Tedesco v LVT Capital Pty Ltd as trustee for the LVT Capital Discretionary Trust

Intervener: Ms K Campbell appeared in person

BETWEEN: IOLANDA TEDESCO First Plaintiff

FRANCESCO VINCENZO TEDESCO Second Plaintiff

AND: LVT CAPITAL PTY LTD ACN 603 316 909 AS TRUSTEE FOR THE LVT CAPITAL DISCRETIONARY TRUST First Defendant

PINO FAMILY PTY LTD ACN 138 353 125 AS TRUSTEE FOR THE PINO FAMILY TRUST Second Defendant

TEDESCO PROPERTY GROUP PTY LTD ACN 099 700 106 Third Defendant

order made by: SHARIFF J DATE OF ORDER: 7 june 2024

1. The parties are to confer and provide by email to the Associate to Shariff J any agreed or competing proposed short minutes of order to give effect to the Court's reasons, other than as to costs, by 4.00pm on 7 June 2024.
2. The parties are to bear their own costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

INTRODUCTION 1 By an Originating Process filed on 6 May 2024, the plaintiffs seek orders under s 588FM of the Corporations Act 2001 (Cth) (Corporations Act) to fix a later time for the purpose of s 588FL(2)(b)(iv) for the registration of certain alleged security interests said to have been granted to them by the defendants. The plaintiffs also seek declarations to the effect that they hold such security interests. 2 The matter was listed for an urgent hearing before me on 5 June 2024 as the Commercial and Corporations Duty Judge of the Court. In support of the relief claimed, the plaintiffs read an affidavit of the first plaintiff, Mr Francesco Tedesco, sworn on 6 May 2024 and an affidavit of their solicitor, Mr Phillip Noel Parker, sworn on 17 May 2024. 3 On the day that these proceedings were commenced, each of the defendants was placed into voluntary administration. The first defendant (LVT Capital) by its administrator appeared in the proceedings before me and opposed in part the relief sought by the plaintiffs. To this end, the solicitor acting for the administrator of LVT Capital provided helpful written and oral submissions to which I will return. The administrators for the second and third defendants informed the plaintiffs that they neither opposed nor consented to the relief being sought. 4 Ms Kathlene Campbell (Ms Campbell) sought leave to intervene in the proceedings to oppose the relief sought by the plaintiffs. In advance of the hearing before me, Ms Campbell filed and served written submissions and documents in support of her position. I granted leave to Ms Campbell to be heard as an intervener. Although Ms Campbell initially sought to tender certain documents in support of her position, which I provisionally accepted, she later withdrew the tender of those documents. I will return later in these reasons to the nature of Ms Campbell's interests in the proceedings and the arguments she raised in opposition to the relief sought by the plaintiffs. 5 I was informed by Counsel for the plaintiffs that the matter was urgent and that a decision had to be made prior to next Tuesday 11 June 2024, when there is to be second creditor's meeting. It was submitted that if I do not grant relief prior to that time, the security interests claimed by the plaintiffs will vest in each of the defendants by reason of s 588FL of the Corporations Act. No application was made for an adjournment of that creditor's meeting, but nevertheless I have proceeded to determine the application as quickly as I have been able.

