Ipswich Earthmoving Machinery Pty Ltd v Austral Bricks

[4] POE carried on an earthworks business. Its directors were and are Mr Robert Perry and Mr Michael O'Brien. They became owners of POE in December 2015.The first respondent, Austral Bricks (Qld) Pty Ltd (Austral), was and is the registered proprietor of Lot 1 on RP854704, which contains a clay shale mine, operated pursuant to a mining lease granted to Austral. Until August 2024, mining was carried out by POE pursuant to an informal license granted by Austral. As will be seen, in August 2024, those activities were taken over by RBP, which also operates on the site pursuant to a license from Austral.

[5] On 27 April 2020, POE and a company called Merit Lining Systems Pty Ltd (Merit) executed an Acknowledgement of Debt (the Acknowledgement) by which, relevantly, POE:

(a) Acknowledged a debt to Merit of $250,523.20;

(b) Gave a signed authority to pay in favour of Merit for sums due from third parties to POE; and

(c) Undertook to grant identified security for payment of the debt.

[6] The identified security included a charge in the nature of a fixed and floating charge over personal property of POE capable of being granted under the PPSA. POE also agreed to execute security documentation necessary for the registration of that charge. A Personal Property Securities Register (PPSR) search confirms that on 20 August 2020, POE granted a charge over all present and after acquired (personal) property (the PPSR security). "Personal" is included to recognise that only interests in personal property are dealt with under the PPSA. The search records the secured party as IEM, though it is reasonable to infer the original grantee was Merit.

[7] RBP was incorporated in December 2020 but did not trade at that time. Its sole director is Mr Perry, one of the directors of POE.

[8] On 23 August 2024, RBP and POE entered into a written sale agreement under which RBP acquired the Contested Items from POE for $230,000 + GST (the Sale Agreement). The purchase price was paid to POE, and title passed to the Contested Items on 23 August 2024. The purchase price was paid in instalments from October 2024 until final payment on 26 June 2025. Although the Sale Agreement does not appear to be in evidence, it is common ground that the equipment sold comprises the 15 Contested Items as follows: [1]

1. Allight XD75P1 PEP03;
2. 2020 Able LG8D1;
3. 2016 Trailers Direct Tandem Axle;
4. 1988 Caterpillar 988B;
5. 2000 Isuzu NPR400;
6. 2008 Mitsubishi Triton GLX;
7. 1997 Isuzu NPR300;
8. 1986 Mack 13,000 Lt Tank Econodyme;
9. Circa 2017 Renegade Industrial HD 1150;
10. 2023 All shelter 40ft Dome Shelter;
11. Lincoln Redi-Mig 352R;
12. 1996 NPKH10 XB Rock Breaker;
13. Custom 4m x 10m Site Office, inc 3 x 40ft Shipping Containers;
14. Custom Fabricated Wheel Wash - Drive through wheel wash with "rumble strip" grid and bath; and
15. Stockpiles of Quarry Product.

[9] The evidence of Mr Perry is that the purchase price was an arm's length figure based on advice from a valuation from "Grays", presumably valuers or auctioneers.

[10] At that time, POE remained in a long-standing dispute with the vendor of the shares in POE. Mr Perry was sufficiently concerned at the time of the Sale Agreement about the company's financial position to seek advice from his solicitor and accountant about the Sale Agreement and to approach Worrells for advice about insolvency processes.

[11] On 28 August 2024, Mr Perry and Mr O'Brien appointed Mr Hammond of Worrells as voluntary administrator. Such an appointment may only occur, relevantly to this case, if the directors consider the company is or is likely to become insolvent.[2] That appointment was an event of default under the Acknowledgement.

[12] From the completion of the Sale Agreement on 23 August, RBP took over the mining operations. Austral consented to that change.

[13] On 2 October 2024, POE was wound up by resolution of creditors in the administration.

[14] On 15 November 2024, Merit assigned by deed the debt under the Acknowledgement and PPSR security to IEM (the Assignment). The Assignment was conditional on payment of $50,000 to IEM. The Assignment recited the debt of POE to Merit at that date at $284,750 (though that recital does not bind POE or any other person other than the parties to the deed of assignment).

[15] IEM acted with alacrity once the Assignment occurred. Notice of the Assignment was seemingly given to POE by the solicitor for IEM on 13 December 2024. On the same day, IEM's solicitor served two so-called "Notices of Seizure" on POE at the premises of the Liquidator, addressed to POE as the grantor and Austral as the licensor (the Notices). The Notices were not in forms provided for under the PPSA, so far as I could determine, nor do the sections referred to in the Notices provide for any such forms. That does not mean they are of no effect. However, the Notices are unusual documents. The first purports to seize 16 identified items under the PPSR security pursuant to s 126(1) PPSA. That section provides:

(1) If:

(a) collateral cannot be readily moved from a grantor's premises; or

(b) adequate storage facilities are not readily available for collateral;

a secured party may seize the collateral under section 123 by taking apparent possession of the collateral.

