National Australia Bank Limited v Healthscope Operations Pty Ltd [2025] FCA 1545

1. Liberty is reserved to any liquidator, administrator or deed administrator of the Defendant to apply to discharge or vary Order 2 if any winding up of the Defendant occurs, or an administrator is appointed to the Defendant under ss 436A, 436B or 436C of the Corporations Act, or the Defendant executes a deed of company arrangement within 6 months of the date that either of the Registrations were registered on the PPSR.
2. There be no order as to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. By an Originating Process filed on 1 December 2025, National Australia Bank Limited (NAB) seeks relief under s 588FM of the Corporations Act 2001 (Cth) (the Act) in respect of certain registrations made over the defendant, Healthscope Operations Pty Ltd (HO), on the Personal Property Securities Register (the PPSR). There is some urgency to the present application; unless and until the making of the orders now sought, the security interests held by the plaintiff (whose registrations are out of time) are liable to vest in the defendant company: see Re Transurban CCT Pty Ltd (in its own capacity and as trustee of the Transurban CCT Trust) [2014] NSWSC 1909 [16]; but see Re Accolade Wines Australia Ltd [2016] NSWSC 1023 [8]. It is noted that, on 28 November 2025, HO was provided with a copy of the Originating Process (and all supporting evidence) and a covering letter which, in general terms, identified NAB's intention to seek relief and HO's entitlement to be heard upon the relevant application: see, in this respect, Re Appleyard Capital Pty Ltd; 123 Sweden AB v Appleyard Capital Pty Ltd (2014) 101 ACSR 629, 641 [34] (Re Appleyard Capital). HO has since communicated its consent to the relief sought and, that being so, no concern arises from the lack of formal service of the Originating Process in this case: see, eg, Re Cao Holdings Pty Ltd [2024] FCA 623; Re Allied Master Chemists of Australia Ltd [2020] NSWSC 291 [24(3)].

1. HO is part of the Healthscope Group, which operates several private hospitals across Australia.
2. NAB is the facility agent under the "Project Vigour Syndicated Facility Agreement" (the SFA). NAB entered into the SFA on or about 22 May 2019, on which date it also entered into the so-called "Project Vigour Security Trust Deed". Some two months later, on or about 31 July 2019, NAB entered a General Security Deed (the GSD), under which it was granted a security interest by various "Grantors" (one such "Grantor" being HO). Specifically, the GSD provided that:

(a) Each Grantor grants a security interest in the Collateral to the Secured Party (for the benefit of the Secured Party) for the purpose of securing payment of the Secured Money.

1. In turn, the phrase "Collateral" was defined by cl 1.1 of the GSD to mean:

... in relation to a Grantor, all that Grantor's rights, property and undertaking:

(a) of whatever kind and wherever situated; and

(b) whether present or after-acquired,

and includes:

(i) other than with respect to Holdco, the capital of the Grantor (called or uncalled and paid or unpaid); and

(ii) any Secured Marketable Security and other Mortgaged Property.

1. The GSD therefore provided for an "all present and after-acquired personal property" security interest (subject to certain exceptions) under the Personal Property Securities Act 2009 (Cth). Dutifully and duly, on or about 29 July 2019, NAB caused two registrations to be made on the PPSR in respect of the aforementioned security interest (bearing PPSR registration numbers 201907290002767 and 201907290002906) (together, the Original Registrations).
2. In mid-2025, one of the hospitals within the Healthscope Group was to be sold (the Sale).
3. On or about 25 August 2025, the plaintiff's legal representatives (Ashurst) were provided with a "Deed of Release SFA Deed Poll" (the Deed of Release), which requested the release of the "Released Property" from the "Security Interest" as part of the Sale. The Sale completed on 1 October 2025 and an executed copy of the Deed of Release was circulated that day.
4. Relevantly, on 4 November 2025, a solicitor in the employ of Ashurst undertook a PPSR search vis-à-vis HO and discovered that the Original Registrations no longer appeared. Upon further investigation, it was discovered that such registrations had been removed - accidentally - from the PPSR by Ashurst. That mishap appears to have occurred on or about 9 October 2025 and in relation to the Sale. As made clear in the affidavits filed by a Ms Camilla Clemente and Mr Theo Gavrilos (on 1 December 2025 and 27 November 2025 respectively), at no point did NAB intend for the Original Registrations to be removed or otherwise discharged from the PPSR.
5. On 5 November 2025, NAB instructed Ashurst to lodge further financing statements upon the PPSR, perfecting its security interest under the GSD. Later that day, two financing statements (bearing PPSR registration numbers 202511050040895 and 202511050041056) (together, the New Registrations) were lodged on the PPSR against HO in favour of NAB.

