Everlyte Ltd and Registrar of Personal Property Securities
[2020] AATA 2584
•30 July 2020
Everlyte Ltd and Registrar of Personal Property Securities [2020] AATA 2584 (30 July 2020)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2019/0100
Re:Everlyte Ltd
APPLICANT
AndRegistrar of Personal Property Securities
RESPONDENT
AndNautilus Aviation Pty Ltd
OTHER PARTY
DECISION
Tribunal:Member K. Parker
Date:30 July 2020
Place:Melbourne
The Tribunal affirms the decision under review.
....................[sgd]....................................................
Member K. Parker
Catchwords
PERSONAL PROPERTY SECURITIES REGISTER (PPSR) – Applicant registered purported security interest in collateral (helicopter) on the PPSR – helicopter stolen from Applicant and sold to Other Party – Other Party subsequently sold helicopter to third party and applied to register financing change statement to end registration – Applicant alleged Other Party knowingly provided false information to Registrar to support application to end registration – Registrar registered financing change statement – whether Other Party had requisite “interest” under s 178 of Personal Properties Securities Act 2009 (Cth) (PPSA) to make amendment demand – whether Other Party made amendment demand on behalf of third party purchaser or as the person in possession of the helicopter – whether Tribunal suspects on reasonable grounds that removal of registration from PPSR not authorised under s 178 – meaning of definition of “security interest” under s 12 of PPSA – whether helicopter constituted prescribed property under r 5.3 of Personal Properties Securities Regulations 2010 (Cth) – decision under review affirmedLegislation
Administrative Appeals Tribunal Act 1975 (Cth)
Personal Properties Securities Act 2009 (Cth)
Personal Properties Securities Regulations 2010 (Cth)Cases
Auto Moto Corporation Pty Ltd v SMP Solutions Pty Ltd [2013] NSWSC 1403
Chelliah v NSW Police [2018] NSWSC 557
Davidson and Registrar of Personal Property Securities [2015] AATA 549
Denbride Pty Ltd and Registrar of Personal Property Securities [2015] AATA 938
i Trade Finance Inc v Bank of Montreal [2011] 2 SCR 360Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217
REASONS FOR DECISION
Member K. Parker
30 July 2020
INTRODUCTION
The decision under review in this application was made on 12 December 2018 by the Registrar of Personal Property Securities (Registrar) (Decision Under Review). The decision was to register a “financing change statement” under s 181(1) of the Personal Property Securities Act 2009 (Cth) (PPSA) to end effective registration on the personal property securities register (PPSR) of the Applicant’s claimed security interest over collateral, being a Eurocopter, model EC120B Colibri helicopter with manufacturer serial number 1348 (Helicopter).
For the reasons set out below, the Tribunal affirms the Decision Under Review.
BACKGROUND
The Applicant, Everlyte Ltd, was previously registered with the Civil Aviation Safety Authority (CASA) as the owner of the Helicopter. Everlyte Ltd alleges that the Helicopter was stolen by one of its former shareholders and directors, Mr David Arthur Graer, and subsequently sold without its authority to the Other Party, Nautilus Aviation Pty Ltd (Nautilus) and subsequently, to other third parties as referred to below.
Everlyte Ltd claims to be the rightful owner of the Helicopter to this day; to have a continuing interest in the Helicopter; and that Everlyte’s registration of this interest under the PPSA should not have been removed from the PPSR. The removal took place as a result of an administrative process under the PPSA, initiated by Nautilus.
Everlyte Ltd is a private company incorporated and based in the United Kingdom.[1] Everlyte Ltd was represented (including at the hearing) by Mr Anton Beckerath (referred to on the appearance slip as a Legal Officer) and Mr Zoltan Varszeghy. There is no dispute between the parties to this application that Everlyte Ltd was the CASA-registered owner of the Helicopter prior to 20 May 2014.[2]
[1] Refer T-Documents T19/208. The T-Documents are a set of documents lodged by the Registrar pursuant to its obligation under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth).
[2] See also Certificate of Registration for the Helicopter issued on 20 May 2011 naming the owner as “EVERLYTE LTD AS TRUSTEE FOR PHOENIX AEROSPACE DISCRETIONARY UNIT TRUST” at T-Documents T20/255&256.
Everlyte Ltd asserts that Mr Graer engaged in fraudulent conduct by registering a business name “Everlyte UK” with the Australian Securities and Investments Commission (ASIC) in his own name for the purpose of impersonating Everlyte Ltd. Everlyte Ltd asserts that this enabled Mr Graer, without Everlyte Ltd’s permission or knowledge, to
(a)gain access to and fly out of Lilydale airport in the Helicopter, in or about May 2014;[3]
(b)falsify documents to transfer the CASA registration of the Helicopter from Everlyte Ltd to a company incorporated [by Mr Graer, without the permission or knowledge of Everlyte Ltd], in Australia, bearing the name Everlyte (Australia) Pty Ltd (Everlyte Australia); and
(c)facilitate the sale of the Helicopter to Nautilus (via a broker).
[3] Refer T-Documents T20/245.
Company records for Everlyte Ltd show that:[4]
(a)Mr Graer was appointed as a Director on 29 February 2012 and resigned on 27 September 2013 (seven months or so before the Helicopter was misappropriated);
(b)Mr Robert Innes was appointed as a Secretary on 1 July 2009 and Director on 1 August 2018; and
(c)Mr Anton Beckerath was appointed as a Director on 1 July 2009 and resigned on 29 February 2012; and was re-appointed as a Director on 27 September 2013 and resigned on 1 August 2018.
[4] Refer T-Documents T19.
Everlyte Ltd produced to the Tribunal a letter from Victoria Police confirming that an investigation was on foot in relation to the alleged theft of the Helicopter.[5] There was no reported outcome in respect of the police investigation as at the time of the hearing, although Mr Beckerath informed the Tribunal that a criminal prosecution was imminent.
[5] Refer Exhibit “A1”.
In about May 2014, the misappropriated Helicopter was sold to Nautilus (a company forming part of the Morris Group) for the sum of $450,000. Nautilus contends that it purchased the Helicopter from Everlyte Ltd. The invoice issued in respect of this sale was produced by Nautilus to the Tribunal on 7 February 2020, pursuant to a direction issued by the Tribunal. The invoice is dated 20 May 2014, recording that it was issued by “David Graer, Director, Everlyte UK LTD” (underlining added); showing an address for this company at “KT6 4JT, Surbiton, Surrey, United Kingdom” with an “Australian Office” at “5 Jarrah Drive, Braeside, Victoria”; and showing a delivery date of 26 May 2014 to Moorabbin airport.[6] Nautilus also produced a “Disbursement Authority” dated 22 May 2014, and issued by “David Graer, Director – Everlyte UK Ltd” (underlining added), which authorised the “settlement agent”, AusJet Aviation Group Pty Ltd (AusJet), to disburse the proceeds from the sale of the Helicopter to the following entities (which notably did not include Everlyte Ltd or the other companies incorporated by Dr Graer bearing “Everlyte” in any part of their name):[7]
(a)$25,000 to AusJet;
(b)$45,293.49 to “Australian Aerospace Ltd – Eurocopter”;
(c)$194,706.51 to Lorimore Pty Ltd; and
(d)$185,000 to Inviro Tech Holdings Pty Ltd.