BACKGROUND 6 The plaintiffs, Mr Francesco Tedesco and Mrs Iolanda Tedesco, are the parents of Mr Pino Tedesco. Without intending or meaning any disrespect, where necessary, I will refer to each of them respectively as Francesco, Iolanda and Pino. 7 Ms Campbell is the former spouse of Pino and, thereby, the former daughter-in-law of Francesco and Iolanda. Ms Campbell claims to be an unsecured creditor of each of the defendants, as well as other entities associated with Pino. For the purpose of these proceedings, neither the plaintiffs nor the administrator of LVT Capital disputed Ms Campbell's status as an unsecured creditor of the defendants. I have proceeded on that basis. 8 The plaintiffs claim that on 10 January 2021, they entered into three loan agreements with the defendants, as follows: (a) Loan Agreement dated 10 January 2021 between Mr and Mrs Tedesco as lenders and the first defendant, LVT Capital Pty Ltd as trustee for the LVT Capital Discretionary Trust, as the borrower (LVT Loan Agreement). The LVT Loan Agreement provided for a loan amount of $410,000; (b) Loan Agreement dated 10 January 2021 between Mr and Mrs Tedesco as lenders and the second defendant, Pino Family Pty Ltd (Pino Family) as trustee for the Pino Family Trust, as the borrower (Pino FT Loan Agreement). The Pino FT Loan Agreement provided for a loan amount of $537,000; (c) Loan Agreement dated 10 January 2021 between Mr and Mrs Tedesco as lenders and the third defendant, Tedesco Property Group Pty Ltd (Tedesco Property), as the borrower (Tedesco PG Loan Agreement). The Tedesco PG Loan Agreement provided for a loan amount of $206,000. 9 Each of the Loan Agreements is short, occupying approximately half a page of terms (excluding signatures). Each Loan Agreement contains identical terms other than as to party details and loan amounts. These relevant terms provide as follows: Advance Date: 10 January 2021 (Advance Date) Facility: Subject to the terms of this agreement the Lender hereby grant to the Borrower a loan facility for the amount set out as the Loan Amount herein this Loan agreement. Interest Rate: 5% per annum. (Interest Rate) Interest Amount: interest is calculated as follows : Interest Rate multiplied by number of years, calculated to the day of repayment or repayment request day. (Interest Amount) Due Date: The Borrower will repay all outstanding Loan Amount, including all outstanding Interest Amount, immediately on demand by the Lender. If no demand by the Lender for repayment has occurred, all outstanding Loan Amount, including all Interest Amount, is to be repaid in full to the Lender by the Borrower, no later than 3 years from the Advance Date. (Due Date) Interest Payment: The Borrower, on demand by the Lender, will pay all interest due in a lump sum on demand, and if no request for repayment made by Lender, then Interest Amount is due, in full, no later than Due Date. (Interest Payment) Security: Entity and or assets of the Borrower (Security). Default: If there is any default of this Loan Agreement by the Borrower, then the Loan Amount and Interest Payment are immediately due to be repaid to the Lender by the Borrower. Such defaults include, but not limited to, Borrower not paying Lender back on demand or by or on Due Date or not paying in full the owing amount of the Loan Amount and or Interest Amount on Due Date. (Default) Conditions of Loan: The Borrower agrees by receiving advancement of any loaned funds from the Lender, that make up the Loan Amount, that the Borrower cannot refuse a Lender initiated Charge over the Security to the amount of what the Lender is owed. This charge, at the Lenders discretion, can include a charge up to the full Lender Loan Amount plus Interest Payment in full plus any and all costs of recovery by the Lender to perform recovery of the Loan Amount plus Interest Payment. This also applies if Borrower is in Default of this Loan Agreement. 10 The plaintiffs advanced funds under these Loan Agreements between 11 January 2021 and 22 February 2021. During the hearing, I received into evidence unredacted bank statements of a joint bank account held by the plaintiffs which record entries consistent with the advance of the loans to each of the defendants in early 2021. I also received a summary of those transactions, which set out the relevant transactions as to the relevant loan advances as follows: Schedule of 3 entity loans Pino Family Pty ltd atf Pino Family Trust: $537,000 Acc ending 7480 Date Amount From Account To Account 12 January 2021 $100,000 Frank Iolanda Acc ending 5652 Pino Family Pty ltd atf Pino Family Trust: Acc ending 7480 12 January 2021 $80,000 Frank Iolanda Acc ending 5652 Pino Family Pty ltd atf Pino Family Trust: Acc ending 7480 22 January 2021 $200,000 Frank Iolanda Acc ending 5652 Pino Family Pty ltd atf Pino Family Trust: Acc ending 7480 26 January 2021 $100,000 Frank Iolanda Acc ending 5652 Pino Family Pty ltd atf Pino Family Trust: Acc ending 7480 21 February 2021 $57,000 Frank Iolanda Acc ending 5652 Pino Family Pty ltd atf Pino Family Trust: Acc ending 7480 Total $537,000

LVT Pty Ltd atf LVT Capital Discretionary Trust: Acc ending 7827 $410,000 Date Amount From Account To Account 10 January 2021 $40,000 Frank Iolanda Acc ending 5652 LVT Pty Ltd atf LVT Capital Discretionary Trust: Acc ending 7827 12 January 2021 $120,000 Frank Iolanda Acc ending 5652 LVT Pty Ltd atf LVT Capital Discretionary Trust: Acc ending 7827 22 January 2021 $250,000 Frank Iolanda Acc ending 5652 LVT Pty Ltd atf LVT Capital Discretionary Trust: Acc ending 7827 Total $410,000

Tedesco Property Group Pty Limited: Acc ending 1866 $206,000 Date Amount From Account To Account 12 January 2021 $100,000 Frank Iolanda Acc ending 5652 Tedesco Property Group Pty Limited: Acc ending 1866 29 January 2021 $98,000 Frank Iolanda Acc ending 5652 Tedesco Property Group Pty Limited: Acc ending 1866 21 February 2021 $8,000 Frank Iolanda Acc ending 5652 Tedesco Property Group Pty Limited: Acc ending 1866 Total $206,000

3 Entities Total $1,153,000 11 On 8 December 2022, Iolanda sent a text message to Pino in which she wrote "Pino please we need our loans paid back. When can you do as we been asking long time now!". 12 The evidence before me is that the amounts advanced by the plaintiffs to the defendants, which total $1,153,000, were not repaid (including as to any interest charges), and that remains the case. 13 On 15 March 2024, the plaintiffs engaged Bridges Lawyers. From around that time, the plaintiffs first became aware of the existence of the Personal Property Securities Register (PPSR) and the significance of registering (or not registering) security interests on the PPSR. They also received advice about whether the clause in each of the Loan Agreements entitled "Conditions of Loan" could be viewed as a security interest. 14 The next day, 16 March 2024, General Security Agreements (GSAs) were executed by the plaintiffs and each of the defendants. The GSAs are all on materially similar terms, save for the identification of the relevant parties to them. It is not necessary for me to set out the relevant clauses of the GSAs, other than to note that there was no effective dispute before me that the GSAs granted the plaintiffs security interests. To the extent that Ms Campbell raised concerns about the GSAs, her concerns related to other matters which I set out below. 15 On 19 March 2024, the plaintiffs' solicitor lodged PPSR registrations in respect of the defendants by reference to their respective "Australian Company Numbers" (ACNs). However, when these relevant PPSR registrations were made, the plaintiffs' solicitor was not aware of whether the trusts of which LVT Capital and Pino Family are trustees had "Australian Business Numbers" (ABNs), and a search did not locate an ABN for either trust at that time. 16 By reason of subsequent enquiries, the plaintiffs' solicitor located the ABNs for the trusts of which each of LVT Capital and Pino Family are the trustees. 17 On 18 April 2024, the plaintiffs' solicitor lodged PPSR registrations over the ABNs for each of the trusts.

