Luckins v Highway Motel (Carnarvon) Pty Ltd

[1975] HCA 50

HIGH COURT OF AUSTRALIA

Barwick C.J., Gibbs, Stephen, Mason and Jacobs JJ.

LUCKINS v. HIGHWAY MOTEL (CARNARVON) PTY. LTD.

(1975) 133 CLR 164

29 October 1975

Companies

Companies—Debentures—Registration of charges—Obligation to register—Exclusion of charge on property of foreign company outside State—Ambit of charge or location of property—Foreign company carrying on business within State—Companies Act, 1961-1970 (W.A.), ss. 100 (1)*, 110**, 344 (1). Companies—Foreign company—Registration—Carrying on business within State—Operation of tourist bus through State—Companies Act, 1961-1970 (W.A.) s. 344 (1). * Section 100 (1) of the Companies Act, 1961-1970 (W.A.) provides:- "Subject to this Division, where a charge to which this section applies is created by a company, there shall be lodged with the Registrar for registration within thirty days after the creation of the charge a statement of the prescribed particulars and—(a) the instrument (if any) by which the charge is created or evidenced; or (b) a copy thereof together with an affidavit verifying the execution of the charge and also verifying the copy as being a true copy of the instrument, and if this section is not complied with in relation to the charge the charge shall, so far as any security on the company's property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company." ** Section 110 of the Act provides:- "A reference in this Division to a company shall be read as including a reference to a foreign company to which Division 3 of Part XI applies, but nothing in this Division applies to a charge on property outside the State of a foreign company."

Decisions

October 29.
The following written judgments were delivered:-
BARWICK C.J. The facts and relevant statutory provisions upon and with respect to which this appeal falls to be decided are set out in the judgments of other members of the Court. I have no need to repeat them in these my reasons. (at p168)

2. Three questions arise in this appeal, and I list them in the order in which it seems to me they must be answered:
1. Was Australian Trailways Pty. Ltd. (the company) carrying on business in Western Australia on 13th August 1973?
2. If it was, did the Companies Act, 1961-1970 (W.A.) invalidate the debenture given that day to H. C. Sleigh Ltd. as to assets of the company then situate otherwhere than in Western Australia?
3. In any case did the receiver appointed on 9th January 1974 (the claimant) prove his title to the bus? (at p168)

3. The facts relevant to the first question are that the only activity of the company in Western Australia at any time was its purchase of food and lodging for its passengers on tour in its bus in order to fulfil the obligations to them assumed by the company outside Western Australia. The company had no property, no agent, no bank account, no office, not even a booking office, and no staff in Western Australia other than the drivers of its buses as they moved through that State on tour. (at p168)

4. It has been found by the Supreme Court of Western Australia that the purchase of food and lodging in these circumstances was, relevantly, a carrying on of business in that State. If that were a possible view, I should be loath to say that the judge who took it was wrong. But after a deal of consideration, I cannot bring myself to think that the conclusion is open on the above-mentioned material. Certainly no reported decision in that sense has been founded on like material. (at p169)

5. I cannot think that Cobb and Co., in buying chaff for its horses and sandwiches for its passengers in a country town on its through journey, carried on business in each town in which it did so. That the company in the instant case made its purchases on credit, which it failed to meet, does not seem to me to make any relevant difference. (at p169)

6. With great respect to those who are able to reach a contrary conclusion, I am of opinion that, by purchasing food and accommodation in Western Australia for its passengers on tour to fulfil its existing obligation to do so, the company did not carry on business in Western Australia within the meaning of, or for the purposes of, the Companies Act of that State. I am further of opinion that the facts I have recited do not afford any ground for a contrary conclusion. (at p169)

7. The matter, however, does not rest there. If, contrary to my own view, the company in doing the things I have indicated was carrying on business, it could only be said to be doing so whilst it was in fact doing those things. We were told that there were a number of tours conducted by the company which went through Western Australia in the year 1973. But there is really no suggestion that they were so frequent and so closely spaced that it can be concluded that the company was carrying on business in Western Australia throughout the whole of the year 1973. We have no information that there was a tour in or about the month of August 1973. The evidence is that the bus here in question was not in Western Australia on 13th August 1973. Thus, unless it could properly be said that the company carried on business throughout the entire year, there is, in my opinion, in any case, no warrant for concluding that the company carried on business in Western Australia on 13th August 1973. (at p169)

8. A negative answer for the first question should result in the allowance of this appeal unless the receiver has failed to make his title to the bus. But there is the intermediate question whether, even if an affirmative answer to the first question should be given, the charge upon the bus created by the debenture in favour of H.C. Sleigh Ltd. was within the exception or exclusion contained in s. 110 of the Companies Act. That debenture charged the company's undertaking and its property and assets whatsoever or wheresoever. It was not limited to assets outside Western Australia. But I do not read s. 110 in relation to the exception it contains to be referring to what has been called "the ambit of the charge as a security". In my opinion, it refers to the particular effect of the security with respect to property which is not in Western Australia. In this respect, I agree with the opinion expressed by my brother Stephen. Such a construction is more consonant with the territorial limitation on the State legislative power than the contrary construction. (at p170)

9. But I do not share my brother's view as to the ambulatory significance which he would give to the exception. In my opinion, the division in which s. 110 is found deals with the creation and registration of charges. It seems to me that it is the time of the giving of the debenture which is relevant to the operation of the Act: indeed, the time for registration is set in relation to that time. I do not think the purpose of the division is secured by an ambulatory construction of the section. Obviously search of the register can afford no information in any case as to the whereabouts then or at any subsequent time of any particular asset of the company such as a bus, a highly mobile piece of property: nor can perusal of the security register really give information as to the particular assets which the charge may have come to cover. It is, in my opinion, an unacceptable view that an asset of the company covered by the debenture and validly charged thereby should become free of the charge by being brought into the State of Western Australia. No machinery is provided by the Companies Act to enable that result to be avoided except the registration of the security at a time when the Companies Act is irrelevant to the validity of the debenture or the effectiveness of the charge it creates. Thus, I am unable to accept that an ambulatory construction is necessary to effect the purposes of the statute. (at p170)

