Hewlett-Packard Aust Pty Ltd v Exeed Pty Ltd

Federal Court of Australia|2004-03-01|Before: Lindgren J

The time within which a notice must be lodged pursuant to s 263(1) of the Corporations Act 2001 (Cth) in respect of the charge granted by the defendant, Exeed Pty Limited, to the plaintiffs, Hewlett-Packard Australia Pty Limited (then called Hewlett-Packard Australia Limited) and Hewlett-Packard Australia Finance Pty Limited (then called Hewlett-Packard Australia Finance Limited) by Deed of Fixed and Floating Charge bearing date 30 June 2002 ('the Charge') be extended to 9 January 2004.

Order 1 be without prejudice to the rights of persons who had dealings with any property the subject of the Charge between the time of its creation and the date on which the Charge is taken to have been registered under s 265 of the Corporations Act 2001 (Cth).

The plaintiffs forward to the Australian Securities and Investments Commission ('the Commission') a copy of these orders as entered, and request the Commission to ensure that such a copy be, and remain, attached to the copy of the Deed of Fixed and Floating Charge by which the Charge was created, as registered with the Commission.

THE COURT NOTES THAT: 1. By agreement between the parties, there is no order as to the costs of the proceeding. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

introduction 1 The plaintiffs, Hewlett-Packard Australia Pty Limited and Hewlett-Packard Australia Finance Pty Limited (separately, respectively 'HPA' and 'HPAF') apply under s 266(4) of the Corporations Act 2001 (Cth) ('the Act') for an order extending the period allowed by s 263 of the Act for lodgment with the Australian Securities and Investments Commission ('ASIC') of a notice giving particulars of a charge, and the related instrument of charge or a verified copy of it. The terms of s 266(4) are set out at [42] below. The charge ('Charge') was a fixed and floating charge given to the plaintiffs by the defendant ('Exeed'). 2 The Charge is found in an instrument which purported to be a deed of fixed and floating charge which has been recently dated 30 June 2002. Section 263 of the Act required Exeed to ensure that the notice and the instrument or verified copy were lodged within 45 days after the creation of the Charge, that is to say, by 14 August 2002. The extension sought is until 9 January 2004, the date on which a notice of particulars of charge in relation to the Charge has been registered provisionally -an extension of some 17 months. 3 On 29 January 2004, I ordered, by consent, that Exeed be joined as defendant. At the beginning of the hearing, Exeed appeared through its solicitor and informed the Court that it neither consented to, nor opposed, the granting of the extension of time. Exeed joined with the plaintiffs in informing the Court that the parties had agreed that:

the amount of Exeed's indebtedness to HPA was $620,000;
this amount was to be paid over a period ending at the end of October 2004; and
there was to be no order as to the costs of the present application.

Finally, the solicitor for Exeed informed the Court that, according to his instructions, no other charges have been given by his client and there is no pending application for an order that Exeed be wound up. The solicitor for Exeed was then excused for from further attendance.