THE ISSUES 18 The plaintiffs' primary position is that the "Conditions of Loan" clause in each of the Loan Agreements gave them an immediate security interest as at the time of entry into those Agreements. If that was the case, the PPSR registrations that occurred as against each of the defendants on 19 March 2024 and as against the ABNs of the trusts on 18 April 2024 were both of out of time by reference to the times specified in s 588FL(2)(b)(i) and (ii) and a later time would need to be fixed under s 588FM for the purpose of s 588FL(2)(b)(iv) as otherwise these security interests would vest in each of the defendants or the applicable trusts (as the case may be). 19 The plaintiffs' alternative position is that the "Conditions of Loan" clause in each of the Loan Agreements gave them a security interest upon either: (a) them making a demand for the loan amounts; or (b) the Due Date specified in each Loan Agreement. Again, if that was the case, the PPSR registrations that occurred in March and April 2024 were out of time and a later time would need to be fixed as otherwise these security interests would vest in each of the defendants or trusts. 20 The plaintiffs' further alternative position is that, if the "Conditions of Loan" in each of the Loan Agreements did not give them a security interest, they nevertheless granted security interests by reason of the GSAs that were entered into on 16 March 2024. If this was the case, the plaintiffs' PPSR registrations that occurred as against each of the defendants on 19 March 2024 were within time, but those that occurred on 18 April 2024 as against the trusts in respect of which LVT Capital and Pino Family are trustees were one day out of time. As a result, a later time would need to be fixed under s 588FM for this purpose, otherwise the security interests in respect of which LVT Capital and Pino Family are trustees will vest in those trusts. 21 The administrator of LVT Capital contends that the Court should not accept the plaintiffs' primary or first alternative position. It accepts that it would be open to the Court to accept the plaintiffs' further alternative position as to the security interests created by GSAs, but does so on the basis that it does not prejudice the rights of the administrator or any subsequent liquidator to seek to set aside one or more of the securities or related transaction on other bases provided for under the Corporations Act. In doing so, the administrator submitted as follows: In adopting this position, the Administrator on behalf of the first Defendant wishes to make clear to the Plaintiffs and the Court that it is without prejudice to any other rights which may arise in respect of the GSA, particularly in the event of the Company entering liquidation. The preservation of these rights is particularly important in circumstances where the monies advanced by the Plaintiffs occurred in 2021 being a time well prior to the entry into the GSA. These rights may include, without limitation: (a) the security being void under section 588FJ of the Act to the extent it is a circulating security interest; (b) the capacity to set the GSA aside as an uncommercial transaction in accordance with section 588FB, 588FE and 588FF of the Act; and (c) the capacity to set the GSA aside as an unfair preference in accordance with sections 588FA, 588FE and 588FF of the Act. 22 Ms Campbell contended that no orders should be made by the Court. Ms Campbell's position is informed by the fact that she is in dispute with Pino in family law proceedings. According to Ms Campbell, Pino established and operated a number of companies and trusts, including the three defendants, which made investments in various assets including cryptocurrency. Ms Campbell contends that each of the plaintiffs, or at least Iolanda, was a director of one or more of these various entities, or had some form of interest in them. She contends that in the family law proceedings Pino has variously claimed an indebtedness to his parents, the plaintiffs, but has not provided any documents to support this position, despite being requested to do so. Ms Campbell contends that the various entities operated by Pino, including the three defendants, owe her money, and, presumably, that Pino's various interests form part of the matrimonial assets. Ms Campbell is concerned that the three defendants were placed into voluntary administration at or about times when he or one or more of the defendants were obliged to make certain payments to her and also to the Australian Taxation Office on her behalf. Ms Campbell is concerned that the belated production of the Loan Agreements, entry into the GSAs, the PPSR registrations, the voluntary administrations of each of the defendants, and other steps that have been taken may be means to defeat her interests. She does not positively allege that the documents and transactions are fraudulent, but she has concerns about them which she considers need to be properly investigated. Ms Campbell is concerned that if the orders are granted, Pino's parents, the plaintiffs, will have priority to her as an unsecured creditor of the defendants. The submissions she provided to the Court set out her position as follows: 1. It is my position, that the Prayers sought by the Plaintiff should be deferred or voided until proper investigations have been undertaken to ascertain the full extent of inter-company loans, the assets within cryptocurrency are properly identified, the cash funds withdrawn are recovered and the relationship between the entities that are not in administration is understood. 2. It is unclear from the financial records of the companies whether there remains an outstanding loan to Iolanda and Frank Tedesco. This will not become clear, until the bank accounts and cryptocurrency assets controlled by Mr Pino Tedesco are fully interrogated. 3. The timing of the Voluntary Administration, and this request for the creation of a retrospective secure interest in favour of Iolanda and Frank Tedesco, appears to be an attempt to defeat previous Family Court Orders and will result in the assets remaining within the Tedesco Family and ultimately, Mr Pino Tedesco's control. 4. It is impossible to say that there was no prejudice given to Iolanda & Frank Tedesco, as the parents of Mr Pino Tedesco. They were privy to insider knowledge of the impending administration and had an awareness of the Family Law proceedings and as such, the timing of this registration is very concerning. 5. Failure to previously seek legal representation should not be grounds for granting retrospective secured interest in a company. 6. Should the court grant the prayers requested, it would be prejudicing all other creditors of the companies and would set a precedent for other parties to do the same. 7. I oppose any costs order being made against me, irrespective of the outcome of the application. 8. This outline has been prepared with the intention of properly informing the Court of relevant matters insofar as they are known to me.