[6] Refer document marked T1/1 of the set of documents lodged by Nautilus dated 7 February 2020.
[7] Refer document marked T3/5 of the set of documents lodged by Nautilus dated 7 February 2020.
At the hearing, Ms Penelope Cotter, Chief Financial Officer of Nautilus, gave evidence that there was no documentary sale agreement entered into by Nautilus when it purchased the Helicopter. She said that Mr Chris Morris of the Morris Group was personally involved in the purchase of the Helicopter and that he was dealing with a person by the name of Mr Frank Wright. Ms Cottle gave evidence that it was “not unusual” for Nautilus to buy and sell helicopters without entering into written sale agreements. That assertion seemed very odd to the Tribunal, for a sale of this type. The Tribunal noted that when Nautilus subsequently sold the Helicopter to Steller, the transacting parties entered into a sale agreement as referred to in more detail below.
Registration of claimed security interest in Helicopter on PPSR – October 2014
On 31 October 2014, Everlyte Ltd lodged a “financing statement” with the PPSR claiming to be a “secured party” in relation to a “security interest” in collateral, namely, the Helicopter. In this statement, Everlyte Ltd named the grantor of the claimed security interest as “ACN 060 410 317”, being the ACN for Nautilus. Everlyte Ltd’s “financing statement” was registered and allocated registration number 201410310069370 (Registration).
Sale of Helicopter by Nautilus to Steller – February 2018
On 5 February 2018 Nautilus sold the Helicopter to Steller Projects Pty Ltd (Steller), via a broker (Helibiz Pty Ltd), for almost double the price they purchased it for, that is, $858,000 inclusive of GST.[8] For this subsequent sale, Nautilus entered into a written aircraft sale agreement with Steller. The sale agreement recorded a completion date of 15 March 2018.[9] The completion of the sale was delayed on account of the registration of Everlyte Ltd’s claimed security interest in the Helicopter on the PPSR.
[8] Refer T-Documents T21/302.
[9] Refer T-Documents T21/302-306.
Amendment Demand made by Nautilus – July 2018
On 18 July 2018, Nautilus initiated an administrative process under the PPSA upon providing Everlyte Ltd with an “amendment statement” under s 180(3) of the PPSA (Amendment Demand). The Amendment Demand sought the consent removal by Everlyte Ltd of the Registration from the PPSR. Nautilus made this demand on the basis that there was “no collateral described in the registration that secures any obligation (including a payment) owed by a debtor to a secured party”. Everlyte Ltd refused this demand claiming that it was the rightful owner of the Helicopter and had not offered it for sale to any party, either directly or through a broker.
The Registrar submits that it appeared that Nautilus made the Amendment Demand “acting on Steller’s behalf” and that “it is not clear whether possession of the Collateral remained with Nautilus or was transferred to Steller at the time of the purported sale”.[10]
[10] Refer [15] of the Registrar’s Statement of Facts, Issues and Contentions (Registrar’s SFIC) dated 10 July 2019.
Mr Innes, on behalf of Everlyte Ltd, provided the Registrar with a statement of objection to the Amendment Demand dated 9 August 2018 (Statement of Objection). Mr Innes referred to various documents provided by Nautilus to the Registrar, purporting to establish that Nautilus had acted lawfully when purchasing the Helicopter. Mr Innes stated in the Statement of Objection that:
(a)Everlyte Australia did not have any association with and was not known to Everlyte Ltd; and
(b)the documents entitled “disbursement authority” and “invoice” (with the heading “Everlyte UK Ltd”) provided by Nautilus to the Registrar were “not associated with” Everlyte Ltd.
Mr Innes made the following further statement about Nautilus’ involvement in this matter:
…Nautilus is an experienced helicopter operator, that operates charter services in Queensland. Following the alleged theft of the aircraft, it would appear the aircraft was offered for sale though the company Ausjet. As a result, Nautilus purchased the helicopter for the sum of $450,000 AUD inclusive of GST. This means the aircraft was purchased for approximately $409,000.
Everlyte, had a value of approximately $800,000 on the aircraft and was insured for $1.2m. While the helicopter had emerging maintenance costs, any reduction in value was offset by the low engine hours. While Everlyte operated the helicopter it ensured all maintenance requirements were met in accordance with the manufacturers specifications, so as not to cause any devaluation in the condition of the helicopter.
As Nautilus operates similar aircraft in its fleet and buys and sells helicopters, it would have known or ought to have known that the purchase price was well below market value. There are specific processes to be followed when purchasing aircraft.
These include the conduct of proper due diligence that a prudent and reasonable person would do including establishing the actual and legal owner of the helicopter.
…
Mr Innes also stated that the documents provided to the Registrar by Nautilus to support its request to have the Helicopter removed from the PPSR were “false and fabricated documents”. Mr Innes stated that original documents for the Helicopter (i.e. its certificate of registration, standard certificate of airworthiness, flight manual and original maintenance release) were not with the Helicopter. Mr Innes stated that Nautilus would have known “there were issues”.
VCAT application lodged against Nautilus, Steller and PPSR – December 2018
On 7 December 2018, Everlyte Ltd lodged an application against Nautilus, Steller and the “Australian Financial Security Authority, trading as Personal Property Securities Register” in the Civil Claims List of the Victorian Civil & Administrative Tribunal, seeking an injunction “to stop further dealings with the helicopter”. Everlyte Ltd also claimed $900,000 on the basis that Everlyte is the “legal and rightful owner” and that Nautilus (and Steller) “have acted illegally and criminally” to obtain title to the Helicopter (VCAT Application).[11]
[11] Refer T-Documents T19/193.
At the hearing of this application, Mr Beckerath said the VCAT application had been “adjourned indefinitely” at the request of Everlyte Ltd, on account of “jurisdictional issues”. Before this decision was handed down in answer to an inquiry by this Tribunal seeking an update, Everlyte Ltd reported that its VCAT application had been abandoned.
Registration removed from PPSR – December 2018
Following consideration by the Registrar of the Amendment Demand and Everlyte’s Statement of Objection, on 12 December 2018 a delegate of the Registrar made the Decision under Review by registering a “financing change statement” under s 181 of the PPSA to bring to an end the Registration; thereby removing the Registration from the PPSR and making it “not available for search”.[12]
[12] Refer T-Documents T24/315.
Application for review by this Tribunal
Everlyte Ltd seeks review of the Decision Under Review by this Tribunal. Nautilus and Steller applied to be joined as parties to this application. Both joinder applications were granted. Steller subsequently went into administration and was removed as a party to this application on 29 November 2019 after attempts made by the Tribunal to contact its representatives following non-compliance with the Tribunal’s directions were unsuccessful. Steller was given notice that it was removed as a party. The Tribunal notes that Steller is no longer under administration. No application was subsequently made by Steller to be re-joined as a party to this application.