10. I am of opinion that, by reason of the exception or exclusion created by the latter part of s. 110, div. 7 did not apply to the charge which the debenture created upon assets of the company which were not then present in Western Australia. Consequently, I would answer the second question in favour of the company. On that footing, the appeal should be allowed, again subject to the proof of the receiver's title to the bus. (at p170)

11. I have included the third question, though in truth it does not seem to have been a specific issue at the trial, nor to have engaged the attention of the Full Court. In these circumstances, I would prefer that it should not be involved in the consideration or decision of this appeal. However, it is dealt with in other judgments, where it is answered on the footing that the onus of proof was not satisfied. (at p171)

12. It may be granted that the receiver could have been placed in the position of plaintiff in the interpleader proceedings. But no order to that effect was made. However, it would be proper, in my opinion, to treat him as being under the necessity of establishing his title to the bus in those proceedings. (at p171)

13. He begins with the fact of the debenture which undoubtedly covers the bus. He is the receiver under the debenture in possession of the assets of the company subject thereto. The floating charge crystallized at the date of his appointment, namely, 9th January 1974. The charge on the bus was then a specific charge. There is no evidence that the bus was in Western Australia at the date of the appointment of the receiver. There is evidence that it was not in that State on the date of the debenture. It would be immaterial, in my opinion, that it may have been in Western Australia at any point of time in between those dates. (at p171)

14. The debenture was duly registered in the State in which it was executed, namely, the State of Victoria. That State was also the State of incorporation of the company but there is no evidence as to the place of its registered office. The bus was registered in the State of Queensland but that fact, in my opinion, has no relevance in the case. (at p171)

15. There can be no doubt that, according to its proper law which would appear to be the law of Victoria, the debenture was effective to charge the company's assets wheresoever situate, except as to assets in Western Australia if the company was carrying on business in that State at the date of the debenture. It does not seem to me to matter whether or not the bus was the property of the company at the date of the debenture, for that document was effective to charge property acquired thereafter. It is sufficient that the bus was the property of the company at the date of the appointment of the receiver. Nor can it matter, so far as the evidence in this case is concerned, where the bus, if then the property of the company, was at the date of the debenture providing it was not in Western Australia or the company was not carrying on business there at that time. The receiver, in my opinion, in order to establish his title does not have to establish where the bus was at the date of the debenture or that the debenture was then an effective charge according to the law of the place where it was. It is sufficient that the debenture was valid where made and that the bus was not at that time in the State of Western Australia. (at p171)

16. In my opinion, the receiver did establish in this case his title to the bus. I would allow his appeal. (at p171)

GIBBS J. On 12th March 1974 a passenger bus, the property of the second respondent, Australian Trailways Pty. Ltd. ("Trailways"), was taken in execution by the bailiff of the District Court of Western Australia acting under a writ of fieri facias issued on the preceding day. The execution creditor is Highway Motel (Carnarvon) Pty. Ltd., the first respondent. Subsequently the bus was claimed by the appellant, Mr. Lewis Luckins, who was on 9th January 1974 appointed a receiver and manager of Trailways under the provisions of a debenture made on 13th August 1973 between H.C. Sleigh Ltd. as mortgagee, Trailways as mortgagor and a third party as guarantor. By the debenture, Trailways charged in favour of H.C. Sleigh Ltd. with the payment of certain moneys thereby secured the whole of Trailways' "undertaking property and assets whatsoever and wheresoever both present and future" and it was recited that except as to the real property, goodwill and uncalled capital (if any) of Trailways, the charge was to constitute and operate as a floating charge. The charge created by the debenture was registered under the Companies Act (1961) (Vict.), as amended, but was never registered in Western Australia. The passenger bus in question had become the property of Trailways on or before 1st March 1973; it was at all material times registered in Queensland; it was not physically in Western Australia on 13th August 1973 but there is no evidence as to its whereabouts at any time before it was seized in Western Australia on 12th March 1974. (at p172)

2. Trailways was incorporated as a company in Victoria. It was not registered as a foreign company in Western Australia. Until the receiver was appointed, Trailways conducted tours, wholly or partly by bus, some of which travelled through Western Australia. For example, during 1973 a number of tours conducted by Trailways travelled overland from Melbourne to Perth and then back to Melbourne via Alice Springs. None of the tours ever started or finished in Western Australia and it was rare for a person who resided in Western Australia to join a tour within that State; if someone joined a tour in Western Australia he always left it outside that State. Trailways has never had an office or place of business in Western Australia. Bookings for the tours were made through independent travel agents in Western Australia, who obtained confirmation of the bookings from Trailways in Victoria. An affidavit sworn on behalf of Trailways stated that the company had never "appointed a booking or other agent or employed anyone" in Western Australia, but this statement would appear to need qualification; those persons who operated the buses while they were being driven through Western Australia were no doubt employees or agents of Trailways. It was also deposed that except for the presence, from time to time, of the company's buses in Western Australia, Trailways had never had any property in Western Australia; this, too, may not be quite accurate, for the company bought food in Western Australia, and it is likely that it had property in it if only for a short time. Trailways has no bank account in Western Australia. However, in the course of passing through Western Australia with its tours Trailways incurred debts in that State for food, accommodation and camping fees. Doubtless the debt of the execution creditor - which was for goods supplied and services rendered "on divers dates during 1973 and 1974" - was incurred in this way. (at p173)

3. Upon an interpleader summons issued by the bailiff a judge of the District Court held that the claim of the appellant to the bus should be disallowed and this decision was affirmed on appeal to the Full Court of the Supreme Court. The present appeal is brought from the judgment of the Supreme Court. If it matters, the bus has since been sold and the proceeds of sale are held by the bailiff, awaiting the result of this appeal. (at p173)

4. In Governments Stock and Other Securities Investment Co. Ltd. v. Manila Railway Ltd., Lord Macnaghten said (1897) AC 81, at p 86 :

"A floating security is an equitable charge on the assets for the time being of a going concern. It attaches to the subject charged in the varying condition in which it happens to be from time to time. It is of the essence of such a charge that it remains dormant until the undertaking charged ceases to be a going concern, or until the person in whose favour the charge is created intervenes."

