed to PPSA security interests granted after the critical time. 60 As noted by Brereton JA in Re Antqip at [58] - [59], a compelling reason for s 588FL to apply only to security interests granted before the critical time is that in the case of winding up, s 468 already voids any disposition of property made after the commencement of a (court-ordered) winding up. The plaintiff submitted and I accept that Brereton JA's reasoning is a fortiori having regard to s 477(2)(g) of the Act which provides as follows: Powers of liquidator ... (2) Subject to this section, a liquidator of a company may: (g) obtain credit, whether on the security of the property of the company or otherwise; … 61 The structure of the Act supports the view that Part 5.4B rather than s 588FL is intended to govern the granting of security after a liquidator has been appointed. 62 The contradictor submitted that insofar as in accepting Brereton JA's analysis is based on the circumstance of a company that is subject to winding up, care should be taken because s 588FL(1)(a) contemplates a broader set of events than would be covered by s 468. That is correct - s 588FL does apply to a broader range of insolvency events. However, an analysis of the Act reveals that there are specific provisions in the Act which govern the granting of security interests after the occurrence of the events listed in s 588FL(1)(a)(ii) to (v) which reinforce Brereton JA's analysis based on s 468 in the context of a winding up event in s 588FL(1)(a)(i).

Administration / DOCA 63 Section 588FL(1)(a)(ii) specifies as the relevant event the appointment of an administrator under section 436A, 436B or 436C of the Act. Section 588FL(1)(a)(iii) specifies entry into a DOCA as the relevant event. Part 5.3A of the Act concerns the appointment of administrators and the execution of DOCAs and contains provisions which govern the exercise and limits of a security party's rights in these contexts. 64 During administration: (1) Section 437D provides that a transaction or dealing is void unless the administrator enters into it on the company's behalf; or the administrator consented to it in writing before it was entered into or it was entered into under an order of the Court. (2) Section 440B imposes restrictions on the exercise of third party property rights, including PPSA security interests during an administration without the administrator's written consent or the leave of the court. (3) Subdivision B of Division 7 of Part 5.3A contains provisions which provide exemptions to section 440B in certain circumstances, for example, where the enforcement of the security interest began before administration (s 441B). Even then, the Court may limit the powers of a secured party on application of the administrator (s 441D). 65 Division 10 of Part 5.3A places restrictions on a secured creditor's rights in the lead up to and consequential upon the execution of a DOCA: (1) Section 444D(1) provides that a DOCA binds all creditors of a company (with some exceptions). (2) Section 444C provides that a creditor is not to act inconsistently with the DOCA before its execution. (3) Section 444E provides that a person cannot bring or proceed with a proceeding or enforcement process in relation to property of the company except with the leave of the Court. (4) Section 444F provides that the Court if it is satisfied of certain conditions, may limit rights of a secured creditor in respect of their security interest.