THE APPLICABLE PROVISIONS 23 Sections 588FL and 588FM of the Corporations Act were introduced as part of the reforms that enacted the PPSR under the Personal Property Securities Act 2009 (Cth) (PPSA). The terms of s 588FM are broadly similar to the circumstances in which the Court could previously extend the time for lodgement of notice of a charge under a predecessor provision, being s 266(4) of the Corporations Act. It has been held that the authorities that were decided under s 266(4) provide assistance in guiding the exercise of the Court's discretion under s 588FM: Re Barclays Bank plc [2012] NSWSC 1095 at [4]. 24 The PPSA established a (then) new national law governing security interests in personal property. It is necessary to consider the provisions of that scheme as they impact upon the issues to be determined in these proceedings. 25 Section 12(1) of the PPSA defines a 'security interest' as "an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property)". 26 Section 12(2) provides examples of different types of security interests. Section 12(3) provides that a security interest also includes certain interests whether or not the transaction concerned, in substance, secures payment or performance of an obligation, such as the interest of a lessor or bailor of goods under a "PPS lease". 27 Section 12(1) of the PPSA creates a "substance test". The PPSA applies to every transaction that in substance creates a security interest, without regard to the form a particular transaction might happen to take. However, the PPSA requires security agreements to be evidenced in writing, but this requirement is not absolute. It only affects the enforceability of a security interest against third parties. In this respect, s 20(1) of the PPSA provides that a security interest is enforceable against a third party only if the security interest is attached to the collateral and either the secured party has possession or control of the collateral, or there is a security agreement evidenced in writing that "covers the collateral". Under s 20(2) of the PPSA, a security agreement "covers the collateral" where it is evidenced in writing, signed by the grantor, or adopted or accepted by the grantor by an act or omission that reasonably appears to be done with the intention of accepting the writing. The writing evidencing the agreement must contain a description of the collateral, or a statement that the security interest is taken in all of the grantor's present and after-acquired property. 28 However, the writing requirement under s 20 of the PPSA is not an absolute requirement - it only affects the enforceability of a security interest against third parties. A security interest will still be enforceable against the grantor itself (so long as the requirement for attachment has been satisfied): s 19 of the PPSA. 29 In order to apply to register a security interest under the PPSA, it is only necessary that the person believes on reasonable grounds that they are or will become a secured party into relation to the collateral. Section 151 of the PPSA states: Registration - belief about security interest Requirements for collateral to secure obligation etc. (1) A person must not apply to register a financing statement, or a financing change statement, that describes collateral, unless the person believes on reasonable grounds that the person described in the statement as the secured party is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself). 30 Under s 267 of the PPSA, unperfected security interests vest in the grantor upon the happening of an event such as winding up, administration, deed of company arrangement or bankruptcy. 31 Further, where a security interest is registered late, and too close to the grantor's insolvency, the security interest can be lost. In this respect, s 588FL of the Corporations Act provides as follows: Vesting of PPSA security interests if collateral not registered within time Scope (1) This section applies if: (a) any of the following events occurs: (i) an order is made, or a resolution is passed, for the winding up of a company; (ii) an administrator of a company is appointed under s 436A, 436B or 436C; (iii) a company executes a deed of company arrangement under Pt 5.3A; and (b) a PPSA security interest granted by the company in collateral is covered by subs (2). Note: A security interest granted by a company in relation to which paragraph (a) applies that is unperfected at the critical time may vest in the company under section 267 or 267A of the Personal Property Securities Act 2009. (2) This subsection covers a PPSA security interest if: (a) at the critical time, or, if the security interest arises after the critical time, when the security interest arises: (i) the security interest is enforceable against third parties under the law of Australia; and (ii) the security interest is perfected by registration, and by no other means; and (b) the registration time for the collateral is after the latest of the following times: (i) 6 months before the critical time; (ii) the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier; (iii) if the security agreement giving rise to the security interest came into force under the law of a foreign jurisdiction, but the security interest first became enforceable against third parties under the law of Australia after the time that is 6 months before the critical time - the time that is the end of 56 days after the security interest became so enforceable, or the time that is the critical time, whichever time is earlier; (iv) a later time ordered by the Court under s 588FM. Note 1: For the meaning of critical time, see subsection (7). Note 2: For when a security interest is enforceable against third parties under the law of Australia, see section 20 of the Personal Property Securities Act 2009. Note 3: A security interest may become perfected at a particular time by a registration that is made earlier than that time, if the security interest attaches to the collateral at the later time (after registration). See section 21 of the Personal Property Securities Act 2009. Note 4: The Personal Property Securities Act 2009 provides for perfection by registration, possession or control, or by force of that Act (see section 21 of that Act). Vesting of security interest in company (4) The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of s 588FN: (a) if the security interest first becomes enforceable against third parties at or before the critical time - immediately before the event mentioned in para (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). … (7) In this section: critical time, in relation to a company, means: (a) if the company is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day under section 513A or 513B; or (b) if the company is under administration or is subject to a deed of company arrangement - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company; or (c) if the company is under restructuring or is subject to a restructuring plan - when, on a day, the event occurs by virtue of which the day is the section 513CA day for the company. 32 Section 9 of the Corporations Act defines the term "PPSA security interest" as meaning "a security interest within the meaning of the Personal Property Securities Act 2009 and to which that Act applies…". 33 Under s 588FL(4) of the Corporations Act, a PPSA security interest vests in the company immediately before the insolvency events mentioned in s 588FL(1)(a) (if the security interest becomes enforceable before the critical time) or at the time the security interest becomes enforceable (if the security interest becomes enforceable after the critical time). 34 The operation of s 588FL can be mitigated by an application for an order fixing a later time for the purposes of s 588FL. The Court has power under s 588FM(1) to make an order effectively extending the time for the registration of a security interest, which has the effect of avoiding the effect of s 588FL, and preserving the security interest in the event that the grantor later becomes insolvent. Section 588FM provides as follows: Extension of time for registration (1) A company, or any person interested, may apply to the Court (within the meaning of s 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. 35 Broadly, the effect of s 588FL(2) is that when a company is being wound up, an administrator has been appointed or a deed of company arrangement executed, any PPSA security interest which was perfected, registered, or enforceable against a third party after the latest of six months before the critical time or 20 days after the security agreement came into force or such later time as the Court may fix under s 588FM, vests in the company, for the benefit of creditors generally, and the secured creditor loses the benefit of the security: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32 at [11]; Re Black Opal IP Pty Ltd [2013] NSWSC 1225 at [6]. 36 Thus, s 588FM confers on the Court a discretion to fix a later time if satisfied of any one of three grounds, namely that the failure to register the collateral earlier was accidental, or was not of such a nature to prejudice the position of creditors or shareholders, or that on other grounds it is just and equitable to do so. The section also permits the Court to make the order on terms and conditions.

