Hewlett-Packard Aust Pty Ltd v Exeed Pty Ltd - [2004] FCA 135

FEDERAL COURT OF AUSTRALIA
Hewlett-Packard Aust Pty Ltd v Exeed Pty Ltd [2004] FCA 135
CORPORATIONS – charge – extension of time within which notice of particulars of charge and instrument creating charge or verified copy thereof required to be registered with Australian Securities and Investments Commission – defective execution of deed on behalf of chargees (signature by one director only) – significance of defective execution by chargees where effective execution by company/chargor – subsequent ratification by chargees by deed duly executed – discretionary considerations relevant to whether extension of time should be granted – solvency of chargor – oversight due to corporate merger and associated workload – lapse of some 17 months between expiry of statutory period allowed for registration and provisional registration of charge – extension of time granted subject to condition.
DEED – deed of fixed and floating charge duly executed by chargor but not duly executed as a deed by chargee companies (signature of one director only) – significance of defective execution by chargees where effective execution by chargor.
AGENCY – ratification – deed of fixed and floating charge duly executed by chargor but not duly executed as a deed by chargee companies (signature of one director only) – significance of defective execution by chargees – subsequent ratification by chargees by deed duly executed.
Corporations Act 2001 (Cth) ss 127, 263, 265, 266
Cooker v Child 1673) 2 Lev 74 (83 ER 456) cited
Otway v Braithwaite (1678) Finch 405 cited
Butler v Powis (1845) 2 Coll 156 (63 ER 679) cited
Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925 (117 ER 1136) cited
Hungerford v Becher (1855) 5 Ir Ch R 417 cited
Chelsea and Walham Green Building Society v Armstrong [1951] Ch 853 cited
Lincoln Contractors Pty Ltd v Searle [1982] Qd R 71 cited
Carter v Schmierer [2003] QSC 035 cited
Green v Horne (1795) 1 Salk 197 (91 ER 177) cited
Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Limited (2000) 201 CLR 520 cited
Hamilton v Property Investments Ltd (1983) 7 ACLR 932 cited
Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd [1991] 2 Qd R 456 cited
Rynmarc Pty Ltd v Classic Ergonomic Chairs Pty Ltd (1994) 12 ACLC 1038 distinguished
National Australia Bank Ltd v T2 Trading Pty Ltd [2003] FCA 1477 cited
Re Lloyd Anthony Furniture Pty Ltd (Receiver and Manager appointed) (in liq); ex parte Walker (1996) 19 ACSR 478.
Re Application of Guardian Securities Ltd [1984] 1 NSWLR 95 cited
Norton on Deeds (2^nded, 1928) at 29
GE Dal Pont, Law of Agency (Butterworths 2001) at [6.38] (132-133)
HEWLETT-PACKARD AUSTRALIA PTY LIMITED (ACN 004 394 763) &
HEWLETT-PACKARD AUSTRALIA FINANCE PTY LIMITED (ACN 006 291 863) v
EXEED PTY LIMITED (ACN 097 115 172)
N 3077 of 2003
LINDGREN J
1 MARCH 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 3077 OF 2003

BETWEEN:

HEWLETT-PACKARD AUSTRALIA PTY…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] FCA 135
Decision Date: 25 FEBRUARY 2004

CaseChat Overview and Summary

Hewlett-Packard Australia Pty Ltd and Hewlett-Packard Australia Finance Pty Ltd sought an extension of time to lodge the notice of particulars of a charge and the instrument creating the charge with the Australian Securities and Investments Commission (ASIC). The dispute arose because the charge, granted to the plaintiffs by Exeed Pty Ltd via a deed of fixed and floating charge dated 30 June 2002, had not been registered within the statutory 45-day period. The plaintiffs had inadvertently failed to register the charge, despite the chargor properly executing the deed. The matter was heard in the Federal Court of Australia.

The central legal issue before the court was whether the plaintiffs were entitled to an extension of time to lodge the charge with ASIC, given the failure to do so within the statutory period. The court had to consider the significance of the defective execution of the deed by the chargees (signature by one director only) and whether this could be rectified by subsequent ratification. The court also needed to weigh discretionary considerations, such as the solvency of the chargor, the oversight due to a corporate merger and the associated workload, and the lapse of 17 months between the expiry of the statutory period and the provisional registration of the charge.

The court found that the failure to register the charge was due to inadvertence and granted the extension of time. The court held that the defective execution by the chargees was not fatal where the chargor had properly executed the deed. The subsequent ratification by the chargees via a duly executed deed was also significant. The court took into account the solvency of Exeed, the oversight due to the corporate merger and the associated workload, and the 17-month lapse in registering the charge. The court granted the extension of time subject to conditions that reserved the right for any liquidator, administrator, or creditor of Exeed to apply for an order discharging or varying the extension if certain events occurred.

The court further ordered that the extension would be until 9 January 2004, when the notice was lodged with ASIC. If the word 'provisional' in the entry in the Register is deleted, the charge will be taken to have been registered from 9 January 2004. The court also ordered that the plaintiffs forward a copy of the orders to ASIC and request ASIC to ensure a copy of the orders be attached to the registered copy of the deed of charge.

Orders

Orders of the court

1. The time within which a notice must be lodged pursuant to s 263(1) of the Corporations Act 2001 (Cth) in respect of the charge granted by the defendant, Exeed Pty Limited, to the plaintiffs, Hewlett-Packard Australia Pty Limited (then called Hewlett-Packard Australia Limited) and Hewlett-Packard Australia Finance Pty Limited (then called Hewlett-Packard Australia Finance Limited) by Deed of Fixed and Floating Charge bearing date 30 June 2002 (‘the Charge’) be extended to 9 January 2004.