Restructuring / Restructuring Plan 66 Part 5.3B concerns the restructuring of a company. 67 During the restructuring of a company: (1) Section 453L(5) voids transactions entered into by a company under restructuring unless it was in the ordinary course of the company's business, under an order of the Court or the restructuring practitioner has provided consent. (2) Section 453R imposes restrictions on the exercise of third party property rights, including PPSA security interests during the restructuring of the company without the restructuring practitioner's written consent or the leave of the Court. (3) Subdivision F of Division 2 of Part 5.3B contains provisions which provide exemptions to section 453R in certain circumstances, including for example, where the enforcement of the security interest began before restructuring (s 454D). Even then, the Court may limit the powers of a secured party on application of the administrator (s 454F). 68 Pursuant to regulation 5.3B.64(2) of the Corporations Regulations 2001 (Cth) and subject to s 454C(3) of the Act, where a company is under restructuring or a company makes a restructuring plan that has not been terminated, the Court may order a secured creditor of the company not to realise or otherwise deal with the security interest, except as permitted by the order. 69 It follows from the above analysis that, as with Part 5.4B in respect of the winding up of a company, Parts 5.3A and 5.3B govern the granting of security interests after the occurrence of the events listed in s 588FL(1)(a)(ii)-(v). The observations made by Brereton JA that it would be a strange way to achieve curial supervision of security interests granted after the critical time although made in respect of s 468 of the Act are apposite in respect of each of the events in s 588FL(1)(a) given the broader context outlined above. 70 Accordingly, s 588FL properly construed in context does not apply to security interests granted after the critical time. 71 I now turn to consider the congruency between s 588FL and the PPSA. By way of supplementary analysis to Brereton JA's observations in Re Antqip, I note the following additional contextual matters. 72 Section 588FK relevantly provides as follows: 588FK Interpretation and application (1) A word or expression used in this Division has the same meaning as in the Personal Property Securities Act 2009. (2) Subsection (1) applies despite any other provision of this Act (subject to subsection (4)). … 73 Section 267 of the PPSA provides as follows: 267 Vesting of unperfected security interests in the grantor upon the grantor's winding up or bankruptcy etc. Scope (1) This section applies if: (a) any of the following events occurs: (i) an order is made, or a resolution is passed, for the winding up of a company or a body corporate; (ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise); (iii) a company or a body corporate executes a deed of company arrangement (whether under Division 10 of Part 5.3A of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise); (iiia) a restructuring practitioner for a company or a body corporate is appointed (whether under section 453B of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise); (iiib) a company or a body corporate makes a restructuring plan (whether under Division 3 of Part 5.3B of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise); (iv) a sequestration order is made against a person (the bankrupt) under the Bankruptcy Act 1966; (v) a person (the bankrupt) becomes a bankrupt by force of section 55, 56E or 57 of the Bankruptcy Act 1966; and (b) a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies: (i) in the case of a company or body corporate that is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day (whether under section 513A or 513B of the Corporations Act 2001, under either section as applied by force of a law of a State or Territory, or otherwise); (ii) in the case of a company or a body corporate to which subparagraph (a)(ii) or (iii) applies - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise); (iia) in the case of a company or a body corporate to which subparagraph (a)(iiia) or (iiib) applies - when, on a day, the event occurs by virtue of which the day is the section 513CA day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise); (iii) in the case of a bankrupt - when a sequestration order is made against the bankrupt under the Bankruptcy Act 1966, or when he or she becomes a bankrupt by force of section 55, 56E or 57 of that Act. Note 1: For the meaning of company, see section 10. Note 2: See also Division 2A of Part 5.7B of the Corporations Act 2001. Security interest vested in grantor (2) The security interest held by the secured party vests in the grantor immediately before the event mentioned in paragraph (1)(a) occurs. Note: This subsection does not apply to certain security interests (see section 268). … 74 Section 267A of the PPSA provides as follows: 267A Vesting in grantor of security interest that attaches after winding up etc. Vesting of security interest (1) A security interest vests in the grantor when it attaches to the collateral if: (a) paragraph 267(1)(a) applies in relation to the grantor; and (b) before the time (the critical time) mentioned in paragraph 267(1)(b), the grantor enters into a security agreement with the secured party that provides for the secured party to take a security interest in collateral from the grantor; and (c) at the critical time: (i) the security interest has not attached to the collateral; and (ii) there is no registration that would perfect the security interest when it attaches to the collateral; and (d) after the critical time, the security interest attaches to the collateral; and (e) at the time of attachment: (i) the security interest is unperfected; or (ii) if the security interest is perfected, it is perfected only by a registration for which the registration time is after the critical time. Note: This section does not apply to certain security interests (see section 268). 75 Section 267A was inserted, through the same instrument which inserted s 588FL, namely the Personal Property Securities (Corporations and Other Amendments) Act 2010 (Cth). 76 The EM in respect of s 267A states as follows: 9.149 Subsection 267(2) provides that a security interest vests in the grantor immediately before an event (such as the winding up of the company or other events such as those listed in subsection 267(1)(a) if the security interest is unperfected at a particular time (as provided for by subsection 267(1)(b)). However, it is possible for a security interest to be created and/or attach after the event referred to in the section. The current effect of the PPS Act is that a security interest that attaches after the event would not vest in accordance with the section. However, a security interest that attaches after the event should also vest in the grantor if it is unperfected by a registration made before the event listed in subsection 267(1). 9.150 This amendment would have the effect that an unperfected security interest that attaches to the collateral after the event referred to in subsection 267(1)(a), in accordance with a security agreement made before that event, would vest in the grantor in the same way that security interests that attach before the relevant time. (emphasis added) 77 As Brereton JA recognised in Re Antqip at [52], both s 267 of the PPSA and s 588FL of the Act contain notes which draw attention to the other provision. I note that the events listed in s 267(1)(a)(i)-(iiib) are comparable to the events listed in s 588FL(1)(a). 78 The EM in respect of s 267A recognised that s 267(2), which does not mention security interests arising after the trigger event provided in s 267(1)(a), did not capture a security interest which was created and / or attaches after the trigger event. To address this issue, s 267A was enacted. 79 Importantly, despite recognising that s 267 did not capture security interests created after the trigger event, s 267A as inserted was not intended to capture those security interests. Rather, the effect of s 267A was to ensure that unperfected securities granted prior to the trigger event would vest with the grantor regardless of whether they attached to the collateral before or after the trigger event. 80 As noted by Brereton JA in Re Antqip at [53], s 267 and 267A work in a complementary fashion alongside s 588FL, capturing securities unperfected at the time of the trigger event, whereas s 588FL captures perfected security interests which at the critical time were not registered within the time provided for under s 588FL(2)(b). 81 Having regard to the above analysis, I respectfully agree with Brereton JA's conclusion that it is congruent with the PPSA ss 267 and 267A for s 588FL to not apply to security interests granted after the critical time. In reaching this conclusion, I am not dissuaded by s 267A(1)(b) being quite explicit in its application to only security agreements which are entered into prior to the critical time whereas s 588FL is not.

