K.J. Renfrey Nominees Pty Ltd (Trustee), in the matter of OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd

DAVIES J: 1 The applicant ("Renfrey") has applied for an order pursuant to s 293(1)(a) of the Personal Properties Securities Act 2009 (Cth) ("PPSA") extending the period for the perfection by registration of purchase money security interests ("PMSIs") that Renfrey holds over plant and equipment that it leases to the respondent ("OneSteel") to 12 December 2016, being the date of registration on the Personal Property Securities Register ("PPSR"). The extension of time is required to ensure that s 62(3)(b)(i) of the PPSA has application to give the PMSIs priority over other security interests. For the reasons that follow, the extension of time should be granted. 2 Under s 62(3) of the PPSA, a PMSI has priority over other security interests if: (a) the interest is in personal property, or its proceeds, other than inventory: s 62(3)(a); (b) the PMSI is perfected by registration before the end of 15 days after, relevantly, the day the grantor, or another person at the request of the grantor, obtains possession of the property: s 62(3)(b)(i); and (c) the registration that perfects the PMSI states, in accordance with Item 7 of the table in s 153, that the interest is a PMSI: s 62(3)(c). 3 Section 293(1)(a) of the PPSA confers on the Court the power to make an order extending the number of business days in a period specified in s 62(3)(b) if the Court is satisfied that it is just and equitable to do so. An order under s 293(1)(a) may be made even if the period referred to in s 62(3)(b) has ended: s 293(2) of the PPSA. In making an order under s 293(1) to extend the 15 business days specified in s 62(3)(b)(i), s 293(3) requires the Court 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; and (c) whether any person has acted, or not acted, in reliance on the period having ended. 4 The prejudice referred to in s 293(3)(b) of the PPSA is prejudice from extending the period. 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: Re Accolade Wines Australia Limited [2016] NSWSC 1023 at [27]-[29]. 5 Renfrey's PMSIs arose under an Equipment Hire Services Agreement ("EHSA") that it entered into with OneSteel on 25 November 2016 (with an effective date of 1 September 2016) under which it leases various plant and equipment to OneSteel. Although registration of the PMSIs occurred within 15 business days of execution of the EHSA, the plant and equipment had been located at the OneSteel's Ardrossan Dolomite Operation site in South Australia for some time under a previous Equipment Hire Services Agreement between the parties ("the previous EHSA"). Whilst clause 3.2(a) of the EHSA provided that OneSteel relinquished any interest it held in the plant and equipment immediately prior to the execution of the EHSA, s 24(1) of the PPSA relevantly provides that "a secured party cannot have possession of personal property if the property is in the actual or apparent possession of the grantor". Accordingly, the requirement under s 62(3)(b)(i) for PMSIs to be perfected by registration before the end of 15 days after, relevantly, the day OneSteel obtained possession of the plant and equipment, was not met by Renfrey, if the entry into the EHSA did not amount to OneSteel obtaining possession of the relevant plant and equipment. 6 The background to the entry into the new EHSA was that after OneSteel went into administration, Renfrey became aware that its security interest under the previous EHSA had not been properly registered on the PPSR as the registration had identified Arrium Limited, OneSteel's parent company, as grantor, not OneSteel as it should have been. Renfrey fell into dispute with the administrators over whether the registration was effective under the PPSA and whether the security interests had vested in OneSteel pursuant to s 588FL(4) of the Corporations Act 2001 (Cth) ("the Corporations Act"). The dispute was resolved when it was agreed that the parties would enter into the EHSA under which Renfrey would be granted new security interests in the relevant plant and equipment which could be registered under the PPSA. The EHSA was entered into in respect of the same plant and equipment on 25 November 2016 giving effect to the commercial settlement. In K.J. Renfrey Nominees Pty Ltd (Trustee), in the matter of OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 325, Renfrey was granted relief from the vesting provisions of s 588FL of the Corporations Act by an extension of time granted pursuant to s 588FM of the Corporations Act for registration of the new security interests to 12 December 2016. In granting that relief the Court held that it was satisfied that it was just and equitable to fix a later time for the purposes of s 588FL(2)(b)(iv) of the Corporations Act. In this application, sufficient cause is also shown for extending the period for registration prescribed in s 62(3)(b)(i) of the PPSA to put beyond doubt that s 62(3) applies to the PMSIs. 7 The question of prejudice in this context relates to the impact of the extension of time on holders of "all of the present and after acquired property" ("AllPAP") security interests. There are two prior registered AllPAPs, one granted by BCG Contracting Pty Ltd ("BCG") and one granted by the Export Finance and Insurance Corporation ("EFIC"). BCG has confirmed that the plant and equipment does not fall within its security interest, that it does not oppose the relief sought by Renfrey and did not require to be joined as a party to this application. Whilst OneSteel has confirmed that the plant and equipment does not fall within EFIC's security interest, EFIC has not given that confirmation but it has advised Renfrey that it also does not oppose the relief sought by Renfrey and that it did not require to be joined as a party to the application. In these circumstances, none of those creditors will be prejudiced by an order under s 293(1)(a) of the PPSA. 8 I also accept that it is unlikely that any person has acted in reliance on Renfrey's security interests in the plant and equipment not being PMSIs as Renfrey's PMSI registrations have been on the PPSR since 12 December 2016. 9 Accordingly the application is granted. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.