Further sale of Helicopter to Microflight – 30 April 2020
Prior to handing down this decision, Everlyte Ltd informed the Tribunal that it had conducted a further search on the CASA’s aircraft registration website, and it appeared that the registration of the Helicopter under registration number VH-BKU was no longer recorded on that registry. Everlyte Ltd stated that it had discovered that on 30 April 2020, the aircraft had been transferred to another third party, Microflight Pty Ltd (Microflight), and that the registration number for the aircraft had been changed from VH-BKU to VH-XXR.[13]
[13] Everlyte Ltd informed the Tribunal that the registration number (or mark) change was obtained from CASA’s website on the 16 July 2020, and a copy of that recorded registration was provided to the Tribunal and the other parties.
Everlyte Ltd expressed its concerns about this development as follows in a letter to the Tribunal on 16 July 2020:
We are very concerned about the the (sic) manner in which this has occurred and are not aware of any of the circumstances as to how this came about, while the matter is currently before the Tribunal. Should this fresh transfer be deemed to be a contempt of this Honourable Tribunal, having been made prior to its final deliberation with full knowledge of the Transferor, we would seek to request permission to issue contempt charges as against the party responsible.
Further civil proceedings in Victoria – May 2020
At the hearing, Mr Beckerath informed this Tribunal that Everlyte Ltd was intending to file a civil proceeding in the Supreme Court of Victoria imminently (by the end of March 2020) seeking orders in relation to the Helicopter. He said he was meeting with a barrister the following week.
Before this decision was handed down, in answer to an inquiry by the Tribunal seeking an update, Everlyte Ltd reported that on 21 May 2020 civil proceedings were issued by Everlyte Ltd in the County Court of Victoria against Nautilus in relation to the Helicopter (County Court Proceeding).
Everlyte Ltd provided the Tribunal with a copy of the Writ (numbered CI-20-02271) and Statement of Claim. Everlyte Ltd informed the Tribunal that the County Court Proceeding had not been served on Nautilus. In the Writ, the Tribunal notes that Everlyte Ltd claims the following relief:
The plaintiff claims the following relief against the Defendant:
A: The Defendant deliver up and return of the aircraft to the Plaintiff
B: The sum of $500,000.00
C: Damages to be assessed.
D Account of profits
E. Costs.
F: Any other Order that this Honourable Court shall deem fit.
LEGISLATION
Section 3 of the PPSA comprises a “Guide to this Act” and provides the following “overview”:
This Act is a law about security interests in personal property.
A security interest is an interest in personal property provided for by a transaction that secures payment or the performance of an obligation. The form of the transaction and the identity of the person who has title to the property do not affect whether an interest is a security interest.
Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest.
A security interest is enforceable against a grantor when it attaches to collateral. A security interest attaches to collateral when a person gives value for acquiring the security interest (or does something else to acquire it), and in return, the person gains rights in the collateral.
A security interest is enforceable against third parties when it has attached to the collateral and either the secured party has possession or control of the collateral, or a security agreement covers the collateral…
The Register of Personal Property Securities enables secured parties to give notice of actual or prospective security interests…
Section 150(1) of the PPSA provides as follows:
(1) A person may apply to the Registrar to register a financing statement with respect to:
(a) a security interest; or
(b) personal property prescribed by regulations made for the purposes of paragraph 148(c).
Rule 5.3 of the Personal Property Securities Regulations 2010 (Regulations) prescribes certain types of personal property for the purpose of s 148(c) of the PPSA:
5.3 What the register contains
(1)For paragraph 148(c) of the Act, the following types of personal property are prescribed:
…
(b)personal property that is subject to a notice or an order, or is confiscated or forfeited, under a provision of a proceeds of crime law;
(c)personal property that is subject to an order of a court or tribunal (however described) that:
(i) prevents or restricts a person dealing with the property; or
(ii) enforces another court order (however described); or
(iii) orders the sale or other disposal of all or part of the property;
…
Everlyte Ltd made an application under s 150(1)(a) of the PPSA to register a financing statement with respect to a claimed security interest in the Helicopter.
Section 12 of the PPSA defines the meaning of “security interest” as follows:
(1)A security interest means 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).
Note: For the application of this Act to interests, see section 8.
(2)For example, a security interest includes an interest in personal property provided by any of the following transactions, if the transaction, in substance, secures payment or performance of an obligation:
(a)a fixed charge;
(b)a floating charge;
(c)a chattel mortgage;
(d)a conditional sale agreement (including an agreement to sell subject to retention of title);
(e)a hire purchase agreement;
(f)a pledge;
(g)a trust receipt;
(h)a consignment (whether or not a commercial consignment);
(i)a lease of goods (whether or not a PPS lease);
(j)an assignment;
(k)a transfer of title;
(l)a flawed asset arrangement.
(3) A security interest also includes the following interests, whether or not the transaction concerned, in substance, secures payment or performance of an obligation:
(a)the interest of a transferee under a transfer of an account or chattel paper;
(b)the interest of a consignor who delivers goods to a consignee under a commercial consignment;
(c)the interest of a lessor or bailer of goods under a PPS lease.
(3A)A person who owes payment or performance of an obligation to another person may take a security interest in the other person’s right to require the payment or the performance of the obligation.
(4)Without limiting subsection (3A):
(a)an account debtor, in relation to an account or chattel paper, may take a security interest in the account or chattel paper; and
(b)an ADI may take a security interest in an ADI account that is kept with the ADI.
(5)A security interest does not include:
(a) a licence; or
(b) an interest of a kind prescribed by the regulations for the purpose of this section.
(6)A security interest is not created only by an agreement or undertaking to do either of the following:
(a)to postpone or subordinate a person’s right to payment or performance of all or any part of a debtor’s obligation to another person’s right to payment or performance of all or any part of another of the debtor’s obligations;
(b) to postpone or subordinate all or any part of a secured party’s rights under a security agreement to all or any part of another secured party’s rights under another security agreement with the same grantor.
Section 178(1) of the PPSA provides as follows:
(1) A person with an interest (including a security interest) in collateral described in a registration with respect to a security interest may give a demand (an amendment demand), in writing, to the secured party for a financing change statement to be registered to amend the registration as authorised by the following table:
Note:If the secured party does not comply with the amendment demand, the demand may be enforced under Subdivision A (administrative process) or Subdivision B (judicial process) of Division 2.
Authorised amendments
Item
When amendment is authorised
What amendment is authorised
1
No collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party.
Amendment to end effective registration (including an amendment to remove the registration).
2
The particular collateral in which the person has an interest does not secure any obligation (including a payment) owed by a debtor to the secured party.
Amendment to omit the collateral.
The administrative process established under Subdivision A of Division 2 of Part 5.6 of Chapter 5 of the PPSA will be invoked if an amendment demand is given to the “secured party” and an application to the Registrar is not made within five business days to register a “financing change statement”.