Note: This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

[16] It is unclear how the preconditions in that section were met at the time that Notice was delivered, except perhaps for the stockpiles of quarry products. More surprisingly, it contains this threat, directed to the world at large, that:

Any person not authorised by IEM or the Licensor who trespasses onto [the mine site] or any of the Property located thereon will be reported immediately to the Police.

[17] A second notice was made pursuant to s 123(3) PPSA. That section provides:

(3) Intangible property may be seized by another method, if so agreed between:

(a) the parties to the security agreement; or

(b) if the intangible property is a licence - the parties to the security agreement together with the licensor or the licensor's successor.

[18] It purported to seize the licence to operate at the mine site (presumably the license of POE, which had seemingly been terminated, though it does not say that). It repeated the warning in [16] above.

[19] The Notices assert that IEM, a holder of a personal property security, has power to exercise authority over real property it neither owns nor leases. It is unclear to me how that can be correct, though that issue is not part of this judgment.

[20] On 12 December 2024, IEM's solicitor wrote to Austral demanding access to the mine site to take possession of the personal property it contended was collateral under the PPSR security. It appears to have included the Contested Items and a large number of other similar items. A series of letters were then exchanged over the period to 19 December 2024. It is unnecessary to set out the content in detail. In summary:

(a) Austral sought information about the basis of the claim and the identification of the equipment on the site claimed under the PPSR security;

(b) IEM asserted a legal right to enter and threatened proceedings if consent was not given within a day;

(c) Austral then made inquiries as to IEM's claims with RBP who informed Austral of their claim to certain of the Contested Items. Further, the Liquidator's solicitors advised that the Liquidator had articulated issues of concern in relation to the validity of the Acknowledgment which had not been addressed by Merit; and

(d) Austral stated that it was an innocent third party caught between competing claims apparently to the same equipment. Austral called on IEM to resolve the dispute with RBP before taking action against Austral.

[21] On 21 December 2024, IEM tried some self-help. Mr Halpin of IEM appears to have organised for four men to attend the mine site and enter without Austral's consent at 2.15am. Police arrived. Mr Perry objected to entry by IEM's agents. Unsurprisingly, the police did not accept that the so-called Notices of Seizure authorised entry. The officers observed that the Notices were not Court orders. They were right not to act on those Notices. Mr Perry swore that Mr Allen, IEM's solicitor, asserted to the police that the Notices were valid and there was an entitlement to enter. If that had occurred, Mr Allen ought to think carefully about such confident assertions where conduct likely to involve wilful damage (as might have occurred here) and breaches of the peace (as was in prospect here) are a possibility.

[22] Austral took a dim view of this event and called on IEM to approach the Court for orders as to the validity of their security.

[23] Without further correspondence between the parties, IEM commenced these proceedings by originating application some six months later, on 16 June 2025, with Austral as the only respondent. IEM sought an order that the applicant "is permitted to enter and access [the mine site]" for the purpose of taking possession of its personal property subject to the PPSR security.

[24] The affidavits in support were premised on IEM's proposition that it was entitled as of right to enter Austral's mine site and retake whatever it asserted was covered by the PPSR security. (Both Mr Allen and Mr Halpin swore affidavits. Both articulated a sense of grievance that Austral did not maintain confidentiality when told about IEM's plans. That grievance was not justified. Nothing in the evidence suggested that the equitable obligation of confidence was engaged. Austral was entitled to do as it thought advisable in respect of its own interests.[3])

[25] The matter came before me on 23 June 2025. Both the Liquidator and RBP sought an opportunity to apply to be joined in the proceedings. On 27 July 2025, I made orders for joinder and ordered pleadings.

[26] On each of 23 June and 27 July 2025, RBP asserted an entitlement to the Contested Items.[4] Despite that, IEM's claim and statement of claim sought relief only against Austral. It sought an order directed to Austral to permit IEM to recover the chattels covered by the PPSR security and added a claim for damages against Austral on various grounds in relation to Austral not permitting IEM entry to retake possession of its secured property.

(a) The Acknowledgement;

(b) That all the respondents were estopped by deed from denying the matters in the recitals and operative provisions. (The basis for this seemed to be that Austral and RBP were privy to the deed somehow; a questionable proposition at best).

