Commissioner of Taxation v 4 Doonan Street Collinsville Pty Ltd

IN THE MATTER OF FORGE GROUP LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ) ACN 065 464 226 LANGDON AND MENTHA, IN THEIR CAPACITIES AS RECEIVERS AND MANAGERS OF FORGE GROUP LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQ) (ACN 065 464 226) Plaintiffs

JUDGE: GILMOUR J DATE OF ORDER: 1 MARCH 2017

(Words and expressions in these Orders have the same meaning as used in the Reasons for Judgment). (1) For the purposes of section 433 of the Corporations Act 2001 (Cth) and generally: (a) neither the Refund, nor the right to claim the Refund, was or is property in the hands of the plaintiffs in their capacities as receivers and managers of Forge as at the date of their appointment (being 11 February 2014); (b) the security interest held by ANZ as Security Trustee pursuant to the GSA in respect of the Refund is not a circulating security interest; and (c) the plaintiffs are not required to apply the Refund to satisfy priority employee entitlements in priority to any claims for principal or interest in respect of the GSA. (2) The costs of and incidental to this application are an expense properly incurred by the plaintiffs in the receivership of Forge and are to be paid from the secured assets of Forge. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GILMOUR J: 1 The plaintiffs, as receivers of Forge Group Limited (Forge) (Receivers) seek directions from this Court, pursuant to s 424 of the Corporations Act 2001 (Cth) (Corporations Act) as to whether monies received from the Australian Tax Office (ATO) by way of a refund (Refund) as a result of the Receivers' application to the ATO are monies which must be paid to satisfy preferential employee entitlements pursuant to s 433 of the Corporations Act or whether they are to be paid to ANZ Fiduciary Services Pty Ltd (ANZ) as Security Trustee. 2 The Receivers have invited the Australian Government Department of Employment (Department) as the governmental representative of the other principal party with an interest in the subject matter of this application to act as a contradictor and the Department has agreed to do so. 3 Hammersley Iron Pty Ltd was granted leave, as intervenor, to be heard in this proceeding, in circumstances where there are proceedings pending between it and Forge and other companies in the Forge Group, in the Supreme Court of Western Australia, where there is arguably some overlap as to issues in those proceedings and this proceeding. 4 The Receivers were appointed under a power contained in an instrument, a General Security Agreement dated 2 July 2013 (GSA). Accordingly, the statutory elements of s 424 are met. 5 The parties accept, correctly in my view, that this application is an appropriate matter for directions to be given by the Court under s 424. 6 In the present circumstances if the receivers dealt with the Refund incorrectly it could be alleged they acted in breach of the Corporations Act or in breach of trust: Cook v Italiano Family Fruit Company Pty Ltd (in Liquidation) (2010) 276 ALR 349 at [80]. The use of directions to protect receivers from such claims is a proper basis for invoking s 424: Korda v Silkchime Pty Ltd (Receivers and Managers Appointed) (2010) 243 FLR 269 at [31]. The matters, the subject of this application, involve legal questions of some complexity which affect the performance and exercise of the functions of the Receivers. 7 The directions sought are now confined to two questions: (a) what is the date for fixing the assets the subject of s 433; and (b) whether the Refund or associated chose in action is a circulating asset within the meaning of s 51C of the Corporations Act? 8 The Receivers contend that the relevant date is the date of appointment of the Receivers and that the Refund is not a circulating asset, which therefore is not caught by the reach of s 433 and is an asset available to ANZ as secured creditor.

The evidence 9 The application is supported by the affidavit of Scott Langdon, one of the Receivers, sworn on 2 November 2015 and the affidavit of Robert Black, one of the solicitors for the Receivers, sworn on 20 April 2016.

Background 10 The following background, which is not contentious, was drawn substantially from the plaintiff's written submissions. 11 The Administrators were appointed to Forge on 11 February 2014 by ANZ under powers in the GSA. 12 Liquidators were appointed to Forge on 18 March 2014 at a meeting convened under s 439A of the Corporations Act. The Administrators became the Liquidators. 13 Forge is one of a number of companies referred to collectively as the Forge Group. The Administrators, Receivers and Liquidators were appointed to each company in the Forge Group in the same manner and on the same dates as with Forge. 14 The Forge Group is an Australian income tax consolidated group for the purpose of Part 3-90 of the Income Tax Assessment Act 1997 (Cth) (ITAA97). Forge is the head company of that group. In that capacity, it became liable for the tax of Forge Group and lodged assessments of the group's taxable income. 15 Entities within the Forge Group were contracted to perform a range of civil procurement, design and construction works for major projects in Western Australia, particularly in the Pilbara. Those entities entered into long term contracts to perform such major works (Contracts). 16 A number of those Contracts were terminated by the other parties after the appointment of the Receivers and the Administrators. Accordingly, the ATO accepted that it could not expect the Forge Group to perform its obligations under any of the Contracts and the estimated amounts brought to tax were now capable of being ascertained as actual profits and losses and it was appropriate to apply section 170(9) of the Income Tax Assessment Act 1936 (Cth) (ITAA36) to amend the 2012 Assessment and 2013 Assessment. 17 Section 170(9) of the ITAA36 specifically applies to the tax treatment of long-term contracts. That provision provides that: Notwithstanding anything contained in this section, when the assessment of the taxable income of any year includes an estimated amount of income, or of profits or gains of a capital nature, derived by the taxpayer in that year from an operation or series of operations the profit or loss on which was not ascertainable at the end of that year owing to the fact that the operation or series of operations extended over more than one or parts of more than one year, the Commissioner may at any time within 4 years after ascertaining the total profit or loss actually derived or arising from the operation or series of operations, amend the assessment so as to ensure its completeness and accuracy on the basis of the profit or loss so ascertained. 18 As a result of and following the termination of the Contracts, it became possible to "[ascertain] the total profit or loss actually derived or arising from" those Contracts. The Receivers instructed PricewaterhouseCoopers (PWC) to review the operation of section 170(9) of the ITAA36 in these circumstances and, if appropriate, act as the Forge Group's tax agent in any objection to the 2012 Assessment and 2013 Assessment. 19 Following the PWC review of the position, the Receivers instructed PWC to lodge an application/objection under s 170(9) of the ITAA36, and that objection was accepted and resulted in a payment to the Receivers, in that capacity, by the ATO of the Refund, being the sum of $53,469,010.64. The Refund was paid to Forge in two tranches of $22,690,742.68 and $30,778,267.96, on 9 and 11 March 2015 respectively. 20 ANZ is owed an amount exceeding $171 million by Forge and is a secured party within the meaning of the Personal Properties Securities Act 2009 (Cth) (PPSA). There are also outstanding entitlements due to employees of the Forge Group that comprise priority payments for the purpose of s 556(1) of the Corporations Act, as made relevant in this context by s 433.