In a later case, Illingworth v. Houldsworth, the same learned judge said (1904) AC 355, at p 358 :

"A specific charge, I think, is one that without more fastens on ascertained and definite property or property capable of being ascertained and defined; a floating charge, on the other hand, is ambulatory and shifting in its nature, hovering over and so to speak floating with the property which it is intended to affect until some event occurs or some act is done which causes it to settle and fasten on the subject of the charge within its reach and grasp." (at p173)

5. In other words, although a floating charge is an existing charge - a present security - it does not specifically affect any asset subject to it until it crystallizes into a fixed security: see Evans v. Rival Granite Quarries Ltd. (1910) 2 KB 979, at pp 994, 999 . If the charge in the present case was valid and effective so far as the bus in question was concerned, it crystallized on 9th January 1974 when the receiver was appointed (Evans v. Rival Granite Quarries Ltd. (1910) 2 KB, at pp 988, 1000 ; M.G. Charley Pty. Ltd. v. F.H. Wells Pty. Ltd. (1962) 82 WN (NSW) 754, at p 757 ) and it was not contested that if the charge was valid the rights of the receiver must prevail over those of the execution creditor. The question in the case therefore is whether the debenture should have been treated by the courts in Western Australia as creating a valid charge over the assets of Trailways subsequently found in Western Australia. (at p174)

6. The argument on behalf of the execution creditor was that because the charge was not registered under s. 100 of the Companies Act, 1961 (W.A.), as amended ("the Act"), the charge so far as any security is thereby conferred on Trailways' property in Western Australia, is void as against any creditor of the company. In reply to this argument the appellant advanced two propositions, first, that if a charge over the bus was lawfully created on 13th August 1973 in the place where the bus was then situate the charge will be recognized in Western Australia unless there is anything in div. 7 of Pt. IV of the Act which provides to the contrary, and secondly, that the Act did not have the effect of invalidating the charge as a security. No objection can be taken to the first of these propositions in the form in which it was stated, since on the one hand it admits that the question is governed by div. 7 of Pt IV of the Act, and on the other hand it was not suggested that any other law of Western Australia is relevant to the validity of the charge. However, as stated the proposition tends to obscure some difficult questions. It may be accepted, although there is not a great deal of authority on the point, that in general the validity of a charge on chattels is to be determined in accordance with the law of the place where the chattels are situated when the charge is created. The two Australian cases to which we were referred on this aspect of the matter - Hockey v. Mother o'Gold Consolidated Mines Ltd. (1903) 29 VLR 196 , and In re Australian Federal Life and General Assurance Co. Ltd. (1931) VLR 317, at p 321 - do not decide the question, because although the assets over which the charges were said to have been given in those cases were situated in Victoria when the question fell to be decided in the courts of that State, it does not appear whether or not they were so situated when the charges were created. However, there seems no reason to doubt the general correctness of the opinions of the text-writers on this matter - see Dicey and Morris, Conflict of Laws, 9th ed. (1973), pp. 534-539; Nygh, Conflict of Laws in Australia, 2nd ed. (1971), pp. 614-618 - although perhaps it could be suggested that the validity of a floating charge should be determined by the laws of the place where the assets were situated when the charge crystallizes. It may also be accepted that if the bus had been validly subjected to a charge in Victoria, the debenture holder in whose favour the charge was given would not lose his rights simply because the bus was moved from Victoria to Western Australia: Taylor v. Lovegrove (1912) 18 ALR (CN) 22 ; Dicey and Morris, op. cit., pp. 542-544; Nygh, op. cit., pp. 620-624. Nevertheless, it is within the competence of the legislature of Western Australia to enact that a charge on goods within the State, even if valid elsewhere, shall be void unless the requirements laid down by that legislature have been complied with: cf. Dulaney v. Merry &Son (1901) 1 QB 536, at pp 542-543 . This was not, and in my opinion could not be, challenged and on the argument submitted by the appellant the case depends on whether div. 7 of Pt. IV of the Act, on its proper construction, made the registration of the charge in Western Australia essential to its validity as a security over chattels in Western Australia. (at p175)