(c) The security interest arising under the Acknowledgment including the PPSR security;

(d) That the only payment made by POE was a payment of $50,097.68 from Cleanaway on account of POE;

(e) The Assignment;

(f) The seizure by the Notices of Seizure of all the personal property of POE on the mine site;

(g) That IEM had thereafter an immediate right to possession to the exclusion of RBP and that Austral interfered wrongly with that right;

(h) That despite the Sale Agreement, the Contested Items remained subject to the PPSR security; and

(i) IEM is entitled to Items 1 to 52 in the Annexure to the Statement of Claim (seemingly Items 1 to 15 are the Contested Items).

(a) Does not admit the validity of the Acknowledgment on the basis (advanced in correspondence by the Liquidator's solicitors) that it was not validly executed by POE because only one of two directors signed;

(b) Denies it is estopped by any statement of fact in the Acknowledgement;

(c) Does not admit the validity of the security created by the Acknowledgement itself on the basis that the charging clause is ineffective to create a charge;

(d) Denies that it is obliged to grant access to IEM;

(e) Does not admit the allegations as to the amount of the secured money;

(f) Denies that it refused access to IEM because it was willing to grant access on provision of information as to its rights to property on the site; and

(g) Alleges that it had received contrary claims to chattels on the mine site from RBP and the Liquidator.

(a) Pleads non-admissions to most of the historical allegations;

(b) Denies it is estopped by the Acknowledgment;

(c) Alleges that to the extent the PPSR security attached to the Contested Items, it attached subject to ss 45 and 46 PPSA;

(d) Alleges a further set-off arising out of a breach by Merit of a contract between POE and a company called Orora of some $124,850; and

(e) Alleges that POE sold the Contested Items in the ordinary course of POE's business and RBP took them free of any security interest under s 46(1) PPSA.

[30] RBP also counterclaimed seeking a declaration that it took the Contested Items free of any security interest.

[31] As to its reliance on s 46(1) PPSA, RBP specifically alleges:

(a) Between December 2015 and August 2024, POE conducted an earthmoving and civil contracting business;

(b) In the ordinary course of that business, it sold plant and equipment from time to time. Particulars refer to Mr Perry's first affidavit,[5] but flag these are the best particulars pending further interlocutory steps;

(c) On 23 August 2024, POE and RBP entered into the Sale Agreement by which POE sold the contested items to RBP with immediate completion and free of security;

(d) The Sale Agreement completed on 23 August and the purchase price was paid over the period to July 2025 to POE; and

(e) The Contested Items were sold in the ordinary course of POE's business of selling property of that kind and therefore RBP took those items free of IEM's security interest pursuant to s 46(1) PPSA.

[32] IEM replied to both defences with replies totalling some 60 pages. I will not summarise those allegations. Many of them are not particularly helpful. It is sufficient to observe that for the most part, they maintain the gravamen of IEM's pleaded case. The relevant allegations are those responding to the reliance by RBP on s 46(1) PPSA.[6] IEM pleads as follows:

(a) IEM denies that POE carried on an earthmoving and civil contracting business over the period identified because on the date of the Sale Agreement its business was to extract clay to supply to Austral and to extract gravel and fill to sell to others under license from Austral;

(b) IEM denies that POE sold plant and equipment in the ordinary course of business as at August 2024 because:

(i) The sales particularised occurred up to 2019 and before the entry into the PPSR security; and

(ii) The sales were not in the ordinary course of POE's business because that business did not comprise selling or leasing personal property of the kind sold, it comprised earthmoving and civil contracting (or clay and gravel extraction);

(c) IEM admits the Sale Agreement but alleges that it was completed at the common office of POE and RBP, Mr Perry signed for both entities, the Contested Items were already on site and continued in use from POE to RBP and that "the payment of the Purchase Price... was structured so that" it was received by the administrator and Liquidator, not POE, and was received by the Liquidator on behalf of POE;

(d) IEM denies the price was paid to POE because:

(i) It was paid to the administrator or Liquidator as agent for POE; and

(ii) (Seemingly) IEM admits only $112,341 was paid;

(e) IEM denies that the facts alleged by RBP engage s 46(1) PPSA because:

(i) POE's business was not selling equipment of the type sold;

(ii) The sale price was well below market value and to a related party and was not advertised;

(iii) The Contested Items were "sold in one line" and the sale "resembled a liquidation" below market value;

(iv) The sale was made at a time of POE's financial stress and likely insolvency and would not have been made but for that financial stress;

(v) The sale was subject to "suspicious circumstances" because POE was placed in administration five days after completion;

(vi) The terms of payment were favourable to RBP on interest rate and immediate transfer of title despite nonpayment of the full price;

(vii) The sale was an isolated transaction not a routine part of the business; and

(viii) RBP bought the property knowing (by Mr Perry) that the sale breached the security provisions of the Acknowledgment, the breach being an event of default under clause 8 (it seems).[7]

[33] There has been no rejoinder, so those allegations are the subject of deemed non-admissions (except to the extent they are dealt with in the defence).

