Central Cleaning Supplies (Aust) Pty Ltd v Elkerton
[2014] VSC 61
•7 March 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST
S CI 2013 3530
IN THE MATTER of
SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900)
BETWEEN:
| CENTRAL CLEANING SUPPLIES (AUST) PTY LTD | Plaintiff |
| v | |
| ANTHONY WAYNE ELKERTON (in his capacity as Joint and Several Liquidator of SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900)) | First Defendant |
| DAVID GREGORY YOUNG (in his capacity as Joint and Several Liquidator of SWAN SERVICES PTY LTD (IN LIQUIDATION) (ACN 000 699 900)) | Second Defendant |
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JUDGE: | Ferguson J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 February 2014 | |
DATE OF JUDGMENT: | 7 March 2014 | |
CASE MAY BE CITED AS: | Central Cleaning Supplies (Aust) Pty Ltd v Elkerton | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 61 | |
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CORPORATIONS — Appeal from liquidators’ decision to reject claim for the return of cleaning equipment subject to retention of title — Transitional security agreements under Personal Property Securities Act 2009 (Cth) — Transitional provisions applying if transitional security agreement in force immediately before 30 January 2012 and provides for security interest — Credit application completed by purchaser before 30 January 2012 — Credit application included that supply of goods governed by Standard Terms and Conditions — Invoices included Condition of Sale that title in goods ‘subject of this sale’ remain property of supplier — Condition of Sale not incorporated into credit application but incorporated into each separate contract of supply — Separate contracts after 30 January 2012 with result that transitional provisions do not apply — Decision of liquidators confirmed — Personal Property Securities Act 2009 (Cth) ss 322(1), 307 and 308(b).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D F McAloon | Tisher Liner FC Law |
| For the Defendants | Mr D R Luxton | TressCox Lawyers |
TABLE OF CONTENTS
Introduction......................................................................................................................................... 1
Personal Property Securities legislation........................................................................................ 2
Agreed facts......................................................................................................................................... 5
Is the Credit Application a ‘transitional security agreement’?................................................... 7
Conclusion......................................................................................................................................... 14
HER HONOUR:
Introduction
Central Cleaning Supplies (Aust) Pty Ltd (“Central Cleaning”) supplied cleaning equipment and products to Swan Services Pty Ltd (“Swan Services”). In September 2009, the financial controller of Swan Services signed a credit application. Amongst other things, the credit application provided for 30 days’ credit to be afforded to Swan Services. The credit application also included a statement that the supply of goods was governed by Central Cleaning’s ‘Standard Terms and Conditions’. Thereafter, from time to time Central Cleaning supplied Swan Services with cleaning equipment and products. Printed at the bottom of the relevant invoices is a retention of title ‘condition of sale’. It stated that the goods the subject of the particular invoice remained the property of Central Cleaning until the whole of the purchase price had been paid by Swan Services in full for those goods.
Swan Services is now in liquidation. Central Cleaning has claimed the return of the cleaning equipment which it supplied to Swan Services.[1] The Liquidators[2] have rejected that claim on the basis that the cleaning equipment has vested in Swan Services by reason of the effect of the provisions of the Personal Property Securities Act 2009 (Cth) (“PPSA”). Central Cleaning has appealed from the Liquidators’ decision. It seeks to reverse that decision.[3] It also seeks a declaration that as at 22 May 2013 (that being the date of administration which preceded the liquidation) it had a perfected transitional security interest under the PPSA in the goods supplied by it from 9 November 2012 to 5 April 2013.[4]
[1]Central Cleaning does not make any claim for return of cleaning products which have been supplied by it.
[2]Anthony Wayne Elkerton and David Gregory Young, who are the defendants in their capacity as liquidators of Swan Services.
[3]Relying on s 1321 of the Corporations Act 2001 (Cth).
[4]Paragraphs 1 and 2 of the Amended Originating Process (2 August 2013). The parties agreed to the hearing and determination of these issues first, leaving paragraphs 3–5 of the Amended Originating Process for determination at a later time. The relief sought in those paragraphs concerns delivery up of the goods and what should happen with the proceeds (if any) of the sale of the goods.
For the reasons which follow, I have formed the view that Central Cleaning does not have a perfected transitional security interest under the PPSA in respect of the cleaning equipment. As such, the Liquidators’ decision will be confirmed and Central Cleaning’s application will be dismissed.
