123 Sweden AB v Appleyard Capital Pty Limited (2014) 101 ACSR 629
Source
Original judgment source is linked above.
Catchwords
123 Sweden AB v Appleyard Capital Pty Limited (2014) 101 ACSR 629
Judgment (2 paragraphs)
[1]
EX TEMPORE Judgment
The Plaintiffs in these proceedings all form part of a group of corporations known as the Firstmac Group, and which provide, inter alia, asset finance and leasing services in connection with motor vehicles purchased from motor dealers.
The transactions which they have entered into and which are the subject of these proceedings are all transactions involving security interests within the meaning of the Personal Property Securities Act 2009 (Cth) ("the Act"). Some of the transactions go as far back as 2014.
The Plaintiffs have at all times recognised the need for them to register under the Act the interest created by the transactions into which they have entered. However, in the period prior to June 2017 two errors were made in the manner in which companies in the Firstmac Group's interests were recorded in the Personal Property Securities Register ("PPSR").
In the matter of Appleyard Capital Pty Limited; 123 Sweden AB v Appleyard... [2018] NSWSC 398 | Case summary | Zoe
The first, described as a secured party group error or "SPG error", involved the wrong SPG number being utilised for that transaction so that, for example, a loan actually made by the second Plaintiff was recorded in the PPSR as a loan from the mortgage manager of Firstmac Limited.
The second error was that where a purchaser or lessee (the grantor) operated under a business name, the ABN number was used to identify the grantor rather than the grantor's name ("ABN error"). Errors of both types (mainly SPG errors) in the many transactions entered into by the Plaintiffs were, by August 2017, rectified on the PPSR.
The problem for the Plaintiffs is that the protection which s 62(3)(b) of the Act provides to a grantee of security over a specific vehicle, if registration is effected within 15 business days of the borrower obtaining possession of the vehicle as between that grantee and a grantee of an all present and after acquired property security interest, will not be conferred if the details that are recorded within the requisite period are not accurate. Priorities as between the Plaintiffs and other later purchase money security interest holders would also be affected: see s 63 of the Act and Annotated Personal Property Securities Act 2009 (Cth) with Regulations 2010 (Cth) (Harris & Mirzai, Wolters Kluwer CCH, 2nd ed, 2014) at [62.5.4.3].
There are two sets of Defendants. The first set of Defendants are the 700 or so grantors, whose transactions are affected by the errors made by the Plaintiffs, and the second set of Defendants are the holders of prior securities whose interests might be affected by the orders the Plaintiffs seek. There are approximately 80 corporations or individuals in that category.
In December last year, an order was made by Black J for substituted service on the Defendants. No Defendants have appeared today. I was provided with an affidavit from the solicitor for the Plaintiffs indicating the steps which his firm has taken to ensure that:
1. all Defendants were served in accordance with the orders for substituted service; and
2. any enquiries that were made by recipients of those orders or their solicitors were answered.
It is clear from that affidavit that extensive work was undertaken to ensure that service was effected and I am satisfied that on the basis of those affidavits that all the parties who needed to be served have been served.
Mr Mirzai, of Counsel, appears for the Plaintiffs and he has provided me with detailed and helpful submissions drawing my attention to the relevant sections of the Act and also to the provisions of s 588FL and s 588FM of the Corporations Act 2001 (Cth). Section 293 of the Act permits a court to make an order extending the number of business days in periods specified in the legislation indicating the period specified in s 62(3)(b) of the Act if the court is satisfied that it is just and equitable to do so.
Section 293(3) of the Act requires the court, in making an order to extend the period in s 62(3)(b), to take into account the following:
"(a) Whether the need to extend the period arises as a result of an accident, inadvertence or some other sufficient cause;
(b) whether extending the period would prejudice the position of any other secured parties or other creditors;
(c) whether any person has acted, or not acted, in reliance on the period having ended."
I have had regard to the affidavit of Ms Julie Sanders of 13 November 2017, which explains the errors that were made by officers or agents of the Firstmac Group.
I am satisfied that it is just and equitable to extend the time pursuant to s 293 of the Act for the following reasons:
1. No party whose interests might be affected by an extension of time has appeared in these proceedings to assert that the extension of time should not be granted.