[34] On 12 September 2025, the proceedings were placed on the commercial list. On that date, the third defendant, on the application of the Liquidator, was relieved from ongoing obligations to appear or file material. The Liquidator has not filed any defence on behalf of POE.

[35] On 27 October 2025, IEM filed an application seeking summary judgment against Austral on IEM's claim for access and summary judgment on its answer to the counterclaim by RBP and in the alternative, an interlocutory injunction seeking (in effect) final relief against Austral for access.

[36] The application came on for hearing on 11 November 2025. In the course of the hearing, two matters emerged:

(a) First, no party disputed IEM's entitlement to items 16 to 52 in the Annexure; and

(b) Second, Austral would be willing to consent to IEM collecting items for which there was no dispute as to its entitlement, so long as IEM complied with mine site regulations.

[37] Success by IEM on its summary judgment application in relation to the Contested Items would therefore have had the practical effect of resolving the principal difference between Austral and IEM, in that if RBP's claims were dismissed, there would be no interested party capable of disputing IEM's entitlement to the items in Annexure A. Access would then be a matter of agreeing proper conditions for access. Accordingly, the parties agreed to the adjournment of the access claim against Austral pending determination of the summary judgment claim against RBP.

[38] IEM seeks summary judgment under rr 292 and 293 Uniform Civil Procedure Rules 1999 (Qld) (UCPR) on its claim and defence to RBP's counterclaim respectively. For present purposes, the two rules raise the same issue. Can IEM establish that:

(a) RBP has no real prospect of establishing at trial that it took the Contested Items under the Sale Agreement free of the PPSR security; and

(b) There is no need for a trial of the proceeding?

[39] It has been observed that "no real prospect of success" does not benefit from further elucidation. To use the words frequently used to juries when dealing with the meaning of "beyond reasonable doubt," they are ordinary English words for a judge to apply.

[40] It is worthwhile recalling a couple of other principles which assist in making the determination of prospects called for by the rules:

(a) First, ordinarily the Court will not resolve contested questions of fact which go to the prospects of success on a summary judgment application. Such matters are properly the concern of a trial where cross-examination can occur and full consideration of the evidence is possible. However if, taken at its highest, the respondent's case can be shown to have no real prospect of succeeding, then the first condition can be made out; and

(b) Second, complex or novel legal issues do not necessarily bar granting summary judgment. However where such issues arise, a court must be careful that the fact context for resolution of those issues is sufficiently articulated at the time of the summary judgment application to permit their proper resolution.

[41] The pleadings give rise to numerous secondary issues of fact, many of which do not appear relevant to resolution of the application. Mr Patty for RBP accepted for the purposes of the application against his client that the real issue was whether his client had a real prospect of establishing that it took the dispute items free of IEM's PPSR security pursuant to s 46(1) PPSA. That helpful position, adopted consistent with the imprecations of r 5(1) UCPR, simplifies resolution of this application.

Taking personal property free of security interest in ordinary course of business

(1) A buyer or lessee of personal property takes the personal property free of a security interest given by the seller or lessor, or that arises under section 32 (proceeds--attachment), if the personal property was sold or leased in the ordinary course of the seller's or lessor's business of selling or leasing personal property of that kind.

(a) ...:

(b) in any case--the buyer or lessee buys or leases the personal property with actual knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest.

[43] IEM also relies on provisions which identify the onus in establishing the application of that provision. Section 296 PPSA relevantly provides:

In a proceeding in Australia under this Act, the onus of proving the following facts lies with the person asserting those facts:

(c) the fact that a person takes personal property free of a security interest...

[44] IEM submitted it is entitled to summary judgment for three principal reasons.

[45] First, IEM submitted that RBP has no prospect of making out that it sold the Contested Items in the ordinary course of business. It relies on the articulation of the factors informing the application of that test by Sifris J in Warehouse Sales Pty Ltd (in Liq) v LG Electronics Australia Pty Ltd [2014] VSC 644 (Warehouse Sales) at [96] - [97] as follows (footnotes omitted):

1. In determining whether the transactions in question were in the 'ordinary course', the Court considered several factors, including factors that had been considered in earlier Canadian cases:

(a) Where the agreement was made ("if the agreement is made at the business premises of the seller, it is more likely to be in its ordinary course of business.")

(b) The degree of formality and any involvement of external advisers in the transaction.

(c) Who the parties to the sale were ("if the buyer was an ordinary everyday consumer, as opposed to a dealer or a financial institution, then that would be more likely to indicate a sale in the ordinary course of business.")

(d) The quantity of goods sold ("if one or a few articles are sold in the ordinary way, this was more likely to be in the ordinary course of business as compared with a sale of a large quantity perhaps forming a substantial proportion of the stock of the seller.")