Personal Property Securities legislation
Before the PPSA came into operation, if a company was placed into administration, liquidation or receivership, suppliers of goods had significant rights if the terms of sale included an effective retention of title clause. In the case of liquidation and receivership, those rights often included the right to retake possession of the goods supplied.[5] It was not necessary for sale agreements including a retention of title clause to be registered.
[5]The position in relation to reclaiming goods when a company was in administration was affected by the operation of the moratorium provided for in s 440C of the Corporations Act 2001 (Cth) (as in force prior to the introduction of the PPSA). That section provided:
However, the PPSA has altered the position in some respects. A supplier (such as Central Cleaning) is now only entitled to reclaim goods if the supplier’s interest in them (by virtue of the retention of title) has been ‘perfected’. The supplier’s interest is referred to as a ‘security interest.’[6] In this regard, ‘security interest’ is defined to include an agreement to sell subject to retention of title if the transaction, in substance, secures payment or performance of an obligation. If an administrator is appointed to a purchaser company (such as Swan Services) and the security interest has not been perfected, then the supplier cannot reclaim the goods and the security interest vests in the purchaser company.[7]
[6]Personal Property Securities Act 2009 (Cth) s 12(2)(d).
[7]Ibid s 267.
The main method of perfecting a security interest is to register the interest on the Personal Property Securities Register (“PPS Register”)[8] established under the PPSA.[9] However, transitional provisions of the legislation enable automatic perfection of ‘transitional security interests’. The question in this case is whether Central Cleaning has a transitional security interest in the goods it supplied to Swan Services.
[8]Ibid s 21.
[9]Ibid s 147.
Section 322(1) of the PPSA provides that ‘a transitional security interest in collateral is perfected from immediately before the registration commencement time [30 January 2012],[10] whether the security interest arises before, at or after the registration commencement time’. For the purposes of the PPSA, ‘collateral’ is ‘personal property to which a security interest is attached’.[11]
[10]The ‘registration commencement time’ for the purposes of the PPSA is 30 January 2012: See PPSA s 306(2)(b); Personal Securities (Migration Time and Registration Commencement Time) Determination, item 5.
[11]PPSA s 10.
So far as relevant in this case, a ‘transitional security interest’ is defined to mean a security interest provided for by a ‘transitional security agreement’, if:
in the case of a security interest arising at or after … [30 January 2012]:
(i)the transitional security agreement as in force immediately before [30 January 2012] provides for the granting of the security interest; and
(ii)[the PPSA] applies in relation to the security interest.[12]
[12]Ibid s 308(b).
‘Transitional security agreement’ is defined as ‘a security agreement that is in force immediately before … [30 January 2012], and that continues in force at and after that time’.[13] ‘Security agreement’ is defined to mean:
(a)an agreement or act by which a security interest is created, arises or is provided for; or
(b)writing evidencing such an agreement or act.[14]
[13]Ibid s 307.
[14]Ibid s 10.
The Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009 stated that the legislation would apply to security interests existing before the legislation came into operation with the transitional provisions generally allowing security holders to maintain their existing priority and preserve their rights for 24 months from the time the PPS Register commenced.[15]
[15]Replacement Explanatory Memorandum, Personal Property Securities Bill 2009 [9.2] (‘Replacement EM’).
The effect of the transitional provisions has been summarised by Professor James O’Donovan as follows:
The transitional provisions will generally not apply to goods supplied subject to retention of title claims after 30 January 2012 but under a previous trading relationship, unless the supplier was under an existing obligation to supply the goods before 30 January 2012. The reason why the transitional provisions will not apply to these transactions is because the security agreement created the obligation to supply goods before 30 January 2012 even though the goods were not delivered until after that time. The security interest was, therefore, ‘provided for’ by a transitional security agreement. Where there is no such obligation under a pre‑commencement time agreement and goods are supplied under an old relationship or a new relationship after the registration commencement time, then the secured party should register its interest on the PPS [Register] ...[16]
[16]James O’Donovan, Thomson Reuters, Personal Property Securities Law in Australia (at October 2013) [60.670].
To similar effect is the Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009:
A security agreement would be able to expressly provide for ongoing supplies and therefore result in a series of security interests. Provided the security agreement is in force prior to the registration commencement time and allows for future security interests to be granted, each security interest granted under that security agreement, regardless of whether it is granted before or after the registration commencement time, would be a transitional security interest. The secured party to such an ongoing transaction would only need to register one financing statement to cover the ongoing transitional security interests.