1. The present difficulty for NAB arises consequent upon the operation of s 588FL(4) of the Act, which makes provision for the vesting of a security interest in a company. It provides:

(4) The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of section 588FN:

(a) if the security interest first becomes enforceable against third parties at or before the critical time -- immediately before the event mentioned in paragraph (1)(a);

(b) if the security interest first becomes enforceable against third parties after the critical time -- at the time it first becomes so enforceable.

Note: For the meaning of critical time, see subsection (7).

1. It is noted that s 588FL(1)(a) includes the winding up of the grantor company or it going into administration. Plainly enough, NAB is concerned as to the consequences that would follow the appointment of a voluntary administrator or liquidator in respect of HO.
2. Relevant in this context is the force of s 588FL(2)(b) of the Act, which provides that, in order to avoid the "vesting" operation of s 588FL(4), a registration on the PPSR is required to have been lodged within 20 business days from the creation of the GSD (s 588FL(2)(b)(ii)); or six months must have elapsed from the date of the registration (s 588FL(2)(b)(i)); or the registering party must have obtained a Court order under s 588FM (s 588FL(2)(b)(iv)). Here, NAB seeks to rely upon the third alternative. In this respect, it is important to excerpt s 588FM in toto:

(1) A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv).

Note: If an insolvency-related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company.

(2) On an application under this section, the Court may make the order sought if it is satisfied that:

(a) the failure to register the collateral earlier:

(i) was accidental or due to inadvertence or some other sufficient cause; or

(ii) is not of such a nature as to prejudice the position of creditors or shareholders; or

(b) on other grounds, it is just and equitable to grant relief.

(3) The Court may make the order sought on any terms and conditions that seem just and expedient to the Court.

1. In the present case, the circumstances bespeak of the "failure to register" as being inadvertent. What constitutes "inadvertence" for the purposes of s 588FM(2)(a)(i) has been held to include a "failure to advert to or understand the requirement for registration within the specified period, and innocent error in the sense of failure to register through ignorance of the legal requirement to do so, or of the consequences of not doing so": Re Appleyard Capital 633 [10]. It may also be established in circumstances where a party "operates under a mistake as to the consequences of failing to register" the interest: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32 [15] (Re Cardinia). As Black J proceeded to observe in Re Cardinia (at [15]):

[15] ... The approach adopted in the case law of treating a matter of that kind as amounting to inadvertence is consistent with the emphasis placed in the case law upon the benevolent operation of predecessor sections, at least where an error of a secured creditor in not attending to registration of its security within time is innocent and does not result from any disregard of its statutory obligations ...

(Citations omitted).

1. Such a broad understanding of the language of s 588FM(2)(a)(i) would seem to encompass the circumstance where the relevant "failure to register" is a product of a solicitor's inadvertence in removing the registration of security interest "X" from the PPSR when it was intended that the registration of security interest "Y" be so removed; such act, at least within the present case, could also be fairly characterised as "accidental" for the purposes of that subsection.
2. Here, it is plain that NAB had no intention of removing the Original Registrations. Had those registrations not been removed, there would be no need for the New Registrations. In those circumstances, the failure to register the relevant security interests can be said to have arisen by virtue of an accident or inadvertence; that being so, s 588FM(2)(a)(i) is satisfied.
3. It is noted that the application was also advanced on the proposition that no other person would suffer prejudice as a result of the court making the order. There are grounds to think that that might be so. The absence of the registered security did not appear to exist for very long, and it is more than likely that no creditor would have relied on the absence of the security; however, I cannot be certain to a sufficient degree that no one did, in fact, search the PPSR in the short period of time during which the registrations did not exist. Therefore, I feel more comfortable acceding to the plaintiff's application on the ground that the "failure to register" was accidental.
4. It was also said that the Court might act upon the basis of s 588FM(2)(b) of the Act. There is some force in that submission. As counsel for the plaintiff, Mr Mirzai, identified in his outline of submissions, there does not appear to be any sound reason why the order sought should not be made, given that NAB acted properly (in that it originally registered its security as required by the GSD) and, yet, through no fault of its own, is now exposed to potential detriment.
5. In the result, it is appropriate to make the orders in the draft provided to the Court.
6. Those orders make provision for liberty for any liquidator, administrator or deed administrator to discharge or vary the order that has been made under s 588FM of the Act (i.e., fixing the time to lodge the New Registrations) in defined circumstances.

1. These are the amended and revised reasons for judgment given on 2 December 2025. Whilst the reasons given above refine and develop those that were delivered ex tempore, the substance of what was said that day has not been changed nor has any other material change been made.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.