Garrison v Australian Premier Finance Company Pty Limited
[2011] NSWSC 850
•28 July 2011
Supreme Court
New South Wales
Medium Neutral Citation: Garrison v Australian Premier Finance Company Pty Limited [2011] NSWSC 850 Hearing dates: Thursday, 28 July 2011 Decision date: 28 July 2011 Before: White J Decision: Refer to paras [22] and [23]
Catchwords: CORPORATIONS - practice and procedure - registration of charges - application for order rectifying Australian Register of Company Charges - where prescribed form incorrectly stated that plaintiff's charge had been discharged or released - orders sought must be addressed to Australian Securities and Investment Commission - Australian Securities and Investment Commission necessary party to application ordered that Australian Securities and Investment Commission be joined as a defendant Legislation Cited: Corporations Act 2001 (Cth)
Companies (New South Wales) CodeCases Cited: State Bank of New South Wales v Berowra Waters Holdings Pty Limited (1985) 3 ACLC 857
Re St Barbara Mines; Commonwealth Bank of Australia Ltd v ASIC (1998) 29 ACSR 238
Venetian Nominees Pty Ltd v Western National Plant Pty Ltd (1999) 17 ACLC 580
Re Securecam Pty Limited [2011] VSC 226
National Australia Bank Ltd v Davis & Waddell (Vic) Pty Ltd [2003] VSC 1; (2003) 44 ACSR 296Texts Cited: Ford's Principles of Company Law Category: Interlocutory applications Parties: Charles Paul Garrison (Plaintiff)
Australian Premier Finance Company Pty Limited (Defendant)Representation: V Whittaker (Plaintiff)
HWL Ebsworth (Plaintiff)
File Number(s): 2011/161943
Judgment
HIS HONOUR : This is an application for an order under s 274 of the Corporations Act 2001 (Cth) for the rectification of the Australian Register of Company Charges and the rectification of a memorandum lodged under s 269 of the Corporations Act . The plaintiff lent moneys to the first defendant, Australian Premier Finance Company Pty Ltd ("the Company"), under various loan agreements and took security for the loans. He took a fixed and floating charge from the Company dated 15 December 2003 that was subsequently varied. The charge was registered on 15 December 2003.
On or about 9 November 2010 the Company instructed a solicitor, Mr Koroknay, that the loans to the plaintiff were to be refinanced. He was instructed to prepare documents to release the plaintiff's security and to replace it with a charge in favour of another proposed lender. Mr Koroknay drafted the documents necessary to give effect to that transaction. He prepared the appropriate forms to be lodged with ASIC to give notice of the charge to be created in favour of the new proposed lender and to give notice that the charge in favour of the plaintiff was discharged. He was instructed that funds were not to be advanced by the new proposed lender until an existing first-ranking secured lender had consented to the refinance. The documents required for the proposed refinance, including the notices to be lodged with ASIC, were executed in anticipation of the refinance proceeding.
The existing first-ranking secured lender did not consent to the refinance and the refinance did not proceed. However, Mr Koroknay lodged the two forms with ASIC, being a Notification of Details of a Charge created in favour of the new lender, and a Notification of Discharge or Release of Property from a Charge in favour of the plaintiff.
This application concerns the second notification. It was in the prescribed Form 312, being the form prescribed for the purposes of s 269(1) of the Corporations Act .
Mr Koroknay deposed that the reasons he lodged the ASIC Form 312 in respect of the plaintiff's charge were, first, that he was of the view that the form had to be lodged within thirty days of the form being signed and, secondly, he believed that the consent of the first secured lender to the proposed refinance would be forthcoming. He had no instructions to lodge the Notification of Discharge prior to settlement of the refinance. He did not advise the plaintiff or the Company of his intention to so lodge it.
As a result of the lodgment of the Form 312, the ASIC Current and Historical Extract for the Company records that the plaintiff's charge has been satisfied. It records the receipt of the Form 312, described as " Notification of Discharge ", on 13 December 2010. It records that document as having been processed.
An ASIC Form 312 was subsequently lodged in respect of the notice that a charge had been registered in favour of the new proposed lender. That is to say, it appears from the public register of documents that that charge has been discharged. No order is sought in relation to that charge.
The defendants to this application were companies that held other registered charges. In the case of two of those companies, their charges had been discharged. None of the companies opposes this application. ASIC was not joined as a defendant.
Sections 269 and 274 of the Corporations Act provide:
" Section 269
Satisfaction of, and release of property from, charges
(1) Where, with respect to a charge registered under this Part:
(a) the debt or other liability the payment or discharge of which was secured by the charge has been paid or discharged in whole or in part; or
(b) the property charged or part of that property is released from the charge;
the person who was the holder of the charge at the time when the debt or other liability was so paid or discharged or the property or part of the property was released must, within 14 days after receipt of a request in writing made by the company on whose property the charge exists, give to the company a memorandum in the prescribed form acknowledging that the debt or other liability has been paid or discharged in whole or in part or that the property or that part of it is no longer subject to the charge, as the case may be.
(2) The company may lodge the memorandum and, upon the memorandum being lodged, ASIC must enter in the Register particulars of the matters stated in the memorandum.
...