Where there is no formal agreement providing for ongoing supplies, generally each supply would be considered to be a separate contract or security agreement. Supplies made after the registration commencement time in this type of situation would each be made under a new security agreement. Security interests made after the registration commencement time would not benefit from the protection provided in the transitional provisions.[17]
[17]Replacement EM [9.14]–[9.15].
The Replacement Explanatory Memorandum went on to give some examples, including the following:
Each Friday, Supplier A supplies Vendor A, a newsagent, with greeting cards. Supplier A and Vendor A signed a contract on 1 February 2007, prior to the first supply, which noted that Mary does not own the cards until she pays for them. The contract provided for the ongoing supply of cards. Three weeks after the Bill commences, a liquidator is appointed to Vendor A’s business. Supplier A has not registered the collateral on the PPS Register.
The contract between Supplier A and Vendor A is a security agreement that provides for future security interests in the cards supplied. The supply each week represents a new security interest under the security agreement. Supplier A will have priority over the liquidator’s interest for all supplies made to Mary as the ongoing supplies are transitional security interests provided for by the original transitional security agreement. The transitional security interests therefore receive temporary perfection for 24 months following the registration commencement time.[18]
[18]Replacement EM [9.15]
Agreed facts
The parties have agreed the facts necessary for determination of the questions in issue in this part of the proceeding.
On about 3 September 2009, Swan Services applied for a 30‑day commercial credit facility with Central Cleaning by completing and signing a document headed ‘Application for Commercial Credit Facilities’ (“Credit Application”). The Credit Application included the following:
2.The supply of goods by [Central Cleaning] is governed by [Central Cleaning’s] Standard Terms and Conditions as in force from time to time. The Standard Terms and Conditions override any terms and conditions of purchase used by [Swan Services] ...
Central Cleaning subsequently supplied cleaning equipment and products (“Goods”) to Swan Services at various commercial and retail sites in Tasmania, South Australia and Victoria. The first of the invoices in evidence is dated 4 September 2009 (that is, the day after the date of the Credit Application).
Between November 2012 and May 2013 the process that was generally followed was that:
(a)Swan Services ordered Goods by sending a purchase order to Central Cleaning (“Purchase Order”).
(b)Each Purchase Order set out:
i.site and delivery address;
ii.the Goods required, including product codes, descriptions, quantities, prices (inclusive and exclusive of GST), GST amounts, totals excluding GST;
iii.the identity of Swan Services personnel placing the Purchase Order;
iv.the date of the Purchase Order; and
v.the Purchase Order number.
(c)Within approximately four weeks of receiving a Purchase Order, Central Cleaning delivered the Goods referred to in the Purchase Order to the applicable site.
(d)Upon delivery, Central Cleaning rendered a delivery docket to the applicable site supervisor.
(e)After the Goods were delivered, Central Cleaning rendered an invoice to Swan Services (“Invoice”).
All Purchase Orders after 30 January 2012 were sent to Central Cleaning. All Invoices which Central Cleaning claims to be outstanding relating to the supply of Goods in the period after 30 January 2012 listed cleaning equipment, identified by way of a serial number, which Central Cleaning claims to have been ordered by Swan Services. These Invoices included the following:
CONDITION OF SALE: Goods the subject of this sale remain the property of Central Cleaning Supplies (Aust) Pty Ltd. (notwithstanding that may have been put in transit or actually delivered to the Purchaser) until the whole of purchase price has been paid by the Purchaser to Central Cleaning Supplies (Aust) Pty Ltd. in full.
(“ROT Clause”)
Central Cleaning does not have a registered security interest on the PPS Register or any other register.
The Liquidators were appointed joint and several administrators of Swan Services on 22 May 2013 and subsequently as Swan Services’ liquidators on 27 June 2013.
Is the Credit Application a ‘transitional security agreement’?
Central Cleaning claims that invoices remain unpaid in respect of some cleaning equipment it supplied to Swan Services between November 2012 and May 2013 (“Equipment”). Central Cleaning sought to collect the Equipment[19] on the basis that it is entitled to do so because it has a transitional security interest under the PPSA. It claimed that its interest is perfected by virtue of the transitional provisions in the PPSA which I have set out above. The Liquidators rejected Central Cleaning’s claim. As I have said above, Central Cleaning seeks to reverse that decision. It relies on s 1321(1) of the Corporations Act 2001 (Cth). In part, that section provides that a person aggrieved by a decision of a liquidator may appeal to the court and the court may confirm, reverse or modify the decision and may make such orders and give such directions as it thinks fit.