The Refund: after - acquired property 21 Until just before the hearing the parties had agreed, correctly in my opinion, upon the following matters. First, the assessment process under s 170(a) of the ITAA36 gives rise to no more than an expectancy and does not constitute "property" within the definition in s 9 of the Corporation Act. Whilst the Commissioner may amend, no amendment can be assessed until after such time as the Commissioner is able to "ascertain the total profit or loss actually derived or arising from the operation or series of operations". Second, a right to a refund arises upon the exercise by the Commissioner of the power under s 170(9) of the ITAA36. Once the amended assessment was issued, the Commissioner was obliged to pay a refund under Part 11B s 8AAZLF(1) of the Taxation Administration Act 1953 (Cth) (TAA) and Forge was entitled to enforce that payment. From that time, Forge had a chose in action with respect to payment. A chose in action is property. Third, accordingly, such chose in action and the Refund itself are property acquired only after the appointment of the Receivers and there is no relevant property prior to that date. 22 Belatedly the Department, in what appears to be a volte face, submitted in oral argument that, whilst what it characterised as the inchoate statutory interest in obtaining a tax refund was not pre-appointment property within the meaning of s 9 of the Corporations Act, nonetheless the statutory interest was "encompassed by" and therefore "comprised in" the circulating security interest. 23 Thus, it contends, that whilst the property arose after the appointment of the Receivers it nevertheless meets the statutory description of property which was comprised within a circulating security interest by virtue of the fact that the statutory interest arose at the time the parties entered into the GSA. 24 These oral submissions were somewhat different to the Department's supplementary written submissions where, for example, at [28] it submits that the inchoate statutory interest, so described, "may well be encompassed by the definition of 'property' [in s 9 of the Corporations Act] and therefore within the scope of s 433 [of that Act]". 25 Whatever be the correct import of its submissions, I do not accept any of them now advanced by the Department, for reasons which I will explain later in these reasons.

The PPSA reforms 26 The PPSA and PPS Register took effect from 30 January 2012. The PPSA reforms followed reforms in other countries and introduced significant changes to the law of securities. In particular the reforms tackled the difficulties arising from the distinction between fixed and floating charges particularly as this related to disputes between secured and preferential creditors. The reforms created a new regime for security interests in Australia: Lewis & Templeton Warehouse Sales Pty Ltd (in liq) v LG Electronics Australia Pty (2016) 308 FLR 100 [150]. 27 While pre-PPSA laws focussed on the form of security and the sources of law varied according to such security, the PPSA applies to all "security interests" in personal property, regardless of form. 28 A "security interest" is defined broadly and focuses on function. It is any interest arising under a transaction that in substance secures payment or performance of an obligation: PPSA s 12. 29 The PPSA introduced a new vocabulary including that of "collateral". 30 An 'all assets' security granted pre-PPSA by way of a fixed and floating charge is now likely to be provided by a written "general security agreement" which is perfected by registration on the PPS Register. This is what occurred in this case by the GSA. 31 The PPSA does not distinguish between fixed and floating security interests and there is no ongoing relevance for related concepts such as "crystallisation". The concept of floating charge is not included within the PPSA regime. The term "floating charge" is referred to in the PPSA only in a limited adjectival, rather than substantive, way, including as a transitional measure in chapter 9: see PPSA ss 10, 12, 19, 25, 304, 309, 318, 338, 339. 32 This is not to say that the effect of the PPSA is to abolish the distinction between fixed and floating damages, including the concept of crystallisation, for all purposes. I do not need to determine that question. 33 The Replacement Explanatory Memorandum, Personal Property Securities Bill 2009 (Cth) at page 11 states that the PPSA "would do away with the equitable concept of crystallisation of floating charges and interests in after-acquired property which attach on the acquisition of the property by the grantor". 34 The terms of the PPSA reflect this objective. 35 Regardless of form and language, so long as the transaction concerns personal property and, in substance, secures payment or the performance of an obligation, the PPSA will deem the charge to constitute a "security interest" and it will be subject to the PPSA: PPSA ss 12(1), 12(2)(a)-(b). A reference to a "floating charge" in a security agreement is deemed a reference to a "security interest that has attached to a circulating asset": PPSA s 339(5). 36 All security interests under the PPSA attach to collateral pursuant to s 19(2) as soon as the grantor has rights in the property. This result does not depend on an event of default or crystallisation before attachment occurs: Jason Harris and Nicholas Mirzai, Annotated Personal Property Securities Act 2009 (Cth) (CCH, 2011) [12.5.2.2]. A security agreement may provide for a security interest in after-acquired property and a security interest in such property attaches without specific appropriation by the grantor. It attaches as soon as the property is acquired: s 18 and s 19(2). There is no role for 'crystallisation'. 37 All security interests under the PPSA, are, employing traditional language, "fixed": Wappett, Whittaker and Edwards, Personal Property Securities in Australia (LexisNexis) [1.2450]. Then, as the learned authors explain, because other legislation and security agreements continue to refer to "charges", "fixed charges", or "floating charges", the PPSA includes provisions which explain how these terms are to be interpreted in the PPSA environment. Relevantly, it does so in order to preserve the position of particular creditors under the Corporations Act: Personal Property Securities in Australia [4.6.1000] 38 The PPSA does this through Part 9.5. Relevantly, ss 339(4) and (5) in Part 9.5 of the PPSA provide that in a law of the Commonwealth or in a security agreement: (a) a reference to a fixed charge is taken to be a reference to a security interest that has attached to personal property that is not a circulating interest; and (b) a reference to a floating charge is taken to be a reference to a security interest that has attached to a circulating asset. 39 Therefore, s 339 PPSA, as stated in Personal Property Securities in Australia at [4.6.900]: …effectively changes the language of security agreements entered into after the registration commencement time - it provides that a reference to a floating charge is a reference to a security interest that has attached to a circulating asset… Describing a charge as a floating charge only has the effect of rendering the assets subject to it circulating assets, and thus making the charge a "circulating security interest" in respect of those assets for the purpose of the Corporations Act. 40 Relevantly to this proceeding, ss 433(2) and (3) of the Corporations Act refer to a receiver paying, relevantly, priority employees out of property comprised in or subject to a "circulating security interest". Section 51A of the Corporations Act defines "security interest" to include a "PPSA security interest". Section 51C of the Corporations Act defines a "circulating security interest" by reference to a PPSA security interest which has attached to a circulating asset within the meaning of s 340 of the PPSA or a floating charge. To that extent, the notion of a general law floating charge appears to survive although the PPSA security interest regime overrides the general law consequence of crystallisation: Ford, Austin & Ramsay's Principles of Corporations Law (LexisNexis) [19.190.3]. 41 I have considered the written submissions lodged by Hammersley. It is unnecessary to traverse these in detail. It is sufficient that I express my acceptance of its submission that it is not necessary, in this proceeding, to determine any issues which it has raised in the Supreme Court proceedings. I accept that it remains an open question whether or not the PPSA has abolished the distinction between fixed and floating changes for all purposes.

The GSA 42 By the GSA, Forge granted a security interest over all its "Collateral" to ANZ. I will consider its terms below, but relevantly for s 433, it is said, at clause 3.1(2)(b) of the GSA, to operate as a floating charge over "Revolving Assets" but as a fixed charge over all other Collateral. Collateral is defined broadly in the GSA at clause 1.1(3).

