AWE Perth Pty Ltd v Clough Projects Australia Pty Ltd

AWE Perth Pty Ltd applied for an extension of time to register certain security interests under the Personal Property Securities Act 2009 (Cth) (PPSA) in relation to its engineering, procurement and construction contract with Clough Projects Australia Pty Ltd (CPA). AWE contended that the transfer of title in works to AWE when the works were paid for, the requirement that any insurance proceeds received from the damage or destruction of any of the works be paid into a bank account in the joint names of CPA and AWE, step-in rights, the irrevocable appointment by CPA of AWE to be its attorney with authority to execute such contracts as necessary to give effect to the novation of any subcontracts if the EPC Contract was terminated, and the obligations imposed on CPA under cl 23.8 where AWE gave notice of termination of the EPC Contract, were security interests within the meaning of s 12 of the PPSA. None of these security interests were registered on the Personal Property Security Register (PPSR) within 20 business days of entry into the EPC Contract. After CPA went into voluntary administration, AWE entered into certain arrangements with the voluntary administrators to ensure the EPC Contract stayed on foot and works under it continued. AWE and the voluntary administrators also negotiated and agreed amendments to the EPC Contract which had the effect of ensuring the EPC Contract stayed on foot and works under it continued. AWE contended the entry into the Deed of Amendment and Restatement arguably gave rise to further security interests within the meaning of s 12 of the PPSA. The rights which arose under the Amended EPC Contract were: step-in rights, the obligations imposed on CPA under cl 23.8, the power of attorney, the transfer of title to goods, and the introduction of a project bank account regime. AWE made three registrations on the PPSR against CPA to perfect the arguable security interests. The registrations were made while CPA was subject to voluntary administration and within 20 business days of entry into the Deed of Amendment and Restatement. On 15 February 2023, CPA executed a deed of company arrangement with WeBuild SPA. Upon effectuation of the deed of company arrangement, all unsecured claims against CPA, which existed at the date of the appointment of the voluntary administrators, were extinguished. However, any future rights under certain pre-administration contracts which continued post-effectuation (including the Amended EPC Contract) were excluded from the releases contained in the deed of company arrangement. On 16 February 2023, after being notified the deed of company arrangement had effectuated, AWE effected three further registrations on the PPSR against CPA. Since the effectuation of the deed of company arrangement, all of the ALLPAP or ALLPAP with exception secured creditors of CPA (apart from AWE) have removed their registrations against CPA from the PPSR. Following correspondence that was exchanged between the parties' solicitors, AWE did not seek any orders in respect of the PPSR Registration in [9(b)] as this obligation was removed in the Amended EPC Contract. The court was satisfied that AWE was a 'person interested' and had standing to bring this application. The court was also satisfied that CPA had been joined as a defendant and had been served with the originating process and relevant material. The court was satisfied that AWE had established that it was reasonably arguable that the step-in rights under both the EPC Contract and the Amended EPC Contract were registrable security interests under the PPSA. The court was also satisfied it was reasonably arguable that the power of attorney in cl 3.4(c)(iii) was a registrable security interest under the PPSA. The court was also satisfied that it was reasonably arguable that cl 23.8 was a security interest under the PPSA. However, the court was not satisfied that it was reasonably arguable that cl 7.6(a) created a security interest in favour of AWE. The court was satisfied that it was at least reasonably arguable that the money in the bank account to be set up under cl 18 of the Amended EPC Contract was a security interest within the meaning of s 12 of the PPSA. The court was satisfied that the objective intention of the parties was to leave the EPC Contract on foot, subject to the alterations contained in the Amended EPC Contract. The court was satisfied that it was reasonably arguable that the security interests, which were the subject of the First Registrations, had been amended, supplemented or altered by the Amended EPC Contract and needed to be the subject of a fresh registration in order to be perfected. The court was also satisfied that it was reasonably arguable that the security interest that was not the subject of the First Registration (namely, the project bank account) needed to be the subject of a fresh registration in order to be perfected. The court was satisfied that AWE had made out both grounds on which it relied. The court was satisfied that it should exercise its discretion to make the orders sought and that there were no particular terms and conditions that should be imposed. The court made orders fixing a later time under s 588FL(2)(b)(iv) in relation to each of the three registrations the subject of the originating process.