[19]There is a factual issue which, for present purposes, it is not necessary to determine what Equipment was in Swan Services’ possession when the administration began in May 2013.
The issue in dispute turns on whether Central Cleaning’s ‘security interest’ (that is, the retention of title until goods have been paid for) was provided for by the Credit Application, such that it is a ‘transitional security agreement.’[20]
[20]It is common ground that the Credit Application was in force immediately before 30 January 2012 and continued in force at and after that time.
Central Cleaning submitted that the correct analysis of the contractual arrangements between the parties and the applicable provisions of the PPSA is as follows:
(1)from September 2009, the Credit Application governed supplies made by Central Cleaning to the Company;
(2)by incorporating the ROT Clause, the Credit Application ‘provided for’ the granting of a security interest (namely, in goods supplied by Central Cleaning to Swan Services pursuant to the Credit Application) and, therefore, the Credit Application is a ‘security agreement’ under the PPSA;
(3)because the Credit Application (in the form described above) was in force and continuing as at 30 January 2012, the Credit Application is a ‘transitional security agreement’ under the PPSA; and
(4)the Equipment was supplied pursuant to the Credit Application, such that the security interests provided for in the Equipment were transitional security interests within s 308 of the PPSA.
It follows, so Central Cleaning contends, that at the time that Swan Services was placed into administration, it had the benefit of the transitional provisions of the PPSA such that its security interests in the Equipment are perfected without the need for registration on the PPS Register.
In relation to the proposition that the Credit Application governed future supplies, Central Cleaning submitted that by signing the Credit Application, Swan Services applied for a 30‑day account. It contended that the Credit Application plainly contemplated that there would be ongoing supplies which would be made on its standard terms and conditions in force from time to time. Central Cleaning relied on Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd.[21] The parties in that case had entered into arrangements for the transportation and storage of a flu vaccine. At issue was whether an exclusion clause, which was one of the ‘Conditions of Contract’ which appeared on the reverse of a credit application document, was binding on the parties. The credit application was signed. The High Court observed:
The ‘‘Application for Credit’’ was designed to have a wider potential operation than one limited to this particular transaction. As the reply of Finemores indicated, it was an application by Richard Thomson to open an account with Finemores, and was intended to cover future dealings.[22]
[21](2004) 219 CLR 165.
[22]Ibid 175 [21].
The High Court held that the terms and conditions on the reverse of the credit application formed part of the contract governing the storage and transportation of the flu vaccine.[23]
[23]Ibid 183 [50].
As to Central Cleaning’s second point, it submitted that there are three bases for the incorporation of the ROT Clause: first, incorporation by reference; second, incorporation by signature; and third, incorporation by notice or course of dealing. For reasons that follow, I do not accept that the ROT Clause which appears on the invoices is incorporated as a term into the Credit Application agreement between the parties.
In relation to incorporation by reference, Central Cleaning relied on Ange v First East Auction Holdings Pty Ltd.[24] In that case, Mrs Ange signed a consignment agreement. Each page of the agreement referred to general conditions attached. No conditions were attached. Sifris AJA (with whom Neave and Tate JJA agreed) held that the general conditions formed part of the agreement having been incorporated by reference. Central Cleaning also relied on Smith v South Wales Switchgear Ltd.[25] In that case, the contract for the overhauling of equipment referred to ‘our General Conditions Contract 2400I, obtainable on request’. The purchaser of the overhauling services did not request a copy of the general conditions although a version of them was sent to it. There were three versions of the general conditions 2400I, each containing (in almost identical form) an indemnity clause in favour of the service provider. In carrying out the overhauling works, one of the service provider’s employees was injured. It sought to rely on the indemnity. The purchaser contended that since it was uncertain which of the three versions of conditions would have been sent to it had it requested a copy of them, it had not been proved that any of the versions were incorporated terms of the contract. The House of Lords did not accept that argument. Rather, their Lordships held that the reference to the conditions and the statement that they were available upon request, was sufficient for their incorporation into the contract.[26] Keith LJ observed that any reference to conditions could ‘only be understood, in the mind of an ordinary reasonable man, as a reference to the conditions currently in force’.[27]
[24](2011) 284 ALR 638.