Section 433 - priority creditors 43 The parties both submit, correctly in my opinion, that the relevant provision for present purposes is s 433 of the Corporations Act. Where receivership commences after the appointment of administrators but before a resolution is passed to wind up the company, s 433 applies and continues to operate post liquidation, although s 561 comes into operation upon liquidation: Re Great Southern Ltd; Exparte Thackray [2012] WASC 59; Re CMI Industrial Pty Ltd (in liq) (2015) 105 ACSR 635. 44 Importantly, it is by reference to the PPSA and s 433 that the operation of the GSA, set within the particular factual context, is to be considered. The use of terms such as "fixed" and "floating" charges does not avoid the operation of the PPSA. 45 Section 433 relevantly provides: 433(2) This section applies where: (a) a receiver is appointed on behalf of the holders of any debentures of a company or registered body that are secured by a circulating security interest, or possession is taken or control is assumed, by or on behalf of the holders of any debentures of a company or registered body, of any property comprised in or subject to a circulating security interest; and (b) at the date of the appointment or of the taking of possession or assumption control … (i) the company or registered body has not commenced to be wound up voluntarily; and (ii) the company or registered body has not been ordered to be wound up by the Court. 433(3) In the case of a company, the receiver or other person taking possession or assuming control of property of the company must pay, out of the property coming into his, her or its hands, the following debts or amounts in priority to any claim for principal or interest in respect of the debentures: … (c) ... next, any debt or amount that in a winding up is payable in priority to other unsecured debts pursuant to paragraph 556(1)(e), (g) or (h) ...' 46 The section first sets out, in sub-section (2), the circumstances in which the provision applies. It is common ground that at the date of the Receivers' appointment, the winding up of Forge had not commenced and therefore sub-section (2)(b) is applicable. 47 Sub-section (3) then prescribes the obligations that are imposed when those circumstances exist. The receiver, or the person assuming control (Controller), must pay certain stipulated statutorily preferred creditors "out of the property coming into his, her or its hands". 48 The authorities concerning s 433(3) have limited the property subject to the obligation under this provision by reference to the purpose and policy of the provision. See eg: McEvoy v Incat Tasmania Pty Ltd (2003) 130 FCR 503 at [24] and Silkchime. 49 Le Miere J in Silkchime at [46] described the policy of the statutory provision as being one "to protect the position of preferential creditors by giving preferential claims priority over the claims of floating chargees who would otherwise have "scooped the pool" of the chargor's assets". 50 Such a limitation of the assets covered was earlier determined by Bryson J in Whitton v ACN 003 266 886 Pty Ltd (1996) 42 NSWLR 123 where his Honour at [135-136] concluded that notwithstanding the literal meaning of the provision, it "applies... only to property subject to a floating charge". 51 Since the introduction of the PPSA, the sub-section is similarly limited to those assets covered by the "circulating security interest" as defined in ss 51A and 51C of the Corporations Act. 52 Section 340 of the PPSA deals with circulating assets and states in part: (1) For the purposes of this Act, if a grantor grants a security interest in personal property to a secured party, the personal property is a circulating asset if: (a) the personal property is covered by subsection (5) (unless subsection (2) or (3) applies); or (b) in any other case--the secured party has given the grantor express or implied authority for any transfer of the personal property to be made, in the ordinary course of the grantor's business, free of the security interest. .... (5) This subsection covers the following personal property: (a) an account that arises from granting a right, or providing services, in the ordinary course of a business of granting rights or providing services of that kind (whether or not the account debtor is the person to whom the right is granted or the services are provided); (b) an account that is the proceeds of inventory; (c) an ADI account (other than a term deposit); (d) currency; (e) inventory; (f) a negotiable instrument. Example: An example of an account mentioned in paragraph (a) is an account that is a credit card receivable 53 Relevantly, for the purpose of this proceeding, a circulating asset means either: (a) property that comes within s 340(5) of the PPSA; or (b) property which the secured party (ANZ) gave the grantor (Forge) express or implied authority to transfer in the ordinary course of the chargor's business, free of the security interest. 54 Thus, any statutory obligations under s 433 relevantly would arise where: (a) a receiver is appointed under an instrument pursuant to which a loan is secured by a circulating security interest; and (b) any "property" comes into the receiver's hands and such property is covered by s 340(5) of the PPSA or is property which the lender has authorised the borrower (expressly or impliedly) to deal with, in the ordinary course of the borrowers business, free of the security. 55 The obligation on the receiver or Controller is a continuing one. The operation of s 433(2), like the provisions that foreran it, continues notwithstanding the subsequent winding up of the company and notwithstanding that the receiver may have paid in full the indebtedness to the appointing secured creditor: see the discussion of one forerunning provision, s 331(2) of the Companies (Victoria) Code, in General Credits Ltd v Chemineer Nominees Pty Ltd (1986) 4 ALCL 570, 574-575.

What is the date for fixing assets caught by s 433? 56 The first question concerns the date for fixing the assets which are the subject of the statutory entitlement in favour of the priority creditors. 57 Does "property" as broadly defined in s 9 of the Corporations Act mean that even future property, the subject of a floating charge, which does not exist at the time of the appointment, is caught by the operation of s 433? 58 This question was considered by Mullins J in CMI Industrial. Post receivership, the receivers traded on and made "inventory trading profit". The floating charge became fixed upon the appointment of the receivers: CMI Industrial, 644 [31]-[32]. 59 The floating charge was a "circulating security interest" as defined in s 51C(b) of the Corporations Act (CMI Industrial, 638 [7]) and so the question arose, relevantly, as to whether the inventory trading profit was to be applied by way of s 433 to preferential creditors. 60 The Court noted that whilst case law to date had made it relatively clear that (relevantly) an employee's entitlement to priority was fixed as at the date of appointment of the Receivers, the issue of the date for fixing the property under the floating charge which might be available to preferential creditors remained undecided: CMI Industrial 638-639 [12]; 640 [17]). 61 The liquidator asserted that the priority position extends to property acquired post-crystallisation of a floating charge, "irrespective of whether it belonged to the company, or was even in existence, at the time of appointment [of the receiver]": CMI Industrial, 644 [34]). However, the secured creditor contended successfully that the property, for the purpose of s 433, was only property coming into the hands of the receiver at the date of appointment, even if collected over time: CMI Industrial, 645 [40]. 62 Mullins J stated: [45] Section 433 of the Act is a remedial provision that favours the specified priority creditors giving them a statutory entitlement to be paid from assets that would have otherwise not been available, because those assets would have become the subject of a fixed charge, when the floating charge crystallised on the appointment of the receivers. [46] The scheme of the priority, in the case of a receivership, revolves around the date of the appointment of the receivers and operates in respect of the assets that are identified on the basis that they would have been the subject of the floating charge, as created, had the charge not crystallised on that date. This is supported by the dicta in Steinberg at 89-90 and 96-97 and Chemineer at 574-5. [47] The scheme under s 433 of the Act does not extend to conferring any statutory entitlement to the priority creditors in respect of the trading profit made by the receivers conducting the business of the company after the date of their appointment... 63 Accordingly, applying CMI Industrial, "property" the subject of a floating charge, which may have been future property at the time the floating charge was granted, must exist and be identifiable as at the date of the receivers' appointment to be caught by the operation of s 433. 64 Nonetheless, the Department submits that this limitation on the scope of s 433 identified in CMI Industrial ought not to be adopted in this instance. Indeed it submits that the decision in CMI Industrial is plainly wrong and that I should not follow it. 65 It makes a number of submissions in this respect. 