CONSIDERATION 37 The defendants are in external administration. However, a grantor's entry into external administration does not preclude the bringing of an application of this kind or the grant of the relief sought: see, e.g., Re Carpenter International Pty Ltd [2016] VSC 118; (2016) 51 VR 190 at [217]; Re 4 in 1 Wyoming Pty Ltd [2017] NSWCA 407; (2017) 120 ACSR 167 at [55] and the cases there cited.

Have the plaintiffs established they have security interests? 38 As will be evident from its text, s 588FL(1) makes it clear that s 588FL applies if "a PPSA security interest granted by a company in collateral is covered by subsection (2)". In turn, s 588FL(2) sets out that it covers a PPSA security interest where at, relevantly, either the critical time or when the security interest arises, it is enforceable against third parties under the law of Australia and the security interest is perfected by registration and by no other means, and the registration time for the collateral is one of those specified in s 588FL(2)(b). 39 A question arises in applications under s 588FM whether the applicant is required to establish the existence of a security interest or only an arguable case that it has such an interest. To date, in the limited number of cases that have considered the point, it has been held that is not necessary in an application under s 588FM for the Court to determine on a final basis whether the interests the subject of the application are PPSA security interests: Bluewaters Power 1 Pty Ltd v the Griffin Coal Mining Company Pty Ltd [2019] WASC 438 at [29]-[20]; AWE Perth Pty Ltd v Clough Projects Australia Pty Ltd [2023] WASC 203 at [41]; Celtic Capital Pty Ltd v Sky and Space Company Pty Ltd [2023] WASC 269 at [33]. 40 In Bluewaters Power, in an application made under s 588FM, Vaughan J of the Supreme Court of Western Australia was called upon to consider whether an alleged security interest in the form of "step in" rights under certain coal supply agreements was a PPSA security interest: at [21]ff. The specific question that arose was whether "step in" rights fell within the meaning of s 12 of the PPSA, which raised novel questions of law that his Honour was "reluctant to authoritatively determine": at [28]. However, his Honour considered that it was sufficient for the Court to be satisfied that it was "reasonably arguable" that such interests were registrable security interests: at [29]-[30]. That approach has been subsequently followed: AWE Perth at [41]; Celtic Capital at [33]. 41 In an application under s 588FM, the postulation of the question on the basis that the Court need only be satisfied that it is reasonably arguable that the relevant applicant has a registerable security interest under the PPSA is consistent (though not the same as) the requirement that would otherwise have been imposed on the security holder at the time of seeking to register its interests on the PPSR. In this regard, as noted above, s 151(1) of the PPSA provides that a person must not apply to register an interest unless the person believes "on reasonable grounds" that the person is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself). 42 Against this, it may be said that there is some artificiality in an application such as this that the Court need only be satisfied that there is a reasonably arguable security interest in circumstances where s 588FL operates on the basis that there has been late registration of an interest and the Court is being called upon to determine whether, in substance, time should be extended for the registration of that interest in the face of one or more types of insolvency or related events. Related to this, it may be said that s 588FL(1) and (2) operate in a manner akin to jurisdictional facts whereby the Court must be satisfied that a PPSA security interest has in fact been granted (s 588FL(1)(b)) and that the security interest is "enforceable against third parties" (s 588FL(2)(a)(i)). Although not put in this way, these two arguments essentially reflected the position that the administrator for LVT Capital took in the hearing before me. 43 I have some reluctance in an urgent duty matter to determine these important questions. That is particularly so in circumstances where there was no effective dispute that the GSAs in the present case did give rise to PPSA security interests and were enforceable as against third parties, and had been perfected by registration or purported registration in the case of the two trusts. The relevance of the issue applies in respect of any security interests that are said to have been created by the Loan Agreements. However, as the plaintiffs pressed that there were such interests, I will express my views about the issue, though I am doing so without having the benefit of more time for considered argument from the parties and the pressing burden to make a decision on an urgent basis. 44 In my view, the position taken by Vaughan J in Bluewaters Power is the appropriate one as it is more consistent with the scheme enacted for registration of security interests under the PPSA. That is so because the scheme operates on the basis, which I have identified above, that by reason of s 151(1) a person may seek to register a security interest if they hold a belief on reasonable grounds that the security holder is or will become a secured party. One can envisage circumstances where a party seeks to register, and does register, a security interest, but which for one reason or another is later found to be invalid or unenforceable as against the grantor of the security or a third party, however in such an instance, the security interest will remain registered until removed. The apparent sanctity of the public register enacted by the PPSA in this sense operates as a means of identification of actual or claimed security interests, but the registration of a security does not necessarily mean that it is thereby enforceable. Registration of security interests provides other protections including, for example, that the security will not vest to the grantor in the events such as those prescribed in s 588FL of the Corporations Act or Part 8.2 of the PPSA (dealing with the vesting of unperfected securities). However, even where registration occurs and the security holder is regarded as being a secured creditor, it does not follow that the security holder's interests or the underlying transaction cannot be impeached, for example, where it is found that the security was not effective or the transaction was voidable or uncommercial or unlawfully preferential. 45 Once this is accepted, it seems to me that in an application under s 588FM, where the Court is being called upon to extend the time for registration by fixing a later time, it would impose a greater burden on a putative security holder to have to actually establish the security interest in a way that they would not have had to do if the registration had been made in time without the need for an extension. I am also mindful that such applications traditionally have come before the Courts (as one might expect given the operation of s 588FL) on an urgent basis in the face of potential events of reconstruction or insolvency of corporations and where it would be impossible to hear every interested person as to whether the underlying security is in fact a security and enforceable as such. 46 None of this is to say that the Court must not make findings or reach a state of satisfaction about the matters in s 588FL(1)(b) and (2). In my view, consistent with Vaughan J's approach in Bluewaters Power, the Court must find that security interests exist or at least be satisfied that there is a reasonably arguable case as to those matters. 47 Further, approaching the question in this way does not prejudice the rights of other parties, including for precisely the same reasons why the administrator of LVT Capital wishes to reserve its position about any other claims that might be made as to the security being void for one or more reasons or susceptible to be set aside. The same can be said as to Ms Campbell's contentions that there needs to be further interrogation of various matters. It needs to be kept in front of mind that in determining applications under s 588FM to fix a later time for registration of security, the Court is not making findings that would affect subsequent or other applications. It is simply dealing with a question as to the fixing of a later time for registration. 48 In the present case, as noted above, the plaintiffs submitted that: (a) the "Conditions of Loan" clause in each of the Loan Agreements gave them an immediate security interest as at the time of entry to those agreements; (b) alternatively, the "Conditions of Loan" clause in each of the Loan Agreements gave them a security interest upon either: (i) them making a demand for the loan amounts; or (ii) the Due Date specified in each Loan Agreement; (c) alternatively, each of the GSAs granted them security interests. 49 The administrator of LVT Capital contended that the first two arguments should be rejected. The solicitor for the administrator contended that the Loan Agreements did not give rise to an immediate or future security interest and relied upon the decision of the Court of Appeal of the Supreme Court of New South Wales in Roberts v Investwell Pty Limited & Ors [2012] NSWCA 134; (2012) 88 ACSR 689. That decision considered the question of a voidable transaction. The relevant transactional document contained a clause (cl 21) on the following terms (at [9]): 21. The parties agree that if requested by Roberts at any time Investwell must at its own expense immediately grant to Roberts a mortgage over the Land, an equitable mortgage or charge over Investwell's assets and undertakings, and/or such other security as Roberts may consider necessary. Any such securities must be in a form acceptable to Robert's legal advisers. 