NFT Specialized in Tower Cranes LLC v Machforce Pty Ltd (in liq) - [2017] WASC 95

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NFT SPECIALIZED IN TOWER CRANES LLC -v- MACHFORCE PTY LTD (in liq) [2017] WASC 95

CORAM: ACTING MASTER STRK

HEARD: 18 NOVEMBER 2016

DELIVERED : 4 APRIL 2017

FILE NO/S: COR 95 of 2016

BETWEEN: NFT SPECIALIZED IN TOWER CRANES LLC
Plaintiff
AND
MACHFORCE PTY LTD (in liq)
First Defendant
RICHARD ALBARRAN as Liquidator of MACHFORCE PTY LTD
Second Defendant
CAMERON SHAW as Liquidator of MACHFORCE PTY LTD
Third Defendant
REGISTER OF PERSONAL PROPERTY SECURITIES
Fourth Defendant

Catchwords:

Corporations law - Operation of Personal Property Securities Act 2009 (Cth) - Rental agreements - 'PPS leases' - Unperfected security interests - Vesting of security interests - External administration - Extension of time under s 588FM Corporations Act 2001 (Cth) and s 267 Personal Property Securities Act 2009 (Cth)

Legislation:

Corporations Act 2001 (Cth)
Personal Property Securities Act 2009 (Cth)

Result:

Application refused

Category: A

Representation:

Counsel:

Plaintiff:     Mr N Mirzai
First Defendant             :     Mr J E Scovell
Second Defendant         :     Mr J E Scovell
Third Defendant           :     Mr J E Scovell
Fourth Defendant          :     Mr J E Scovell

Solicitors:

Plaintiff:     George Papamihail Barristers & Solicitors
First Defendant             :     HWL Ebsworth Lawyers
Second Defendant         :     HWL Ebsworth Lawyers
Third Defendant           :     HWL Ebsworth Lawyers
Fourth Defendant          :     HWL Ebsworth Lawyers

Case(s) referred to in judgment(s):

123 Sweden AB v Appleyard Capital Pty Ltd [2014] NSWSC 782
In the matter of Accolade Wines Australia Ltd [2016] NSWSC 1023
Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313
Mentha, in the matter of Arrium Ltd (Administrators Appointed) [2016] FCA 972
North Central Wagon & Finance Co Ltd v Graham [1950] 2 KB 808
Re Carpenter International Pty Ltd [2016] VSC 118
Re Enviro Pallets (NSW) Pty Ltd [2013] QSC 220
Reliance Car Facilities Ltd v Roding Motors Ltd [1952] 2 QB 844
Sanwa Australia Finance Ltd v Ground‑Breakers Pty Ltd (in liq) (1990) 2 ACSR 692
Sargent v ASL Developments Pty Ltd (1974) 131 CLR 634
Scotton v John Bridge & Co Ltd (1919) 19 SR (NSW) 70
Union Transport Finance Ltd v British Car Auctions Ltd [1978] 2 All ER 385

ACTING MASTER STRK: This application concerns the decision made on 6 April 2016 by the liquidators (then administrators) of the first respondent (Machforce), in which they determined that six cranes, the subject of six separate rental agreements, vested in Machforce immediately before their appointment as administrators on 29 March 2016 (Appointment Date).
The liquidators rejected the interest of the applicant (NFT) in the cranes hired by NFT to Machforce on the basis that the security interest was not 'perfected' within the meaning of the Personal Property Securities Act 2009 (Cth) (PPSA).
The relief sought by NFT is set out in Schedule A to these reasons.
In support of its application, NFT relies on the affidavit of Clifford Cyril Loreno, the Finance Manager of NFT, sworn 9 May 2016 (the Loreno Affidavit); the affidavit of Nabil Alzahlawi, Chief Executive Officer and Managing Partner of NFT, sworn 2 June 2016 (the First Nabil Alzahlawi Affidavit); a further affidavit of Mr Nabil Alzahlawi sworn 13 November 2016 (the Second Nabil Alzahlawi Affidavit); and the affidavit of Nawar Alzahlawi, Business Development Manager of NFT, sworn 24 May 2016 (the Nawar Alzahlawi Affidavit).
In response, Machforce and the liquidators rely on the affidavit of Russell Peter Francis, sole director of Machforce, sworn on 24 October 2016 (the Francis Affidavit).

Background

NFT is a company incorporated in Abu Dhabi, United Arab Emirates. It is in the business of renting and supplying tower cranes for building and construction works.[1] Machforce is an Australian proprietary company which operated as a supplier of hoists and mastclimbers for hire, installation and maintenance in the mining and construction industry.
[1] First Nabil Alzahlawi Affidavit [4] ‑ [5].
In July 2014, Machforce contacted NFT with a view to secure a new long term supplier to provide it with a cross‑hire arrangement or to enter into a joint venture for tower cranes.[2]

Rental Agreements

[2] First Nabil Alzahlawi Affidavit, 'NA‑1'.