7. However in fact there was no evidence to show where the bus was situated when the charge was created. All that is known is that the bus was at all times registered in Queensland and was not in fact in Western Australia on 13th August 1973. If on that date the bus was in some State other than Victoria it has not been shown whether the facts were such that the registration of the debenture was required under the companies legislation of that State. In my opinion, in these circumstances, the appellant has failed to prove that the debenture was validly made under the law of the State where the bus was then situated. I further consider that the appellant bore the onus of making out his claim. The interpleader summons was brought under O. 17 of the Rules of the Supreme Court of Western Australia which, we were told, applies to proceedings in the District Court of that State. Under O. 17, r. 5 it may be ordered (inter alia) that an issue between the claimants be stated and tried and directions may be given as to which of the claimants is to be plaintiff and which defendant and as to the method of trial. In the present case no order appears to have been made under O. 17, r. 5. The learned District Court judge proceeded upon a summons which called upon the parties to "state the nature and particulars of their claims on one 41 seater Passenger Bus . . . seized and held by the Bailiff in this action and maintain and (sic) relinquish them". In accordance with long-standing practice, where an interpleader summons has been taken out by a sheriff who has seized under a writ of execution goods in the possession of the judgment debtor, the claimant is generally made plaintiff and the execution creditor defendant in the issue and the burden of proof is on the claimant to prove his title to the goods or his right to possession of them: see Supreme Court Practice 1973, pp. 246-247, par. 17/5/4; Halsbury's Laws of England, 3rd ed., vol. 22, pp. 479-480. The explanation given for this practice in Chase v. Goble (1841) 2 M &G 930, at p 935 (133 ER 1021, at p 1023) was that the judgment creditor is in possession and would therefore be the party against whom the action of trover, or for money had and received, would have been brought. However, it does not seem correct to say that the execution creditor is in possession - see Richards v. Jenkins (1887) 18 QBD 451, at p 455 ; it is the fact that the judgment debtor was in possession that casts the burden of proof on the claimant: cf. Yorke v. Smith (1852) 21 LJQB 53, at p 56 . Similarly, where the interpleader proceedings are brought by a person other than a sheriff or similar officer, the claimant who was not in possession bears the burden of proof and is properly put in the position of plaintiff: see De La Rue v. Hernu, Peron &Stockwell Ltd. (1936) 2 KB 164, at p 170 . On the same reasoning, where the claimant was in possession of the goods at the time of their seizure by a sheriff, the execution creditor will generally be made plaintiff. There can be no doubt that where an order is made that the claimant be the plaintiff in the issue against the execution creditor, the plaintiff bears the burden of proof. Where, as in the present case, no formal order is made under O. 17, r. 5, the claimant who was not in possession of the goods at the time of seizure still bears the onus of establishing the facts on which his claim depends. This is clear in principle, and it was, I think, recognized in Peake v. Carter (1916) 1 KB 652 . In that case no formal order appears to have been made that the claimant should be plaintiff in the issue but it was nevertheless accepted that the claimant must prove such an interest as would make it wrongful as against him that the goods should be seized to satisfy the debt from the execution debtor (1916) 1 KB, at pp 656, 660 . In the present case the bus was in the possession of Trailways, the execution debtor, at the time when it was seized. The execution creditor had no onus of proving anything once it appeared that the vehicle was taken in execution under the writ. On the other hand, the appellant, as a claimant who was never in possession, bore the onus of showing that the bus was subject to a valid charge. To discharge this onus it was not enough to show that the debenture was registered in Victoria when it was not shown and could not be inferred that the vehicle was situated in that State at the time when the charge was created; it was necessary to show that the facts were such that the debenture did not require registration under the law of the State in which the vehicle was situated at the time of the creation of the charge. For these reasons I consider that the appellant failed to make out his claim in the District Court. I would not base my decision on this ground, since it does not appear to have been taken in the courts below, but since the question of the onus of proof is not unimportant in relation to another aspect of the case, I have thought it convenient to consider it. The substantial question argued in the courts below was whether the debenture was void as a security in respect of the bus by reason of the fact that it was not registered in Western Australia, and I now turn to consider that question. (at p177)

8. The provisions of s. 100 (1) of the Act, so far as it is material to quote them, are as follows:

"Subject to this Division, where a charge to which this section applies is created by a company, there shall be lodged with the Registrar for registration within thirty days after the creation of the charge a statement of the prescribed particulars and - (a) the instrument (if any) by which the charge is created or evidenced:

. . . and if this section is not complied with in relation to the charge the charge shall, so far as any security on the company's property or undertaking is thereby conferred, be void against the liquidator and any creditor of the company."

Section 100 (3) provides that the charges to which the section applies are (inter alia), "(d) a floating charge on the undertaking or property of the company". By. s. 5 (1), unless the contrary intention appears, "'Company' means a company incorporated pursuant to the Act or pursuant to any corresponding previous enactment." Trailways was not a company within that definition; it was a "foreign company" as defined in s. 5 (1). However, s. 110 (which appears in div. 7 of Pt IV) provides as follows:

"A reference in this Division to a company shall be read as including a reference to a foreign company to which Division 3 of Part XI applies, but nothing in this Division applies to a charge on property outside the State of a foreign company." (at p177)

9. By s. 344 (1), div. 3 Pt XI applies to a foreign company "only if it has a place of business or is carrying on business within the State". It will therefore be seen that Trailways was a company within the meaning of s. 100 at the material time only if it was then carrying on business within Western Australia. Further, even if Trailways was a company within s. 100, nothing in that section applied "to a charge on property outside the State of a foreign company". The two questions that then arise are whether on 13th August 1973 Trailways was carrying on business within the State of Western Australia and whether the debenture was "a charge on property outside the State" within the meaning of s. 110. (at p178)

10. The expression "carrying on business" may have different meanings in different contexts. It would usually connote, at least, the doing of a succession of acts designed to advance some enterprise of the company pursued with a view to pecuniary gain. It is clear from the words of s. 344 (1) that a company may carry on business within a State although it has no place of business there. The expression "carrying on business" is defined by s. 344 (2) to include "establishing or using a share transfer or a share registration office or administering, managing or otherwise dealing with property situated in the State as an agent, legal personal representative, or trustee, whether by servants or agents or otherwise . . . ". Obviously this definition is not exhaustive; for example, there could be little doubt that a company that dealt with property situated in the State for itself and not as an agent would be carrying on business within that State if the dealings were not merely isolated transactions and were done in the course of the business of the company. The provisions of s. 344 (1), and of the definition in s. 344 (2) , make it clear that a company can carry on business within the meaning of s. 344 although it does not reside in the State and although its "real business" - in the sense of the business "carried on where the central management and control actually abides" (to use the well-known words from De Beers Consolidated Mines Ltd. v. Howe (1906) AC 455, at p 458 ) - is not carried on there. Section 344 (3) has the effect that certain other activities in themselves do not amount to the carrying on of business within the State - in particular, a company is not to be regarded as carrying on business within the State simply because it conducts an isolated transaction there. Subject to the limits indicated by these provisions, the question whether a company is carrying on business within the State is simply one of fact and must be decided by having regard to all the circumstances of the case. In the present case Trailways would not have conducted business within Western Australia simply because travel agents within that State received requests for bookings and transmitted them to Victoria for confirmation. It is unnecessary to consider whether the company would have carried on business within Western Australia if the only relevant fact had been that its tours had proceeded through that State without receiving or depositing passengers and if its employees or agents had no dealings with persons within the State. That, however, was not the case. It can be inferred from the evidence that the company agreed to provide the tourists, whom it conveyed through Western Australia on its buses, with food and either accommodation or camping facilities, and that to fulfil its obligations it bought food, and hired accommodation of camping sites, from persons within Western Australia. It was submitted on behalf of the appellant that a motel proprietor, for example, who supplied accommodation to one of the tourists would have been carrying on his own business and not the business of Trailways, but the proper inference to be drawn is that such a motel proprietor would have been doing business with Trailways and not directly with the tourists. The evidence thus supports the conclusion that for the purposes of its business Trailways despatched busloads of passengers through Western Australia and in the course of so doing entered into commercial transactions with various people in various parts of the State and that it did so not merely on isolated occasions but from time to time during 1973 and the early part of 1974. There was no direct evidence that Trailways had a bus within the State on 13th August 1973 but on the evidence outlined above it was open to the courts in Western Australia to reach the conclusion that the activities of Trailways were carried on within the State throughout 1973. In any case, for the reasons I have already given, the onus of proving that the debenture did not require registration in Western Australia lay upon the appellant as claimant in the interpleader proceedings. If in fact Trailways was not carrying on business within the State on 13th August 1973 this could readily have been proved, and it was incumbent on the appellant to prove it. (at p179)

