Wilde v Australian Trade Equipment Co Ltd - [1981] HCA 13 - HCA 1981 case summary — Zoe

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Wilde v Australian Trade Equipment Co Ltd

[1981] HCA 13

High Court of Australia|1981-03-13|Before: Wilson JJ, Gibbs J

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Source facts

Court

High Court of Australia

Decision date

1981-03-13

Before

Wilson JJ, Gibbs J

Source

Original judgment source is linked above.

Judgment (56 paragraphs)

[1]

High Court of Australia Gibbs, Stephen, Murphy, Aickin and Wilson JJ. Wilde v Australian Trade Equipment Co Ltd [1981] HCA 13

[2]

The difficult question that arises in this case is whether the respondent, the grantee of a bill of sale, is entitled to priority over the creditors of the company which granted the bill of sale, and is now in liquidation.

[3]

The bill of sale bears the date 6th March 1979. It was not registered within thirty days after the creation of the charge, and so will be void against the liquidator and any creditor of the company, under s. 100 (1) of the Companies Act, 1961 Q., as amended, ("the Act"), unless the circumstances about to be mentioned render it valid or require to to be treated as valid. On 23rd April 1979 the respondent made application to a judge in chambers for an order extending the time for the filing of the bill of sale, and dispensing with the production of a statement of the prescribed particulars. The application was prompted by the fact that the respondent had been advised that the company, the grantor of the bill of sale, had apparently ceased to carry on business and that chattels possibly subject to the bill of sale were being removed from its premises. The application was heard on the same day ex parte and was granted, but the order for extension of time was made subject to the usual provision that it was to be "without prejudice to any rights which may have been or may be acquired against the holders of the charge prior to the time of actual registration". On the same day the charge was registered and the Assistant Commissioner for Corporate Affairs gave a certificate of registration which, omitting formal parts, was in the following terms:

[9]

The first question for decision is whether, putting aside the possible effect of s. 103 (2) and of the issue of the certificate, the charge is void against the appellants for non-compliance with s. 100 (1). In my opinion that question should be answered in the affirmative. The provisions of s. 100 (1) were not complied with: the documents were not lodged for registration within the time fixed by that sub-section. There is no subsisting order for an extension of time under s. 106. Therefore s. 100 (1) operates, and renders the charge void against the liquidator and any creditor. Of course, the registration was perfectly valid when it was effected, and the certificate was properly issued. The voidable order of 23rd April remained good until it was set aside, and supported what had been done under it: cf. MacFoy v. United Africa Co. Ltd. [6] . But once the order was set aside that support was removed; what remained was a charge registered out of time, with no order for extension of time continuing in existence. "Without the order the registration is out of time and ineffective.": Commercial Banking Co. of Sydney Ltd. v. George Hudson Pty. Ltd. (In liq.) [7] . I find it impossible to suppose that an order wrongly made per incuriam and promptly revoked should forever continue to have the same effect as if it had never been set aside. If that were so, as D. M. Campbell J. pointed out in the Full Court, it would mean that a successful appeal against an order extending the time for registration could not undo the fact of registration. But in my opinion when the order was set aside, there no longer remained the one thing that prevented s. 100 (1) from avoiding the charge against the appellant. What I have said is, of course, subject to the effect of the certificate. In opposition to this view some reliance was placed on two cases in which it was held that an act of bankruptcy was constituted by a failure to comply with a bankruptcy notice founding on a default judgment which was later set aside: Re Hanby; Ex parte Flemington Central Spares Pty. Ltd. [8] ; Re Hayes; Ex parte Thomas Borthwick & Sons (Australasia) Ltd. [9] . Those decisions were based on the settled principle that the critical time for determining whether an act of bankruptcy has been committed is the date on which the period limited by the bankruptcy notice expired. If the debtor has not within that time moved to set aside the bankruptcy notice, and if he has failed to comply with it, he has committed an act of bankruptcy, even if the default judgment was wrongly obtained and is later set aside. Of course in such a case it remains necessary for the petitioning creditor, whether original or substituted, to prove the existence of the requisite debt. Those decisions seem to me to have no bearing on the present case.

[12]

The Commissioner shall issue a certificate of every registration stating if applicable the amount secured by the charge and the certificate shall be conclusive evidence that the requirements as to registration have been complied with. The provisions of corresponding sections in England have been given a wide effect, and in two cases it has been held that "the requirements as to registration" include the requirement as to the time within which the charge is to be lodged for registration: In re Eric Holmes (Property) Ltd. [10] and In re C. L. Nye Ltd. [11] . In those cases particulars which incorrectly stated the date of the charge were lodged for registration within the prescribed time after the date so stated but not within the prescribed time after the true date. In each case the certificate was held to be conclusive. The respondent naturally places strong reliance on those cases, which follow a number of earlier decisions in which, however, the error in the particulars did not concern the date. As has been pointed out in the authorities, the requirement that a charge shall be registered is intended to enable persons who are minded to deal with companies to be able, by searching the register, to find out whether the company has encumbered its property or not. In other words the provisions are intended to protect persons who may become unsecured creditors of the company. On the other hand, the provision making the certificate conclusive is intended for the protection of the person entitled to the charge. The documents may be lodged for registration by the company or by any person interested, but it appears from the provisions of s. 101 that the primary duty lies on the company. The grantee of the charge may therefore not see the particulars lodged for registration and may be neither aware of nor responsible for errors in them. The object of s. 103 (2) is to give security to persons relying on the certificate: In re C. L. Nye Ltd. [12] , and to protect secured creditors from being faced with technical objections to the sufficiency of the registration: see National Provincial and Union Bank of England v. Charnley [13] . To achieve these purposes, a certificate is made conclusive evidence of due registration even if the particulars lodged for registration were defective and misleading, and even if in fact the charge was not properly registered: National Provincial and Union Bank of England v. Charnley [14] . The unsecured creditors may, however, have remedies against the grantee of the charge if the latter was guilty of fraud: In re C. L. Nye Ltd. [15] . 1. [1965] 1 Ch. 1052. 2. [1971] 1 Ch. 442. 3. [1971] 1 Ch., at pp. 469, 474. 4. [1924] 1 K.B. 431, at p. 453. 5. [1924] 1 K.B., at p. 448. 6. [1971] 1 Ch., at p. 474.