Between 19 September 2014 and 9 July 2015, NFT entered into six separate rental agreements with Machforce (together the Rental Agreements), on materially the same terms.[3]
[3] First Nabil Alzahlawi Affidavit, 'NA‑2' ‑ 'NA‑7'.
The Rental Agreements state that a tower crane and parts are rented by Machforce 'for the purpose of performing against a "back to back" rental between (Machforce) and its customers for hiring of the … tower crane'.[4]
[4] First Nabil Alzahlawi Affidavit, 'NA‑2' page 10; 'NA‑3' page 16; 'NA‑4' page 22; 'NA‑5' page 28; 'NA‑6' page 34; 'NA‑7' page 40.
The First Agreement relevantly provides as follows.[5]
[5] There are typographical and grammatical errors in the Rental Agreements. They are not corrected in the excerpt above.
1.Machforce Pty Ltd is allowed to rent the aforesaid tower crane to its customer strictly in Australia. Rental shall commence once tower crane arrived at the desired job site. (rental agreement between Machforce and its customer as marked Annex 'A' form part of this agreement.
2.Of the Monthly rental income of A$ 7,200 for this tower crane between Machforce and its customer for at least minimum of 12 months, NFT as the legal owner is entitled to 70% to the total A$ 5,040 x 12 months. The full amount of monthly rental A$ 60,480 must be paid to NFT by TT upon receipt of NFT's monthly invoice to Machforce. All local and overseas bank charges for the TT remittance to be paid by Machforce.
3.In the event of any extension of time required after 12 months of rental, Machforce need to apply in writing within 30 days before the expiry of the 12 months, such written application shall contain reasons why they will be delay and amount of the extension of time sought. When NFT has received sufficient information to enable NFT to decide the application for extension of time, which NFT consider Machforce to be entitled to, at the same rental of A$ 5,040 per month to be payable to NFT until such time until the crane is fully dismantled.
…
19.In the event if the crane arrived in Australia and NFT not informed of the installation date, NFT is entitled to invoice the monthly rental amount at 70% of A$ 5,040, effective at 60 days after its arrival in Australia. NFT is entitled to proceed with the invoicing of monthly rental even though crane is still lying in Machforce's yard.
20.NFT shall be entitled to immediately terminate this contract and to receive from Machforce, all the remaining outstanding of the rental incomes, without prejudice to NFT's rights to claim for damages, if Machforce fail to fulfil one of the following obligations as mentioned above (1) To (19). Moreover, this contract shall automatically terminate in the event of any change in Machforce's corporate structure as - but not limited to bankruptcy, insolvency, assignment or other judicial proceedings.
The other Rental Agreements are in substantively similar terms, save that there are differences in the amount of monthly rental income payable under each Rental Agreement.
The solicitors for NFT conveniently identify each of the Rental Agreements as follows, and in these reasons I adopt the same 'reference' description:

Rental Agreement Date Delivery Date Reference

19 September 2014 3 November 2014 First Agreement

24 September 2014 27 October 2014 Second Agreement

3 November 2014 22 December 2014 Third Agreement

23 December 2014 16 March 2015 Fourth Agreement

11 June 2015 3 August 2015 Fifth Agreement

9 July 2015 (varying an agreement dated 1 September 2014 6 October 2014 Sixth Agreement

NFT says that at the time of entering into the Rental Agreements, NFT did not obtain independent legal advice or advice from advisors (legal or otherwise) in Australia, nor was it aware of any of the obligations imposed by the PPSA or the Corporations Act 2001 (Cth).[6] At the time of entering into the Rental Agreements, no financing statement in respect of any security interest held by NFT in the six crane towers the subject of the Rental Agreements was lodged on the Personal Property Security Register (PPSR).

Default under the Rental Agreements

[6] Statement of claim filed on behalf of NFT dated 14 July 2016 [9].

From about July 2015, NFT began to default on all or part of its ongoing obligations to pay rent under each of the Rental Agreements. From on or around October 2015, NFT and Machforce corresponded in respect of arrears under the Rental Agreements.
NFT asserts that in or about 16 January 2016, representatives of NFT met with representatives of Machforce in Singapore (the 16 January Meeting). NFT says that at the 16 January Meeting, NFT terminated each of the Rental Agreements orally; demanded payment of all outstanding moneys owing in respect of each Rental Agreement; and proposed several options to Machforce with a view to preserving some form of working relationship going forward.[7] Machforce and the liquidators do not admit NFT's account, and note that NFT continued to rent the cranes to Machforce and continued to charge rental payments in relation to the cranes until at least 31 March 2016.[8]

PPSR Registrations and external administration

[7] Statement of claim filed on behalf of NFT dated 14 July 2016 [15].

[8] Amended defence and counterclaim filed 15 November 2016 [15].

On 7 January 2016, Machforce lodged seven financing statements on the PPSR, six in respect of the cranes and one in respect of a further piece of equipment (described as the Amco crane), listing itself as 'grantor' and as 'secured party'.
On 29 March 2016, the second and third respondents were appointed joint and several administrators of Machforce. On the same day, the administrators lodged seven further financing statements on the PPSR, one in respect of a purported 'all present and after‑acquired personal property' (AllPAP) security interest and the remaining six in respect of each tower crane.[9]
[9] Statement of claim filed on behalf of NFT dated 14 July 2016 [17] ‑ [18].
On 4 May 2016, Machforce went into liquidation.
On 11 May 2016, NFT lodged a financing statement in respect of any security interest it held in the six crane towers the subject of the Rental Agreements.[10]
[10] Statement of claim filed on behalf of NFT dated 14 July 2016 [23(a)].
Westpac Banking Corporation has the first registered 'all present and after‑acquired personal property' (ALLPAP) security over Machforce's assets on the PPSR and the liquidators have informed creditors of Machforce that any funds received from the cranes will be provided to Westpac to reduce its secured liabilities against Machforce.[11]

Status of the tower crane the subject of the Fifth Agreement

[11] Clifford Affidavit, 'CCL-11' (being the Report to Creditors dated 26 April 2016), page 132.

The crane the subject of the Fifth Agreement has been returned to NFT and Machforce and the liquidators do not assert any vesting claim in relation to the Fifth Agreement or that crane to which the agreement related.
The other cranes have not been returned to NFT on the basis of the decision made on 6 April 2016 by the liquidators (then administrators) of Machforce, which decision NFT seeks to overturn by these proceedings.

Issue 1: Did the Rental Agreements give rise to security interests pursuant to the PPSA?