(e) The price charged ("a discounted price ... would also indicate against the sale being in the ordinary course ...")

(f) The nature and significance of the transaction ("in particular, could it be carried out at a manager's own initiative without referring back to his or her superiors?")

(g) The reason for the transaction ("in particular, was it in response to financial difficulties or in suspicious circumstances?"). That reason is supported by the REM, which states that a person would not take free in the ordinary course "if the sale is made at a time of financial stress and the sale would not have been made but for the seller's financial stress."

(h) The frequency of the transaction.

(i) The arm's length nature of the transaction.

1. Professor Gedye points out four other factors that might be relevant:

(a) Whether the seller advertises that it sells goods of the relevant kind.

(b) Whether the transaction "resemble[s] a liquidation of assets".

(c) Whether the intent or effect of the transaction was to undermine a security interest.

(d) Whether consideration for the transfer was the discharge of an existing liability.

[46] IEM also relied on the meaning of "ordinary course of business" in a venerable decision of the High Court in the bankruptcy context. Sifris J dealt with that decision as follows (footnotes omitted):

1. One context in which the concept is used is in insolvency and bankruptcy cases. In Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (In liq), Rich J, in considering the expression as it arose in s 95(2)(b) of the Bankruptcy Act 1924-1946, held at page 477:

that the transaction must fall into place as part of the undistinguished common flow of business done, that it should form part of the ordinary course of business as carried on, calling for no remark and arising out of no special or particular situation.

1. This approach was approved by Dixon CJ in Taylor v White at page 136 where the Chief Justice said:

The time honoured phrase `in the ordinary course of business' is meant to refer to transactions regularly taking place in a sustained course of activity or some usual process naturally passing without examination.

1. Although these cases are useful and to some extent instructive, the context and relevant enquiry in relation to insolvency are different to the relevant enquiry in relation to the PPSA.

[47] By its first outline, IEM submitted that on the allegations set out in its reply summarised at [32](e) above, applying the factors identified in Warehouse Sales, the sale of the Contested Items could not be in the ordinary course of business. That submission depends on each of those allegations being uncontentious or established to the standard required on summary judgment. Its second outline added a further proposition: being that the effect of the sale was to bring an end to POE's business (I could not see where that allegation was made in the reply) and that such a sale could not be in the ordinary course o[8] business.8. In oral argument, Mr Allen submitted that the entry into administration within five days supported that proposition.

[48] Second, IEM submitted that the sale of the Contested Items was not a sale by POE in the ordinary course of its business of selling personal property of that kind. IEM advanced two contentions:

(a) That the business of POE, on RBP's case, was earthmoving and civil contracting and that selling plant and equipment is not part of the ordinary course of that business; and

(b) That if selling plant and equipment was part of POE's business, the evidence only sustained that proposition up to 2019. There is no evidence of sales after that time so it can be concluded that selling plant and equipment was not part of its ordinary course of business in 2024.

[49] Third, IEM submitted that Mr Perry had actual knowledge that the Sale Agreement constituted a breach of the Acknowledgement as articulated in the Reply: see paragraph [36] above.

[51] First, RBP did not appear to cavil with the list of factors identified in the cases cited by IEM. Mr Patty emphasised, however, the fact specific analysis required and submitted that such an analysis was ill suited to summary determination. RBP further submitted that, by reference to several factors identified by Sifris J, on RBP's evidence the sale of the Contested Items could be within the ordinary course of business.

[52] Second, RBP submitted that sale of plant and equipment could be part of a business of an earthmoving contractor and that the evidence demonstrated sale of plant and equipment by POE demonstrated that to be the case for POE.

[53] Third, RBP submitted that there was no breach of any express terms in selling plant and equipment in the ordinary course of business. It therefore submitted that the fact that Mr Perry was a director of both companies and knew of the PPSA security is insufficient as a matter of law to make out the exclusion. Ultimately, Mr Patty submitted that this issue turns on whether there was in fact a sale in the ordinary course of business.

[54] There is a dearth of authority dealing directly with the meaning of the ordinary course of business as it appears in s 46(1) PPSA with Warehouse Sales the only considered analysis I could locate. The only later consideration of that case I could locate was in a recent New South Wales Court of Appeal decision which was not concerned with the meaning of "ordinary course of business" in s 46(1).[9]

[55] "Ordinary course of business" is a phrase which has been consistently used in statutes and in commercial transactions, including in relation to securities in the nature of a floating charge. Cases on the meaning of the phrase in other contexts, therefore, can assist so long as the specific statutory context is kept in mind. Further, the analysis of Sifris J is, with respect, of assistance.