66 First, the Department submits that neither the wording of the section nor its evident purpose supports or mandates such a restriction. It submits that the terms of the section do not suggest a temporal limitation of that kind. Rather, if the floating charge or circulating security interest expressly encompasses future property, the plain meaning of the provision is that it comes within the scope of the priority when it "comes into the hands" of the receiver. Thus, the Departments contends, it is not necessary to impose an unexpressed temporal limitation on the section in order to identify the property which is subject to the priority - it is readily identifiable from the security interest or charge. 67 The Department submits that there should be a "snapshot" taken of the assets of the Company, first, either just prior to the commencement of the receivership, or, second, as at the date of creation of the GSA. I accept the first proposition but not the second. 68 It contends that this snapshot serves to identify "the character" of the property which is "comprised in or subject to a circulating security interest": s 433(2) of the Corporations Act but that the snapshot does not otherwise confine the obligation of the receiver. It submits that the obligation upon the receiver under s 433(3) is to pay "out of the property [that is property with the character determined by the snapshot] coming into the receivers hands" priority debts. Thus, it submits that, for the purposes of s 433(3), it does not matter that the property comes into existence after the receiver's appointment. Rather, it contends, what is required is that it meets the "character" of the property set by subsection (2). Relevantly, it says, this means that it is property that can be transferred in the ordinary course of the grantor's business: PPSA s 340(1)(b). 69 I do not accept this analysis or the submissions which flow from it. It is an unacceptable gloss upon s 433, and is contrary to the decision in CMI Industrial and other cases there cited. 70 The Department further submits as to policy that the object of the provision is to prevent the debenture holder from taking assets that would otherwise have been available to the company to conduct its business in the ordinary course but which are scooped up by the charge when financial problems cause an event of default to occur. It submits that policy is no less applicable in respect of assets covered by the GSA that first come into the Receivers' hands after the appointment. Indeed, it contends that the Refund represents tax funds that, in retrospect, ought never to have been paid and would have represented cash in the hands of Forge. It then posits a hypothetical circumstance that the Refund had been paid the day before the Receivers were appointed, and then submits that in that circumstance these issues would not have arisen and that cash would have been available to the employees. 71 As to the assertion of retrospectivity, the Department amplified this in later written submissions. 72 It submits that the legislative regime which governs the Refund and the manner in which the Refund was in fact dealt with by the Commissioner reflects precisely that position. 73 It describes that legislative regime in the following way. Under s 172 of the ITAA36, the Commissioner was obliged to apply the amount of any tax overpaid (ultimately the amount which became the Refund) in accordance with Divisions 3 and 3A of Part IIB of the TAA. These divisions of the TAA provide for the establishment of a running balance account between the taxpayer and the ATO. Section 8AAZL(1)(b) of the TAA provides that Division 3 of Part IIB deals with credits that an entity is entitled to under a taxation law. It also provides for running balance account (RBA) rules. Pursuant to that division, the Commissioner must first apply overpayments against either the RBA debts (s 8AAZLA) or non-RBA debts (s 8AAZLB). The excess (called an excess non-RBA credit) is then refunded under section 8AAZLF. Section 8AAZLH sets out how the refund is to be made. 74 The Department asserts that a copy of Forge's RBA is contained with the amended assessments and that Forge's running account balances disclose that the Commissioner treated the Refund as being money in the hands of Forge from a date before the appointment of the Receivers (identified in the RBA as the "effective date"). It is, the Department submits, in that way, retrospective. Thus, it submits, the Commissioner's conferral on Forge of the benefits of the Refund from the various "effective dates" gives the Refund a retrospective nature. It further contends that the retrospective nature of the Refund is given further force by the terms of s 172(1) of the ITAA36 which provides that an overpayment is taken never to have been payable for the purposes of the general and shortfall interest charges. 75 Second, the Department submits that there is no warrant to add a temporal limitation when the statute necessarily provides a temporal limitation of a different kind. Namely that, the scope of s 433 is limited to property that is subject to a circulating security interest at the time it comes into the hands of the receiver. This, it contends, is the plain meaning of the section. 76 Third the Department submits that, in any event, CMI Industrial is distinguishable on the facts. 77 It submits that, unlike the position in CMI Industrial, the Receivers here did not trade or make any profit. Rather, they merely recovered from the ATO tax overpayments. It contends that the tax overpayments giving rise to the Refund were made from circulating assets of Forge (cash), and in part, are attributable to an income tax year earlier than the date of ANZ's security interest. 78 It submits that the wording of CA, s 433, "out of the property coming into his, her or its hands", gives rise to two relevant considerations: (a) the word "coming" in its ordinary meaning sits most uncomfortably with the temporal limitation contended for by the Receivers. The expression is not "that came" or "that has come" or even "that comes". The notion of "coming" suggests a continuing notion that would apply to property that comes into the receiver's hands at some later point; (b) the use of the word "coming" also connotes a sense of passivity. The statute does not define the property the subject of the obligation by reference to the property over which control is assumed at the time such as "property to which the receiver is appointed". Rather the expression in its natural meaning includes property which simply "comes into the hands" of the receiver. Such a connotation might indeed be a further reason to distinguish CMI Industrial on the basis of the statutory language. In CMI Industrial the money did not simply "come" into the receiver's hands; it was actively pursued and created by the receiver's trading efforts. 79 I will deal with these first three submissions together. The words "coming into his, her, or its hands" were expressly considered in CMI Industrial by Mullins J who at [50] stated: To the extent that it is argued that the use of the expression "out of the property coming into his, her or its hands" in s 433(3) suggests assets received after the date of appointment of the receivers, those words need to be construed in the context of when s 433 applies, as expressly set out in s 433(2)(a). The property "coming into" the hands of the receiver must be property that falls within the designation in s 433(2)(a). That property is identified by the operation of s 433(2)(a) which operates at the date of the appointment of the receivers. The statutory entitlement cannot apply unless the identified property comes into the hands of the receiver: Silkchime at [58], [60] and [61]. 80 I respectfully agree with her Honour's conclusion. They are consistent with conclusions in like cases considered at length by her Honour. The decision of the New Zealand Court of Appeal in Strategic Finance Ltd (in receivership and in liquidation) v Bridgman [2013] NZCA 357 at [86] involving a similar PPSA priority regime is to like effect. 81 Were it otherwise a floating charge would, in effect, float indefinitely even after the appointment of Receivers. This would be to ignore the agreement between the secured party and the grantor that assets, subject to a floating charge, could be dealt with only in the ordinary course of business. The secured party would be denied recourse to assets which upon the appointment of a Receiver were subject to a fixed charge. Nor is there any policy conflict. Where there are assets the subject of a floating charge at the time the grantor was carrying on the ordinary course of business these cannot be "scooped up". However upon the appointment of receivers, there is no longer a floating charge. The Refund is captured by the fixed charge. 82 As to the Refund, I do not accept the submission that the tax funds "ought never to have been paid". They were paid by Forge in meeting its then statutory obligations and whilst it was carrying on its business. The Refund, on the facts of this case, was the product of Forge's insolvency and was made after the Contracts were terminated. As I explained earlier the Refund would not, indeed could not, have come into existence in the ordinary course of Forge's business. The Contracts would have remained on foot. Forge would have continued to receive payment under the Contracts and incurred tax liabilities, as contemplated in the original 2012/2013 Assessments. It is not to the point that a tax refund may have been available to Forge in the ordinary course of business. That is not this case. 83 As to the Department's contentions concerning retrospectivity, the "Effective Date" is no more than a date for calculation of the general interest charge as is set out under the "explanation of terms" section on the back of the statement of account, for example in the affidavit of Scott Langdon sworn 2 November 2015, which states at page 588 that the "Effective Date" is: …the date we use for the calculation of general interest charge and other penalties or interest. It is also the due date of any liabilities. 