SFS Projects Australia Pty Ltd v Registrar of Personal Property Securities

Federal Court of Australia|2014-09-11|Before: Ms J, Gleeson J

REASONS FOR JUDGMENT 1 On 11 August 2014, I published my judgment in SFS Projects Australia Pty Ltd v Registrar of Personal Property Securities [2014] FCA 846 ("earlier judgment") and directed the parties to prepare short minutes of orders to reflect the Court's reasons. 2 On 12 August 2014, after receiving competing short minutes and hearing the parties, I made the following orders, which were proposed by the respondent: 1. For the purposes of s 163 of the Personal Property Securities Act 2009 (Cth) ("PPS Act") the end time of registration number 201305140009782 be taken to be 11.59.59 pm on 1 May 2019. 2. For the purposes of s 163 of the PPS Act the end time of registration number 201305140009795 be taken to be 11.59.59 pm on 1 May 2019. 3. For the purposes of s 163 of the PPS Act the end time of registration number 201306040017043 be taken to be 11.59.59 pm on 1 June 2019. 4. The respondent pay the applicants' costs as agreed or taxed. 5. The question of whether any further relief is to be granted be reserved. 3 I reserved the question of whether any further relief should be granted to consider additional orders sought by the applicants. The applicants seek declarations that: 1. The respondent has power under s 186 of the PPS Act to register a financing arrangement change statement to restore data that was incorrectly removed from the register by the registration of a financing change statement under s 150 of the PSS Act where, having regard to the material before the respondent, the data formerly on the register appears to the respondent to have been incorrectly removed. 2. The applicants are entitled to have the data comprising registrations [201305140009782, 201305140009795 and 201306040017043] which was incorrectly removed from the register restored pursuant to s 186 of the PSS Act and the restored data taken to have never been removed from the register. 4 The applicants also seek orders compelling the respondent to register financing change statements "to restore the end date" of each registration to the original end dates. 5 The respondent contends that no further orders should be made.

Evidence 6 The respondent relied on an affidavit of Andrew Sellers affirmed 11 August 2014. The affidavit identifies limitations of the functionality of the software that establishes and maintains the register. It also gives evidence concerning what might be involved in changing that functionality and risks said to be associated with changing data fields otherwise than in accordance with the functionality of the software. As the applicants' counsel, Ms Gatland, observed, this evidence is hearsay evidence based on inquiries made of the "application architect" for the register system. The applicants objected to paragraphs 3, 4 and 8 of the affidavit 7 Ms Gatland, submitted that questions regarding the functionality of the software were irrelevant to the question of appropriate relief. She referred to a decision of the Court of Appeal of Alberta in Case Power & Equipment v Price Waterhouse Limited [1994] ABCA 274 at [26], for the proposition that the legislature should not be taken to have delegated legislative power to the computer programmer (or, presumably, the application architect). 8 The solicitor for the respondent, Mr Markus, contended that the relevance of the affidavit was to draw the Court's attention to considerations affecting the respondent's practical ability to comply with the proposed orders. I accept that the contents of the affidavit are relevant to the question of what relief is appropriate in the circumstances. 9 At the hearing, I said that I would rule on the admissibility of the affidavit in these reasons. I allow paragraphs 3 and 4. Paragraph 3 is a statement (albeit conclusory) as to a relevant fact that is made from Mr Sellars' personal knowledge. Paragraph 4 is a statement of Mr Sellars' understanding as to orders sought by the applicant, of potential relevance to the appropriate relief. 10 Paragraph 8 is disallowed. It is inadmissible hearsay, not covered by any of the exceptions to the hearsay rule in the Evidence Act 1995 (Cth).

Applicants' submissions 11 According to Ms Gatland, a particular reason why the additional orders are sought is to establish the continuous perfection of the security. In particular, she seeks relief under s 186 because that provision allows for data to be restored as if it had never been removed.

Respondent's submissions 12 Mr Markus submitted that the proposed declarations are not declarations of right within the meaning of s 21 of the Federal Court of Australia Act 1976 (Cth) ("Federal Court Act"). 13 He also submitted that the second proposed declaration mis-describes the data that had been held to have been removed from the register. 14 Mr Markus submitted that the orders made on 12 August 2014 were sufficient to protect the applicants' interests. 15 Finally, Mr Markus submitted that the Court should not make orders with which the respondent could not comply. He referred to s 23 of the Federal Court Act in support of that submission.

Consideration 16 Section 22 of the Federal Court Act provides: The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. 17 Section 23 provides: The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate. 18 Section 163 of the PPS Act provides: (1) A registration with respect to a security interest that describes particular collateral, in relation to a secured party, is effective with respect to that collateral from the registration time for the description of the collateral until the earliest of the following times: (a) the end time (if any) registered for the collateral; (b) if the registration is amended to omit the collateral description - the amendment time; (c) the time when the description of the collateral in the registration stops being available for search in the register (by reference to that time) in respect of the secured party. Note: For the registration time for collateral, see section 160. (2) This section is subject to sections 164, 165 and 166 (defects in registration). 19 Section 163 establishes the duration of the effectiveness of a registration of a financing statement. 20 By s 56(1) of the PPS Act, for the purposes of the Act, a security interest is "continuously perfected" after a particular time if the security interest is, after that time, perfected under the Act at all times. 21 By s 21, a security interest in particular collateral is perfected if, relevantly: 1. The security interest is attached to the collateral; 2. The security interest is enforceable against a third party; and 3. For any collateral, a registration is effective with respect to the collateral. 22 The effect of the orders made on 12 August 2014 is that the relevant registrations are effective with respect to the collateral from the registration time until the end times specified in the 12 August 2014 orders. 23 Counsel for the applicants did not identify any particular reason why the orders made would not address the applicants' concern to ensure continuous perfection of the security interests. I am not convinced that the proposed additional orders are necessary for that purpose. 24 However, the effect of the earlier judgment is that the applicants are entitled to have the earlier end times restored to the register. An order giving effect to that entitlement is within the scope of the relief sought in the originating application. As I understand the position, not unreasonably, the applicants want the restoration of the status quo prior to the removal of the end dates, so that all persons who search the register will again be able to obtain correct and complete information about the security interests. The orders made on 12 August 2014 do not achieve that result. I accept that the applicants are entitled to additional relief. 25 As to the first declaration, however, I do not accept that a declaration ought to be made in those terms. In an appropriate case, a declaration may be made as to jurisdiction to deal with issues: see, for example, Bargal Pty Ltd v Force (1983) 154 CLR 261 at 309, where the High Court declared that this Court had jurisdiction to hear and determine all the questions raised in specified proceedings. The proposed declaration goes beyond the issues in these proceedings, by purporting to deal with the power of the Registrar generally. 26 Although the evidence sought to be adduced about the current functionality of the register has been ruled inadmissible, I infer from the orders proposed by the respondent that he would have put forward a more straight forward order to give effect to the earlier judgment had that been practicable. Accordingly, in my opinion, the Court's orders should be framed to enable the Registrar to comply with them within a reasonable time.

Conclusion 27 In my opinion, it is appropriate to make a declaration as to the respondent's power under s 186 of the PPS Act in this case, and an order requiring the respondent to register a financing change statement to restore data to the register on or before 12 December 2014. 28 I will also grant liberty to apply in the event that the respondent is unable to comply with order 2 by 12 December 2014. I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

Personal Property Securities Act 2009(Cth)ss 21, 56(1), 163, 186

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