Under those circumstances, the Registrar may give the “secured party” an amendment notice in accordance with s 180(1) of the PPSA. The amendment notice may be given at the initiative of the Registrar (see s 180(2)) or in response to a statement given to the Registrar by the person who served the amendment demand on the “secured party” (see s 180(3) and (4)). The amendment notice must invite the secured party to submit a response in writing to the Registrar before the end of five business days after they receive the amendment notice (see s 180(5)), or an extended period if granted by the Registrar.
Section 181 of the PPSA creates an obligation on the Registrar to register a “financing change statement” after the end of this period,[14] unless the Registrar “suspects on reasonable grounds that the amendment is not authorised under section 178”.
[14] Section 181(2) provides that the Registrar may register such a financing change statement before the end of this period if the secured party provided their response and the Register has “no reason to believe that the secured party intends to give a further response”.
ISSUES
In deciding this application, the Tribunal is required to reach a view as to whether the Tribunal suspects on reasonable grounds that the registration of the “financing change statement” in the Amendment Demand is not authorised under s 178 of the PPSA. This will require a consideration of:
(a)whether Nautilus had the requisite “interest” in the Helicopter under s 178 of the PPSA to make the Amendment Demand in respect of the Registration; and
(b)whether:
(i)the Helicopter is personal property of the type prescribed under r 5.3 of the Regulations; or
(ii)Everlyte Ltd has a “security interest” in the Helicopter as defined under s 12 of the PPSA.
CONSIDERATION
Whether Nautilus had the requisite “interest” to make the Amendment Demand
Everlyte Ltd contends that even if it had sold the Helicopter (which it denies), payment was not made to Everlyte Ltd but instead, to “a third party not known or associated with” Everlyte Ltd.[15] Everlyte Ltd claims that for the Registrar to have applied procedural fairness, it should have advised the respective parties to resolve the “legitimacy of ownership” of the Helicopter, prior to accepting Nautilus’ claim of ownership, when advised to the contrary by Everlyte Ltd.[16] Everlyte Ltd considers that the Registrar’s removal of the Registration gave “unwitting support to the alleged theft and fraud and wrongful claim of ownership” by Nautilus (and Nautilus’ right to on-sell to Steller).[17]
[15] Refer page 2 of Everlyte Ltd’s Final Submissions in Response to the Respondent and the First Other Party (Nautilus Aviation Pty Ltd), Submissions dated 10 April 2020 (Everlyte’s Closing Submissions).
[16] Refer page 2 of Everlyte’s Closing Submissions.
[17] Refer page 2 of Everlyte’s Closing Submissions.
Everlyte Ltd contends that Nautilus has not at any stage provided any proof of ownership of the Helicopter, or established that Nautilus had a right to make the Amendment Demand; and that the Registrar should not have accepted it and acted upon it, until it had established that Nautilus had a lawful right to make such a request under the PPSA.[18] Everlyte Ltd contends that false documents were submitted by Nautilus to the Registrar to legitimise its request for the Registration to be removed from the PPSR, and that those documents did not establish any right of ownership of the Helicopter. For this reason, Everlyte Ltd contends that the Registrar should not have entertained “the removal request made on behalf of Nautilus”.[19] Everlyte Ltd also contends:[20]
Furthermore, that the Registrar did not act appropriately and made the decision to remove the security from the database without establishing any and all relevant facts as to the parties legitimacy or legal right or entitlement to make any such application to have the security removed in the first instance.
[18] Refer page 3 of Everlyte’s Closing Submissions.
[19] Refer page 2 of Everlyte Ltd’s SFIC and Summary of Evidence lodged on 13 June 2019 (Everlyte’s SFIC).
[20] Refer page 3 of Everlyte’s SFIC.
Everlyte Ltd drew the Tribunal’s attention to a document produced by the Registrar being a transcript of a telephone conversation between a “PPSR officer” and Steller’s solicitor. Everlyte Ltd highlighted the following statement made by this officer and contends that the Registrar had failed to follow its own process in establishing the bona fide requisite “interest” of Nautilus; and for that reason, the Decision Under Review was made in error:[21]
PPSR Officer: It’s about demonstrating an interest, which is a relatively vague term thanks to the PPS Act, so it’s about us interpreting whether they have a requisite interest, and sometimes that can be that they are the owner, or in possession of, or it can sometimes be that they are acting on behalf of someone that does have an interest…But, that is part of our process to make sure that the applicant had the requisite interest before we proceed. Which the fact that it has now come to me as a decision maker tells me that they decided at that point in time that Nautilus and [Ms Cottle] specifically had the requisite interest.
[21] Refer pages 3 and 4 of Everlyte Ltd’s Closing Submissions and Supplementary T-Document ST1/341.
In the Registrar’s closing submissions in reply, the Registrar conceded there would be a defect in the Amendment Demand if Nautilus was not in possession of the Helicopter, or Nautilus was not acting on behalf of Steller.[22] However, the Registrar contends that the evidence before the Tribunal supports the conclusion that Nautilus was acting on behalf of Steller, and at least one of them (Nautilus or Steller) had possession of the Helicopter at the relevant time.[23]
[22] Refer Registrar’s Closing Submissions Reply.
[23] Ibid at paragraph [6].
The Registrar relied upon the witness statement of Ms Cottle, sworn on 29 July 2019, asserting that Nautilus was representing Steller when making the Amendment Demand; and that this evidence was not challenged at the hearing.[24]
[24] Ibid at paragraph [7]; and paragraphs [17] and [18] of Ms Cottle’s Statement.
Nautilus made detailed submissions about this issue, seeking to establish that it had a proper basis upon which to issue the Amendment Demand:[25]
[25] Refer paragraphs [4] to [6] of the Nautilus’ Closing Submissions Reply.
…
4.Under s 178 of the [PPSA], a person with an interest in collateral described in a registration with respect to a security interest may give an amendment demand.
5. Ms Cottle gave evidence that [Steller] authorized [Nautilus] to serve the amendment demand on the applicant on 12 June 2018, and further to lodge the statement with the respondent on 8 July 2018 pursuant to s 180(3) of the Act.[26] Ms Cottle attended the hearing on 25 February 2020 and was available for cross-examination. The applicant did not challenge Ms Cottle’s evidence. Ms Cottle’s evidence is uncontradicted and otherwise supported by the contemporaneous documentary evidence available to the Tribunal as follows:
[26] ‘See the Affidavit of Penny Cottle sworn on 29 July 2019, [17]-[19].’