84 Forge had no property until after the issuing of the amended assessment notices, the allocating of the credit to an RBA and the application of the credit to particular primary tax debts or general interest charges within the RBA: see Commissioner of Taxation v 4 Doonan Street Collinsville Pty Ltd (In Liquidation) (2016) 332 ALR 349 at [52] and at [75], where the New South Wales Court of Appeal stated: Prior to the Commissioner issuing the amended notice of assessment on 14 May 2013, the Company had no entitlement to claim payment of the sum identified in its amended return for the year ended 30 June 2010. After the amended notice of assessment was issued, provided the Commissioner had not had any occasion to act in accordance with Pt IIB of the TAA, the Company would have had administrative law remedies available to it to enforce its entitlement to payment…. But in this case the Commissioner exercised his powers and performed his duties under Pt IIB prior to 14 May 2013 so that on that date the only amount due to the Company was that in fact refunded to it. And at [76]: It is true that the Company had a statutory right (which it had exercised) to apply to amend its assessment, and it had other administrative law rights in the event that the Commissioner failed to accede to its application, or even took too long to do so. However, the Company had no right to recover any money until such time as the Commissioner had completed the process mandated by Pt IIB of allocating and applying the amount in credit…. 85 Later at [77] the Court of Appeal concluded that the allocation and application process, "did not affect any property of the Company." Accordingly, the "conferral of benefits", referred to by the Department, neither used nor affected any of Forge's "property". 86 I do not regard the factual differences between this case and CMI Industrial as material. The Receivers did not merely recover tax overpayments from the ATO. It was the product of the application which occurred only by reason of Forge no longer carrying out its business and upon the termination of the Contracts. 87 That the Receivers did not trade or make any profit supports the Receivers' submission that there was no ordinary course of business following the appointment of the Receivers and liquidators. This is the vital point. 88 So far as concerns the expression "out of the property coming into his, her or its hands", in s 433 the Department's contentions are misconceived. The meaning of this phrase, in my opinion, is as explained in CMI Industrial and particularly in the passage at [50] which I set out earlier. 89 Fourth, the Department submits that even if a temporal limitation on the scope of the obligation under s 433(3) could be distilled in the circumstances considered in CMI Industrial, such a limitation can no longer apply under a security instrument that is crafted to accommodate the regime that now prevails under the PPSA (such as the GSA itself), because the PPSA abolishes the distinction between a fixed charge and a floating charge and it directs attention solely to the nature of the property secured, not the nature of the security. It contends that prior to the introduction of the PPSA a temporal element may have been significant as there was a point in time at which the nature of the security changed by virtue of the crystallisation of the charge, as this was the very nature and function of a floating charge. It contends that under the PPSA, the focus is on the nature of the property secured and, in particular, whether it is a circulating asset and that no temporal element arises under the current regime. 90 Whilst, in terms, there is no crystallisation under the PPSA, the incident of a floating charge permitting disposal of identified assets in the ordinary course of business remains under the PPSA regime. The important question is as to when the ordinary course of business ceased thereby rendering the grantor unable to deal with the secured assets. As I have sought to explain earlier, an asset is only circulating within the meaning of s 340 when it circulates in the ordinary course of business as permitted by the secured party. 91 Fifth, the Department submits that even to the extent that the nature of a floating charge may still continue to be relevant, the definition of 'floating charge' in s 9 refers to 'a charge that conferred a floating security at the time of its creation' which directs attention to the nature of the charge at the time of its creation rather than at the time the receiver is appointed. It relies for this proposition upon Re Smouha Fabrics Pty Limited (In Liq) (2012) 92 ACSR 542, 552 [33]-[34] per Black J. 92 The definition of floating charge means, in effect, that an asset that was subject to a floating charge is still available to priority creditors where the floating charge fixes upon it prior to the appointment of a receiver or liquidator. It then becomes fixed at the time of appointment. 93 To the extent that Smouha Fabrics at [33]-[34] may characterise a floating charge which, upon the appointment of administration or receivers, remained in effect a floating charge, I would not follow it. I do not regard the definition of "floating charge" in s 9 of the Corporations Act as having that effect. 94 Section 433 of the Corporations Act has a long and interesting history going back to companies' legislation in Western Australia and New South Wales. It was the subject of historical review by Finklestein J in McEvoy at [8]-[16] which was, in turn, referred to with apparent approval by Mullins J in CMI Industrial at 639 [13]. 95 Sections 196 and 292(4) of the Companies Act 1961 (WA) were in the same (or similar) terms as those sections in the Companies Act 1961 (NSW) (both having adopted the UK provisions referred to in In re Griffin Hotel Co Ltd [1941] 1 Ch 129) until shortly after the judgment in Stein v Saywell (1969) 121 CLR 529 was handed down. 96 Stein concluded that s 292 of the Companies Act 1961 (NSW) did not confer priority to debts within s 292(1)(d) over the claims of debenture holders under a floating charge which became specific after the presentation by a creditor of a winding-up petition but before the making of a winding-up order. 97 Both Western Australia and New South Wales amended their respective Companies Acts which included provisions to reverse the effect of the judgment in Stein. 98 Section 196(2) was amended to read: For the purposes of this section: (a) "floating charge" includes a floating charge within the meaning of section [292]; and (b) The periods of time mentioned in section [292] shall be reckoned from the date of the appointment of the receiver or of possession being taken, as the case may be. Section 292 was amended to insert the definition of "floating charge" to the same effect as is now set out in s 9 of the Corporations Act. 99 These amendments were effected in New South Wales by the Companies (Amendment) Act 1971 (NSW), and in Western Australia, the Companies Act Amendment Act 1973 (WA). 100 The second reading speech for the Companies (Amendment) Bill 1971 (NSW) in the Legislative Assembly on 9 September 1971 stated, relevantly, as follows (at p 936): The remaining amendments made to section 292 are designed to reverse the judgment of the High Court in Stein v Saywell which held that the provisions as presently drafted deprive employees of the preferential rights in a winding up which it was always intended to confer upon them. …The amended section also provides for preferential claims in respect of wages and pay in lieu of leave to have priority over a floating charge, whether or not the charge crystallized and became a fixed charge before the relevant date. 101 And in the Legislative Council on 29 September 1971 (at p 1590): The Government has followed with the greatest concern the litigation culminating in a judgment of the High Court, which revealed that section 292, was defective in several important respects, depriving employees of a company which is wound up of the preference in respect of salaries, wages and leave which are their rightful due. Under the amendments made to the section preferential debts will have their priority determined at the date of the winding up order. … The amended section will provide also that preferential claims in respect of wages and pay in lieu of leave have priority over floating charges, including floating charges which have crystallized at the date of the winding up order. Under the existing law, the crystallization of a floating charge immediately before the winding up order would defeat employees' preferences over claims under the charge." 102 The second reading speech of the Companies Act Amendment Bill (WA) in the Legislative Assembly on 21 September 1972 (at p 3534) and in the Legislative Council on 12 September 1973 (at p 3135) relevantly stated as follows: A further amendment is proposed to the section to ensure that wages and salaries earned between the date of the presentation of the petition for a winding-up and the date of the making of the winding-up order are entitled to priority to the same extent as wages and salary earned preceding the presentation of the petition to wind up a company. The expression "floating charge" is defined and the effect of that definition is that the priority extended to wages and salaries over the holder of a floating charge is not defeated by the crystallisation of the floating charge on a date prior to the commencement of the winding-up. 103 The same definition of "floating charge" has existed in the various iterations of companies legislation in force in Western Australia since 1974 and nationally, first by s 9 of the corporations law established under the Corporations Act 1989 (Cth) and then by s 9 of the Corporations Act. 104 The definition in s 9 of the Corporations Act protects the position of priority creditors where a security interest which is "floating" becomes "fixed", before but not upon or after the appointment of a receiver and/or liquidator. 