11. I hold, therefore, that Trailways was at the time of the execution of the debenture a company within the meaning of s. 100 of the Act, and that the charge required registration to give it validity as a security unless it was "a charge on property outside the State" within s. 110. It was submitted on behalf of the appellant that the charge did answer this description, since Trailways had no property within the State when the charge was created. In fact it must follow from the conclusion that Trailways was carrying on business within the State on 13th August 1973 that it had some property within the State on that date - at least a bus. In any event, the contrary has not been proved; all that has been shown is that the particular bus the subject of the present proceedings was not within the State on that date. However, I respectfully agree with the view taken in the Supreme Court that in the case of a floating charge it is not the actual situation of the property but the scope or ambit of the charge that is the material consideration. The question whether a charge answers the description of "a charge on property outside the State" should be answered by looking at the words of the charge. Where, as in the present case, a floating charge is given over all the property of the company "whatsoever and wheresoever both present and future", the property over which the charge is given may change its situation and may at one time be within the State and at another outside it, but it will attach to any property that happens to be within the State when the charge crystallizes. Such a charge is in my opinion misdescribed by calling it "a charge on property outside the State" because it affects all the property of the person giving it whether it is within the State or not, and will be a charge on property within the State if any such property exists during the currency of the charge. Of course a floating charge which by its terms is confined to property in one State will be a charge on property outside another State. (at p180)

12. In my opinion a construction of the provisions of div. 7 of Pt IV of the Act that had the effect that a floating charge given by a foreign company over all its assets did not require registration because at the time of its creation there were no assets within the State would tend to defeat the purposes of that division, which are to enable it to be discovered whether a company carrying on business within the State has encumbered the assets of which it has possession. If registration were required only if the foreign company had assets within the State at the time the floating charge was given, foreign companies would be enabled, by bringing property into the State after a floating charge had been given, to "have an appearance of assets when they had no assets at all": Hockey v. Mother o'Gold Consolidated Mines Ltd. (1903) 29 VLR, at p 199 . No doubt the purposes of the Act could be fulfilled in another way, by requiring registration when property was first brought into the State, although that would lead to practical difficulties, but for the reasons given I consider that it is the scope of the charge as determined by its proper construction that determines whether or not it requires registration. On behalf of the appellant, some reliance in argument was placed on s. 102 of the Act, which section requires a company in certain circumstances to register charges made at an earlier date but which does not expressly provide that a failure to register invalidates the charge. It is enough to say that s. 102 has no application to a case in which a foreign company has created a floating charge over all its property and has subsequently, and for the first time, brought some of that property into the State. That section neither applies to the present case nor materially assists in the construction of ss. 100 and 110. It follows from what I have said that in some cases a charge, to be valid, will require to be registered in a number of States, but this is recognized by s. 100 (4), whose provisions appear in the companies legislation of all the States. (at p181)

13. For these reasons, in my opinion it was right to conclude that the debenture was void as a security so far as any property in Western Australia was concerned. The learned primary judge was right in dismissing the appellant's claim to the bus and the appeal should be dismissed. (at p181)

STEPHEN J. A tourist bus owned by a Victorian company, Australian Trailways Pty. Ltd. was, while on tour in Western Australia, seized in execution under fi. fa. in March 1974. Confronted with competing claims by the receiver of the company, appointed under the terms of a deed of debenture charge, and by the Western Australian judgment creditor the bailiff interpleaded. In the interpleader proceedings the claim of the receiver was disallowed and upon this disallowance being affirmed by the Full Court of the Supreme Court of Western Australia the receiver has appealed to this Court. (at p181)

2. The short point is whether the security conferred by the debenture charge prevails over the judgment creditor's rights in execution. Unless the failure to register the debenture charge under the provisions of the Companies Act, 1961-1973 (W.A.), avoids that security in relation to the bus the claim of the receiver, acting in the interests of the debenture holder, will prevail. (at p181)

3. The relevant facts are few; in August 1973 Australian Trailways Pty. Ltd. created the debenture charge which was duly registered as a charge in accordance with s. 100 of the Companies Act (Vict.) but was not registered under the identical provisions of the Western Australian Act. The company had been incorporated in Victoria, it has never been registered as a foreign company in Western Australia. In January 1974, events having occurred which resulted in the floating charge created by the debenture charge becoming enforceable, the debenture holder appointed a receiver and manager of "the mortgaged premises", being the whole of the company's property and assets. Included in these assets was this bus, which the company first acquired early in 1973. The whereabouts of the bus when the floating charge became enforceable do not appear; however there is evidence that it was not in Western Australia in the preceding August when the debenture charge was created. During 1973 and 1974 the company undertook several bus tours from the Eastern States through Western Australia and it was in the course of one of these that in March 1974 this bus was seized in execution at the instance of the judgment creditor. The unsatisfied judgment was apparently one of a number in respect of debts incurred by the company in Western Australia for goods and services supplied in connexion with its tour buses. (at p182)