The first issue to be determined in these proceedings is whether the Rental Agreements gave rise to security interests pursuant to the PPSA. A security interest is defined in s 12(1) of the PPSA as
an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).
Section 12(3)(c) of the PPSA provides that agreements give rise to security interests pursuant to the PPSA if they are deemed to be a security interest because they satisfy the meaning of a 'PPS lease'. The meaning of a PPS lease is found at s 13 of the PPSA, as follows:
13(1)A PPS lease means a lease or bailment of goods:
(a)for a term of more than one year; or
(b)for an indefinite term (even if the lease or bailment is determinable by any party within a year of entering into the lease or bailment); or
(c)for a term of up to one year that is automatically renewable, or that is renewable at the option of one of the parties, for one or more terms if the total of all the terms might exceed one year; or
(d)for a term of up to one year, in a case in which the lessee or bailee, with the consent of the lessor or bailor, retains uninterrupted (or substantially uninterrupted) possession of the leased or bailed property for a period of more than one year after the day the lessee or bailee first acquired possession of the property (but not until the lessee's or bailee's possession extends for more than one year).
There are a number of exceptions to s 13(1) of the PPSA,[12] although no exception applies in this case. Relevantly, NFT concedes that it is in the business of providing crane towers on a rental basis in Australia.[13]

Are the Rental Agreements 'PPS leases' within the meaning of the PPSA?

[12] Section 13(2) of the PPSA.

[13] Paragraph 3 of NFT's response to the notice to admit dated 10 November 2016.

The parties are in dispute as to whether or not the Rental Agreements are 'PPS leases'.
The Rental Agreements in this case are not, by their terms, expressed to be for a term of more than one year and are not for a term of indefinite duration. None of the parties contend that the Rental Agreements are 'PPS leases' pursuant to s 13(1)(a) or (b) of the PPSA. Rather, the dispute is whether the Rental Agreements are 'PPS leases' pursuant to s 13(1)(c) or (d) of the PPSA.

The position of NFT

NFT argues that the Rental Agreements are not 'PPS leases' and therefore are not deemed to be security interests for the purpose of the PPSA. The argument is advanced on a number of fronts.
NFT says that the term of each of the Rental Agreements was 12 months. As to the commencement date, NFT says that the Rental Agreements commenced 'once tower crane arrived at the desired job site',[14] or after 60 days from the time the relevant crane arrived in Australia in circumstances where NFT had not been informed of the 'installation date'.[15] It is NFT's position that the Rental Agreements commenced on the date the relevant crane was installed, not the date the relevant Rental Agreement was executed.
[14] By operation of cl 1 of the Rental Agreements.
[15] By operation of cl 19 of the Rental Agreements.
It is NFT's position that s 13(1)(c) has no application in the circumstances of this case. This is because while the term of the Rental Agreements was 12 months, the agreements were subject to an extension of time being requested and granted in writing. NFT says that no extension of time was ever requested by Machforce, nor granted in respect of any of the cranes under any of the Rental Agreements;[16] and the Rental Agreements were not able to be renewed at the option of Machforce.
[16] Applicant's outline of submissions dated 10 November 2016 [13] ‑ [14].
As to the possible application of s 13(1)(d), NFT says that it cannot apply in respect of the crane the subject of the Fifth Agreement and possibly in respect of the crane the subject of the Fourth Agreement.
As to the Fifth Agreement, it appears to be NFT's position that regardless of whether the Fifth Agreement commenced on the execution date of 11 June 2015, or the 'installation date' 3 August 2015, the Fifth Agreement came to an end before the conclusion of the 12 month term (that is, on 16 January 2016 or 29 March 2016), such that Machforce could not be found to have held uninterrupted (or substantially uninterrupted) possession of the relevant crane for a period of more than one year after the day Machforce first acquired possession of the crane. However, the crane the subject of the Fifth Agreement has been returned to NFT and Machforce and the liquidators do not assert any vesting claim in relation to the Fifth Agreement or that crane to which the agreement related. Therefore, I need not decide whether the Fifth Agreement constituted a 'PPS lease'.
As to the Fourth Agreement, it appears to be NFT's position that if the Fourth Agreement commenced on the 'installation date' 16 March 2015, the Fourth Agreement came to an end before the conclusion of the 12 month term (that is, on 16 January 2016), such that Machforce could not be found to have held uninterrupted (or substantially uninterrupted) possession of the relevant crane for a period of more than one year after the day Machforce first acquired possession of the crane.

Were the Rental Agreements on foot as at the Appointment Date?