Section 274
Power of Court to rectify Register
Where the Court is satisfied:
(a) that a particular with respect to a registrable charge on property of a company has been omitted from, or misstated in, the Register or a memorandum referred to in section 269; and
(b) that the omission or misstatement:
(i) was accidental or due to inadvertence or to some other sufficient cause; or
(ii) is not of a nature to prejudice the position of creditors or shareholders; or
(iii) was due to a failure of an electronic system to lodge a notice in respect of a charge;
or that on other grounds it is just and equitable to grant relief;
the Court may, on the application of ASIC, the company or any person interested and on such terms and conditions as seem to the Court just and expedient, order that the omission or mis-statement be rectified. "
In the course of her thorough submissions, counsel for the plaintiff referred me to apparently conflicting authorities on the scope of the power under s 274 to rectify the Register of Australian Company Charges ( State Bank of New South Wales v Berowra Waters Holdings Pty Limited (1985) 3 ACLC 857; Re St Barbara Mines; Commonwealth Bank of Australia Ltd v ASIC (1998) 29 ACSR 238; Venetian Nominees Pty Ltd v Western National Plant Pty Ltd (1999) 17 ACLC 580; and Re Securecam Pty Limited [2011] VSC 226).
In Re Securecam Pty Limited , Gardiner ASJ of the Supreme Court of Victoria preferred the approach taken by Needham J in the Berowra Waters case to that taken by Murray J in Re St Barbara Mines which was followed by Scott J in Venetian Nominees .
The broader view of s 274 is also supported by the authors of Ford's Principles of Company Law at [19.384].
In Berowra Waters Holdings the facts were materially the same as the facts in the present case, in that a proposed refinancing did not take place but the bank mistakenly lodged the discharge documents for registration. Section 212 of the Companies (New South Wales) Code was in materially the same terms as s 274 of the present Act. Needham J said (at 859):
" It seems to me that the plaintiff comes within s212 in that a particular with respect to a registrable charge, namely the particular as to its discharge, or satisfaction, has been mis-stated in the Register, and I think that the Court, accordingly, has power, on the application of the plaintiff, or a person interested, to order that the omission or mis-statement be rectified. "
His Honour was clearly of the view that s 212(b) (the equivalent of s 274(b)) was also satisfied.
There is a question as to whether a particular with respect to a registrable charge on property of a company is omitted from or mis-stated in the Register if the Register accurately records the particulars required to be provided when notice of a charge is lodged under s 263, or notice of acquisition of property subject to a charge is lodged pursuant to s 264. It is not necessary to deal with that question in the present case. Here the particular " with respect to a registrable charge on property of a company " has been mis-stated in the memorandum referred to in s 269. That memorandum was the Form 312 which is dated 22 October 2010 and was lodged on 13 December 2010. The form incorrectly stated that the plaintiff's charge had been discharged or released on 22 October 2010. That mis-statement was made by Mr Koroknay.
There is a further question whether that mis-statement was accidental, or due to inadvertence, or to some other sufficient cause, within the meaning of s 274(b)(i). Undoubtedly it was mistaken. Ms Whittaker, counsel for the plaintiff, submitted on the basis of National Australia Bank Ltd v Davis & Waddell (Vic) Pty Ltd [2003] VSC 1; (2003) 44 ACSR 296 at [58], [62]-[63] and [66]-[67], that the mis-statement was due to accident, inadvertence or other sufficient cause. That case certainly supports that submission.
Without deciding that question I am, in any event, satisfied that the mis-statement is not of a nature to prejudice the position of creditors or shareholders. There would also be other grounds making it just and equitable to grant relief if Mr Koroknay's errors were not such as to enliven s 274(b)(i). So far as s 247(b)(ii) is concerned, no secured or former secured creditor is prejudiced.
The relief sought in the plaintiff's originating process is expressed to be without prejudice to the rights of persons who had any dealings with any property subject of the charge between 13 December 2010 and 9 April 2011. The proposed orders reserve liberty to any liquidator, administrator or creditor of the company to apply for an order varying or discharging an order under s 274 if the company is wound up, or an administrator or liquidator is appointed before 7 October 2011. The significance of those dates is that on 7 April 2011 a fresh Form 309 was lodged with ASIC to register another charge in favour of the plaintiff. Given the form of orders sought, it would be just and equitable to grant the relief sought under s 274 irrespective of the width of the power under 274(b)(i).
However, the orders sought must be addressed to ASIC. I think ASIC is a necessary party to the application.
One of the orders made in Re Securecam Pty Limited was an order that ASIC remove any reference to the Form 312 that had been lodged in that case purporting to discharge the charge from the Register of documents accessed by the public.
It may be that ASIC would wish to be heard on the question as to whether there should be removed from any Register the Notification of Discharge of the Charge, when that document was lodged and processed. On the other hand, if the Register were corrected merely to change the status of the charge from " satisfied " to " registered ", the Register would have a confusing appearance in that it would show both that the charge was registered and also that a notification had earlier been lodged that the charge was discharged. It may be that the Register could be rectified by incorporating a notice that it had been corrected by order of the Court. On the other hand, the system maintained by ASIC might not allow such an entry. These are matters upon which ASIC may wish to be heard.
Accordingly, I have made an order that ASIC be joined as a defendant. If ASIC wishes to be heard as to the form of the orders to be made, I will hear it before finally dealing with the application.
The application is stood over to 9.30am on 5 August 2011.
Decision last updated: 08 August 2011
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