4. The debenture charge not being registered in accordance with s. 100 of the Companies Act (W.A.) the respondent contends that the charge is "so far as any security on the company's property or undertaking is thereby conferred, . . . void against . . . any creditor of the company" - s. 100 (1). This provision is said to be applicable because, despite the restricted definition of "company" in s. 5, the reference to a company in s. 100 is, by s. 110, extended to include a reference to a foreign company to which div. 3 of Pt XI applies; one which is carrying on business within Western Australia is such a company - s. 344 (1) - and it is contended that Australian Trailways Pty. Ltd. was such a company. (at p182)

5. The appellant, on the other hand, contends that s. 110 does not have this effect, either because of its concluding words, which exclude from its operation "a charge on property outside the State of a foreign company", or because the facts disclose that the company was in any event not a foreign company to which div. 3 of Pt XI applies, because it did not carry on business in Western Australia. (at p182)

6. The first task is, then, to determine the effect of the concluding words of s. 110. The section reads:

"110. A reference in this Division to a company shall be read as including a reference to a foreign company to which Division 3 of Part XI applies, but nothing in this Division applies to a charge on property outside the State of a foreign company."

Its reference to a "charge" does not, I think, refer to the document creating it but to the charge itself. Section 100 is careful to distinguish between the instrument creating a charge and the charge thereby created, as are ss. 101 and 102, and although s. 103 and subsequent sections refer to registration of charges and to registered charges this must be understood as no more than a shorthand reference to a charge the instrument creating which has been registered. (at p182)

7. What s. 110 then does is to include within the registration requirements of div. 7 of Pt IV, which comprises ss. 100 to 110, the generality of charges created by relevant foreign companies but subject to the exclusion of charges possessing a particular quality, the quality of charging only property situated outside the State. (at p182)

8. In the Full Court the view was taken that because "the ambit of the charge as a security" was unlimited in terms of location it failed to satisfy the terms of the concluding words of s. 110; the company had "charged its property - such property as it should have - within this State and if as to that property it wished to avoid the operation of s. 100 (1) it was in my opinion required to lodge the charge for registration". On this view the security conferred by such an unlimited charge will, if the company is then carrying on business in the State, be avoided for non-registration because s. 100 will then apply to it. (at p183)

9. I take a different view of s. 110; the quality of charging only property situated outside the State may, in my view, be conferred upon a charge by the terms of the instrument creating the charge or, failing that, by the actual location of the assets which are charged. An instance of the former is provided by the debenture trust deed in Ferrier v. Bottomer (1972) 126 CLR 597 where the floating charge was expressly confined to assets in Queensland and New South Wales. In the present case however "the whole of the Mortgagor's undertaking property and assets whatsoever and wheresoever" are charged, without limitation of locality, so that the terms of the instrument cannot be relied upon to confer this necessary quality upon the charge. (at p183)

10. Nevertheless, as I have said, if the actual location of the assets which are charged be confined to places outside the State of Western Australia that too will suffice to come within the exclusion in s. 110. (at p183)

11. The question is, however, whether the quality conferred by the actual location of the assets is to be determined once and for all on a particular date, which would no doubt be the date of creation of the charge (per Cussen A.C.J. in Colonial Gas Association Ltd. v. Green (1932) VLR 193, at p 216 , and see Barcelo v. Electrolytic Zinc Co. of Australasia Ltd. (1932) 48 CLR 391, at pp 411, 420, 435-436 and Re Otway Coal Co. Ltd. (1953) VLR 557, at p 565 ); or whether it is, rather, a continuing affair, the charge losing its relevant quality and ceasing to answer the description applicable to charges excluded by the concluding words of s. 110 if at any time after its creation the location of any charged assets is found to be within the State. If the former, the evidence is that the bus was not in Western Australia when the deed of debenture was executed. If the latter, the bus having entered Western Australia some time before its seizure there, the charge would then cease to be within the exclusion in s. 110 and the security conferred by it would be void as against creditors for want of registration, always assuming the company to be carrying on business within the State. (at p183)

12. In my view the second of these two views, which for convenience I shall refer to as the ambulatory construction, is to be preferred; only thus will effect be given to the purpose which div. 7 is intended to serve, the protection of those who deal with companies upon the faith of their possession of assets - "The object of that legislation is that those who are minded to deal with limited companies shall be able, by searching a certain register, to find whether the company has incumbered its property or not." (In re Jackson &Bassford, Ltd., per Buckley J. (1906) 2 Ch 467, at p 476 ). (at p184)

13. The division recognizes the need for disclosure, upon a register available to the public, of any charges upon a company's assets the possession of which would otherwise suggest their availability to meet, to their full unencumbered value, the claims of creditors. Such a need is not confined to locally incorporated companies. It extends also to foreign companies which carry on business in the State, hence the opening words of s. 110, but only if local assets, which being within the State give to such a company its appearance of creditworthiness there, are subject to a charge; out-of-State assets give no such local appearance and if creditors, in their dealings with foreign companies, choose to rely upon the existence of assets elsewhere they must look to foreign registers for the disclosure of encumbrances, hence the concluding words of s. 110. (at p184)