In respect of the Fourth Agreement, and in respect of the Rental Agreements generally, NFT's case is that the Rental Agreements were terminated at the 16 January Meeting (prior to the appointment of administrators to Machforce), and therefore there were no 'security interests' to vest in Machforce upon their appointment.
The parties are in dispute as to whether or not the Rental Agreements were, in fact terminated at the 16 January Meeting.
NFT summarises the communications exchanged prior to the 16 January Meeting as follows:[17]
a.In a chain of correspondence between the Applicant and the First Respondent between 9 October 2015 and 15 October 2015, the parties discussed some concerns in relation to back charging and in relation to the calculation of the rental commencement date;
b.Between 9 November 2015 and 17 November 2015, the Applicant raised concerns in respect of overdue payments for the supply of several cranes, the First Respondent sought to discuss an exchange of a minor percentage share of it in lieu of amounts payable under the Rental Agreements. This proposal was rejected by the Applicant and the First Respondent informed the Applicant that it would progress with alternative avenues to raise funds;
c.On 20 November 2015, the First Respondent informed the Applicant that it was not in a good financial position to pay the Applicant and provided that:
'we don't have money to pay, we can only leave it in NTF hands to do what necessary and we will try to help in anyway within our power.' (emphasis in original).; and
d.On 24 November 2015, the Applicant responded to the First Respondent's 20 November 2015 email providing that:
'You have to find a way to arrange your own financing for payment, FAR from any financial support from NFT!'
and proposed a face-to-face meeting to discuss the matter in Singapore on 26 and 27 November 2015 or for the First Respondent's representative to come to Abu Dhabi between 29 and 30 November or between 6 and 10 December 2015. (footnotes omitted)
[17] Applicant's outline of submissions dated 10 November 2016 [27].
As to what transpired at the 16 January Meeting, NFT says as follows:[18]
[18] Applicant's outline of submissions dated 10 November 2016 [29] ‑ [31].
29.The 16 January 2016 meeting (the Meeting) followed an extensive period of default and delay of the First Respondent in adhering to its contractual obligations pursuant to the Rental Agreements.
30.It is, respectfully, beyond dispute that termination and return of the Property to the Applicant was discussed at the Meeting even if the Respondents' evidence is preferred by the Court.
31.That said, and accepting that the communication between the parties suffered from some self-evident language barriers (as the balance of the evidence in this proceeding demonstrates), the Rental Agreements were terminated on or around 16 January 2016 for the following reasons:
a.The non-payment of contractual obligations by the First Respondent on and from November 2015;
b.The concession that the First Respondent could not pay the Applicant on and from mid-November 2015;
c.The rejection of any investment from the Applicant into the First Respondents business in mid to late November 2015;
d.The contemporaneous letter prepared by the Applicant purporting to terminate the Rental Agreements on 16 January 2016;
e.The contemporaneous diary notes in respect of the Meeting; and
f.The correspondence on 18 January 2016 to all persons in attendance at the Meeting setting out alternatives for the parties going forward (as discussed at the Meeting) - each of the options involving the termination of the Rental Agreements;
g.No term of the Rental Agreements requires that any notice of termination be issued in any particular form (such as in writing). (footnotes omitted)

NFT also asserts that it had a right to terminate the Rental Agreements at law by reason of Machforce's fundamental breach. In short, NFT says the fact that it had not re-taken physical possession of the cranes, and that it continued to charge rental termination, were not acts inconsistent with Rental Agreements having been terminated. In this regard, it is NFT's position that
no formal conduct is required on the part of the bailor, at law, in order to determine the accompanying conduct contract or to crystallise the bailor's immediate right to possession of the property bailed.[19]

The position of Machforce and the liquidators

[19] Applicant's outline of submissions dated 10 November 2016 [34]; referring to the following cases at footnote [31]: Scotton v John Bridge & Co Ltd (1919) 19 SR (NSW) 70; North Central Wagon & Finance Co Ltd v Graham [1950] 2 KB 808; Reliance Car Facilities Ltd v Roding Motors Ltd [1952] 2 QB 844; Union Transport Finance Ltd v British Car Auctions Ltd [1978] 2 All ER 385.

Machforce and the liquidators say that the Rental Agreements (other than the Fifth Agreement) constitute 'PPS leases' within the meaning of s 13(1)(c), alternatively s 13(1)(d) of the PPSA because:[20]
(a)Machforce entered into the Rental Agreements with NFT for a period of at least 12 months;
(b)clause 2 and cl 3 of the Rental Agreements contemplate an option to renew the initial term of the Rental Agreements;
(c)following the conclusion of the initial 12 months term contemplated by the Rental Agreements, the Rental Agreements continued to operate consistent with the practice of the parties; and
(d)NFT, under the ambit of the Rental Agreements, continued to charge Machforce fees in connection with the lease of the cranes the subject of the Rental Agreement.
[20] Respondents' written outline of submissions dated 16 November 2016 [8], [10].
In relation to the 16 January meeting, Machforce and the liquidators say as follows:[21]
[21] Respondents' written outline of submissions dated 16 November 2016 [27].
(a)there is no evidence before the Court of any election by the Applicant to terminate the Rental Agreements (or any of them) prior to the Appointment Date;
(b)Mr Nabil Alzahlawi deposes to having said, at the meeting on 16 January 2016, that 'As far as I was concerned the contracts were finished, the cranes needed to be returned and the outstanding rental amounts had to be paid';
(c)it is the evidence of Mr Russell Francis that no such statement was made;
(d)the evidence of Mr Alzahlawi has not been corroborated by any of the other attendees at the meeting on 16 January 2016;
(e)leaving to one side that the alleged statement (being subjective in nature) would, in the event that it had been made (which is denied), not be sufficient to constitute unequivocal words evincing an election to terminate the Rental Agreements, the other evidence of Mr Alzahlawi in relation to the content of the meeting conflicts with his contentions in relation to his alleged statement. Specifically, Mr Alzahlawi deposes to:
(i)having provided Mr Francis with a proposal letter for Mr Francis to sign; and
(ii)Mr Francis having refused to sign the proposal letter; and
(f)the use of the word 'proposal' is telling. A proposal is not a termination, nor is it a unilateral or unequivocal act. It is an invitation or offer. On Mr Alzahlawi's own evidence, the proposal was an offer that was not accepted by Machforce. (footnotes omitted)