(1) On 5 February 2018, [Nautilus] as vendor and [Steller] as purchaser entered into a sale agreement for the sale of the collateral.[27]
(2) On 9 May 2018, Jess Williams for and on behalf of [Steller] sent an email to [Nautilus]’s selling agent requesting that [Everlyte]’s security interest registered on the [PPSR] be removed.[28] On 9 May 2018, Ms Williams’ email was forwarded to Aaron Finn of the first other party.[29] On 9 May 2018, Ms Williams’ email was further forwarded to Penny Cottle of the [Nautilus].[30]
(3) On 12 June 2018, and as requested by and on behalf of [Steller], Ms Cottle sent the amendment demand to [Everlyte].[31]
(4) On about 8 July 2018, as requested by and on behalf of [Steller], Ms Cottle lodged an (sic) statement with the respondent under s 180(3) of the Act.[32]
(5) On 18 July 2018, Ms Cottle sent an email to Aaron Finn and Chris Morris of [Nautilus] updating them as to the steps taken.[33] On 18 July 2018, Aaron Finn forwarded Ms Cottle’s email to Alistair Williams of [Steller].[34]
(6) [Nautilus] then updated [Steller] as to the progress of the amendment demand on 20 July 2018,[35] 30 July 2018,[36] 29 August 2018,[37] 18 October 2018,[38] 26 November 2018,[39] 29 November 2018,[40] and 13 December 2018[41] following repeated and numerous requests from the [Steller] as to the progress of the amendment demand.[42]
6. In those circumstances, it is clear that [Steller] (as the bona fide purchaser for value) had a relevant interest in the collateral for the purposes of s 178 of the Act at the time of the amendment demand on 12 June 2018. It is also clear that [Steller] requested and authorized [Nautilus] to serve the amendment demand on 12 June 2018, and then lodge the statement with the respondent on 8 July 2018 under s 180(3) of the Act. Last, it is clear that [the Registrar] had the power under section s 180(1) of the Act to give the amendment notice as they had reasonable grounds to suspect that the amendment demand was authorised under section 178 of the Act.
[27] ‘See the sale agreement at T21/302: T5/23.’
[28] ‘See the email at T7/39 and in exhibit PVC-5.’
[29] ‘See the email at T7/39 and in exhibit PVC-5.’
[30] ‘See the email at T7/39 and in exhibit PVC-5.’
[31] ‘See the amendment demand contained in the email from Penny Cottle to Anton Beckerath dated 12 June 2018 at See the email at T1/031: T3/081: T4/095: T11/147: T8/41.’
[32] ‘Affidavit of Penny Cottle sworn on 29 July 2019, [17].’
[33] ‘See the email at T11/73.’
[34] ‘See the email at T11/72.’
[35] ‘See the email from Penny Cottle to Alistair Williams at T11/70.’
[36] ‘See the email from Aaron Finn to Rachel Wat at T11/69 and the email from Penny Cottle to Rachel Wat at T11/67.’
[37] ‘See the email from Penny Cottle to Rachel Wat at T11/65.’
[38] ‘See the email from Penny Cottle to Alistair Williams at T11/62.’
[39] ‘See the email from Penny Cottle to Rachel Wat at T11/60.’
[40] ‘See the email from Penny Cottle to Rachel Wat at T11/59.’
[41] ‘See the email from Penny Cottle to Rachel Wat at T12/77.’
[42] ‘See emails from Rachel Wat dated 29 August 2018 at T11/66, 20 September 2018 at T11/64, 18 October 2018 at T11/63, 20 November 2018 at T11/62, 22 November 2018 at T11/61, and 29 November 2018 at T11/59.’
The Registrar contends that its decision to remove the Registration did not depend on it making any finding regarding the authenticity of the documents produced by Nautilus and Steller to the Registrar seeking to establish that they had legitimately purchased the Helicopter. The Registrar contends that instead, it was the “absolute absence of any evidence of a security interest that was central to its decision to remove the Registration from the PPSR”.[43]
[43] Refer paragraph [20] of the Registrar’s SFIC.
The Registrar contends that the main relevance of the documents produced to it by Nautilus was whether they demonstrated an “interest” in the Helicopter sufficient to entitle Nautilus to give the Amendment Demand to Everlyte Ltd in accordance with s 178(1) of the PPSA. Section 178(1) requires that the Amendment Demand be given by a person with an interest in the collateral, including a person who acts on behalf of such a person.[44] The Registrar contends that such an interest must involve an identifiable proprietary interest, which includes possession of the subject collateral.[45]
[44] Ibid at [21].
[45] Ibid at [22].
The Tribunal accepts Ms Cottle’s evidence in respect of the history leading up to Nautilus making the Amendment Demand in that it did so on behalf of Steller. Ms Cottle’s evidence was uncontradicted by Everlyte Ltd and corroborated by the email correspondence between Nautilus and Steller as set out in Ms Cottle’s Statement.
The Tribunal finds that Nautilus made the Amendment Demand on behalf of Steller who clearly had a proprietary interest in the Helicopter, having purchased it from Nautilus at the time the Amendment Demand was made; and for which Steller had paid due consideration to Nautilus. There was no challenge raised to the suggestion that the Helicopter was either in the possession of Nautilus or Steller at the time the Amendment Demand was made.
For these reasons, the Tribunal finds that Nautilus, either being in possession of the Helicopter or if not, acting on behalf of Steller being otherwise in possession of the Helicopter, had the requisite “interest” in the Helicopter for the purpose of s 178 of the PPSA at the time it made the Amendment Demand. Therefore, the Tribunal considers that Nautilus had a proper basis under s 178 to make the Amendment Demand on Everlyte Ltd which instigating the administrative process under the PPSA before the Registrar.
Next, the Tribunal must reach a view as to whether it suspects on reasonable grounds that the amendment demanded by Nautilus was not authorised under s 178 of the PPSA. This will involve a consideration of whether ss 150(1)(a) or (b) of the PPSA applies to Everlyte Ltd in respect of the Helicopter.
Whether the Helicopter is personal property of the type prescribed in r 5.3 of the Regulations
Starting with s 150(1)(b) of the PPSA, the Tribunal will consider whether the collateral the subject of the Registration is personal property of the type prescribed under r 5.3 of the Regulations. The Tribunal considers that r 5.3(1)(b) or r 5.3(1)(c) are potentially relevant. This caused the Tribunal to inquire about the existence of any criminal or civil proceedings issued in respect of the alleged theft or misappropriation of the Helicopter.
Firstly, there was no suggestion or evidence placed before the Tribunal to suggest that the Helicopter is subject to a notice or an order, or is confiscated or forfeited, under a provision of a proceeds of crime law. The Tribunal accepts there is a Police investigation on foot but to the knowledge of the Tribunal, no criminal proceedings or proceeds of crime proceedings have (yet) arisen from that investigation. Accordingly, the Tribunal finds that r 5.3(1)(b) of the Regulations does not apply in the circumstances of this application.
Secondly, there was no evidence placed before the Tribunal that any orders of the type described in r 5.3(1)(c) of the Regulations have been made in respect of the Helicopter. The Tribunal acknowledges the VCAT Application referred to in paragraph [18] and [19] of these Reasons for Decision. However, no orders of the type described in r 5.3(1)(c) were made in that proceeding and as mentioned above, the VCAT Application has been abandoned by Everlyte Ltd.