BACKGROUND FACTS 4 The testimonial evidence supporting the application is found in affidavits of Lachlan Campbell, Michael Rowley Hope and Holly Michelle Doyle. Mr Campbell was employed by HPA from 9 November 1998 to 7 March 2003 as a credit analyst. He was responsible for managing the credit accounts of wholesale distributors of HPA products, of which Exeed was one. According to Mr Campbell it was usual for HPA to take a charge over the assets of a reseller where HPA saw a potential risk in extending credit to the reseller or where the level of credit was high. In either case, HPA would require the reseller to enter into a resale agreement and a fixed and floating charge. 5 During his employment at HPA, Mr Campbell was involved in the drafting, negotiation and finalisation of such charges. He understood that a copy of a charge was required to be lodged with ASIC, but was not aware of the 45-day statutory time limit for lodgment. 6 In or about August 2001, Exeed entered into a resale agreement with HPA, but the level of credit extended to it was not considered high enough to call for the taking of a charge over its assets. In or about April 2002 Exeed applied to extend its credit facility to $800,000. HPA thought that security was now called for. 7 Mr Campbell negotiated, over the telephone and face to face, with Michael Bosnar, the Managing Director of Exeed. Once Mr Campbell had concluded the arrangement for the giving of a charge, HPA's internal solicitors checked the Charge document then handed it back to him to arrange for execution of it. Mr Campbell states that the Charge was executed 'in May or June 2002'. 8 After execution of the Charge, there were negotiations between HPA and Exeed as to which of them should pay the stamp duty on the document so that it could be registered. Neither party wished to do so, and, according to Mr Campbell, 'the negotiations became protracted and reached deadlock'. 9 Apparently, Mr Campbell then became heavily occupied with a merger of HPA with Compaq Australia Pty Limited. He states that HPA 'was in a state of transition and the workload increased across the board'. In the department in which he worked, two staff covered three people's jobs. Mr Campbell recalls putting the file containing the Charge to one side 'as other matters, including transitional work and merger issues, were extremely pressing'. He states: 'Due to the increased workload following the merger with Compaq in August 2002, I overlooked the fact that the Charge had not been registered and it escaped my attention. I did not think of this matter again and it was not dealt with prior to my leaving my employment with [HPA] in March 2003. Had I become aware at any time prior to my leaving [HPA] in March 2003 that the Charge had not been registered, I would have immediately sought advice from either [HPA's] in-house lawyers or its external lawyers as to what needed to be done in order to register the Charge.' 10 Mr Hope is the South Pacific Credit Manager of HPA, which he joined following the merger of HPA and Compaq in August 2002. Mr Hope assumed responsibility as credit manager for various wholesale distributors of HPA products. He assumed responsibility for Exeed from Mr Campbell when Mr Campbell left HPA in March 2003. 11 On the basis of his inspection of HPA's records relating to Exeed, Mr Hope states that Exeed was a small distributor of HPA computer hardware, which it purchased and held to be on-sold to various 'second tier "channel" partners'. Exeed was a small company competing in the same market as larger distributors. 12 During mid 2003, HPA reviewed every wholesale distributor, including Exeed. HPA decided not to renew its reseller contract with Exeed and terminated it on 30 November 2003 because of its comparatively small turnover, value, profitability, volume, growth and financial strength. Mr Hope adds: 'The solvency of Exeed or the amount of debt owing by Exeed to [HPA] were not factors in [HPA's] decision to terminate the Contract.' 13 In early December 2003 Mr Hope conducted a search of the ASIC website and discovered that the Charge had not been registered. (The present proceeding was commenced by an application to me as Corporations Judge on 24 December 2003 for an abridgment of time for service of the originating process.) 14 Mr Hope has attempted to locate the file kept by Mr Campbell, which he assumed would contain correspondence relating to the creation of the Charge, but without success. He adds: 'It is likely that the file was misplaced due to various integration problems, such as loss of staff and restructuring of various accounts, following the merger between Compaq and [HPA].' 15 Mr Hope states that Exeed owes HPA $801,794.74, but, as noted earlier, the parties joined in informing me on the hearing that the amount of Exeed's debt has been agreed at $620,000. 16 Ms Doyle, a solicitor employed by Henry Davis York, the plaintiffs' solicitors, wrote to Exeed on 23 December 2003 referring to the non-registration of the Charge which she described in the letter as having been 'entered into in about May or June 2002'. She indicated that the plaintiffs proposed to apply to the Court on 24 December 2003 seeking an abridgment of time in connection with an application for an extension of the time for registration. She asked Exeed to check its records and 'confirm the date that the Charge was entered into'. 17 On the same day, 23 December 2003, Moores Legal replied advising that that firm acted for Exeed and was instructed that its client had no record of having entered into a fixed and floating charge with HPA in May or June 2002 or at any other time. The firm requested that a copy of the Charge be supplied. On 24 December 2003, Ms Doyle obliged. No doubt in the light of the signatures on the Charge of both of its only two directors, Exeed has not denied that it executed the Charge. 18 Ms Doyle states that the date 30 June 2002 was recently inserted in the Charge as its date, on the basis that that was the latest date by which the Charge could have been executed consistently with its having been executed 'in May or June 2002', as stated by Mr Campbell. Ms Doyle's affidavit was served on Exeed which has not objected to, or raised any question about, the insertion of the date 30 June 2002 in the Charge. 19 According to a letter of 9 January 2004 from ASIC to Henry Davis York, the relevant notice of particulars of the Charge was registered by ASIC provisionally for 90 days from 9 January 2004 to 8 April 2004 pursuant to s 265(4) of the Act. The registration was expressly made subject to production of a certificate to the effect that all documents accompanying the notice 'have been duly stamped as required by any applicable law'. ASIC's letter points out that the provisional registration will expire on 8 April 2004 and that the Charge may become void unless the certificate has been produced by that date.