[25][1978] 1 All ER 18.
[26]Ibid 24 (Fraser LJ), 29–30 (Keith LJ) (the other Law Lords agreeing with them).
[27]Ibid 30 (Keith LJ).
In relation to incorporation by signature, Central Cleaning observed that above the signing clause in the Credit Application (which had been signed by Swan Services’ financial controller) the following wording appears:
The Customer warrants that the terms of and information in this application have been read and understood by each of the signatories below.
Central Cleaning submitted that this acknowledgment must include clause 2, which refers to the ‘Standard Terms and Conditions’.[28] It submitted that in circumstances where a credit application expressly refers to the terms and conditions and the ROT Clause commences with the words ‘Condition of Sale’, a reasonable person would have understood that the terms upon which Central Cleaning would make future supplies under the Credit Application to Swan Services included that condition, unless something changed, such as a new credit and supply agreement being entered into by the parties.
[28]See [15] above.
In relation to incorporation by notice or course of dealing, Central Cleaning submitted that the ROT Clause had appeared on each invoice, starting with the first invoice after the Credit Application was signed and continuing until the last invoice was issued by Central Cleaning. Consequently, Central Cleaning submitted that by November 2012 (which is when the first of the Equipment which is the subject of this proceeding was sold) there can be no doubt but that the ROT Clause was incorporated. Central Cleaning submitted that the Court should not be concerned that there is a difference in terminology between clause 2 in the Credit Application (which refers to ‘Standard Terms and Conditions’) and on each invoice (which refers to ‘Condition of Sale’). It contended that the two phrases were sufficiently similar to be synonymous.
In the cases relied upon by Central Cleaning which concern incorporation by reference or signature, the conditions were clearly identifiable. They were attached to the contract,[29] or found on the reverse of the relevant document,[30] or in the possession of both parties, or referred to by the exact same title in the contract and intended to form part of the contract,[31] or referred to by an identifying number.[32] Smith v South Wales Switchgear Ltd[33] falls into the last of those categories. Although there were three versions with the same reference number, the three documents could be identified. It is unsurprising that their Lordships held that it was the latest version that was incorporated.
[29]Industrial Progress Corporation Pty Ltd v Wilson [2013] WASC 225.
[30]GE Commercial Corporation (Australia) Pty Ltd v Mell Associates Pty Ltd [2009] NSWSC 787.
[31]Ange v First East Auction Holdings Pty Ltd (2011) 284 ALR 638.
[32]Smith v South Wales Switchgear Ltd [1978] 1 All ER 18.
[33]Ibid.
These cases stand in contrast to the facts here. Clause 2 of the Credit Application refers to Central Cleaning’s ‘Standard Terms and Conditions’, but the ROT Clause is a ‘Condition of Sale’ which refers to the retention of title in ‘Goods the subject of this sale’ (emphasis added). The Credit Application must be construed using an objective approach to ascertain the intention of the parties as they have expressed it (not their subjective intention).[34] Using that principle to construe clause 2, it seems to me that the parties must be taken to have intended that the terms to be incorporated were recorded in a separate document existing at the date of the agreement. There is no evidence of what those terms were (if they did exist). Rather, Central Cleaning wishes to rely on a clause on invoices that came after the Credit Application and that clearly treats each sale as a separate contract. In my view, once a sufficient time had passed, the ROT Clause formed part of each separate and individual contract of sale (by dint of the consistent course of conduct). But it was too late for it to be incorporated as a term of the Credit Application agreement by this method, coming as it did, after that contract had been entered into by the parties.[35]
[34]Toll (FGCT) Pty Limited v Alphapharm Pty Limited and Ors (2004) 219 CLR 165, 179; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, 461–462; Byrnes v Kendle (2011) 243 CLR 253, 284 [98]. See also Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337.
[35]Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197, 228 (per Brennan J).
Whilst the retention of title condition was incorporated into the separate contracts that are the subject of this proceeding, that does not assist Central Cleaning because those contracts came after 30 January 2012. It was only those separate and distinct contracts that provided for the security interests, and the transitional provisions did not serve to perfect them.