As detailed in paragraph [2424] to [26] of these Reasons for Decision, the County Court Proceeding has now been issued against Nautilus in relation to the Helicopter. However, those proceedings are yet to be served on Nautilus and importantly, no orders have been made in that proceeding which prevents or restricts a person dealing with the Helicopter or enforces another court order (however described) or orders the sale or other disposal of all or part of the Helicopter.
Accordingly, the Tribunal finds that r 5.3(1)(c) of the Regulations does not apply in the circumstances of this application. By way of observation, it may be that at some point in the future that such an order as described in the above paragraph may be made as an outcome of the County Court Proceeding. At such time, Everlyte Ltd would be at liberty to seek registration of the Helicopter on the PPSR on the basis that it is property of the type prescribed by r 5.3(1)(c) of the Regulations by reason of such orders, if made, without the need to establish that it has a “security interest” in the Helicopter as defined by s 12 of the PPSA. It is incumbent upon Everlyte Ltd to seek its own legal advice in this regard.
Whether Everlyte has a “security interest” in the Helicopter
Dealing next with s 150(1)(a) of the PPSA, the Tribunal will consider whether Everlyte Ltd has a “security interest” in the Helicopter as defined under s 12 of the PPSA. The Registrar accepts that if the Tribunal suspects on reasonable grounds that Everlyte Ltd has a “security interest” in the Helicopter, “it should reverse” the Registrar’s decision.[46] However, its primary contention in this case is that Everlyte Ltd did not have any such security interest.
[46] Refer [30] of the Registrar’s SFIC.
The Registrar relied upon the decision of Garling J of the New South Wales Supreme Court in Chelliah v NSW Police [2018] NSWSC 557 (Chelliah). Garling J considered whether a “security interest” had arisen in respect of a stolen rare vintage Lamborghini Espada (which was subsequently sold to a third party, not unlike the fact circumstances in the present application before this Tribunal). Garling J was required to interpret the definition of “security interest” as appearing in s 12 of the PPSA.
In Chelliah, the Lamborghini was taken into the possession of the Police and it was the third-party buyer of the car, Mr Chelliah, who registered a “security interest” on the PPSR. The facts here diverge from the facts in the present application. Mrs Hall claimed ownership of the car as the beneficiary of her late husband’s Estate in circumstances where the car was registered in her late husband’s name. The Supreme Court was required to determine whether Mrs Hall had an interest of the kind to which the PPSA applied.
The Tribunal notes the observations of Garling J as follows:
[75]In order to be an interest with which the PPS Act is concerned, the acquisition of that interest must have occurred in circumstances of a transaction which, in substance, “…secures payment or performance of an obligation…”. It is the notion of a transaction which secures payment, or performance of obligation, which gives rise to a security interest of the kind which can be registered on the PPSR. Thus it is not every transaction for the sale or purchase of an item involving a transfer of title or a legal interest which creates a security interest.
[76]For example, a simple purchase and sale transaction where the consideration paid is cash and the property is promptly delivered does not create any interest with which the PPS Act is concerned.
[77]Here, Mrs Hall acquired ownership of the Espada through the mechanism of being the beneficiary of her husband’s Estate. In legal terms, her late husband gifted his Estate to her. He did so by the terms of his Will. That gift came into being after his death. Mrs Hall did not have to pay for any of the items which she received, nor were the terms of the Will such that she only received the Espada on the condition that she performed some obligation with respect to it. The terms of the Will do not support any such conclusion.
[78]For this reason, Mrs Hall did not have a security interest in the Espada of any kind, which meant that she could not register her interest on the PPSR. Mrs Hall’s interest was as outright owner of the vehicle.
…
[83] Mr Chelliah argued that the registration of his interest onto the PPSR meant that he gained absolute ownership. The Magistrate rejected this argument, and correctly so.
[84]The register is created by the legislation in order to record security interests so as to give notice to any potential lenders or purchasers or others interested in a transaction of other claims to interests in, in this case, the Espada which can be described as security interests.
[85]The fact of registering a security interest on the PPSR does not of itself and without more establish any right to ownership of the vehicle. It is a register which records underlying transactions and notifies the public of claims arising from these transactions. The PPSR is used as the means by which priority of competing security interests is determined. Here, the Local Court held that the underlying transaction was not effective to give Mr Chelliah any title to or interest in the Espada. In those circumstances, registration on the PPSR did not improve that position.
At the hearing, the Registrar also referred the Tribunal to the decision of the Supreme Court of Victoria in Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217 (Sandhurst). In this case, the Supreme Court was required to determine whether three of the defendants, “the Popplestones”, were entitled to register a financing statement in respect of the commercial property intended for development as a golf course and housing. Robson J held that two of the defendants asserted, at best, a proprietary interest in the personal property of the plaintiffs by way of equitable relief. Robson J found that even if those assertions were made out, those interests were not, by their nature, security interests within the meaning of the PPSA.
Robson J adopted a construction of the definition of “security interest” that was given to the definition of “security interest” contained in the Canadian Province of Ontario’s Personal Property Security Act 1990 in a Canadian Supreme Court case of i Trade Finance Inc v Bank of Montreal [2011] 2 SCR 360 (i Trade). In doing so, Robson J found that the transaction that gives rise to the security interest must be consensual and that the transaction itself must give rise to the security interest.[47]
[47] Refer [99] in Sandhurst.
At [100], Robson J in Sandhurst observed as follows:
It follows that if the Popplestones’ claim over the personal property of the plaintiffs is based on obtaining equitable relief from a court, then the claim is not able to be registered under the Act. The claim does not arise under any consensual transaction between the Popplestones, or any of them, and the plaintiffs. At best, the claim arises under disputed dealings.
Robson J concluded as follows at [106]:
In my opinion, the Popplestones’ claims are not registrable under s 150 of the Act as they do not arise out of a consequential transaction between the plaintiffs and the Popplestones and any claim the Popplestones may have does not give rise to a security interest. Rather, the interest, if any, may arise under the principles of equity if so held by a court. The rights of the Popplestones (if so held by a court to exist) do not secure payment of any sum or the performance of any obligation. Nor does the interest claimed by the Popplestones fall within s 12(3) of the PPSA.
At the hearing, Mr Beckerath on behalf of Everlyte Ltd referred the Tribunal to the Supreme Court of New South Wales decision in Auto Moto Corporation Pty Ltd v SMP Solutions Pty Ltd [2013] NSWSC 1403 (Auto Moto). With all due respect to Mr Beckerath, the Tribunal does not consider that this authority offers any support to Everlyte Ltd’s case. In Auto Moto, there were competing claims of ownership over a Lamborghini Aventador, and the Supreme Court was required to determine whether there was an equitable interest that constituted a “security interest” for the purpose of the PPSA.
The plaintiff in Auto Moto claimed that he had entered into an agreement with a car sales business pursuant to which the business had authorised the plaintiff to sell the Lamborghini on its behalf and that the plaintiff could retain the proceeds to the extent necessary to discharge a debt the business owed to the plaintiff. The plaintiff contended that this agreement conferred upon him “an equitable interest in the vehicle” which comprised a “security interest” under s 12(1) of the PPSA. The Supreme Court found that even if the plaintiff had a security interest in the vehicle, this “interest was thereby converted to an interest in the proceeds of sales of the Vehicle”.[48] Ultimately in this case, the Court did not find that the plaintiff had an “interest” either in the vehicle or in the proceeds of sale of the vehicle, and so there was no registration able to be made onto the PPSR.