20 A historical company extract in respect of Exeed as at 20 February 2004 shows:

· that Exeed was incorporated on 30 June 2001; · that it has two directors, Michael Vincent Bosnar who was appointed on 13 June 2001 and Frank Colli who was appointed on 10 August 2001; and · that it has given one charge only, namely, the Charge.

Execution of the Charge 21 I was informed from the bar table that the reason why a date was recently inserted in the Charge as its date was that the Charge had to bear a date so that it could be stamped and registered. The particular date was inserted without the knowledge of Exeed. It is a common practice for it to be left to one of the parties to a document to date it. No doubt this practice is supported on the basis that a document should bear the date of its execution by the last party to execute - something which may not be able to be known in advance. I assume that Exceed left it to HPA and HPAF to date the document. The fact of the insertion of the date 30 June 2002, and the reason for the selection of that date were promptly disclosed to Exeed via the affidavit of Ms Doyle. Exeed has not complained about the insertion of the date 30 June 2002, and I will say no more of the matter. 22 Ms Soars, counsel for the plaintiffs, has fairly drawn my attention to an irregularity in the execution of the Charge on behalf of HPA and HPAF. 23 The Charge is called a 'Deed' and is expressed to be made between Exeed as Chargor and HPA and HPAF as Chargeholders. It is also said in the testimonium to be 'executed as a deed'. There is a purported execution by Exeed and by each of HPA and HPAF, but in all three cases the wording follows the form: 'this document was executed by [name and ACN of company] was hereto affixed in accordance with Section 127 of the Corporations Law in the presence of:' None of the common seals of the companies is affixed. In the case of Exeed, Frank Colli has signed as 'Director', and Michael Bosnar has signed as 'Director-Secretary'. In the case of each of HPA and HPAF, Jack Gargano has signed as 'Director' and there is no other signature. Historical company extracts show that Mr Gargano was a director of HPA and HPAF in May and June 2002. 24 Section 127 of the Act provides for alternative forms of execution of documents by companies: without using a common seal (subs (1)) and using a common seal (subs (2)). Subsection 127(1) provides for the former as follows: 'A company may execute a document without using a common seal if the document is signed by: (a) 2 directors of the company; or (b) a director and a company secretary of the company; or (c) for a proprietary company that has a sole director who is also the sole company secretary - that director. 25 In May and June 2002, each of HPA and HPAF was a public company with more than one director. It follows that par (c) of s 127(1) did not apply. 26 Subsection 127(3) provides that a company may execute a document as a deed if the document is expressed to be executed as a deed and is executed in accordance with, relevantly, subs (1). 27 Perhaps the words 'was hereto affixed …' are to be understood as an intended reference to the affixing of the common seal of the company concerned. So far as Exeed is concerned, the Charge is expressed to be executed as a deed by Exeed and is signed by a director and by another person who is both a director and the company secretary. In my opinion, the execution of the document on behalf of Exeed satisfies s 127(1). The deed was duly executed by Exeed. 28 As noted above, in the case of HPA and HPAF, the signature of only Jack Gargano appears. The purported executions by HPA and HPAF do not meet terms of s 127(1) of the Act. 29 Subsection 127(4) provides that s 127 does not limit the ways in which a company may execute a document (including a deed). There is no evidence directed to establishing any relevant express or implied authority which was possessed by Mr Gargano. All that the evidence reveals about him is his holding of the office of 'director'. The constitution of neither HPA nor HPAF is in evidence. I am therefore not equipped by evidence to infer that Mr Gargano had authority from either HPA or HPAF to sign the Charge on its behalf, even though it was a document entirely for the benefit of those companies. 30 The making of an order extending the time for lodgment will not overcome any ineffectiveness of the Charge arising from the defective execution of it on behalf of HPA and HPAF. But if the correct conclusion should be that, as a result of the defect the Charge is unenforceable, I would not make the order sought, either because the power to extend is not activated because a 'charge' does not exist, or in the exercise of my discretion. 