Issue 1: Determination

Having regard to the Rental Agreements, in particular cl 3, I find that the Rental Agreements were not 'PPS leases' within the meaning of s 13(1)(c) of the PPSA. Under the terms of the Rental Agreements, they were not automatically renewable, nor were they renewable at the option of one of the parties.
However, I find that the Rental Agreements gave rise to security interests as 'PPS leases' within the meaning of s 13(1)(d) of the PPSA, with the exception of the Fifth Agreement (which as explained above, is not the subject of any claim in these proceedings). In coming to this conclusion, I have had regard to the following.
First, the proposition advanced by NFT as to the commencement date of the Rental Agreements cannot be sustained for the following reasons:
(a)As explained above, NFT relies on a particular reading of the Rental Agreements, particularly cl 1 and cl 19. However, cl 1 and cl 19 are concerned (among other things) with the period from which 'Rental' shall be payable under the Rental Agreements. They do not prescribe a commencement date for the Rental Agreements.
(b)Under the Rental Agreements, it appears that certain rights and obligations come into effect before the obligation to pay rent. For example, cl 7 of the Rental Agreement provides that 'NFT makes no warranty as to the delivery and installation of the tower crane and shall not be liable for any loss or damage result direct or indirectly from any delay in the delivery or installation of the tower crane'; cl 8 provides that 'NFT shall be responsible for the shipping of the tower crane up to Australia sea port. Machforce shall be responsible for any tax, VAT and all the clearance and transportation of the tower crane up to Machforce's yard and job site including providing of all labours and any form cranages to load and unload the crane'; cl 10 provides that 'Machforce shall provide free storage of the said tower crane at all times in Australia'; and cl 15 creates an obligation on Machforce to insure the crane at its own expense in Australia. Further, the testatum is in the following terms: 'Now it is hereby agreed between the parties that:'.
To adopt the interpretation advanced by NFT would be to unnaturally strain the language of two clauses for a particular purpose - namely, to try to limit the cranes (and the Rental Agreements) that would be characterised as 'PPS leases' within the meaning of s 13 of the PPSA. Such an artificial interpretation cannot be sustained.
I find that the Fourth Agreement commenced on 23 December 2014. It is on the same footing as the other Rental Agreements, with the exception of the Fifth Agreement.
Secondly, I am not satisfied on the evidence before me that the Rental Agreements were in fact terminated on 16 January 2016, or at any time prior to the Appointment Date under cl 20 of the Rental Agreements.
Under cl 20, NFT had the contractual right to immediately terminate the Rental Agreements if Machforce failed to fulfil its contractual obligations as prescribed in cl 1 to cl 19. The failure to pay rent gave NFT the right to immediately terminate the Rental Agreements, but the Rental Agreements did not provide that such a breach would automatically terminate the agreements.
Further, while there is no requirement under cl 20 that termination take effect by notice in writing, an unequivocal response to the breach, indicating that the contract is at an end, is required. Any words or conduct are sufficient if they 'make the election manifest to the relevant party'.[22]
[22] Karacominakis v Big Country Developments Pty Ltd [2000] NSWCA 313 [155]; citing Sargent v ASL Developments Pty Ltd(1974) 131 CLR 634, 646.
Mr Nabil Alzahlawi deposes to having attended the 16 January Meeting and his evidence is as follows:
33.In that meeting, I recall Russell telling me that the first respondent was in big financial trouble and needed a joint venture or capital investment from the applicant in order to continue operating.
34.I remember telling Russell that the applicant was not interested in any form of investment with the first respondent.
35.I said that as far as I was concerned the contracts were finished, the cranes needed to be returned and the outstanding rental amounts had to be paid.
…
37.At that meeting I remember providing a copy of a proposal for Russell to sign, which he refused to do.[23]
[23] First Nabil Alzahlawi Affidavit, [33] ‑ [37].
The proposal includes the following statement:
Both parties agreed that N.F.T. shall terminate all rental agreements with Machforce with immediate effect and arrange to take back all the cranes as mentioned in Annex B.[24]
[24] First Nabil Alzahlawi Affidavit, 'NA‑14'.
Mr Francis' evidence in relation to the 16 January Meeting is as follows.[25]
[25] Francis Affidavit [10] ‑ [13].
10On 16 January 2016, I attended a meeting at the offices of Crane World Asia Pte Ltd Singapore with representatives of the Applicant. To the best of my knowledge, those present at that meeting on behalf of the Applicant were (amongst others) as follows:
(a)Nabil Alzahlawi
(b)Nawar Alzahlawi; and
(c)Roger Poon.
11At the meeting referred to at paragraph 10 (January Meeting), I said words to the effect that:
(a)there had been several issues with the cranes provided by the Applicant;
(b)I had caused the First Respondent to pay the Rectification Costs; and
(c)as a result of paying for the Rectification Costs that properly should have been paid for by the Applicant, the First Respondent should not have to pay the rental fees in full but, rather, with deduction (taking into account the amount paid by the First Respondent for the Rectification Costs).
12At the January Meeting, Nabil Alzahlawi said words to the effect that:
(a)the First Respondent had failed to make its payments pursuant to the Rental Agreements and that the Applicant demanded payment of the same;
(b)the Applicant was not responsible for the Rectification Costs;
(c)he was planning on sending send his Chief Financial Officer, who I now know to be Clifford Loreno, to Perth in order to evaluate and address the issues raised by me at the January Meeting; and
(d) the Applicant would continue to consider its options with respect to the Rental Agreements, and that those options were as follows:
(i)the Applicant and the First Respondent enter into a joint venture agreement; or
(ii)the First Respondent return the cranes and the Rental Agreements would be terminated; or
(iii)the First Respondent provide an alternative propose to the Applicant to resolve the issues in dispute.
13At no point during the January Meeting did Nabil Alzahlawi, or any representative of the Applicant, state that the Rental Agreements were terminated.
NFT also relies on the evidence of Mr Nawar Alzahlawi, who was present at the 16 January Meeting. Mr Nawar Alzahlawi's role at the meeting was to observe and take note of what was said.[26] Annexed to the Nawar Alzahlawi Affidavit is what Mr Alzahlawi says is a true copy of his diary notes.[27] The diary notes do not record that the Rental Agreements were terminated. Rather, two possible options are described under the heading 'conclusion'. The first is a possible joint venture between NFT and Machforce; the second is termination of the Rental Agreements, return of the cranes to NFT and payment of moneys.
[26] Nawar Alzahlawi Affidavit [7].
[27] Nawar Alzahlawi Affidavit [8], 'NA‑1'.
The communication between the parties suffered from some self‑evident language barriers.[28] I find that at the 16 January Meeting, various options were canvassed by Mr Russell on behalf of Machforce. However, no agreement was reached as between Machforce and NFT in relation to a potential joint venture with NFT, termination and a repayment plan, or otherwise. Further, while I believe it likely that NFT's concerns in relation to the rental arrears were forcefully agitated at the 16 January Meeting, and that termination was discussed, I am not persuaded that there was a clear and unequivocal statement made for and on behalf of NFT that the Rental Agreements were terminated. Further, the actions by Machforce after the 16 January Meeting did not sufficiently manifest an election to treat the Rental Agreements as terminated.
[28] As acknowledged by counsel for NFT in the applicant's outline of submissions dated 10 November 2016 [31].
This finding is supported by the correspondence which passed between NFT and Machforce after 16 January Meeting; and the conduct of both parties in the months that followed, including the fact that NFT continued to charge rent for the cranes and lodged a proof of debt, the terms of which were consistent with the Rental Agreements having remained on foot until the appointment of administrators to Machforce.
As to NFT's submission that the Rental Agreements were terminated 'as a matter of law', I find that the cases cited by NFT do not support its proposition that 'no formal conduct is required on the part of the bailor, at law, in order to determine the accompanying conduct contract or to crystallise the bailor's immediate right to possession of the property bailed'.[29]
[29] Applicant's outline of submissions dated 10 November 2016 [34]. See cases identified at footnote 19 above.
Those authorities confirm that a bailment (as with any agreement) may be terminated in response to a repudiatory breach, or a breach of an essential term, as the option of the innocent party. An agreement is not terminated automatically upon the occurrence of a repudiation or breach. While it is true that there is no requirement as to the form of the notice, some act, declaration or notice is required that unequivocally show NFT's election to terminate.
I note that counsel for both parties addressed me in relation to the consequences of a finding that the Rental Agreements were terminated on 16 January 2016. Given the factual finding made, I do not intend to comment on the question of whether, despite termination of the Rental Agreements, NFT's interest in the cranes would have continued, so as to be capable of vesting in Machforce immediately before the appointment of the administrators.

