Adia Venture Ltd v Traffic Technologies Ltd

Case [2025] FCA 564


FEDERAL COURT OF AUSTRALIA

Adia Venture Ltd v Traffic Technologies Ltd [2025] FCA 564

File number(s): VID 667 of 2025
Judgment of: O’CALLAGHAN J
Date of judgment: 28 May 2025 
Date of publication of reasons: 30 May 2025
Catchwords: PRACTICE AND PROCEDURE – application by plaintiffs for an order pursuant to s 588FM of the Corporations Act 2001 (Cth) (Act) extending the time for registration of a security interest in defendants’ assets for the purposes of s 588FL(2)(b)(iv) of the Act – where failure to register was due to inadvertence – where granting relief would not prejudice the position of creditors or shareholders – where no basis for adjournment – relief granted
Legislation: Corporations Act 2001 (Cth) ss 440D, 442C, 447A, 447C, 588FL and 588FM
Cases cited:

Bevillesta Pty Ltd v Imagine UN Ltd [2009] VSC 50; (2009) 69 ACSR 574

Bluewaters Power 1 Pty Ltd v Griffin Coal Mining Company Pty Ltd [2019] WASC 438

Re Accolade Wines Australia Ltd [2016] NSWSC 1023

Re Amotran Pty Ltd [2017] VSC 637

Re Appleyard Capital Pty Ltd [2014] NSWSC 782; (2014) 101 ACSR 629

Re Cardinia Nominees Pty Ltd [2013] NSWSC 32

Re Guardian Securities Ltd [1984] 1 NSWLR 95

Re Psyche Holdings Pty Ltd [2018] NSWSC 1254

Re Transurban CCT Pty Ltd [2014] NSWSC 1909

Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Number of paragraphs: 47
Date of hearing: 28 May 2025
Counsel for the Plaintiffs: Ms V E Bell
Solicitor for the Plaintiffs: Thomson Geer
Counsel for the Defendants: Mr J L Evans KC
Solicitor for the Defendants: Madgwicks Lawyers

ORDERS

VID 667 of 2025
BETWEEN:

ADIA VENTURE LIMITED (HONG KONG REGISTRATION NUMBER 76722321)

First Plaintiff

SEASON COMPONENTS COMPANY LIMITED (HONG KONG REGISTRATION NUMBER 130050)

Second Plaintiff

AND:

TRAFFIC TECHNOLOGIES LTD (ADMINISTRATORS APPOINTED) ACN 080 415 407

First Defendant

GLENN JEFFREY FRANKLIN & JASON GLENN STONE IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF TRAFFIC TECHNOLOGIES LTD (ADMINISTRATORS APPOINTED) ACN 080 415 407

Second Defendants

ORDER MADE BY:

O’CALLAGHAN J

DATE OF ORDER:

28 MAY 2025

THE COURT ORDERS THAT:

1.The name of the First Plaintiff is amended to ADIA VENTURE LIMITED (HONG KONG REGISTRATION NUMBER 767223321).

2.The Plaintiffs’ have leave pursuant to section 440D of the Corporations Act 2001 (Cth) (the Corporations Act) to commence and proceed with the proceeding against the First Defendant.

3.Pursuant to section 588FM of the Corporations Act, 18 November 2024 is fixed as the time for registration of the Plaintiffs’ security interest pursuant to registration number 202411180056932.