31 In view of the lack of evidence of authority of Mr Gargano, I proceed on the hypothesis that he did not sign the Charge at all. The Charge remains expressed as being made with HPA and HPAF, but is to be treated as if Mr Gargano's signature did not appear on it. 32 A careful reading of the Charge shows that by it, the Chargeholders did not promise to do anything. Certainly, it contains an agreement by them to certain régimes, such as, that communications between the parties under the Charge will be in the English language, may be effected via certain stated addresses, and will be deemed to be received at certain times. The nearest thing to a promise is found in cl 10.1 which provides that if there is default by Exeed, and if the Chargeholders exercise the rights given them by the Charge, and if theyrecover money from the exercise of their rights against the charged property, these 'Remedy Proceeds' are to be applied by the Chargeholders in a certain order. 33 No consideration for the granting of the Charge is stated, and, in particular, the Chargeholders do not promise to advance money or credit to Exeed. Clause 2.9 states simply: 'The Chargor has entered into this document for valuable consideration from the Chargeholder and receipt of the consideration is acknowledged.' 34 The charging provision (cl 2.1) is: 'The Chargor charges the Charged Property in favour of the Chargeholder as security for the payment of the Secured Money.' The expression the 'Secured Money' is defined in cl 1.1 to mean 'the money owing from time to time by the Chargor to the Chargeholder under any Relevant Document', and the expression 'Relevant Document' is widely defined. 35 The Charge is thus an instrument validly executed by the obligor for the benefit of an obligee who is identified in it but who has not executed it. A long line of authority establishes that such an instrument is valid and enforceable: Cooker v Child (1673) 2 Lev 74 (83 ER 456) (successful action by co-owner of ship for debt on indented charter party, executed by charterer and containing covenant by charterer in favour of plaintiff co-owner but not executed by him); Otway v Braithwaite (1678) Finch 405 (specific performance granted of agreement in deed poll); Butler v Powis (1845) 2 Coll 156 (63 ER 679) at 161 (ER 681) (obligee granted specific performance of covenant to grant lease to obligee, although obligee not a party to the instrument); Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925 (117 ER 1136) at 937-940 (ER 1141-1142) (successful action on deed poll by which defendant insured plaintiff's cargo); Hungerford v Becher (1855) 5 Ir Ch R 417 (indenture of rent-charge enforced though not executed by chargee-lessor); Chelsea and Walham Green Building Society v Armstrong [1951] Ch 853 ('Chelsea & Walham') (transfer of land, equivalent to a deed, containing covenant to pay named mortgagee which was not a party to it); Lincoln Contractors Pty Ltd v Searle [1982] Qd R 71 ('Lincoln Contractors') (enforcement of deed of guarantee expressed to be inter partes but executed by guarantor alone); Carter v Schmierer [2003] QSC 035 (appointment of receivers and manager by charge held not invalid by reason of charge having been signed by only one director of chargee); and see Green v Horne (1795) 1 Salk 197 (91 ER 177), and Norton on Deeds (2nd ed) at 29. I do not find it necessary to discuss whether the Charge is properly categorised as a deed inter partes or as a deed poll; cf the interesting discussion of the question by Vaisey J in Chelsea & Walham at 857-859 and by Master Lee QC in Lincoln Contractors at 75-76. It suffices to say that the Charge was a deed for the benefit of a person identified in it. 36 The defective execution of the Charge on behalf of the plaintiffs does not affect its validity or its enforceability by them. 37 For more abundant precaution, the plaintiffs tendered on the hearing a 'deed of confirmation and ratification' dated 23 February 2004, expressed to be 'executed as a deed', and to be executed for and on behalf of HPA and HPAF by, in each case, one 'Director' and one 'Secretary/Director'. On its face, each execution meets the terms of s 127 of the Act. 38 The operative provisions of the deed of confirmation and ratification are as follows: '1. Each of the Companies [HPA and HPAF]: (a) confirms its approval of its entry into the Charge; and (b) ratifies the execution of the Charge by Mr Gargano on its behalf; in each case with effect from 30 June 2002. 2. Each of the Companies confirms that it is bound by the Charge in accordance with its terms.' 39 If, contrary to my firm view, the Charge was not, for the reasons mentioned earlier, fully effective in favour of HPA and HPAF, this deed is an effective ratification of Mr Gargano's purported 'binding' of each of them to the Charge. 40 Generally speaking, ratification is retrospective, ie it is equivalent to original authority, and relates back to the time of the act of the person who purported to act as agent, so that the principal is bound by the act in all respects as if it was done with the principal's previous authority: GE Dal Pont, Law of Agency (Butterworths 2001) at [5.38] (132-133) and authorities there cited; Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Limited (2000) 201 CLR 520 at 533. The evidence does not suggest any reason, such as the intervention of the rights of third parties, why the general principle does not apply here. In any event, the orders I will make will protect third parties. There is, moreover, every reason why ratification should be effective in this case: Exeed intended that the Charge should be fully effective in favour of the plaintiffs.