50 In respect of this clause, Bathurst CJ (with whom Beazley JA and Tobias AJA agreed) stated at [32] that: In the present case, cl 21, in my opinion, does not confer an immediate right of recourse to the property in the sense I have suggested. First, the obligation to grant the mortgage is expressed to be on request. Second, the proposed security is expressed as alternatives, the third alternative being security that Mr Roberts may consider necessary. Third, the form of security is not settled but is required to be in a form acceptable to the legal advisers to Mr Roberts. These matters taken cumulatively seem to me to lead to the conclusion that there was no intention to grant an immediate equitable interest of charge. 51 The solicitor appearing for the administrator of LVT Capital contended that the clause considered in Investwell had similarities to the "Conditions of Loan" clauses in the present case. It will be recalled that these clauses are identical and are expressed as follows (including their surrounding terms): Security: Entity and or assets of the Borrower (Security). Default: If there is any default of this Loan Agreement by the Borrower, then the Loan Amount and Interest Payment are immediately due to be repaid to the Lender by the Borrower. Such defaults include, but not limited to, Borrower not paying Lender back on demand or by or on Due Date or not paying in full the owing amount of the Loan Amount and or Interest Amount on Due Date. (Default) Conditions of Loan: The Borrower agrees by receiving advancement of any loaned funds from the Lender, that make up the Loan Amount, that the Borrower cannot refuse a Lender initiated Charge over the Security to the amount of what the Lender is owed. This charge, at the Lenders discretion, can include a charge up to the full Lender Loan Amount plus Interest Payment in full plus any and all costs of recovery by the Lender to perform recovery of the Loan Amount plus Interest Payment. This also applies if Borrower is in Default of this Loan Agreement. 52 The solicitor appearing for the administrator of LVT Capital contended that the "Conditions of Loan" clauses did not give rise to an immediate or future security interest because: (a) the provision of "Security" envisages a further request being made, albeit one which the Borrower "cannot refuse"; (b) there is uncertainty as to what assets the requested security may attach to given the definition of "Security" is the "Entity and or assets of the Borrower (Security)". This definition does not clarify what is meant by "Entity" and what assets the security may be granted over as an alternative; (c) the form of security to be provided is not settled by the clause; (d) there remained a discretion on the part of the Lender as to the amount of the security to be requested up to the full Loan Amount plus Interest Payments. 53 Counsel for the plaintiffs contended that Investwell was distinguishable on its facts. It was submitted that in this case the defendants as borrowers had no capacity to refuse the charge, it was clear that the proposed security was a charge and that the scope of the security was clear as it applied to the borrowing entity and all of its assets. Alternatively, it was contended that if the Loan Agreements did not give rise to an immediate security, they provided for the security to crystallise at a future point in time, being on demand for repayment of the loans, the due date, or other default. It was submitted that the "Conditions of Loan" clause should be construed as a "springing" security (that is, a security which comes into existence upon the occurrence of an event), which arose upon the occurrence of a default or upon the due date. 54 Counsel for the plaintiffs contended that, in any event, security interests arose when the GSAs were executed. On this alternative, only the registrations against the trusts occurred out of time and orders should be made to that end. The solicitor for the administrator of LVT Capital accepted that the GSAs gave rise to security interests in favour of the plaintiffs. 55 As noted above, the authorities to date indicate that in an application under s 588FM it is not necessary to determine whether in fact a security interest exists, but whether there is a reasonably arguable case that it does. To that extent, it should be borne in mind that the decision of the Court of Appeal in Investwell was dealing with the question of the existence of a security on a final basis as a necessary step in the determination of a question as to whether there was a voidable transaction. Nevertheless, the reasoning and conclusions reached in Investwell are persuasive, and relevant. 56 In the present case, I am not satisfied that the "Conditions of Loan" clauses of the Loan Agreements gave rise to an immediate security interest in favour of the plaintiffs. The relevant text of the clauses "the Borrower cannot refuse a Lender initiated Charge over the Security to the amount of what the Lender is owed" suggests the clauses and the Loan Agreements did not give an "immediate right of recourse" to the property the subject of the putative charge in a way similar to that which Bathurst CJ observed in Investwell at [32]. Rather, it would appear that the clauses were seeking to record a promise that such security would be provided upon request by the plaintiffs (as lenders) or upon default with such default occurring where there was either a demand for payment or upon the "Due Date". Read this way, I am satisfied that the Conditions of Loan clauses did not give rise to an immediate security interest. 57 However, I consider it is reasonably arguable that the clauses gave rise to a "springing" security that would arise in the event that one or more of the conditions were satisfied, being: (a) request by the plaintiffs; (b) demand for repayment; or (c) default by the defendants. The solicitor for the administrator of LVT Capital contended that even if the Conditions of Loan clauses were to be construed as giving rise to a "springing" security, they were vague and uncertain, and amounted to no more than an agreement to agree to provide a security at some point in the future. I do not need to decide these matters on a final basis for the reasons identified above. It is sufficient that I note the following: (a) the decision in Investwell does not appear to have involved any consideration as to the enforcement of a security within the meaning of the PPSA, but was focussed upon whether the putative interest fell within the meaning of "charge" under the Corporations Act (as it applied at that time): see [15]-[17]; (b) as noted above, s 12(1) of the PPSA creates a "substance test" that requires an examination of the substance of a transaction, as opposed to its form; (c) the "substance test" also needs to be read in light of well settled authorities that Courts should be "astute to adopt a construction which will preserve the validity of [contracts]": Meehan v Jones (1982) 149 CLR 571 at 529 (Mason J); Biotechnology Australia Pty Ltd v Pace (1988) 15 NSWLR 130 at 132 (Kirby P) (d) further, it is important to seek to give effect to the objective intent of the parties, and, in endeavouring to discern the parties' intent and in construing the meaning of the words used, the Court will strive to give the document a commercial, reasonable and rational operation: Australian Broadcasting Commission v Australian Performing Right Association (1972) 129 CLR 99 at 109 (Gibbs J); Hide & Skin Trading v Oceanic Meat (1990) 20 NSWLR 310 at 313 (Kirby P). 58 Bearing the above matters in mind, although it may be said that the Loan Agreements are not a model of perfection, it is reasonably arguable that they in substance seek to give security to the plaintiffs, though upon the occurrence of future events and requiring the defendants not to refuse the giving of that security. Similarly, although far from being a model of clarity, it is reasonably arguable that the "Security" so provided was in the nature of a charge over all assets of the defendants. However, as I have said, it is not necessary in the present application for me to determine as a matter of finality or right that the Loan Agreements did grant security interests, only that it is reasonably arguable that they did. I am so satisfied. 59 In any event, it does not matter to the determination of the present application whether the Loan Agreements gave rise to security interests or not. That is because I am satisfied that the GSAs granted security interests to the plaintiffs. This was not in contest in the proceedings before me, other than by reason of the matters raised by Ms Campbell to which I will return. 60 Accordingly, I am satisfied that it is reasonably arguable that the plaintiffs have security interests. Having reached this state of satisfaction, I turn to consider whether I am satisfied of the matters specified in s 588FM(2) so as to exercise my discretion in favour of the grant of the orders sought by the plaintiffs.