[56] IEM must take POE's case at its highest on this application where there are disputed facts. Further, while s 46(1) PPSA adds as a specific requirement that the business must be one of selling personal property of the kind in question, it is necessary to engage in that analysis when determining whether a sale is in the ordinary course of business in any event because it is always necessary to identify the nature of the business before identifying what kinds of conduct will be in the ordinary course of that business.

[57] The following factors favour the conclusion that RBP has a real prospect of establishing that the sale of the Contested Items was in the ordinary course of its business of selling property of that kind.

[58] First, RBP has a real prospect of establishing that selling plant and equipment of the kind sold to RBP was part of POE business. IEM's submissions on this issue are not to the point. Describing a business as earthmoving and civil contracting or quarrying or by some other plenary description, does not of itself define the scope of a business. The content of the course of any particular business depends on the activities actually carried out over time. That can include ancillary activities.[10] There is evidence that POE sold plant and equipment in the course of its business regularly up to 2019. It is scarcely surprising that an earthmoving company would do so. While there might be reason to question whether that remained part of the course of business in August 2024, it is not a matter which is properly determined on a summary basis. That is particularly so where RBP indicates in its pleading that further particulars might be given after interlocutory steps. I am aware that Mr Perry was a director of POE, but that does not necessarily mean he has all its books and records. Indeed one would assume that the Liquidator holds those. I cannot at this stage ignore the pleading in that regard.

[59] Second, there is evidence that the equipment was sold at market value. While IEM cavils with that contention, there is evidence before the Court which supports it. The administrator's report states that the market value was higher than the sale price, but that is an issue for resolution at trial.

[60] Third, there is authority for the proposition that a transaction is not necessarily outside the ordinary course of business when personal property is sold to a related entity, though the sale might be subject to greater scrutiny.[11] As a general proposition that must be correct.

[61] Fourth, in answer to IEM's submission that the sale amounted in effect to a winding up, RBP correctly submits that POE did not sell all its equipment. Further, while there might be a strong suspicion that it sold all the equipment needed to carry on its principal activity of mining and quarrying, that is presently only a suspicion.

[62] Fifth, a number of the allegations relied upon by IEM to sustain its submission on "ordinary course of business" are not pleaded in the statement of claim. They include:[12]

(a) The effect of the Sale Agreement was that POE ceased business on that day;

(b) The sale was made two years after POE was likely to have been insolvent;

(c) The sale was not made with the effect or intent of carrying on POE's business as a going concern; and

(d) POE dealt with the Contested Items with the intention of defeating the security.

[63] While on the current evidence, those inferences might be open, a Court must exercise care in granting summary judgment based on allegations which are not pleaded. Ordinarily, an applicant for summary judgment is confined to its pleaded case.[13] The reason is procedural fairness. A respondent to such an application comes to meet the case defined on the pleadings, not one which evolves in the course of argument.

[64] Sixth, IEM's allegation that the transaction was unduly favourable to RBP is also problematic on summary determination. It pleads that the interest rate, the immediate transfer of title and the payment plan were unduly favourable and that the "structure of the sale agreement was for the price to be paid to" after entry into administration and liquidation. None of these allegations are particularised and I was taken to no evidence which made them out. Indeed, without particulars they are rather ambiguous. The Sale Agreement has an interest rate of 3%. This is modest but not necessarily uncommercial, especially calculated on daily balances: see clause 4.4. The payments are heavily weighed to the final payment in June 2025. Again, this is favourable but not necessarily uncommercial. The allegation that the Sale Agreement was structured so payments went to the insolvency practitioner is not pleaded.

[65] If IEM is to succeed on its summary judgment application, it must therefore be able to establish that RBP has no real prospect of establishing that the sale of the Contested Items was not in the ordinary course of POE's business of selling property like the Contested Items despite the above issues. IEM's submission that the sale immediately brought an end to POE's business is not pleaded. However, there are matters which are pleaded in the reply and established on uncontested evidence to consider.

(a) The Contested Items remained on the site after the sale; and

(b) Were continually used before the sale by POE and continually used by RBP afterwards.

[67] Those allegations are the subject of deemed non-admissions by RBP. However, Mr Perry's evidence confirms that the Contested Items were used by RBP to operate from the mine site as at the date of his affidavit (June 2025). Mr Nolan of Austral swears that RBP operated at the site from August 2024.[14] Title passed to the Contested Items on 23 August 2024. There is no suggestion anywhere in the evidence or the pleadings other than that the two above allegations are correct.

[68] Second, by paragraph 10(d) of the statement of claim,[15] it is pleaded that:

(a) POE appointed Mr Hammond as administrator on 28 August 2024; and

(b) He was appointed on the basis that POE was insolvent or was likely to become insolvent at some future time.

