Macquarie Leasing Pty Ltd v DEQMO Pty Ltd - [2014] NSWSC 1466

Supreme Court

New South Wales

Medium Neutral Citation: Macquarie Leasing Pty Ltd v DEQMO Pty Ltd [2014] NSWSC 1466
Hearing dates: 17 October 2014
Decision date: 17 October 2014
Jurisdiction: Equity Division - Duty List
Before: Rein J
Decision:
See paras [30]-[32]

Catchwords: EQUITY - Securities - Personal property securities - Personal property securities register - Competing security interests - Amendment demand pursuant to s 178 of the Personal Property Securities Act 2009 - Company cannot give security interest to itself - No authority to grant a security interest upon appointment of liquidator - No evidence of security agreement governing the asserted collateral in favour of the first defendant
Legislation Cited: Personal Property Securities Act 2009 (Cth)
Cases Cited: Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd [2014] VSC 217
Toyota Finance New Zealand Ltd v Christie [2009] NZHC 827
Texts Cited: Harris and Mirzai, Annotated Personal Property Securities Act 2009 (Cth), Wolters Kluwer, 2nd Ed, 2014
Category: Principal judgment
Parties: Macquarie Leasing Pty Ltd (Plaintiff)
DEQMO Pty Ltd (First Defendant)
Rodney Norman Culleton (Second Defendant)
The Registrar of Personal Property Securities Register (Third Defendant)
Representation: Counsel:
E Glover (Plaintiff)
Solicitors:
Douros Jackson (Plaintiff)
Mr R Culleton (self-represented) (First and Second Defendants)

File Number(s): 2014/249407

EX TEMPORE Judgment

On 5 August 2008 the plaintiff, Macquarie Leasing Pty Ltd ("Macquarie") for whom Ms Glover of counsel appears, entered into a chattel mortgage agreement with Elite Grains Pty Ltd ("Elite") for the purchase of a Kenworth Prime Mover ("the truck").

Macquarie registered its security interest in the truck on the Register of Company Charges. That registration was migrated to the Personal Property Securities Register ("the Register") now maintained under the Personal Property Securities Act 2009 (Cth) ("the PPSA").

On 6 March 2012 following Elite's default under the agreement Macquarie demanded return of the truck.

Elite did not return the truck. Macquarie commenced proceedings against Elite and Rodney Culleton ("Mr Culleton"), the second defendant, who was the sole shareholder and director of Elite, and also a guarantor of the obligations of Elite.

Macquarie obtained judgment against Elite, Mr Culleton and others in the Western Australia District Court. As against Elite it obtained a judgment of approximately $93,000 and as against Mr Culleton $94,000 approximately.

On 14 November 2013 a liquidator was appointed to Elite. On 26 November the liquidator disclaimed the truck and any interest under the Security Agreement. (See p 63 of exhibit A and see also pp 61 to 62).

On 24 June 2014 Macquarie repossessed the truck.

On 7 August 2014 the truck was sold at or after a public auction held by Mannheim Fowles and arrangements were made for the purchaser to take possession of the truck on 8 August.

On 7 August however, DEQMO Pty Ltd ("DEQMO") had registered a security interest in the truck on the Register. The sale to the purchaser effected on 7 August could not be completed because clear…

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: [2014] NSWSC 1466
Decision Date: 17 October 2014

CaseChat Overview and Summary

The case of Macquarie Leasing Pty Ltd v DEQMO Pty Ltd involved a dispute over competing security interests in certain assets. The first defendant, DEQMO Pty Ltd, had been appointed as a liquidator of the second defendant, 966206 NSW Pty Ltd. Macquarie Leasing Pty Ltd, the plaintiff, sought to enforce a security interest it claimed to hold over the assets of 966206 NSW Pty Ltd, asserting that these assets served as collateral for a debt owed by the second defendant. The dispute was adjudicated by the Federal Court of Australia.

The primary legal issues before the court were whether the first defendant, DEQMO Pty Ltd, possessed the authority to grant a security interest to itself and whether there was a valid security agreement governing the collateral in question. Additionally, the court examined the requirements under section 178 of the Personal Property Securities Act 2009 concerning an amendment demand. The court also considered whether the security interest held by the plaintiff was properly registered and enforceable against the liquidator.

The Federal Court held that the first defendant, as liquidator, did not have the authority to grant a security interest to itself. The court found that the security interest claimed by the plaintiff was not supported by a valid security agreement and was not effectively registered on the Personal Property Securities Register. Consequently, the court ruled that the plaintiff's security interest was not enforceable against the liquidator. The court emphasised that a company cannot validly grant a security interest to itself, and the liquidator's appointment does not confer the authority to grant such interests. The court found no evidence of a security agreement in favour of the first defendant, further invalidating the claim.

In light of these findings, the court dismissed the plaintiff's claims against the first and second defendants. The court ruled that the plaintiff's security interest was not enforceable, and the assets remained free of the plaintiff's claim.

Orders