14. A contrary view would distort the operation of the division; in the case of a floating charge, the division would then afford no protection in the perhaps not uncommon situation of credit dealings being had in State A with a foreign company which, having originally only assets in State B, at that time charged its assets wherever situate, and has thereafter extended its business into State A and acquired assets there. Floating charges are by no means uncommon, whether to secure bank overdraft accommodation or for other purposes, and were s. 110 to be given other than an ambulatory interpretation it would constitute a trap rather than a safeguard; a search within State A of the register of such a registered foreign company would disclose no charges although in fact all its assets in State A were subject to a floating charge. Nor would the penalty provisions of s. 102 (1) (b) or (c), affecting the assets of foreign companies before they become registered as such, operate to discourage the occurrence of such a situation; to the circumstances postulated above par. (c) clearly has no application, nor, I think, has par. (b). This position would not be confined to floating charges but would apply equally to a particular fixed charge on a moveable asset which later enters the State after the mortgagor company has begun to carry on business there. (at p185)

15. These considerations apart, the concluding words of s. 110 bear, I think, according to their ordinary meaning, the ambulatory sense to which I have referred. When applied to a floating charge, a not unimportant category of charge with which div. 7 concerns itself, this ambulatory interpretation is particularly apt; if location of assets be selected by the legislation as the criterion and be applied to a floating charge, itself ambulatory in effect, it is quite arbitrary and unreasonable to make the need for registration of a charge, and hence its effectiveness, depend upon the location of those assets which happen to be the charged assets at the date of creation of the charge and which will be by no means identical with that everchanging group of assets to which the mortgagee will look for his security throughout the currency of the charge. All the more so when those assets include items such as vehicles, which are inherently liable to change their location from time to time. (at p185)

16. The terms of s. 102 (1) (b) and (c) of the Act were relied upon by the appellant for the contrary view, that location of the assets charged at the date of creation of the charge was decisive to determine forever the applicability of div. 7 to the charge. An examination of s. 102 does not support this submission. It was said that because pars (b) and (c), dealing with foreign companies and their charged assets, impose only a penalty for non-compliance, leaving unaffected the validity of the security, this reflected a policy that events occurring after creation of a charge should not work to the detriment of the mortgagee. (at p185)

17. This submission is persuasive only so long as its misuse of the phrase "creation of a charge" remains undetected. In the context of div. 7 as applied to foreign companies by s. 110 the phrase involves the coincidence of three factors; the carrying on of business within the State, an asset within the State and the subjection of that asset to a charge. When these three factors coincide non-registration leads to invalidity; they do not coincide in the cases dealt with in pars (b) and (c) because the subjection of the asset to the charge occurs at some unspecified time prior to the occurrence of one of those other factors, the carrying on of business within the State. In those particular circumstances the legislation has, understandably, contented itself with the sanction of a penalty but in doing so it throws no light on legislative policy where the three factors do coincide. (at p185)

18. The meaning which I would assign to s. 110 was said by the appellant to conflict with the requirement of s. 100 (1), calling for registration within thirty days "after creation of the charge". Again this disregards what is involved in that phrase, it follows from s. 110 that no registrable charge is relevantly created by a foreign company until the three factors to which I have referred coincide and the thirty days allowed by s. 100 (1) will run from the date of that coincidence. Suppose a company carrying on business in the State which, while having no other assets within the State which are subject to a charge, brings into the State a charged asset or acquires an asset which upon its acquisition becomes subject to a charge; until that moment there exists in respect of that foreign company no registrable charge for the purposes of s. 100, thereafter there does and it must accordingly be lodged for registration. (at p186)

19. I see no anomaly in the operation generally of the legislation, interpreted as I think it should be. It is not unreasonable that a mortgagee, relying for his security on a floating charge over moveables or over assets to be acquired by the mortgagor in the future, should ensure that, whatever State in the future those assets move to or be located in, his charge is there registered so that those who may deal with the mortgagor can ascertain its true position as to encumbrances over assets. (at p186)

20. I accordingly conclude that unless in the present case the company was not carrying on business in Western Australia at the relevant time the security over its bus conferred by the charge was avoided for want of registration. (at p186)

21. The evidence of the activities of the company in Western Australia before and at the time of seizure of the bus by the bailiff is fragmentary; it has been examined and restated in the reasons for judgment in the Full Court and calls for no detailed repetition here. (at p186)

22. The company conducted from Victoria a tourist bus business and in the course of doing so undertook some long distance tours from the Eastern States to Western Australia. Burt J. in his reasons for judgment in the Full Court says of these tours:

"In the course of these journeys the company would in performance of the contracts entered into between it and its customers supply the latter with food, accommodation and camping facilities. It would itself obtain these goods and services from the judgment creditors and probably from others and it would do so on credit. Hence the claims and the judgments."

The respondent, a motel company, was one of these judgment creditors, for an amount of $1,195 for goods supplied and services rendered to the company during 1973 and 1974. (at p186)

23. Whether or not the company was carrying on business in Western Australia is very much a question of fact - Saccharin Corporation Ltd. v. Chemische Fabrik von Heyden Aktiengesellschaft (1911) 2 KB 516 , Colley v. Meads, per McMillan C.J. (1917) 20 WAR 1, at p 3 . Nothing, either in the definition of "carrying on business" in s. 344 (2) of the Act or in the exceptions listed in s. 344 (3), bears upon the question as it arises in this case. The evidence showed that the company had been entering into contracts there for the supply of goods and services, the learned District Court judge who heard the interpleader proceedings referred to a total of six actions by creditors and inferred that the company had "carried on a number of similar transactions repeated from time to time within the State of Western Australia, namely being supplied with goods and services . . ." That the conduct of bus tours was a part of its business activities, that a number of such tours through that State were undertaken in 1973 and that in the course of them debts were incurred by the company for food, accommodation and camping fees all appeared from an affidavit of the company's managing director. (at p187)

24. In these circumstances there was evidence upon which the learned District Court judge could find, as he did, that the company was carrying on business in the State. In my view the members of the Full Court were right in not interfering with that finding. (at p187)

25. I would accordingly dismiss this appeal. (at p187)

MASON J. I have had the advantage of reading the reasons for judgment prepared by Gibbs J. I agree, for the reasons there expressed, that there was evidence from which the District Court and the Supreme Court of Western Australia could draw the inference, as they did, that Australian Trailways Pty. Ltd. ("the company") was "carrying on business within the State" within the meaning of s. 344 (1) of the Companies Act, 1961 (W.A.), as amended, throughout 1973 and, in particular, on 13th August 1973, the date when the floating charge in favour of H.C. Sleigh Ltd. was executed. (at p187)