[48] Refer [41] of Auto Moto.
The Registrar highlighted two other decisions of this Tribunal that involved a consideration of the definition of “security interest”.
The first was the decision of Deputy President McCabe in Re Denbride Pty Ltd and Registrar of Personal Property Securities [2015] AATA 938 (Denbride). In Denbride, DP McCabe was able to identify specific provisions in a franchising agreement that created potential obligations owed to the franchisor (including an obligation to indemnify and an obligation in relation to an option to purchase the franchising unit) and further, Denbride’s assets were secured by registered fixed and floating charges. The Tribunal concluded that the franchisor’s interest fell within the definition of a “security interest” under the PPSA. The Registrar highlighted this decision to point out the following observation made by DP McCabe in relation to the role of the Tribunal (and the Registrar) when involved in cases requiring an assessment of whether a registration should be removed from the PPSR.
At [16] of Denbride, DP McCabe observed:
Denbride has argued the fees and other obligations were not reasonable. There is certainly a whiff of unconscionability in the air, and there may be a valid claim that the contract, or some of its terms, was unfair. But that is a question to be decided by a court of competent jurisdiction having regard to all the facts and the Australian Consumer Law and other enactments. My role, and the role of the Registrar, is narrower. We are not in a position to resolve the larger commercial dispute between the parties. It is enough that I am satisfied the obligations appear to be real; unless and until those obligations are set aside or varied in subsequent proceedings in another place, I am not in a position to order an amendment to the register.
The second case the Tribunal was referred to is the decision of Deputy President Forgie in Re Davidson and Registrar of Personal Property Securities [2015] AATA 549 (Davidson). DP Forgie made the following observations about the legislative scheme regarding amendment of the PPSR:
[59]The subject of the suspicion is the authorisation of the amendment under s 178. The immediate context in which the issue must be decided is the registration of the financing change statement but the wider context is the integrity of the system of regulation of security interests. It is a system that seeks to ensure that the interests of the grantor and those of the secured party are protected as are those of third parties who may have dealings involving personal property in which a security interest is held. It is a system where registration provides those protections but where registration may also limit the ability of a person to deal with that personal property even though the payment or obligation in relation to which the security interest was given has been made or performed.
[60]The procedure set out in s 178 followed by the administrative process set out in ss 180 and 181 enables a person who has an interest in personal property that is the subject of a registered interest to demand rectification of the Register. Parliament has not imposed an onus on the person seeking rectification to establish that payment has been made or the obligation performed. It has not left the matter to be decided on the balance of probabilities. Instead, it has weighted the scales in favour of rectification as sought by the person who gave the secured party the amendment notice under s 180. That weighting, however, can be overcome not by the secured party’s having to establish on the balance of probabilities that the amendment is not authorised but by there being material that leads to the Registrar, and this Tribunal in turn, to suspect on reasonable grounds that the amendment is not authorised by s 178. Suspicion on reasonable grounds is a less rigorous standard than satisfaction on the balance of probabilities. The weighting can be contrasted with that in s 182, which sets out the judicial process for considering an amendment demand. On an application to it, a court must consider whether the amendment demanded is, or is not, authorised by s 178. It would do that on the balance of probabilities for no mention is made of any other standard of proof.
The Registrar contends that Everlyte Ltd misunderstands the nature of a PPSA security interest and the purpose of it being registered on the PPSR, as evident from Everlyte Ltd’s reference to the Registration as a “security”, rather than a “security interest”; and that Everlyte Ltd had conceded that it made the Registration in an attempt to protect its ownership of, and to prevent further dealings with, the Helicopter.[49]
[49] Refer paragraph [24] of the Registrar’s SFIC.
The Registrar contends:
[26]The registration of a security interest protects its priority, saves the security interest in insolvency and allows it to be enforced against third parties. However, a registration’s worth turns on the underlying security agreement. The registration of a non-security interest as a security interest is prohibited by the PPSA in section 151.
[27]Section 181(1) establishes a presumption that an amendment demanded will be made by the Registrar. Evidence that causes the Registrar to suspect on reasonable grounds that the amendment demanded is not authorised under section 178 will overcome this presumption. The amount of evidence required to displace the presumption is not significant – it is less than that required to establish a fact on the balance of probabilities.[50] However, even if the Applicant’s claims of ownership are accepted, it has demonstrated no evidence of a security interest and its security interest registration has no place on the PPSR.
[50] Refer Davidson.
As to Everlyte Ltd’s allegations of wrongdoing by Nautilus, Nautilus contends that those allegations were not supported by any evidence; and in any event, the question of Nautilus’ acquisition of the Helicopter was not a question to be determined in this application. Nautilus contends that “security interest” is defined in s 12 of the PPSA and does not include a claim to ownership of personal property and that Everlyte Ltd held no security interest in the Helicopter.[51]
[51] Refer paragraphs [2] and [3] of the Outline of First Other Party’s Submissions in Reply dated 16 April 2020 (Nautilus’ Closing Submissions Reply).
The Registrar contends that Everlyte Ltd’s inability to demonstrate a security interest in the Helicopter had persisted; and without a security interest, s 181 of the PPSA was “clear”, and there could not be a “suspicion on reasonable grounds” that the amendment demanded was not authorised. The Registrar contends, “this is true even if the collateral described in the Applicant’s registration is theirs and has been stolen from them”.[52]
[52] Refer [1] of the Respondent’s Response to Applicant’s Submissions of 10 April 2020 (Registrar’s Closing Submissions Reply).
The definition of “security interest” in s 12 of the PPSA begins with a general definition of “security interest” in subsection (1) being “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)”. The elements of this definition are that there must be “a transaction” and that transaction, “in substance, secures payment or performance of an obligation”.
The definition mandates (by the words in the brackets above) that the Tribunal must put out of its mind certain matters when deciding whether there exists a “security interest”, namely: (a) the form of the transaction; and (b) the identity of the person who has title to the property. So, if the Tribunal is to follow this mandate, even if the Tribunal accepts Everlyte Ltd’s evidence and finds that the Helicopter was stolen from it and sold without its authority, it must not have regard to the fact that Everlyte Ltd was the previous CASA-registered owner of the Helicopter. The overview provided in s 3 of the PPSA expressly states that “the identity of the person who has title to the property” does not affect whether an interest is a security interest. Further, this principle was recognised at paragraph [78] in Chelliah where Garling J held:
For this reason, Mrs Hall did not have a security interest in the Espada of any kind, which meant that she could not register her interest on the PPSR. Mrs Hall’s interest was as outright owner of the vehicle.