2. Order 1 be without prejudice to the rights of persons who had dealings with any property the subject of the Charge between the time of its creation and the date on which the Charge is taken to have been registered under s 265 of the Corporations Act 2001 (Cth).

3. Liberty be reserved for any liquidator, administrator or creditor of the defendant, to apply for an order discharging or varying order 1 in the event that an order that the defendant be wound up is made, or an administrator of the defendant is appointed, within six months of the date on which the Charge is taken to have been registered under s 265 of the Corporations Act 2001 (Cth).

4. These orders be entered forthwith.

5. The plaintiffs forward to the Australian Securities and Investments Commission (‘the Commission’) a copy of these orders as entered, and request the Commission to ensure that such a copy be, and remain, attached to the copy of the Deed of Fixed and Floating Charge by which the Charge was created, as registered with the Commission.

THE COURT NOTES THAT:

1. By agreement between the parties, there is no order as to the costs of the proceeding.

Note:

Background

Background to the litigation

On 29 January 2004, I ordered, by consent, that Exeed be joined as defendant. At the beginning of the hearing, Exeed appeared through its solicitor and informed the Court that it neither consented to, nor opposed, the granting of the extension of time. Exeed joined with the plaintiffs in informing the Court that the parties had agreed that: the amount of Exeed’s indebtedness to HPA was $620,000; this amount was to be paid over a period ending at the end of October 2004; and there was to be no order as to the costs of the present application.Finally, the solicitor for Exeed informed the Court that, according to his instructions, no other charges have been given by his client and there is no pending application for an order that Exeed be wound up. The solicitor for Exeed was then excused for from further attendance.BACKGROUND FACTS The testimonial evidence supporting the application is found in affidavits of Lachlan Campbell, Michael Rowley Hope and Holly Michelle Doyle. Mr Campbell was employed by HPA from 9 November 1998 to 7 March 2003 as a credit analyst. He was responsible for managing the credit accounts of wholesale distributors of HPA products, of which Exeed was one. According to Mr Campbell it was usual for HPA to take a charge over the assets of a reseller where HPA saw a potential risk in extending credit to the reseller or where the level of credit was high. In either case, HPA would require the reseller to enter into a resale agreement and a fixed and floating charge. During his employment at HPA, Mr Campbell was involved in the drafting, negotiation and finalisation of such charges. He understood that a copy of a charge was required to be lodged with ASIC, but was not aware of the 45-day statutory time limit for lodgment. In or about August 2001, Exeed entered into a resale agreement with HPA, but the level of credit extended to it was not considered high enough to call for the taking of a charge over its assets. In or about April 2002 Exeed applied to extend its credit facility to $800,000. HPA thought that security was now called for. Mr Campbell negotiated, over the telephone and face to face, with Michael Bosnar, the Managing Director of Exeed. Once Mr Campbell had concluded the arrangement for the giving of a charge, HPA’s internal solicitors checked the Charge document then handed it back to him to arrange for execution of it. Mr Campbell states that the Charge was executed ‘in May or June 2002’. After execution of the Charge, there were negotiations between HPA and Exeed as to which of them should pay the stamp duty on the document so that it could be registered. Neither party wished to do so, and, according to Mr Campbell, ‘the negotiations became protracted and reached deadlock’. Apparently, Mr Campbell then became heavily occupied with a merger of HPA with Compaq Australia Pty Limited. He states that HPA ‘was in a state of transition and the workload increased across the board’. In the department in which he worked, two staff covered three people’s jobs. Mr Campbell recalls putting the file containing the Charge to one side ‘as other matters, including transitional work and merger issues, were extremely pressing’. He states:‘Due to the increased workload following the merger with Compaq in August 2002, I overlooked the fact that the Charge had not been registered and it escaped my attention. I did not think of this matter again and it was not dealt with prior to my leaving my employment with [HPA] in March 2003.Had I become aware at any time prior to my leaving [HPA] in March 2003 that the Charge had not been registered, I would have immediately sought advice from either [HPA’s] in-house lawyers or its external lawyers as to what needed to be done in order to register the Charge.’

Evidence

Evidence Before The Court

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Decision

Reasons for decision

LINDGREN J

The latter condition will reserve to any liquidator, administrator or creditor of Exeed the liberty to apply for an order discharging or varying the order extending time, in the event that an order that the defendant be wound up is made, or an administrator of the defendant is appointed, within six months of the date on which the Charge is taken to have been registered under s 265 of the Act. CONCLUSION I am satisfied that the failure to lodge was due to inadvertence and that there should be an extension of time. The extension should be until 9 January 2004 when the notice was lodged with ASIC. If the word ‘provisional’ in the entry in the Register is deleted, the Charge will be taken to be registered and to have been registered from 9 January 2004: s 265(9) of the Act. Whether that word is deleted will depend on payment of the stamp duty. The two protective conditions mentioned will be framed by reference to the date on which the Charge is taken to have been registered under s 265 of the Act. There will also be orders that the orders be entered forthwith and that the plaintiffs forward to ASIC a copy of the orders as entered, and request ASIC to ensure that a copy of them be attached to the copy of the Charge as registered with ASIC.

Ratio Decidendi

Legal Principle Established

Established by: LINDGREN J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 3077 OF 2003