Purpose 82 Section 588FL was inserted as the successor to the former section 266 of the Act. The EM to the inserting Act sets out the purpose of s 588FL: Although Chapter 2K would be repealed, section 266 would be retained to prevent security interests being granted fraudulently with knowledge of an imminent administration, liquidation or deed of company arrangement and to avoid property falling into the trustee's or administrator's estate or being claimed by unsecured creditors. (emphasis added) 83 The purpose as extracted above has been recognised as being the purpose of s 588FL in single instance judgments of this Court and the Victorian Supreme Court: Pozzebon (Trustee) v Australian Gaming and Entertainment Ltd (in liq) [2014] FCA 1034 at [48]; Carrafa, Gountzos & Lofthouse (as liquidators of Relux Commercial Pty Ltd (in liq)) & Anor v Doka Formwork Pty Ltd [2014] VSC 570 at [60]. 84 To read s 588FL as applying to security interests granted after the critical time, particularly by the appointed liquidator, administrator, restructuring practitioner or pursuant to a deed of company arrangement or restructuring plan, is to divorce the section from the purpose to which it is directed - namely, preventing the fraudulent granting of security interests with knowledge of an imminent administration, liquidation, restructuring, deed of company arrangement or restructuring plan.

Conclusion in respect of Egerton Security 85 I am satisfied that on the proper construction of s 588FL, the Egerton Security is not covered by the section. Accordingly, I will make a direction substantially in the form sought by the liquidator under s 90-15 of the IPS. I note that the effect of this declaration will be to protect the liquidator on the basis that he was justified in not seeking relief under s 588FM. 86 Given the confined nature of the relief under s 90-15 of the IPS I consider there is utility in also making an order which is expressed to be conditional on necessity extending the time for registration under s 588FM. In taking this approach I am adopting the approach taken by Jackman J in Revroof recognising that there is as yet no intermediate appellate authority on the point. In making this order, I note that had it been necessary to do so I would have been satisfied that on the evidence before me it was just and equitable to make an order under s 588FM extending the time for the purpose of s 588FL(2)(iv).

CONCLUSION 87 For these reasons, I will make orders substantially as sought by the plaintiff. I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Cheeseman.

Personal Property Securities (Corporations and Other Amendments) Act 2010(Cth)

Corporations Act 2001(Cth)ss 588FL, 588FM

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