105 Sixth, the Department submits that the fact that a floating charge can extend to future property for the purpose of s 433 is consistent with the definition of 'property' in s 9, which defines property to mean: any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action... 106 It contends that a floating charge continues to attach to assets acquired after crystallisation: "[t]he crystallised charge continues to cover present and future assets held or acquired by the chargor during the course of the receivership. Even in the case of winding up, the crystallised charge should in principle also extend to assets acquired during the course of the winding up through the exercise of the limited trading powers of the liquidator or otherwise.": W J Gough, Company Charges (2nd ed) Butterworths at 123. (emphasis added) 107 I have assumed the Department's submission as to "future property" means property acquired after the Receivers' appointment. Gough, in the passage quoted, is concerned with a charge that has crystallised and become specific. Then, as a fixed charge or "crystallised charge" it catches assets acquired post appointment because the charge expressly extends to after acquired property. Following crystallisation, the charge continues to extend to present as well as future property and attaches as a fixed charge to then future assets from the time of crystallisation. Gough goes on to explain that "…any suggestion that a charge crystallises only as to present assets but remains floating as to future assets cannot be sustained. Crystallisation terminates the business dealing licence of the chargor, which would be necessary for continuance of the charge in any floating phase": Company Charges at 125. 108 Seventh, the Department submits that the fact that the priority creditor provisions extend to property acquired post-crystallisation of a floating charge is consistent with the approach taken in I.R.C v Goldblatt [1972] Ch 498 in respect of analogous employee entitlement provisions in the United Kingdom. 109 In Goldblatt, on 6 April, 1961, a debenture holder appointed a receiver to be receiver and manager of the company but subsequently revoked the appointment. The receiver, at the request of, and having obtained an indemnity from the debenture holder, transferred the sum of £6,134 16s 3d and other assets which he had collected to the company. 110 Thereafter, the company, the debenture holder and two directors acting as sureties entered into an agreement whereby they assigned goods, certain leasehold properties in Bexleyheath, Kent and the sum of £6,134 16s 3d to the debenture holder in full satisfaction of the claims under the debentures. 111 The preferential creditor commenced proceedings against the receiver and debenture holder for breach of statutory duty under section 94(1) of the Companies Act 1948 (the analogue of s 433). 112 The receiver and debenture holder submitted that the section did not apply as against the debenture holder to the sum of £6,134 16s 3d because it became an asset of the company after crystallisation of the floating charge. The Department pointed in this context to the following passage from Goff J's judgment in Goldblatt at 507: In my judgment, however, whilst the section only becomes operative when a receiver is appointed, or possession is taken, the ambit of the section has to be ascertained when the debenture is created. 113 I do not regard this passage as an acceptance by his Honour that the asset of the company, being monies due to it in the sum of £6134 16s 3d, came into existence after the floating charge crystallised. Indeed his Honour, at 506, described the monies due as part of the assets of the company prior to the appointment of the Receiver. They were thus caught by s 94(1). This fact distinguishes that case from the present one. Mullins J in CMI Industrial considered Goldblatt at [16], [42], and [48], and correctly concluded that it was not relevant to the controversy under consideration. Nor does it assist the resolution of this case. 114 I have, for these reasons rejected the Department's submissions. CMI Industrial, in my opinion, was correctly decided and I will apply it in this case. It is the date of the appointment of the Receivers which is relevant in applying provisions of s 433. 115 Neither the chose in action nor the Refund existed at the time of any floating charge or when there were circulating assets. They were not property in the hands of the Receivers upon their appointment and are not caught by s 433. 116 It is not, by reason of this conclusion, strictly necessary to consider whether the chose in action or the Refund could have comprised a circulating asset. Senior counsel for the Department conceded, in argument, subject to one matter concerning the Refund which I have resolved against the Department, that for his client to succeed would require me to conclude that the decision in CMI Industrial was clearly wrong. I have not so concluded. To the contrary, as I have said already, I consider it to be correct and I have followed it in this case. Nonetheless, lest I should be wrong in my conclusion, I will consider the Department's further submissions.

Were the Chose in action and Refund circulating assets? 117 There is no controversy that future-acquired property came within the scope of the security interest created by the GSA. The issue, as articulated by the Department, is whether, at the time the property came into the hands of the Receivers, it was a circulating asset even though this was at a time after the appointment of the Receivers. Relevantly, the Department identifies the question as to whether for the purposes of s 340(1)(b) of the PPSA, ANZ gave Forge express or implied authority for the transfer of the Refund to be made in the ordinary course of Forge's business free of ANZ's security interest. This, the Department submits, is purely a matter of statutory construction. 118 It is convenient to set out at length the Department's submissions concerning s 340(1)(b) PPSA as follows: (1) Clauses 4.1 and 4.2 are the applicable provisions of the GSA. They provide: 4.1 Restricted dealings The Grantor must not do, or agree to do, any of the following unless it is permitted to do so by clause 4.2 or another provision in a Finance Document: (1) create or allow another interest in Collateral including any Security Interest; or (2) dispose, or part with possession, of any Collateral. (2) The definition of 'Finance Document' is contained in clause 1.1(12) of the GSA and extends to include the Common Terms Deed. The Common Terms Deed is, therefore, a relevant document in determining the extent of ANZ's express or implied authority to Forge to deal with its entitlement to the Refund. (3) The Common Terms Deed, by clause 5.9, imposes obligations on Forge to pay taxes and outgoings. (4) Clause 5.10 of the Common Terms Deed requires all the members of the Forge group to be part of a Tax Consolidated Group and be parties to the Tax Sharing Agreement and the Tax Funding Agreement. Clause 5.10(3) restricts changes from being made to those agreements in any material respect without prior written consent. (5) The Tax Sharing and Funding Agreement dated 18 June 2007 provides by clause 3.2: 3.2 Refunds (1) Where the Head Company is issued with an amended assessment reducing its income tax liability any refund must be distributed to the Contributing Member whose taxable income was reduced causing the issue of the amended assessment. (6) The terms of clause 5.10(3) of the Common Terms Deed, when read with the Tax Sharing and Funding Agreement dated 18 June 2007, amount to at least an implied permission by ANZ for Forge to perform the Tax Sharing and Funding Agreement. That permission includes transferring refunds received from the ATO for income tax liability thus falling within an exception to the clause 4.1 GSA restriction and amounting to an implied authority for the purposes of s 340(1)(b) of the PPSA. (7) That position is reinforced by the terms of clause 5.5 of the Common Terms Deed which requires the business of each obligor to be carried on and conducted in a proper and efficient manner. (8) Accordingly, Forge was entitled, at least impliedly, to deal with its immediate entitlement to the Refund once it arose that is once the amended assessment was issued. (9) Moreover, by clause 5.14 of the Common Terms Deed, Forge was subject to certain undertakings in relation to the Secured Property. Relevantly, by clause 5.14(2) of the Common Terms Deed, Forge was at least impliedly permitted to dispose of an asset if the disposal was a 'Permitted Disposal' as defined in clause 1.1(125) of the Common Terms Deed. (10) The effect of Clauses 5.14(2) and 1.1(125) is to allow Forge, inter alia: (a) by sub-paragraph (b), to dispose of assets, in the ordinary course of its business and on arm's length terms where the greater of the book value and sale value of the assets is less than $2m and the aggregate value of all assets disposals by Forge in the immediate preceding 12 months period is less than $10m; and (b) by sub-paragraph (c), to make 'a disposal of an asset in exchange for another asset having similar or improved function and of comparable or superior type value and quality'. (11) Clause 5.14(6) of the Common Terms Deed is also relevant. It permits, inter alia, the disposal of an asset on arm's length terms and in the ordinary course of Forge's business. (12) The practical effect of these clauses is to permit Forge to transfer all or part of the right to the Refund (the personal property) so long as the transaction occurs in the ordinary course of business and is at arm's length (and otherwise meets the requirements of the exceptions). For example, Forge is permitted to: (a) transfer the value of its right to receive the Refund up to the limit of $2m in any single transaction and $10m annually in exchange for another asset or as payment of amounts owing by it; or (b) transfer its right to receive the Refund to a third party in exchange for some new plant and equipment. (13) These exceptions to the negative undertaking in clause 5.14(2) of the Common Terms Deed operate as exceptions to the restriction imposed by clause 4.1 of the GSA. The exceptions authorise (expressly or, alternatively impliedly) Forge to transfer the right to the Refund free of the security interest. 