[69] RBP's reply pleads an admission of the appointment but a non-admission to the basis for the appointment. Section 436A Corporations Act 2001 (Cth) provides:

(1) A company may, by writing, appoint an administrator of the company if the board has resolved to the effect that:

(a) in the opinion of the directors voting for the resolution, the company is insolvent, or is likely to become insolvent at some future time; and

(b) an administrator of the company should be appointed.

[70] I do not accept that the non-admission of the basis of the appointment is properly made, nor that it justifies refusal to make a finding in terms of that allegation. Mr Perry was one of only two directors of POE. Mr Perry swore he was in contact with Worrells before the Sale Agreement. The appointment could not have occurred without his concurrence in the resolution. The resolution had to be made for the appointment to be lawful. There is no reason to assume that the board acted unlawfully.[16] Mr Perry swore nothing addressing or supporting the non-admission. In all those circumstances, RBP has no real prospect of avoiding a finding that the board of which Mr Perry was a member resolved on 28 August 2024 that in their opinion, POE was or was likely to become insolvent.

(a) That the Sale Agreement occurred at a time when POE was under financial stress and likely insolvent; and

(b) That the Sale Agreement would not have been entered into but for POE's financial stress.

[72] Again, this is the subject of a deemed non-admission by RBP. Mr Perry gives no evidence about these allegations, nor about the financial position of POE on 23 August 2024 at all. If I was able to conclude that these allegations were made out on the evidence, that would add substantially to IEM's case. The difficulty is that there is no direct evidence and I do not think on a summary judgment I can properly infer that POE was under financial stress and likely insolvent on 23 August simply from the appointment of the administrator five days later, likely though that seems to be. The resolution recites, relevantly, that the company is "likely to become insolvent at some future time". That does not mean it was likely to be insolvent when the resolution was passed and does not compel the conclusion that the company was under financial stress at the time, much less five days prior.

[73] The Liquidator's affidavit filed in the proceedings might cast light on that issue, but that affidavit was not read on the application by IEM,[17] or any other party. There were passing references to it in submissions but that cannot result in the affidavit being somehow read by implication, and it is not a proper process for a Court to rifle through a file to find evidence for use in a summary judgment which has not been read on the hearing.

[74] Given that conclusion, I am also not persuaded that the evidence demonstrates that RBP has no real prospect of establishing that the Sale Agreement would not have been entered into but for POE's financial stress.

[75] Both the propositions in paragraph [71] seem likely at this stage to be established at trial, but of course that is not the test.

[76] So that leaves the Court with the first and second matters set out above. Are they sufficient for me to conclude that the sale was not in the ordinary course of business of POE? The necessary finding would have to be that the effect of the sale was to terminate POE's business. Such a sale could not be in the ordinary course of the business because it would not be a sale in the course of the business but a sale terminating the business. Ultimately, I am not persuaded that I can make such a finding with sufficient confidence to conclude that RBP has no real prospect of making out that the sales under the Sale Agreement were in the ordinary course of business of selling items of the type sold, doubtful though RBP's prospects presently appear.

[77] IEM also submitted that even if the sale arguably met the requirements of s 46(1) PPSA, there was no real prospect of RBP making out that the exclusion in s 46(2)(b) does not apply. That subsection provides, relevantly, that s 46(1) does not apply if:

The buyer...buys...the personal property with actual knowledge that the sale ...constitutes a beach of the security agreement that provides for the security interest.

[78] It is conceded by RBP that Mr Perry knew of the security provisions in the Acknowledgement and the PPSA security. However, he also had to have had actual knowledge that the sale constituted a breach of that security agreement/interest. That statutory provision creates a difficulty. Whether a particular sale comprises a breach of the terms of a security agreement is ultimately a question of law. A person cannot actually know that a sale constitutes a breach of a security agreement, at least prior to authoritative determination of that issue by a Court. At best they can hold a belief or understanding as to that issue. However, the statutory provision must be construed and applied by the Court as best it can.

[79] Fortunately, that issue does not need to be resolved in this application. IEM's case that the sale in fact breached the security agreement is encapsulated by its reply submission that it was plainly a breach of the security for POE to sell the Contested Items with the intention of defeating the security interest of IEM in those items.[18] There are two problems with that submission on a summary judgment application:

(a) First, a sale with that intention alleged might well be a breach of an implied term of the security agreement, but neither that term nor the intention alleged is pleaded; and

(b) Second, if RBP has a real prospect of establishing that the sale was in the ordinary course of business of selling property of that kind (which I have found), then I am not persuaded on the evidence before the Court on this application that that the sale was in breach of a term of the security agreement.