Discretion 41 Chapter 2K of the Act deals with charges. Part 2K.2 deals with registration of charges. Section 263 provides that, where a company creates a charge, it must ensure that there is lodged, within 45 days after the creation of the charge, a notice in the prescribed form setting out certain particulars of the charge, and the instrument of charge or a verified copy of it. Where a notice in respect of a charge required by s 263 is lodged, whether before or after the period within which it was required to be lodged, and contains all the required particulars, ASIC must, as soon as practicable, enter in the Register the time and date of lodgment and specified particulars in relation to the charge (s 265(2)). 42 Section 266 provides, so far as relevant, as follows: '(1) Where: (a) an order is made, or a resolution is passed, for the winding up of a company; or (b) an administrator of a company is appointed under section 436A …; or (ba) a company executes a deed of company arrangement; a registrable charge on property of the company is void as a security on that property as against the liquidator, the administrator of the company, or the deed's administrator, as the case may be, unless: (c) a notice in respect of the charge was lodged under section 263 …: (i) within the relevant period; or (ii) at least 6 months before the critical day; ……… (2) The reference in paragraph (1)(c) to the relevant period is to be construed as a reference to: (a) in relation to a charge to which subsection 263(1) applies - the period of 45 days specified in that subsection, or that period as extended by the Court under subsection (4) of this section; ……… (3) … (4) The Court, if it is satisfied that the failure to lodge a notice in respect of a charge, or in respect of a variation in the terms of a charge, as required by any provision of this Part: (a) was accidental or due to inadvertence or some other sufficient cause; or (b) is not of a nature to prejudice the position of creditors or shareholders; or that on other grounds it is just and equitable to grant relief, may, on the application of the company or any person interested and on such terms and conditions as seem to the Court just and expedient, by order, extend the period for such further period as is specified in the order. (5) … (6) … (7) … (8) In this section: critical day, in relation to a company, means: (a) if the company is being wound up - the day when the winding up began; or (b) if the company is under administration - the section 513C day in relation to the administration; or (c) if the company has executed a deed of company arrangement - the section 513C day in relation to the administration that ended when the deed was executed.' 43 In my opinion, the background facts recounted earlier show that the failure to lodge a notice in respect of the Charge was 'due to inadvertence'. Knowing that the Charge was required to be registered (though not knowing of the 45-day limit), Mr Campbell at first disputed with Exeed over the liability to pay the stamp duty. Then he put the matter to one side due to work pressures, apparently intending to return to the questions of stamp duty and registration when time permitted. After putting the matter to one side, he failed to advert again to the necessity of registering the Charge before he left HPA in March 2003. If he had remembered that the Charge had not been registered, he would have sought the advice of the plaintiffs' in-house solicitor. 44 Mr Campbell's failure was 'due to inadvertence' in the sense that he was 'not properly attentive': cf Hamilton v Property Investments Ltd (1983) 7 ACLR 932 at 935. It has been accepted that there can be 'inadvertence' even where the relevant person was unaware of the requirement of lodgment within 45 days: cf Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd [1991] 2 Qd R 456 esp at 461; Rynmarc Pty Ltd v Classic Ergonomic Chairs Pty Ltd (1994) 12 ACLC 1038 ('Rynmarc') esp at 1046; National Australia Bank Ltd v T2 Trading Pty Ltd [2003] FCA 1477 and cf Re Lloyd Anthony Furniture Pty Ltd (Receiver and Manager appointed) (in liq); ex parte Walker (1996) 19 ACSR 478. 45 Mr Campbell knew that there was a legal requirement of registration, did not know of the 45-day time limit, and forgot about the matter. The case is distinguishable from Rynmarc, in which the person concerned (a solicitor) understood that there was a legal requirement of registration as soon as practicable, did not know of the statutory time limit, but 'was continually conscious of the need to register the charge' and 'adverted to the need to register throughout the period of delay but did not get around to doing it' (at 1,046). Mr Campbell was not 'continually conscious' of the need to register the Charge and did not advert to the need to do so 'throughout the period of delay'. 46 My conclusion that the failure to lodge a notice in respect of the Charge was 'due to inadvertence' makes it unnecessary for me to consider the second statutory ground for an extension of time (that the failure was not of such a nature to prejudice the position of creditors or shareholders), or the third statutory ground for an extension of time (that on other grounds it is just and equitable to grant relief). But the question of prejudice to creditors remains a relevant discretionary consideration: see Re Application of Guardian Securities Ltd [1984] 1 NSWLR 95 at 98. 47 There is no present threat of a winding up or of the appointment of an administrator, and Exeed continues to trade. It is possible, however, that some person has, between 14 August 2002 and 9 January 2004, become a creditor of Exeed in reliance on the absence of the registration of particulars of any registered charge given by the company. I am certainly not satisfied that creditors have been prejudiced, but should I be satisfied that they will not be if the time for lodgment is extended? This question requires attention to be given to the likelihood that within six months from 9 January 2004: (a) an order will be made, or a resolution will be passed, for the winding up of Exeed; (b) an administrator of Exeed will be appointed under s 436A of the Act; or (c) Exceed will execute a deed of company arrangement (see s 266(1) of the Act set out at [42] above). 48 This question requires, in turn, that attention be given to the evidence relating to Exeed's financial position. 49 Exeed trades as trustee of the Exeed Unit Trust. A profit and loss statement in respect of that Trust for the period of 12 months ending 30 June 2003 is in evidence. So is the Trust's balance sheet as at 30 June 2003. On the hearing, pursuant to a notice to produce, Exeed produced to the Court a certain more recent financial document. 50 For the year ended 30 June 2003 Exeed had sales of $15,320,952 with costs of sales of $14,588,272, giving a gross trading profit of $732,680. When non-trading income of $9,042 is added, the gross profit for the year becomes $741,722. The total operating expenses for the year were $830,212. Deduction of this amount from the sum of $741,722 gives a 'Net Operating Loss' for the year of $88,490. The profit and loss statement deducts a further $3,416 for 'Foreign Currency Gain/Loss' and $30,000 for 'Distribution' to arrive at a net loss of $121,906. 51 A balance sheet of the Exeed Unit Trust as at 30 June 2003 shows Current Assets of $2,143,467, Fixed Assets of $37,594, and Current Liabilities of $1,900,005, giving Net Assets of $281,056, including a 'working capital' element of $243,462. 52 The relevant document produced on the hearing pursuant to the notice to produce is headed 'Budgeted Monthly Profit and Loss Statements'. This shows, in respect of the months February to June 2004, budgeted total sales of $3,700,000, budgeted cost of sales of $3,420,250, and a budgeted gross profit of $279,750. The budgeted total operating expenses shown for that period are $171,975, and the budgeted net profit shown is $107,776. 53 There is no evidence of Exeed's actual financial position since 30 June 2003. Apparently, it was not able to pay the amount of its agreed indebtedness of $620,000 to the plaintiffs immediately, but considers that it will be able to pay that amount by instalments by the end of October 2004. 54 While the evidence is not strong, there is no evidence that Exeed is in financial difficulty. But having regard to:

the fact that HPA terminated Exeed's Reseller Contract as from 30 November 2003;
the long period of the failure to register the Charge, during which Exeed traded;
the fact that Exeed made a loss for the year ended 30 June 2003; and
the fact that the evidence of Exeed's financial position is not detailed or comprehensive; the order extending time should be subject to conditions. These will be directed to protecting both third parties who may have dealt with property the subject of the Charge and unsecured creditors. 55 The former condition may have little scope for operation, since the Charge is 'floating' over, inter alia, stock-in-trade, work-in-progress and property Exeed acquires for disposal in the ordinary course of its ordinary business (cl 2.2 of the Charge). There is no suggestion that in so far as the Charge was initially floating, it has become fixed. 56 The latter condition will reserve to any liquidator, administrator or creditor of Exeed the liberty to apply for an order discharging or varying the order extending time, in the event that an order that the defendant be wound up is made, or an administrator of the defendant is appointed, within six months of the date on which the Charge is taken to have been registered under s 265 of the Act.

CONCLUSION 57 I am satisfied that the failure to lodge was due to inadvertence and that there should be an extension of time. The extension should be until 9 January 2004 when the notice was lodged with ASIC. If the word 'provisional' in the entry in the Register is deleted, the Charge will be taken to be registered and to have been registered from 9 January 2004: s 265(9) of the Act. Whether that word is deleted will depend on payment of the stamp duty. The two protective conditions mentioned will be framed by reference to the date on which the Charge is taken to have been registered under s 265 of the Act. 58 There will also be orders that the orders be entered forthwith and that the plaintiffs forward to ASIC a copy of the orders as entered, and request ASIC to ensure that a copy of them be attached to the copy of the Charge as registered with ASIC. I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.

Solicitor for the Defendant: Mr Robert Pelletier of Toomey Pegg Drevikovsky

Corporations Act 2001(Cth)ss 127, 263, 265, 266

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