119 The Department further submits that the question whether authority is granted to transfer in the ordinary course of a company's business is not answered by examining the position when the company is not conducting its business in the ordinary course, but rather by examining the position when the company is conducting its business in the ordinary course. 120 It also contends that applying the proper approach in this case does not require the Court to inquire whether the Refund came into existence as result of an event outside Forge's ordinary course of business or can be transferred outside Forge's ordinary course of business. Rather, it requires the Court to ask: Has ANZ given Forge express or implied authority for the transfer of the refund (tax refunds) in the ordinary course of Forge's business free of the security interest? 121 The answer to that question is, the Department contends, "yes", including because ANZ permitted Forge to pay to its downstream companies' tax refunds in accordance with the group tax arrangements. 122 This approach, the Department submits, is consistent also with the wording of the provision which applies "if a person grants a security interest...", as the plain import of those words suggests that the relevant point in time in respect of the question is when "a grantor grants a security interest in personal property" and, where relevant, such later time when there may be a course of dealings between the parties that may constitute implied authority. It contends that the section is not concerned with the particular prevailing circumstances of the grantor. 123 Finally the Department submits that, if the Receivers submissions were right, then s 433 could never apply to property that arose after the appointment because at that point a company would have ceased to conduct its business in the ordinary course. Yet, as it points out, s 433 by reference to the definition of property in s 9 of the Corporations Act expressly includes in its scope, future property. 124 I do not for the reasons which follow, accept these submissions. 125 "Circulating security interest" is defined in s 51C of the Corporations Act. Whether there is a "circulating security interest" within that definition requires consideration of whether the relevant property is a "circulating asset". "Circulating asset" is defined in s 340 of the PPSA. I will for ease of reference, set out again s 340 as relevant. 126 Section 340 relevantly states in part: (1) For the purposes of this Act, if a grantor grants a security interest in personal property to a secured party, the personal property is a circulating asset if: (a) the personal property is covered by subsection (5) (unless subsection (2) or (3) applies); or (b) in any other case - the secured party has given the grantor express or implied authority for any transfer of the personal property to be made, in the ordinary course of the grantor's business, free of the security interest. … Current assets (5) This subsection covers the following personal property: (a) an account that arises from granting a right, or providing services, in the ordinary course of a business of granting rights or providing services of that kind (whether or not the account debtor is the person to whom the right is granted or the services are provided); (b) an account that is the proceeds of inventory; (c) an ADI account (other than a term deposit); (d) currency; (e) inventory; (f) a negotiable instrument. Example: An example of an account mentioned in paragraph (a) is an account that is a credit card receivable. 127 Whether the ANZ expressly or implicitly authorised Forge to deal with the Refund in the ordinary course of its business free of the security interest is substantially a question of fact. It is not, as the Department submits, merely a matter of statutory construction. 128 The Department's submissions ignore some important facts. The Refund was the product of particular circumstances which, on no view, arose in the ordinary course of Forge's business. Its performance under the Contracts did not proceed, due to its insolvency, which resulted in their termination. The Receivers, who self-evidently were not acting in the ordinary course of Forge's business, made an application referrable to s 170(9) of the ITAA36 which resulted in the Refund. 129 The Refund would never have come into existence in the ordinary course of Forge's business. It is no answer to point to tax refunds which could arise in the ordinary course of business. The Refund was not of that kind. 130 These factual circumstances do not give rise to an implied authorisation by ANZ, for Forge, in the ordinary course of its business, to deal with the Refund free of the security interest. To conclude otherwise defies the factual and legal context out of which the Refund arose. 131 Indeed the GSA by clause 7.2 expressly prohibits any dealings by Forge with assets following the appointment of receivers. The terms of the GSA cannot be ignored. The PPSA, in s 18(1), provides that the GSA will take effect "according to its terms". 132 I will now consider the Department's submissions concerning provisions in the GSA, the Common Terms Deed and the Tax Sharing and Funding Agreement, which, it submits, as set out above, disclose an implied authorisation by ANZ for Forge to perform the Tax Sharing and Funding Agreement to deal with the Refund in the ordinary course of Forge's business free of the security interest. 133 No such implied authorisation arises. Clauses 5.14(2) and 1.1(125) were not engaged after the appointment of the Receivers. As from that time Forge was not in the ordinary course of business. I deal further with these provisions below. 134 The Refund came into existence, as I have explained, after the date of the Receivers' appointment. Moreover, ANZ is not a party to any tax sharing agreements which, in any event are not "Finance Documents". Accordingly they could never constitute a permission under clause 4.1 GSA. Nor do they comprise any authorisation to transfer any part of a Refund. The Obligors under the Common Terms Deed agree that they will comply with a certain tax regime. As the Receivers submit correctly, these obligations do not inform the question as to whether Forge may deal with the Refund outside the ordinary course of business, in circumstances where it is the subject of a security interest and where Forge's powers to deal with any assets including proceeds have been expressly circumscribed by clause 7.2. 135 Clause 5.5 of the Common Terms Deed does not alter this position. Upon the appointment of the Receivers, Forge was no longer carrying on business in the sense employed in this provision. In any event, a general obligation to conduct a business in a proper and efficient manner does not constitute an implied authority to transfer the Refund free of security given the express constraints upon disposals of assets contained in the GSA. 136 Clause 5.14 of the Common Terms Deed provides that an Obligor must not dispose of or part with possession of any of its assets other than a "Permitted Disposal". The Department submits that this provision permits a transfer of the chose in action or Refund. 137 By clause 5.14(2) of the Common Terms Deed, read together with the definition of Permitted Disposal, Forge can dispose of its assets only in limited circumstances: (a) if the assets are damaged, obsolete or redundant; or will be exchanged for another asset of comparable or superior type, value and quality; or to another Obligor where the asset will be the subject of a Security; or a disposal which occurs by the creation of a Permitted Security Interest (cl 1.1(142)(a), (c), (d) (e)); (b) in the ordinary course of its business and on arm's length terms, where the greater of the book value and sale value of the asset is less than A$2,000,000 (or its equivalent in another currency) and the aggregate value (being the greater of the book value and sale value of each asset) of all asset disposals by the Obligors in the immediately preceding 12 month period is less than A$10,000,000 (or its equivalent in another currency) (cl 1.1(142)(b)); or (c) with the prior written consent of the Majority Lenders (cl 1.1(142)(f)). 138 The Receivers submit that having regard to the references in subparagraphs 1.1(142)(a), (c), (d) and (e) of the definition of Permitted Disposals to physical characteristics of assets (for example, obsolete or damaged assets, or the quality of assets), together with the references in subparagraph (b) to "book value" and "sale value", the Permitted Disposal in subparagraph (b) is actually concerned with the disposal of tangible assets (such as plant and equipment), and not an asset of the nature of the chose in action. 