Lehman Brothers Holdings Inc v City of Swan & Ors [2010] HCATrans 88

Lehman Brothers Holdings Inc (in liquidation) as applicant sought special leave to appeal to the High Court of Australia from a decision of the Full Court of the Supreme Court of Western Australia. The respondents were the City of Swan and others. The dispute concerned the validity of certain charges registered against the assets of Lehman Brothers Australia Limited (in liquidation), a subsidiary of the applicant, under the Corporations Act 2001 (Cth).

The primary legal issue before the High Court was whether the Supreme Court of Western Australia had erred in its interpretation of the registration provisions of the Corporations Act, specifically concerning the effect of registration of charges by a company. The applicant contended that the registration of charges by Lehman Brothers Australia Limited did not, as a matter of law, create or perfect those charges against the applicant, which was the ultimate holding company.

The High Court granted special leave to appeal and, in a joint judgment, dismissed the appeal. Their Honours held that the registration of a charge under Chapter 7 of the Corporations Act does not create or perfect the charge. Rather, registration is a public notice requirement. The Court affirmed that the validity and enforceability of a charge are determined by general law principles, not by the registration provisions of the Corporations Act. The registration provisions do not confer validity on a charge that is otherwise invalid or unperfected under general law.

The High Court therefore found that the Supreme Court of Western Australia had correctly determined that the registration of the charges did not operate to create or perfect them against the applicant. The appeal was dismissed.