2. Registration was initially effected, albeit inaccurately, but with the consequence that anyone searching the PPSR would have been aware that an interest had been created in respect of the particular vehicles. What they would not have known is the correct identity of the grantee. The grantor, of course, would know the correct identity of the grantee and, in the case of an ABN error, that grantee had received the funds and has given the capital, mortgage, or other security over the vehicle.
3. This is a case of inadvertent error. It did take considerable time for the error to be ascertained but that does not alter the fact that there was no deliberate disregard for the requirements of the Act. Registration, albeit inaccurate, was effected within the fifteen business days specified in the Act.
4. My attention has been drawn to authorities which indicate a liberal approach to extensions of time or alterations pursuant to s 588FM of the Corporations Act 2001 (Cth): see, for example, In the matter of Appleyard Capital Pty Limited; 123 Sweden AB v Appleyard Capital Pty Limited (2014) 101 ACSR 629; [2014] NSWSC 782 and also In the matter of Cardinia Nominees Pty Ltd [2013] NSWSC 32. In the matter of Accolade Wines Australia Limited and other companies [2016] NSWSC 1023, Brereton J indicated that the approach taken in cases to s 588FM of the Corporations Act 2001 (Cth) provide some assistance to cases in which s 293 of the Act is relied upon. His Honour noted, however, that the focus of the two sections is different and that the prejudice referred to in s 293(3)(b) is prejudice from "extending the period" and his Honour then said, at [27]:
"This directs attention not to the impact on other secured parties or creditors of the delay in registration, but to the impact of making an order extending the period; to evaluate prejudice for that purpose, one compares the position of creditors if an extension is granted, with their position if no extension is granted, and usually there will be a difference because priorities will be disturbed."
His Honour also noted that there is a difference in emphasis in cases concerned with transactions that involve security for financial accommodation and those which are concerned with the lease or hire of specific goods which are often "ordinary course of business" transactions: see [35], and his Honour noted that prejudice, if established, whilst relevant, is not conclusive: see [29].
1. Whatever the considerations which may need to be taken into account where a prior holder of security asserts that there would be a prejudice to it by the extension of time, the situation here is that no prior security interest holder has come forward to assert such prejudice and I proceed on the basis that, therefore, it is unlikely that any prejudice could be established by such prior holders. It is difficult to see how any grantor could assert or claim prejudice and none has sought to do so.
One other matter which was raised is that one of the grantors has gone into administration, that is, the company Brigam Road Tank Haulage Pty Limited ("Brigam Road").
There are cases which indicate that the Court can grant an extension of time under s 588FM even where a corporation has gone into administration, provided that it is after the registration of the interest: see In the matter of Carpenter International Pty Limited (Administrators Appointed) (ACN 165 690 657) [2016] VSC 118 at [217] per Cameron J; In the matter of Appleyard Capital Pty Limited; 123 Sweden AB v Appleyard Capital Pty Limited (Supra) at [22]-[23] and In the matter of Duke Contracting Australia Pty Ltd [2017] NSWSC 767 at [10], Brereton J held that the same considerations should apply to s 293.
Mr Mirzai has informed me, and I accept, that the relevant registration of that transaction for that grantor occurred on 20 October 2016. Brigam Road was put into administration on 28 November 2017. Accordingly, the administration postdates the correction of the PPSR in August 2017. The fact that this grantor has been placed in administration is not, therefore, an obstruction to the making of the orders sought.
The extension sought is for 770 days, a very significant period, as some of these transactions date back to 2014. Rather than having to specify a different date for each transaction, it seemed convenient that there be a comprehensive period covering all of the transactions.
I will make orders in accordance with the Short Minutes of Order prepared by Mr Mirzai, which I shall initial and date in the top right hand corner, and I will add a further order that the Exhibits, including confidential Exhibits, be returned and be retained in the form in which they have been provided to the Court for a period of 12 months in accordance with SC Gen 18 of the Supreme Court Rules.
[2]
Amendments
29 March 2018 - Coversheet - corrected catchwords
Paragraph [2] - changed "Properties" to "Property"
Paragraph [11] - changed "course" to "cause"
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Decision last updated: 17 December 2018
Parties
Applicant/Plaintiff:
In the matter of Appleyard Capital Pty Limited; 123 Sweden AB
Respondent/Defendant:
Appleyard Capital Pty Limited
Legislation Cited (4)
Annotated Personal Property Securities Act 2009(Cth)