139 Alternatively, the Receivers submit that if subparagraph (b) of the definition of Permitted Disposal does cover such an asset, there are still restrictions in place, so that Forge can only dispose of such assets: (a) in the ordinary course of its business and on arm's length terms, where the value of each asset is less than A$2,000,000 and the aggregate value of all asset disposals by all Obligors in the immediately preceding 12 month period is less than A$10,000,000; or (b) with the prior written consent of the Majority Lenders. 140 Apart from the question of what other assets may have been disposed of and for what aggregate value, two questions arise. As to these I accept the Receivers' submissions. First, a sale or other disposal of a chose in action is not in the ordinary course of Forge's business. Second, the value of the chose in action and Refund exceeds $2,000,000. Thus Forge could not have disposed of the chose in action without the prior written consent of the Majority Lenders. 141 Moreover, as the Receivers submit, because the sale or disposal of the chose in action is not in the ordinary course of Forge's business, clause 5.14(6) of the Common Terms Deed, which allows Forge to dispose of an asset on arm's length terms and in the ordinary course of its ordinary business, has no application. 142 The Department's submission that the Refund could be split into separate $2m payments in order to fall within the Permitted Disposal definition is a contrivance. However structured it would still constitute a disposal of the Refund in circumstances which, as I have explained, fall outside the ordinary course of Forge's business. Even this assumes, as the Receivers have pointed out, that the ATO could be compelled to distribute the payment in instalments or to entities other than the taxpayer to whom it is obliged to make the refund, and it does not explain how other disposals (bearing in mind the $10m aggregate limit) would affect such a device. 143 The submission by the Department that a disposal could be achieved under subparagraph 1.1(142)(c) is without substance. It is to stretch language beyond acceptable limits to contend that there is plant and equipment that would have a similar or improved function and be of comparable or superior type, value and quality to a chose in action. 144 Under the terms of the GSA and Common Terms Deed, Forge could not dispose of or transfer the chose in action or Refund without the consent of ANZ. No such consent was given expressly nor can it be implied. Accordingly, these assets do not constitute circulating assets on the first basis advanced. 145 As to the Department's submission concerning after-acquired property, it is only such property that comes into existence after the appointment of receivers (and liquidators) and therefore after the ordinary of business has ceased which is not within the scope of s 433. This is consistent with CMI Industrial. 146 Alternatively, the Department submits that Forge's entitlement to the Refund is a monetary obligation that arose from Forge's disposal of money by way of taxation payments and that it is therefore an "account" within the meaning set out in s 10 of the PPSA. 147 It contends that this monetary obligation arose from the right of objection granted to Forge as discussed above which is in the ordinary course of the business operations of the Commissioner and the ATO. Accordingly, it submits that the thing in action is an account for the purpose of s 340(1)(a) and s 340(5)(a) of the PPSA. 148 Further, or alternatively, the Department submits that the monetary obligation arose from services provided by Forge in the ordinary course of Forge's business operations. It therefore comes within s 10(b) of the PPSA definition of "account". It is plain from that definition that the account debtor (here the ATO) is not required to be the person to whom the services were provided. The Refund arose as a direct consequence of Forge providing services to its customers in the ordinary course of its business and overpaying tax. 149 There was, as I earlier explained, no obligation on the part of the ATO to pay any due amount at the time of the Receivers' appointment. I have explained the particular circumstances which gave rise to the amended assessments resulting in the Refund. This occurred post appointment and after any ordinary course of business ceased. The "right of objection" did not arise in the ordinary course of business. The right to an amended assessment did not arise out of providing services but because of Forge's inability to continue to provide services. The Refund was not the product of an overpayment of tax, simpliciter, but was the product of an amended assessment in the particular circumstances of this case. The Refund is not an account within the meaning of s 340(5)(a). It is not, on this further asserted basis, a circulating asset. 150 The New Zealand Court of Appeal, in Strategic Finance, was of the same opinion in an analogous case, relevantly, concerning a GST refund which came into existence post receivership. The Court concluded that at the date of liquidation the Commissioner was under no obligation to pay a GST refund. The fact that it did so pursuant to certain provisions of the Goods and Services Tax Act 1985 (NZ) did not mean that the Commissioner had a retrospective obligation to do so. Conversely, at the time of the appointment of the Receivers, the company has no right to recover a refund and accordingly it was not an existing monetary obligation at that time: Strategic Finance [15], [98]-[100]. 151 The Department then submitted that its proposition that the assets were circulating assets is supported by a decision of the Supreme Court of Canada in Royal Bank of Canada v Radius Credit Union Ltd [2010] 3 SCR 38. 152 This case, the Department submitted, considered equivalent provincial PPSA legislation in Canada. The court considered the exact nature of the interest acquired by the secured creditor in after-acquired collateral. At [31] the Court referred to s 10 of the Saskatchewan Period Property Security Act 1993 (SPPSA) which, in substance, provides for a security interest to cover after-acquired property. The Department submits that, in substance, s 20 of the PPSA is to the same or similar effect and that at the time of the execution of the GSA there was an inchoate proprietary interest in the after acquired property, namely the Refund such that when the Receivers were appointed to, or assumed control of the property, being the Refund, this answered the description of property within the terms of s 433(2)(a) of the Corporations Act . 153 This submission fails for a number of reasons. 154 The decision in Royal Bank does not reflect the position in Australia. It involved consideration of differing Acts and quite different facts. 155 The present case is not concerned with competing PPSA and non-PPSA interests and rules that may apply in such cases to determine priority. More importantly, and contrary to the Department's submission, the Australian equivalent of s 10 of the SPPSA, being s 20 of the PPSA, which prescribes when security interests are enforceable against third parties, is materially different from s 10 of the SPPSA. It provides, relevantly, that security interests are only enforceable against third parties when they attach to the collateral. 156 Therefore, as the Receivers correctly submit, under the PPSA, a security interest being a proprietary interest in the collateral arises at the time of attachment. In the case of future property, it can only attach when the property exists. This reflects the concept of attachment which recognises that a security interest is proprietary in nature and must fasten to specific collateral on attachment. 157 Here there was no attachment of the Refund prior to the Receivership. It did not constitute part of the collateral. This is because, as I have explained, it did not exist when the Receivers were appointed. 158 In any event, s 433 of the Corporations Act relates to property "comprised in or subject to a circulating security interest". Such an interest is defined in s 51C, relevantly as a security interest that is a PPSA security if: (a) the security interest has attached to a circulating asset: s 19 of the PPSA; and (b) the grantor has title to the asset. 159 Here there was no property over which Forge had title or to which ANZ security interest could attach until March 2015 when the amended assessments were issued.

Conclusion and Order 160 I will, for the preceding reasons, order and direct as follows: (1) For the purposes of section 433 of the Corporations Act 2001 (Cth) and generally: (a) neither the Refund, nor the right to claim the Refund, was or is property in the hands of the plaintiffs in their capacities as receivers and managers of Forge as at the date of their appointment (being 11 February 2014); (b) the security interest held by the Security Trustee pursuant to the GSA in respect of the Refund is not a circulating security interest; and (c) the plaintiffs are not required to apply the Refund to satisfy priority employee entitlements in priority to any claims for principal or interest in respect of the GSA. (2) The costs of and incidental to this application are an expense properly incurred by the plaintiffs in the receivership of Forge and are to be paid from the secured assets of Forge. I certify that the preceding one hundred and sixty (160) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.