4.The Second Defendants are to take steps to cause notice of these orders to be given, within one business day of the making of these Orders to:

(a)Where the First Defendant has an email address for a creditor, by notifying each such creditor, via email of the making of the Orders;

(b)Where the First Defendant does not have an email address, by publishing the Orders on the website maintained by the…

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AGLC
Adia Venture Ltd v Traffic Technologies Ltd [2025] FCA 564
Case
[2025] FCA 564
Decision Date

CaseChat Overview and Summary

Adia Venture Limited and Season Components Company Limited, part of the Season Group which provides electronic manufacturing services, supplied components to Traffic Technologies Ltd (TTI) and its subsidiaries. Adia also provided US$3 million in financial accommodation to TTI under a convertible note deed poll dated 28 August 2024, which was secured by a general security interest over all of TTI’s present and after-acquired property (TTI AllPAAP Security). The security interest was granted by a general security deed dated 28 August 2024. However, the security interest was not registered on the Personal Property Securities Register (PPSR) due to inadvertence. The plaintiffs sought an order under section 588FM of the Corporations Act 2001 (Cth) extending the time for registration of the security interest. The defendants opposed the application.

The court considered whether the failure to register the collateral earlier was accidental or due to inadvertence, and whether the orders sought would not prejudice the position of creditors or shareholders. The court found that the failure was due to inadvertence, and that the orders would not prejudice creditors or shareholders. The court also noted that the solvency of the company and the likelihood of its solvency being maintained into the foreseeable future are factors to be taken into consideration. The court exercised its discretion to grant the order.

The court made the following orders: 1) the name of the First Plaintiff was amended to ADIA VENTURE LIMITED (HONG KONG REGISTRATION NUMBER 767223321); 2) the plaintiffs have leave to commence and proceed with the proceeding against the First Defendant; 3) 18 November 2024 is fixed as the time for registration of the plaintiffs’ security interest; 4) the Second Defendants are to take steps to cause notice of these orders to be given to creditors, the Australian Securities and Investments Commission, and others; 5) any person who can demonstrate a sufficient interest to vary or discharge Order 2 has liberty to apply to the Court within 28 days of the date of these orders; and 6) the defendants’ costs be costs in the administration of the First Defendant.

Orders

Orders of the court

1. The name of the First Plaintiff is amended to ADIA VENTURE LIMITED (HONG KONG REGISTRATION NUMBER 767223321).

2. The Plaintiffs’ have leave pursuant to section 440D of the Corporations Act 2001 (Cth) (the Corporations Act) to commence and proceed with the proceeding against the First Defendant.

3. Pursuant to section 588FM of the Corporations Act, 18 November 2024 is fixed as the time for registration of the Plaintiffs’ security interest pursuant to registration number 202411180056932.

4. The Second Defendants are to take steps to cause notice of these orders to be given, within one business day of the making of these Orders to:

(a) Where the First Defendant has an email address for a creditor, by notifying each such creditor, via email of the making of the Orders;

(b) Where the First Defendant does not have an email address, by publishing the Orders on the website maintained by the Second Defendants; and

(c) The Australian Securities and Investments Commission, by its email address.

5. Any person who can demonstrate a sufficient interest to vary or discharge Order 2 of these Orders (including any creditor of the First Defendant) has liberty to apply to the Court within 28 days of the date of these orders and on two business days’ written notice to the parties to these proceedings.

