In the matter of Bowery Bar Pty Ltd

Bowery Bar Pty Ltd sought a declaration that a security interest in its assets, which included a statutory licence, was invalid. The dispute was heard in the Supreme Court of New South Wales. The key legal issue was whether the grantor held rights in the statutory licence at the relevant time, given that the statutory licence was held by an employee of the company rather than the company itself, and whether the interest in the statutory licence was subject to registration by a statutory authority. The court had to determine whether the entry into contractual arrangements constituted a "transaction" that secured the performance of an obligation, specifically the prohibitions on dealing with the statutory licence and entitlements.

The court examined the definitions and provisions of the Personal Property Securities Act 2009 (Cth) to assess whether the statutory licence was personal property and whether the company held rights in it. The court considered the nature of statutory licences and whether they could be subject to security interests. It found that the statutory licence was held by the employee and not the company, and that the interest in the statutory licence was subject to registration by a statutory authority, which affected its capacity to be a security interest. The court concluded that the contractual arrangements did not constitute a "transaction" that secured the performance of an obligation because the obligations involved were prohibitions on dealing with the statutory licence and entitlements, rather than affirmative obligations.

The court ruled that the security interest in the statutory licence was invalid as the company did not hold rights in the statutory licence at the relevant time, and the interest was subject to registration by a statutory authority. The court found that the contractual arrangements did not create a security interest in the statutory licence because they did not secure the performance of an obligation but rather imposed prohibitions on dealing with the statutory licence. The court made a declaration that the security interest in the statutory licence was invalid.