Inadvertence (s 588FM(2)(a)(i)) 61 For the purpose of s 588FM(2)(a)(i), "inadvertence" includes 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: Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (in liq) [1991] 2 Qd R 456; (1990) 2 ACSR 692; Campbell Finance Pty Ltd v Vivstan Packaging (Aust) Pty Ltd (in liq) [1998] 2 VR 340; (1996) 22 ACSR 109; Freightlines Northern Territory Pty Ltd (1999) 32 ACSR 573 at 576; Cardinia Nominees at [14]-[16]; Re Appleyard Capital Pty Ltd (2014) 101 ACSR 629 at [36]. 62 Here, I am satisfied that it was not until 15 March 2024 that the plaintiffs learned of the existence of the PPSR, the requirements for registration and the significance of registration in so far as it affected the enforceability of security interests. Thereafter, registrations were made quickly as against the defendants. 63 The delay in registrations as against the two trusts, in each case, was attributable to an error in failing to locate the ABNs for the relevant trusts. It has been held that mistakes made by lawyers and others in the lodgement of registration documents on the PPSR fall within the scope of s 588FM(2)(a)(i): see Re Eticore SD Pty Limited [2021] NSWSC 110 at [15]. In the present case, I do not need to get into who made the mistake or why it was made. It is sufficient that I have received evidence that the ABNs for the two trusts were unable to be located but when they were later identified the registrations were then attended to quickly. 64 I am satisfied that the delayed registrations arose due to inadvertence within the meaning of s 588FM(2)(a)(i) of the Corporations Act.