6. The Defendants’ costs be costs in the administration of the First Defendant.

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

Background

Background to the litigation

I declined to accede to the adjournment application and made the orders set out above. These are my reasons.BACKGROUND The plaintiffs, Adia Venture Limited and Season Components Company Limited (SCC) are both companies registered in Hong Kong. They are part of a corporate group of companies referred to as the Season Group. The Season Group is a vertically integrated electronic manufacturing services provider which manufactures and supplies traffic lights and street lights from Malaysia and China. The Season Group supplied components to the first defendant, Traffic Technologies Ltd (administrators appointed) (TTI) and two of its subsidiaries (together, the TTI Group) for the production of traffic management and safety products. As well as supplying componentry to the TTI Group, Adia agreed to provide US$3 million in financial accommodation to TTI under a convertible note deed poll dated 28 August 2024 (Deed Poll), which was secured by a general security interest over all of TTI’s present and after acquired property (TTI AllPAAP Security). The TTI AllPAAP Security was granted pursuant to a general security deed dated 28 August 2024 (GSD). Pursuant to clause 2.1 of the GSD, TTI granted a security interest over all of its present and after-acquired property to secure payment of the “Secured Money”. “Secured Money” was defined in clause 1.1 of the GSD as:… all money and amounts (in any currency) that the Grantor [i.e. TTI] is or may become liable to pay under or in connection with, or as a result of a breach of or default under, a Transaction Document, whether:(a) present or future, actual, prospective or contingent and at any time ascertained or unascertained; or (b) as principal, interest, Tax, Loss, fee, indemnity, guarantee or liquidated or unliquidated damages (whether for breach of contract or tort or incurred on any other grounds).It includes money and amounts:(c) owed or incurred by, or on account of, the Grantor:(i) whether alone or not and in any capacity (as principal debtor, surety or otherwise); and (ii) whether or not the Grantor has a right of indemnity; and (d) owed to or incurred for the account of the Grantor (whether alone or not and in any capacity) or to any agent of the Secured Party (whether disclosed or not) before or after the date the Convertible Note Deed Poll directly or as a result of: (i) the assignment or transfer of any debt or liability of the Grantor whether or not:(A) the assignment was before, at the same time as, or after the date of the Convertible Note Deed Poll;(B) the Grantor consented to or was aware of the assignment; or (C) the transferred obligation was secured before the assignment; or (ii) any other dealing with any debt or liability of the Grantor. Ms Wookey, a partner of Thomson Geer, acted for the plaintiffs in relation to the transaction, including advising on the GSD and other transaction documents. She swore in her affidavit that although it is her usual practice to register all security interests on the Personal Property Securities Register (PPSR) as early as possible, she does not recall instructing a team member to attend to the registration of the TTI AllPAAP Security. I accept that evidence.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Section 588FM of the Act provides:Extension of time for registration(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).(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) it 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. The power conferred under s 588FM is discretionary. Factors which may impact the exercise of the court’s discretion include delay and the presence or absence of prejudice to creditors or shareholders. In order for an extension of time to be granted, the solvency of the company under administration and the likelihood of its solvency being maintained into the foreseeable future are factors to be taken into consideration. See Bluewaters Power 1 Pty Ltd v Griffin Coal Mining Company Pty Ltd [2019] WASC 438 at [54] (Vaughan J); Re Cardinia Nominees Pty Ltd [2013] NSWSC 32 at [20] (Black J); Re Guardian Securities Ltd [1984] 1 NSWLR 95 at 97–98 (McLelland J); Bevillesta Pty Ltd v Imagine UN Ltd [2009] VSC 50; (2009) 69 ACSR 574 at 579 [28] (Robson J); and Re Appleyard Capital Pty Ltd [2014] NSWSC 782; (2014) 101 ACSR 629 at 638 [25]–[26] (Brereton J). Absent evidence of solvency, steps are usually taken to preserve the interests of unsecured creditors by reserving liberty to apply to any external administration appointed within six months of the date on which registration for the security interest is fixed. In this case, Ms Bell relied on two grounds under s 588FM to support the plaintiffs’ application, viz:(1)the failure to register the collateral earlier was accidental and due to inadvertence (s 588FM(2)(a)(i)); and(2)the orders sought will not prejudice the position of creditors or shareholders of the defendants (s 588FM(2)(a)(ii)). Inadvertence The cases have in some instances sought to define the meaning of the ordinary English word “inadvertence”. In Re Accolade Wines Australia Ltd [2016] NSWSC 1023 at [14], Brereton J said that “‘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”. In Bluewaters at [40], Vaughan J observed that “inadvertence … is concerned with human error or oversight or being ‘not properly attentive’”.No prejudice to creditors or shareholders The cases say that the relevant type of prejudice is the prejudice attributable to the delay in registration, rather than prejudice from making the order. See, for example, Accolade Wines at [18] (Brereton J). Further, as Brereton J said in Appleyard Capital at 640 [30], “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”.