Issue 2: What was the status of NFT's security interests as at the Appointment Date?

The second issue to be determined in these proceedings is the status of NFT's security interests as at the Appointment Date.
A security interest can be perfected by a secured party in three ways pursuant to s 21 of the PPSA, by:
(a)control in accordance with section 19 of the PPSA;
(b)possession in accordance with section 153 of the PPSA; and
(c)registering a financing statement pursuant to s 20 of the PPSA.
Section 21(2)(a) of the PPSA provides for perfection of security interests by way of registering a financing statement on the PPSR.
At all material times up to and including the Appointment Date, NFT was not in possession of the cranes the subject of the Rental Agreements and had not taken any active steps to re‑take possession of the cranes. Consequently, NFT was incapable of perfecting its security interest by the methods referred to at pars (a) and (b) above. Further, as at the Appointment Date, NFT had failed to perfect its security interest by way of registration. Rather, NFT registered a financing statement in respect of its security interest after the Appointment Date, on 11 May 2016.
As a result, immediately prior to and at the Appointment Date, NFT's security interest in the cranes the subject of the Rental Agreements remained unperfected.

Issue 3: Did NFT's security interests in the cranes vest pursuant to s 267 of the PPSA?

The third issue to be determined in these proceedings is whether NFT's interests in the cranes vested pursuant to s 267 of the PPSA. Section 267(2) provides that any security interest granted by a corporation that is unperfected immediately prior to the commencement of the administration or winding up of the grantor corporation vests in the corporation.
The relevant time for determining whether the security interest is perfected is the Appointment Date.
NFT had not, immediately prior to the Appointment Date, perfected its security interest in the cranes the subject of the Rental Agreements by registration or otherwise. Consequently, as at the Appointment Date, NFT's unperfected security interest in the cranes the subject of the Rental Agreements vested in Machforce on and from the Appointment Date.

Issue 4: Extension of time and the application of s 588FM of the Corporations Act

NFT's case was framed as follows. The Rental Agreements (or at least some of them), did not give rise to security interests. If the Rental Agreements gave rise to security interests, then the security interests came to an end upon the termination of the Rental Agreements in January 2016, such that they could not vest in Machforce on and from the Appointment Date. In the alternative, if the security interest survived termination of the Rental Agreements, then NFT should be granted an extension of time to 11 May 2016 to register its interests on the PPSR for the purposes of the PPSA pursuant to s 588FM of the Corporations Act.[30]
[30] As explained above, on 11 May 2016, NFT lodged a financing statement in respect of any security interest it held in the six crane towers the subject of the Rental Agreements.
I have found that the Rental Agreements were not terminated on 16 January 2016. Therefore, the fourth issue to be determined in these proceedings is the application of s 588FM of the Corporations Act in circumstances where immediately prior to and at the Appointment Date, NFT's security interest in the cranes the subject of the Rental Agreements existed and remained unperfected.