[31]

We turn now to the facts, none of which are in dispute. The charge was created on 6th March 1979. Section 100 required that a statement of the prescribed particulars together with the instrument be lodged with the Commissioner for Corporate Affairs for registration within thirty days, but for various reasons this was not done. Notwithstanding that the Act (s. 102) makes it an offence for a grantor of a charge to fail to comply with s. 100, the grantor in this case does not appear to have concerned itself at all with such compliance. On the other hand, the respondent was very much concerned to have its security registered, particularly when matters came to its knowledge suggesting that a winding-up of the grantor was likely. It applied to a judge in chambers for an order pursuant to s. 106 extending the time for registration. The application was made ex parte on a summons issued on 23rd April 1979, returnable at 2.30 p.m. on the same day. It was supported by an affidavit which outlined the reasons for the delay in effecting registration, and informed the judge that the grantor had apparently ceased to carry on business and that information had been received to the effect that action was being taken to put the company into liquidation. The respondent further informed the judge that it was unable to secure the completion by the grantor of the statement of prescribed particulars required by s. 100. The learned judge extended the time for registration to include the 24th April, subject to a proviso directed to preserving "any rights which may have been or may be acquired against the holders of the charge prior to the time of actual registration". He also dispensed with the lodging of a statement of particulars with the charge. Armed with this order, the respondent lodged the charge for registration during the afternoon of 23rd April. The precise time of lodgment is not known. The Commissioner for Corporate Affairs subsequently issued his certificate dated 23rd April 1979 in the terms required by s. 103 (2).

[41]

The appellants then are confronted with two significant facts which were in existence when they sought to have the order extending time set aside, namely, the fact of a registration effected within the extended time, and the fact of a certificate of the Commissioner having the effect and operation accorded to it by the statute. It seems to us that the second of these two facts must be evaluated, in the light of the appellants' submission, separately from the first. The essential question is as to the effect if any of the order setting aside the extension of time. Mr. Williams argues that the discharge of the ex parte order necessarily deprives the registration that was effected in reliance on that order of its efficacy as against the liquidator. The registration is as if it had never been, it is void ab initio as against the liquidator. We pause to remark that if the argument is a good one the registration should be wholly void, not merely as against the liquidator. But in any event the consequence that will follow an order setting aside an earlier decision will vary from case to case. So long as the earlier decision stands, and no stay is operative, it is a lawful decision and the action taken in reliance upon it is lawful. It is true that from the moment it is set aside the order can no longer provide the lawful justification for further action, but whether what has been done can be undone will depend upon the availability of appropriate remedies, to bring about the appropriate relief. If s. 106 conferred on the court a power to remove a registration from the register then clearly on the facts of this case such action would be appropriate consequent on the order setting aside the extension of time. But it is quite clear that s. 106 does not empower the court to remove a registration as distinct from rectifying an entry: cf. per Russell L.J. in In re C. L. Nye Ltd. [18] . Again, the cases of Re Hanby; Ex parte Flemington Central Spares Pty. Ltd. [19] and Re Hayes; Ex parte Thomas Borthwick & Sons (Australasia) Ltd. [20] provide illustrations where a judgment, although subsequently set aside, has nevertheless provided the occasion for an event of lasting significance, in these cases the commission of an act of bankruptcy.

[47]

It can be said that it was not the order extending time but the actual registration within the extended time that affected the liquidator, but as that registration could not have been made had the order extending time not been granted, I consider that the liquidator, when appointed, was affected by the order. It had given the bank the opportunity to perfect its security against the liquidator and so improve its position vis-à-vis the liquidator when appointed. It was to achieve this very result that the application was made and it would be to depart from reality to regard the order as one not affecting the liquidator. Without the order the registration is out of time and ineffective. In short, the order, by making late registration effective, does adversely affect the liquidator in relation to the assets of the company in Queensland (emphasis added). The sentence which we have emphasized is the statement upon which Mr. Williams relies to support his proposition that the effect of an order setting aside an extension of time is necessarily to render the registration ineffective as against the liquidator, notwithstanding the existence of a certificate. But with respect we do not think that his Honour is speaking to either limb of Mr. Williams' problem at all. His attention in this passage is not directed to the effect of a certificate nor to the effect on registration of an order setting aside an extension of time. There was no evidence before Hart J. that a certificate had been issued, and no argument was directed to the question of its effect had it been issued; although the point was mentioned in argument in the High Court, no member of the Court took it up (see per Walsh J. [23] ). In our opinion, Menzies J. is saying simply that of course the liquidator was adversely affected by the Registrar's order because without it the charge could not be registered and was therefore ineffective as against the liquidator. The point becomes clear if the following sentence is understood as saying "In short, the order, by making late registration" [possible and therefore] "effective, does adversely affect the liquidator in relation to the assets of the company in Queensland". It follows from what we have said that we do not find Hudson to be of assistance in the present case. 1. (1973) 131 C.L.R. 605, at p. 614. 2. (1973) 131 C.L.R., at pp. 613-614. 3. (1973) 131 C.L.R., at p. 620.