Further, the authorities referred to above have recognised that beyond “outright ownership” it is not enough that a person is able to claim an equitable interest in the property, without more, to establish the existence of a “security interest” as defined under the PPSA. The Tribunal considers that even if Everlyte Ltd can successfully claim some type of equitable interest over the Helicopter, this is still insufficient. The requirements in s 12(1) of the PPSA require Everlyte Ltd to be able to point to some type of consensual transaction which took place between Everlyte Ltd and a third party, by which the Helicopter secures payment or the performance of an obligation by the third party to Everlyte Ltd’s benefit. As set out in the overview in s 3 of the PPSA, a “security interest attaches to collateral when a person gives value for acquiring the security interest (or does something else to acquire it), and in return, the person gains rights in the collateral”. There is no evidence of this in Everlyte Ltd’s case.
Section 12(2) of the PPSA provides specific examples of such transactions referred to in s 12(1) of the PPSA. At the hearing, Mr Beckerath contended that a transaction as described in s 12(2)(k) being “a transfer of title”; or s 12(2)(l) being “a flawed asset arrangement”, applied in the circumstances of this case. Everlyte Ltd’s contentions in this regard were not developed at the hearing beyond bare assertions. The Tribunal does not consider that either of those types of transaction occurred, to which Everlyte was a party. There is simply no evidence before the Tribunal to reach such a finding. Instead, by its own evidence, Everlyte was (and claims it still is) the owner of the Helicopter, and that it was taken from Everlyte without its knowledge or authority. This evidence also supports a finding, which the Tribunal now makes, that there was no transaction of the type that fits any of the examples specified in s 12(2), including subsections (k) or (l), or that fits the general description of a “security interest” as provided for under s 12(1) of the PPSA. On the evidence presented in this case, the Tribunal is unable to identify any such transaction, and accepts the Registrar’s submission that Everlyte Ltd has not been able to point to such a transaction to satisfy this fundamental element of there being a “security interest” in the Helicopter as defined by the PPSA.
Accordingly, the Tribunal concludes that Everlyte did not have a “security interest” in the Helicopter by reason of the application of ss 12(1) and (2) of the PPSA.
In s 12(3) of the PPSA, there are some specific exceptions to the requirement in the general definition under subsection (1), to show that the transaction concerned, in substance, secured payment of performance of an obligation. However, it is still necessary to establish that there had been “a transaction” entered into by Everlyte Ltd. Even if Everlyte Ltd were able to do so, the Tribunal considers that none of the specified exceptions referred to in ss 12(3)(a), (b) and (c) apply in the factual circumstances of this case. The Tribunal concludes that s 12(3) of the PPSA does not apply to Everlyte Ltd’s circumstances in respect of the Helicopter.
The Tribunal considers that s 12(3A) of the PPSA does not apply to the factual circumstances in this case, because the security interest is claimed in the Helicopter, and not in another “person’s right to require the payment or the performance of the obligation”. None of the specific examples in s 12(4) of the PPSA apply. Section 12(5) of the PPSA has no application in the circumstances of this case. Neither of the exclusions referred to in s 12(6) of the PPSA apply to the circumstances in this case.
Everlyte Ltd’s circumstances in respect the Helicopter are fairly characterised as being disputed dealings. Consistent with the approach of Robson J in Sandhurst, at paragraph [100] of that decision, this Tribunal considers that disputed dealings are not enough to amount to a finding that Everlyte Ltd has a “security interest” in the Helicopter as defined in the PPSA.
Accordingly, the Tribunal concludes that Everlyte Ltd’s interest in the Helicopter is not a “security interest” as defined under s 12 of the PPSA. Its interest is limited to that of being a former CASA-registered owner of the Helicopter and now as a company which has a potential claim against Nautilus, Mr Graer, and potentially others, for relief of the type sought in the County Court Proceeding. For the reasons set out above, the Tribunal concludes that this is insufficient for a finding that Everlyte Ltd has a “security interest” in the Helicopter based on the definition, which the Tribunal must apply, under s 12 of the PPSA.
CONCLUSION
Firstly, the Tribunal concludes that Nautilus had the requisite “interest” under s 178 of the PPSA to make the Amendment Demand in respect of the Registration.
Secondly, upon consideration of the evidence, the Tribunal does not suspect, on reasonable grounds, that registration of the “financing change statement” in the Amendment Demand was not authorised under s 178 of the PPSA. Instead, the Tribunal is satisfied that the effective removal of the Registration by the delegate of the Registrar was authorised under s 178 of the PPSA because there was no basis under s 150 of the PPSA upon which the Helicopter, or Everlyte Ltd’s interest in the Helicopter, was registrable on the PPSR. Specifically, the Tribunal concludes that:
(a)the Helicopter is not property of a type as prescribed under r 5.3 of the Regulations, which would make it registrable on the PPSR; and
(b)otherwise, Everlyte Ltd does not have any “security interest” in the Helicopter within the meaning of s 12 of the PPSA, which would make it registrable on the PPSR.
Accordingly, the Tribunal affirms the Decision under Review as it considers that the Registrar was required by force of s 181 of the PPSA to register the “financing change statement” to end the Registration. This means that Everlyte Ltd’s application in this Tribunal is unsuccessful.
By way of observation, the Tribunal understands that Everlyte Ltd will be disappointed by this outcome. Upon consideration of the evidence presented as part of this application, including the oral evidence given by Ms Cottle at the hearing, the Tribunal can understand why Everlyte Ltd has made the allegations of misconduct on the part of Mr Graer and Nautilus in respect of the misappropriation of the Helicopter. However, there are significant limitations on the extent to which the personal property securities registration scheme can offer Everlyte Ltd the type of protections it clearly desires. The purpose of the scheme, as aptly described by Garling J in paragraphs [84] and [85] in Chelliah (reproduced at paragraph [57] of these Reasons for Decision) should be borne clearly in mind by Everlyte Ltd.
The legislators appear to have contemplated a predicament of the type that Everlyte Ltd has found itself in, by enacting r 5.3 of the Regulations. It prescribes property the subject of orders which prevent or restrict a person dealing with the collateral, or enforces another court order (however described), or orders the sale or other disposal of all or part of the collateral, as being registrable on the PPSR, without the need to establish the existence of a “security interest” in the collateral. For this reason, the key to Everlyte Ltd in securing registration of the Helicopter on the PPSR, lies in the existence of such orders referred to in r 5.3 of the Regulations. The Tribunal notes that Everlyte Ltd is now pursuing alternative avenues to seek redress (and perhaps, to secure such orders) in a court of competent jurisdiction to hear its claims.
I certify that the preceding 85 (eighty-five) paragraphs are a true copy of the reasons for the decision herein of Member K. Parker
.........................[sgd]..............................................
Associate
Dated: 30 July 2020
Date of hearing: 25 February 2020 Date final submissions lodged:
Advocate for the Applicant:
16 April 2020
Mr Anton Beckerath
Advocate for the Respondent:
Mr Michael Piotrowicz
Counsel for the Other Party:
Mr Patrick Miller
Solicitors for the Other Party: Lander & Rogers Lawyers
0
5
0