The relevant sections

Section 588FL of the Corporations Act provides as follows.
Vesting of PPSA security interests if collateral not registered within time
Scope
(1)This section applies if:
(a)any of the following events occurs:
(i)an order is made, or a resolution is passed, for the winding up of a company;
(ii)an administrator of a company is appointed under section 436A, 436B or 436C;
(iii)a company executes a deed of company arrangement under Part 5.3A; and
(b)a PPSA security interest granted by the company in collateral is covered by subsection (2).
Note: A security interest granted by a company in relation to which paragraph (a) applies that is unperfected at the critical time may vest in the company under section 267 or 267A of the Personal Property Securities Act 2009.
(2)This subsection covers a PPSA security interest if:
(a)at the critical time, or, if the security interest arises after the critical time, when the security interest arises:
(i)the security interest is enforceable against third parties under the law of Australia; and
(ii)the security interest is perfected by registration, and by no other means; and
(b)the registration time for the collateral is after the latest of the following times:
(i)6 months before the critical time;
(ii)the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier;
(iii)if the security agreement giving rise to the security interest came into force under the law of a foreign jurisdiction, but the security interest first became enforceable against third parties under the law of Australia after the time that is 6 months before the critical time--the time that is the end of 56 days after the security interest became so enforceable, or the time that is the critical time, whichever time is earlier;
(iv)a later time ordered by the Court under section 588FM.
Note 1: For the meaning of critical time, see subsection (7).
Note 2: For when a security interest is enforceable against third parties under the law of Australia, see section 20 of the Personal Property Securities Act 2009.
Note 3: security interest may become perfected at a particular time by a registration that is made earlier than that time, if the security interest attaches to the collateral at the later time (after registration). See section 21 of the Personal Property Securities Act 2009.
Note 4: The Personal Property Securities Act 2009 provides for perfection by registration, possession or control, or by force of that Act (see section 21 of that Act).
Vesting of security interest in company
(4)The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of section 588FN:
(a)if the security interest first becomes enforceable against third parties at or before the critical time - immediately before the event mentioned in paragraph (1)(a);
(b)if the security interest first becomes enforceable against third parties after the critical time - at the time it first becomes so enforceable.
Note: For the meaning of critical time, see subsection (7).
Property acquired for new value without knowledge
(5)Subsection (4) does not affect the title of a person to personal property if:
(a)the person acquires the personal property for new value from a secured party, from a person on behalf of a secured party, or from a receiver in the exercise of powers:
(i)conferred by the security agreement providing for the security interest; or
(ii)implied by the general law; and
(b)at the time the person acquires the property, the person has no actual or constructive knowledge of the following (as the case requires):
(i)the filing of an application for an order to wind up the company;
(ii)the passing of a resolution to wind up the company;
(iii)the appointment of an administrator of the company under section 436A, 436B or 436C;
(iv)the execution of a deed of company arrangement by the company under Part 5.3A.
Note: For what is actual or constructive knowledge, see sections 297 and 298 of the Personal Property Securities Act 2009.
(6)In a proceeding in Australia under this Act, the onus of proving the fact that a person acquires personal property without actual or constructive knowledge as mentioned in paragraph (5)(b) lies with the person asserting that fact.
(7)In this section:
'critical time' , in relation to a company, means:
(a)if the company is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day under section 513A or 513B; or
(b)in any other case - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company.

Section 588FM of the Corporations Act provides as follows.
Extension of time for registration
(1)A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv).
Note: If an insolvency-related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company.
(2)On an application under this section, the Court may make the order sought if it is satisfied that:
(a)the failure to register the collateral earlier:
(i)was accidental or due to inadvertence or some other sufficient cause; or
(ii)is not of such a nature as to prejudice the position of creditors or shareholders; or
(b)on other grounds, it is just and equitable to grant relief.
(3)The Court may make the order sought on any terms and conditions that seem just and expedient to the Court.

Section 293 of the PPSA relevantly provides as follows.
Timing - applications for extension of time
(1)On application, a court may make an order extending the number of business days in a period specified in the following provisions if the court is satisfied that it is just and equitable to do so:
(a)paragraphs 62(3)(b) (perfection of purchase money security interests);
...
(2)The court may make the order even if the period has ended.
(3)In making an order to extend a period under subsection (1), the court must take into account the following:
(a)whether the need to extend the period arises as a result of an accident, inadvertence or some other sufficient cause;
(b)whether extending the period would prejudice the position of any other secured parties or other creditors;
(c)whether any person has acted, or not acted, in reliance on the period having ended.