2. I also agree, for the reasons given by his Honour, that the words in s. 110 of the Companies Act, "nothing in this division applies to a charge on property outside the State of a foreign company", should be understood as referring, not to the situation of the property which is subject to a charge, but to the scope or ambit of the charge, that is to say, to a charge which is so expressed as to be confined to property outside the State. (at p187)

3. I was at first inclined to think that this conclusion was not entirely consistent with the language of div. 7 of Pt IV of the Act on the ground that s. 100 appears to draw a distinction between the instrument creating the charge and the charge thereby created and that s. 110 reflects this distinction by referring to the charge rather than the instrument which creates it. However, on reflection I consider that even if such a distinction is drawn elsewhere, this constitutes no strong reason for giving to s. 110 a construction which would be inimical to the policy of protecting unsecured creditors of a company within the State, which so evidently underlies the provisions of the division. (at p188)

4. As the floating charge upon which the appellant relied was expressed so as to relate to the entire undertaking and property of the company without restriction as to situation, the charge required to be registered under s. 100 and is void as against the respondent execution creditor for want of registration in so far as it related to property in Western Australia. (at p188)

5. Accordingly, I would dismiss the appeal. (at p188)

JACOBS J. The facts, which as I see the case are relevant and not substantially in dispute, are as follows: The company Australian Trailways Pty. Ltd. created in Victoria a floating charge over all its assets present and future and wheresoever situate on 13th August 1973. The charge crystallized on 9th January 1974 when the appellant was appointed receiver. The company repeatedly from time to time in 1973 and 1974 ran coach tours through Western Australia and in so doing entered into transactions in Western Australia by way of purchase of food and arranging accommodation for passengers on the coach tours. The coach or bus, the subject of the proceedings, was taken in Western Australia on 12th March 1974 by a District Court bailiff in execution of a judgment. The coach had been purchased by the company prior to the creation of the floating charge. The coach was not in Western Australia at the date of the creation in Victoria of the floating charge. (at p188)

2. A disputed question of ultimate fact or of mixed fact and law is whether the company was carrying on business in Western Australia either at the time of creation of the charge or at any particular time thereafter up until the day when the bus was taken in execution. There was in my view evidence sufficient to establish that throughout this period the company was carrying on business in Western Australia. I agree with the conclusion of the judge at first instance and of the Supreme Court of Western Australia that repeated running through Western Australia of coach tours (involving the purchase of food and accommodation for passengers in Western Australia) from time to time through 1973 and early 1974 was a carrying on of business in Western Australia over that time. (at p188)

3. Therefore the company was a foreign company to which div. 3 of Pt XI of the Companies Act, 1961-1970 (W.A.) applied. Therefore div. 7 of Pt IV (ss. 100-110) of that Act applied to the company (see s. 110). (at p189)

4. The question then is the correct application of div. 7 of Pt IV. Section 100 would require the floating charge to be registered within thirty days after the creation of the charge and if this was not complied with the charge would, so far as any security on the company's property or undertaking was thereby conferred, be void against the execution creditor, Highway Motel (Carnarvon) Pty. Ltd. Section 100 is silent on the location of the property intended to be subject to its provisions, but s. 110 provides that nothing in div. 7 of Pt IV applies to a charge on property outside the State of a foreign company. It is accepted that the reference to a foreign company is a reference to one to which div. 3 of Pt XI applies. Once it is found that the company was carrying on business in Western Australia through 1973 to 1974, the company is established to be such a foreign company. (at p189)

5. The question of more than usual difficulty is the meaning and application of the provision in s. 110. The difficulty substantially arises in the reconciliation of the requirement of s. 100, that the charge be registered within thirty days after its creation, with the provision in s. 110 that the Division including this requirement of s. 100, does not apply to a charge on property outside the State of a foreign company. Does this mean that if the property is outside the State when the charge is created, then the charge need not be registered even if that property is thereafter brought into the State? It would be strange if it did mean that when the obvious purpose of the division is to enable those who deal with the company in the course of its business in the State of Western Australia to know whether the assets apparently owned by it are available for payment of its unsecured debts or are secured to a prior creditor. I do not think that s. 110 has this meaning. The words "property outside the State of a foreign company" refer to property which is at all material times outside the State. They do not refer only to property which is outside the State at the time when the charge is created. A charge is not void under s. 100 against a creditor so long as it is a charge on property outside the State, but when it becomes a charge which does not meet this description it will be void unless it be registered. (at p189)

6. The obvious difficulty with this approach is that the charge becomes void ex post facto, or perhaps one should say ex post non facto; the requirement of registration may not arise within the prescribed thirty days but if the charge is not registered within those thirty days, the charge is void against a creditor when the property subject thereto ceases to be property outside the State. (at p189)

7. It is conceded that, whatever construction be adopted, anomalies arise in the application of the provisions. It seems to me that this construction is the least anomalous. A foreign company carrying on business inside Western Australia need not register a charge on its property so long as that property is outside the State but it may do so. If it does not and thereafter the property is brought by it within the State, then it will need to apply to register the charge out of time under s. 106. The fact that the property had been outside the State would be sufficient cause for the omission to register the charge within the time required by s. 100 and the omission would of its nature not be one to prejudice the position of creditors in the State if the application be made promptly. Nevertheless it is a cumbersome and expensive procedure and legislative action is clearly required. (at p190)

8. I do not find it necessary to determine whether the onus lay upon the appellant to establish not only the existence of the charge but also that the charge was valid against a liquidator and creditors in the place where it was created or to establish that at 13th August 1973 it had no property in Western Australia. (at p190)

9. In my opinion the appeal should be dismissed. (at p190)

Orders

Appeal dismissed with costs.