No prejudice (s 588FM(2)(a)(ii)) 65 For the purpose of s 588FM(2)(a)(ii), the question of prejudice to creditors or shareholders is one about the "prejudice attributable to the delay in registration, rather than the prejudice from making the order (which is inevitable)": Re Appleyard at [30]-[31]. The prejudice to creditors might be distinct depending on whether they are secured or unsecured creditors. It is important to identify the type of prejudice that is relevant. In Re Appleyard, Brereton J said at [30]: Thus, although I accept, as the authorities make clear, that the presence or absence of prejudice to unsecured creditors is a relevant discretionary consideration, relevant prejudice is not necessarily established merely by showing that the dividend to unsecured creditors will be less if the security interest does not vest in the company; the unsecured creditors may well have been in no different a position had the security interest been timely registered. The type of prejudice that is of particular relevance is prejudice attributable to the delay in registration, rather than prejudice from making the order (which is inevitable). This is the type of prejudice contemplated by the legislation (see s 588FM(2)(a)(ii), which refers to prejudice from the failure to register earlier, not from making the order)… 66 In the present case, I received evidence that none of the defendants have any other secured creditors. The only prejudice that arises is to the position of unsecured creditors, but such a prejudice arises from the delay in registration and not from the making of the orders. 67 Further, orders granted and made under section 588FM are often made on the condition that other interested parties such as secured and unsecured creditors, liquidators, administrators and others have a right to seek to set aside or vary such orders if they are adversely affected. These orders have come to be described as "Guardian Securities orders", taking their name from the decision of McLelland J in Re Guardian Securities Ltd [1984] 1 NSWLR 95. The plaintiffs here seek that such orders be made. I will make those orders. 68 That leaves the position of Ms Campbell to consider. Ms Campbell contended that if I were to make the orders sought, the plaintiffs would become secured creditors and have priority over her as an unsecured creditor. However, the position is more subtle than that. To the extent that orders are made by this Court under s 588FM, they are orders that fix a later time for the registration of the security interests. In the present case, at the very least, the GSAs granted security interests to the plaintiffs on 15 March 2024 and registrations were made in respect of the defendants on 16 March 2024 and in respect of the trusts on 18 April 2024. The plaintiffs seek the fixing of later time to be 18 April 2024. I am satisfied that this short period of time does not prejudice Ms Campbell's interests as an unsecured creditor. 69 Further, I would add, as I have set out above, that registration of a security interest, and the fixing of a later time for the registration of a security interest, is not determinative of the existence of the underlying interest or its enforcement. Leaving to one side circumstances such as those that arise in applications under s 588FM, the manner in which the PPSA operates is that a person may seek to register an interest, essentially, if that person "believes on reasonable grounds" that the relevant secured party is or will become a secured party. Whether a registered security is effective or enforceable is a matter that may be separately determined. 70 In the present case, as I have noted above, the administrator for LVT Capital contended that its position in these proceedings was without prejudice to any other applications that may be made under the Corporations Act or otherwise. That is obviously the case. It is a matter that necessarily follows for the reasons I have outlined above. It is also the case for Ms Campbell.

Just and equitable (s 588FM(2)(b)) 71 The plaintiffs contended that I should also make orders on the basis of the "just and equitable" limb of s 588FM. That limb "confers a broad judicial discretion informed, at least at one level, by what is 'just and equitable'; as such, it is to be read liberally for the purpose intended by the statute in question and is not to be constrained or limited by glosses or implications not found in the relevant statute": Re Highlake Resources Ltd [2018] FCA 1292 at [35(b)] and the cases there cited. 72 In the present case, I am also satisfied within the meaning of section 588FM(2)(b) that on other grounds, it is just and equitable (in the circumstances to which I have referred) to grant the relief sought by the plaintiffs: see, generally, KJ Renfrey Nominees Pty Limited (Trustee), in the matter of OneSteel Manufacturing Proprietary Limited v OneSteel Manufacturing Proprietary Limited [2017] FCA 325; (2017) 120 ACSR 117 at [28].

Identification of the security interests to which the PPSR registrations relate 73 The solicitor for the administrator of LVT Capital contended that in making any orders, the Court should clearly specify the security agreement to which it relates and, specifically, whether it relates to the security contained in the Loan Agreements or in the GSAs. I was initially attracted to the idea that there should be such specification in the orders. However, in view of the conclusions I have reached that it is reasonably arguable that the Loan Agreements gave rise to a security interest in the way I have outlined above and that the GSAs actually did, I do not consider that it would be appropriate to make any such specification as it would be apt to confuse and mislead. It would require me in the orders to identify alternatives. These reasons make clear the basis upon which I have decided to exercise my discretion to make orders under s 588FM.

DISPOSITION 74 For the foregoing reasons, I will make the orders sought by the plaintiffs. Given the conclusions I have reached, it is not necessary for me to deal with the plaintiffs' claims for declaratory relief. 75 The plaintiffs contended that I should order costs in its favour if the administrator of LVT Capital opposed its relief. In turn, the administrator and Ms Campbell submitted that there should be no order as to costs. In my view, the position of the administrator was more nuanced than one of opposition. In all of the circumstances, the appropriate order is that each party bear its own costs. I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Shariff.