[80] IEM further submitted that the sale, even if compliant with s 46(1) PPSA, was in breach of clauses 6(b) and 8.2(a) of the Acknowledgment. Clause 6(b) provides that "a breach of the Debtor's obligations under clauses 7 or 8" is an event of default. Clause 8.2(a) provides that:

It is agreed that that the Debtor charges in favour of the Creditor its interest and grants security to the Creditor over all the Debtor's present and after-acquired property in which the Debtor can be a grantor of a PPSA Security interest including property in which the Debtor has or may in the future have, rights or the power to transfer rights;

[81] The charge takes effect according to its terms on acquisition of future personal property as defined under the PPSA. That provision does not expressly identify an obligation under clause 8.2(a) resulting in a breach by selling the disputed items, much less selling them in the ordinary course of business of selling such items as is implicitly authorised by s 46(1) PPSA. In that sense, the problem is the same as for the first point.

[82] It is an interesting question as to whether on its proper construction, the Acknowledgment impliedly authorises sale of collateral as contemplated by s 340(1)(b) PPSA. However, on the case pleaded and advanced on the application, I am not persuaded that IEM has established that RBP has no real prospect of establishing that there is no breach under s 46(2)(b) PPSA if it makes out the sale met the requirements of s 46(1).

[83] Given my conclusions above, it is unnecessary to consider this precondition for summary judgment.

[84] For the above reasons, I dismiss IEM's application for summary judgment. I do so conscious of the real difficulties presently evident in RBP's case. However, summary judgment must be decided on the pleadings and evidence before the Court, and submissions properly made on that material. Succeeding on a summary judgment application requires a level of precision which in my respectful view was not reached in this application.

[85] IEM submits that the failure of the Liquidator to file a defence engages r 166 UCPR and that all the allegations in the statement of claim are deemed admitted. Assuming that the events on 12 September have no implications for that proposition, r 166 read literally appears to have that consequence. That might sit uncomfortably with rr 284 to 288 dealing with default judgment on claims other than for liquidated sums, which on one view of it are premised on the proposition that the Court does not accept as proved claims for damages, even if pleaded specifically in the statement of claim. It is presently unnecessary to decide this issue because no relief is sought against POE in the application before the Court.

[86] Further, IEM also submits (and pleads repeatedly in its replies) that the allegations relating to the dealings between POE and Merit are deemed admitted as against all the defendants. That proposition is wrong. A party is not bound by the admission of another party. It might be that the plaintiff's submission assumes that somehow RBP and Austral are agents or "privies" of POE (as is alleged in a conclusory way in relation to the recitals and facts contained in the Acknowledgment). No basis for that assertion is pleaded or developed. I do not accept it for the purposes of this application. This issue is moot in relation to the scope, validity and enforceability of the security interest in relation to the summary judgment against RBP because of its acceptance of those matters subject to application of s 46(1) PPSA.

[87] There is one final observation about the pleadings. The statement of claim and replies contain numerous irrelevant or marginally relevant allegations, submissions and contentions of law. This has made the pleadings longer than necessary and less helpful than they could have been. Before trial, it would be very helpful if the pleadings could be reviewed.

[1] See Affidavit of Reece Justin Allen sworn 10 June 2025 [CD 2] (Allen Affidavit); and Affidavit of Anthony Robert Halpin affirmed 10 June 2025 [CD 3] (Halpin Affidavit).

[2] Corporations Act 2001 (Cth), s 436A.

[3] Allen Affidavit, [35]; Halpin Affidavit, [4]-[6].

[4] Interested Party's Amended Outline of Argument [CD 9]; Proposed Second Respondent's Outline of Argument [CD 22].

[5] Affidavit of Robert Bruce Perry affirmed 30 June 2025 [CD 12].

[6] RBP also pleaded s 45(1) PPSA but abandoned reliance on that section at the hearing.

[7] See Reply to the Second Defendant's Defence at [42](e)(iv)(2) [CD 31] (the Reply). IEM relies on clauses 6(b) and 8(2) of the Acknowledgment.

[8] Fire Nymph Products Ltd v The Heating Centre Pty Ltd (1992) 7 ACSR 365, [371].

[9] Metal Manufactures Pty Limited t/as TLE Electrical v WesTrac Pty Limited [2025] NSWCA 97 at [125] to [126]

[10] Warehouse Sales, [104]-[105].

[11] Nichibo Trading Company New Zealand Ltd v Luchich (2011) 9 NZBLA 103, 253 [61].

[12] Reply to the Second Defendant's Defence [CD 31], [24], [26].

[13] Ke Qin Ren v Hong Jiang; Yi Cheng Jiang v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2014] NSWCA 388, [44]-[48].

[14] Affidavit of Kyrien Joseph Nolan affirmed 10 November 2025 [CD 38], [17].

[16] Indeed, the presumption of regularity would probably apply: see Caltabiano v Electoral Commission of Queensland (No 1) [2009] QCA 182; [2010] 1 Qd R 100, [45] (Muir JA).