Having reached these conclusions, it is not necessary for me to determine whether Central Cleaning’s first point is correct, that is, that the Credit Application was an agreement governing future supplies it made to Swan Services. If it was, then for the reasons that I have given, that contract did not incorporate the ROT Clause. Were it necessary to decide the point, I am inclined to the view that in this case, the Credit Application agreement did not operate as an overarching supply agreement. I accept that in other circumstances it might have and that Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[36] is such an example. But here, in my opinion, the better characterisation of the contractual arrangements is that each sale was a separate contract. The fact that each invoice, on its face, indicates that there was a separate contract for the sale of goods the subject of that invoice, is to my mind a strong indicator that this is what the parties intended.
[36](2004) 219 CLR 165.
Whilst Central Cleaning relied on the decision of Beech J in Industrial Progress Corporation Pty Ltd v Wilson,[37] in my view that decision is distinguishable. There, a credit account application in standard form had been signed by the customer and a guarantee had been signed by two of the defendants. The supplier’s standard terms and conditions of sale were attached to the credit application. They included a retention of title clause so that property and goods supplied remained the property of the supplier until the full purchase price was received by it. The clause provided for a right of repossession in the event of default in payment of the purchase price. Goods were supplied after the commencement of the PPS Register, but the supplier’s security interest was not registered. The purchaser company was placed under external administration. Invoices remained unpaid. Beech J concluded that it was at least seriously arguable that the rights of the supplier under the retention of title clause in the supplier’s standard terms and conditions were temporarily perfected for 24 months by operation of the transitional provisions of the PPSA.[38] Beech J only needed to determine whether the plaintiff’s claim was ‘seriously arguable’, as this was all that was required to preserve the caveat that had been lodged to protect its interest in the guarantors’ property. His Honour observed that the provision by the supplier of the credit application and the guarantee amounted to an offer which was accepted when the signed documents were returned. His Honour concluded that the terms of the contract were that the supplier would supply goods to the customer on credit when requested to do so, on the standard terms and conditions that formed part of the credit account application.[39]
[37][2013] WASC 225.
[38]Ibid [27].
[39]Ibid [34].
That case is distinguishable, because there was no confusion about the retention of title clause and whether it was incorporated into the contract — the terms and considerations were attached to the credit application and were acknowledged to have been received by the customer. The invoices for the goods did not contain wording like appears on the Central Cleaning invoices and which, as I have said, indicates the parties intention to enter into separate contracts.
For similar reasons, the facts in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd[40] are distinguishable — the terms were on the reverse of the application for credit such that there was certainty about which terms were incorporated and there was nothing in any separate document to suggest that the parties intended to and did enter into separate later contracts for the transportation of goods.
[40](2004) 219 CLR 165.
I would add, that had I been persuaded that the Credit Application agreement had as one of its terms the ROT Clause, it would not have mattered that steps were taken in connection with the supply of the Equipment after 30 January 2012 (for instance, the issuing of purchase orders and invoices). For instance, if the Credit Application agreement had provided that title in all goods whenever supplied was retained by Central Cleaning until payment in full was made, it would not matter that some purchase orders were not placed until after 30 January 2012. As Central Cleaning submitted (correctly, in my view) s 308(b) of the PPSA expressly recognizes that security interests can arise after 30 January 2012 if a transitional security agreement provides for the granting of the security interest. In this regard, I accept Central Cleaning’s submission that the phrase ‘provides for’ should be given a different and more expansive meaning than ‘created’ and ‘arises’ (being the other limbs of section (a) of the definition of ‘security agreement’ but not used in s 308(b)).
Conclusion
The Credit Application agreement does not include a term in which title in goods is retained until payment for them has been made. It follows that the Credit Application agreement is not a transitional security agreement because it does not provide for the granting of a security interest. Therefore, Central Cleaning does not have the benefit of the transitional provisions of the PPSA that would have resulted in perfection of its security interests without the need to take any step.
The security interests which Central Cleaning has were only provided for in contracts entered into after 30 January 2012. Those interests have not been perfected, as they were not registered on the PPS Register.
The Liquidators quite properly rejected Central Cleaning’s claim for the return of the Equipment. Their decision should be confirmed and Central Cleaning’s application should be dismissed.
I will hear the parties as to the costs of the application.
During the administration of a company, the owner or lessor of property that is used or occupied by, or is in the possession of, the company cannot take possession of the property or otherwise recover it, except:
(a) with the administrator’s written consent; or
(b) with the leave of the Court.
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