The position of NFT

NFT referred me to the discussion in Re Carpenter International Pty Ltd,[31] where Cameron J made the following observations:
It appears that s 588FM has been applied liberally. One of the cases under s 588FM involved an application for extension filed after a liquidator had been appointed to the company [noting Re Enviro Pallets (NSW) Pty Ltd [2013] QSC 220 (Philippides J)]. In another case, an administrator had already been appointed [noting Re Southern Engineering Services Pty Ltd [2014] NSWSC 1882]. In Re Quality Blend Liquor Pty Ltd [(2014) 102 ACSR 451; [2014] QSC 234] a provisional liquidator had been appointed by the time Wilson J granted an extension. In yet another case, an extension was granted even though the plaintiff intended to appoint a voluntary administrator and receivers to the grantor company [noting Re Apex Gold Pty Ltd [2013] NSWSC 881. In Appleyard [(2014) 101 ACSR 629; [2014] NSWSC 782] an extension was granted despite the high degree of likelihood that the grantor was insolvent and would go into liquidation or administration within six months. As CS submitted, the fact that administrators have been appointed to Carpenter is not a bar to relief under s 588FM.
...
As Brereton J explained in Appleyard, the only utility of an extension order is in the event that the company does go into liquidation or administration within six months after the actual date of registration. Section 588FM therefore contemplates that within six months of the actual date of registration, the company will go into administration or liquidation, and the unsecured creditors will receive less dividend if an extension is granted. The fact that administrators have been appointed to Carpenter does not mean an extension should not be granted. If some prejudice to unsecured creditors other than a reduced dividend can be shown, the Court may decline to exercise its discretion under s 588FM. The prejudice that must be shown is prejudice from the failure to register in time, not prejudice from the granting of an extension.
[31] Re Carpenter International Pty Ltd [2016] VSC 118 [217], [236].
NFT says that s 588FM has clear application in the circumstances of this case. In support of its position, NFT notes that s 588FM orders have been sought by and granted to external administrators themselves in respect of agreements entered after their appointment, and cites Mentha, in the matter of Arrium Ltd (Administrators Appointed),[32] where Davies J found as follows:
[32] Mentha, in the matter of Arrium Ltd (Administrators Appointed) [2016] FCA 972 [20] ‑ [21].
Order 3 was sought because there is a concern about the potential operation of s 588FL of the Act. Section 588FL deals with the automatic vesting of a PPSA security interest in the guarantor, if an effective registration is not made within the time set out by s 588FL(2)(b) and the interest is not perfected by other means. Relevantly, under s 588FL(2)(b)(ii) the deadline for registration is the earlier of the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force and the 'critical time' which is defined in s 588FL(7) to be, relevantly, the date on which the administration of the grantor began. Concern was expressed that it is arguable on a strict construction of s 588FL of the Act that the security interest granted in favour of EFIC under the EFIC Loan will immediately and automatically vest in the OneWhyalla Mining Entities because the security will be granted after the 'critical date'. For this reason, EFIC requested, and the administrators sought, an order under s 588FM extending the time for the security interests in favour of EFIC to be registered under the PPSA. The registration time can be extended by order of the Court: s 588FL(2)(b)(iv) and s 588FM of the Act. Section 588FM provides as follows:
'(1)A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv).
Note: If an insolvency related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company.
(2)On an application under this section, the Court may make the order sought if it is satisfied that:
(a)the failure to register the collateral earlier:
(i)was accidental or due to inadvertence or some other sufficient cause; or
(ii)is not of such a nature as to prejudice the position of creditors or shareholders; or
(b)on other grounds, it is just and equitable to grant relief.
(3)The Court may make the order sought on any terms and conditions that seem just and expedient to the Court.'
It is appropriate to make an order under s 588FM extending the registration time to put beyond doubt that s 588FL will not, in this case, operate to vest the security interest in the OneWhyalla Mining Entities automatically because the 'critical time', being the commencement of a voluntary administration, has already passed.
It was NFT's position that even if the court does not accept that the NFT terminated the Rental Agreements at a point in time prior to the appointment of the administrators, it is beyond doubt that the Rental Agreements terminated by force of cl 20 upon their appointment.
Any security interest thereby arising from Machforce's continued possession of the cranes would, as was the case in Mentha, in the matter of Arrium Ltd, arise after the appointment of the administrators and would properly be the subject of section 588FM.
NFT says that, assuming section 588FM of the Corporations Act applies, in respect of what constitutes 'inadvertence', I should have regard to the decision of Brereton J in In the matter of Accolade Wines Australia Ltd:[33]
For the purpose of s 588FM(2)(a)(i), 'inadvertence' includes failure to advert to or understand the requirement for registration within the specified period, and innocent error in the sense of failure to register through ignorance of the legal requirement to do so, or of the consequences of not doing so. Inadvertence will readily be found where an error of a secured creditor in not attending to registration of its security within time is innocent and does not result from any disregard of its statutory obligations. In Transurban CCT, the secured party became aware that the financing statements initially lodged contained potential defects, in that while they were properly registered against the ACN of each relevant corporate entity (as required), they were not registered against the ABN of the trust of which one of the defendants was a trustee (as required by PPS Regulations Schedule 1, cl 1.5). When this potential defect was discovered (more than 20 business days after the security interest was created), the secured patty lodged a further financing statement referring to the ABN of the trust, and applied for an extension of time pursuant to CORPA, s 588FM. In granting that application, the Court held:
'For the purposes of s 588FM(2)(a)(i), "inadvertence" has been interpreted to include failure to advert to or understand the requirement for registration within the specified period, an innocent error in the sense of failure to register through ignorance of the legal requirement to do so, or of the consequences of not doing so [Appleyard Capital, [10], and the cases there cited]. In this case, it is apparent that a bona fide attempt to register the security interests was made on 4 July 2014 and that the potential deficiencies - which, as I have said, are not clearly deficiencies - came to notice of the plaintiff's solicitors on about 13 August 2014 when the consultant who had carriage of the matter learnt of his firm's preferred practices in respect of such registrations.'
[33] In the matter of Accolade Wines Australia Ltd [2016] NSWSC 1023 [14].
NFT says that in this case, it was inadvertent in failing to register prior on the basis that:
(a)the Rental Agreements had been terminated;
(b)the law applicable to the Rental Agreements was the law of UAE; and
(c)NFT was not aware that even if it was the owner of the cranes it may be required to register any security interest created in respect of that collateral.
Further, NFT says that other than the windfall gain that unsecured creditors would otherwise receive if NFT is entirely unsuccessful in the proceedings, there is no other relevant prejudice to unsecured creditors of the relief sought.
If the Court is satisfied that NFT is entitled to relief pursuant to section 588FM of the Corporations Act, NFT says that it would likewise be satisfied that relief pursuant to section 293(1)(a) of the PPSA is appropriate.

Issue 4: Determination

NFT seeks an extension of the date for registration under s 588FM of the Corporations Act. The application fails as s 588FM of the Corporations Act has no application in circumstances where immediately prior to and at the Appointment Date, NFT's security interest in the cranes the subject of the Rental Agreements existed and remained unperfected.
An order under s 588FM affects the date by which a financing statement must be entered to avoid the vesting of the security interest under s 588FL. However, in this case, the security interests did not vest under s 588FL. Rather, NFT's security interests vested under s 267 of the PPSA.
Section 588FL applies only if the security interest was perfected by registration and by no other means 'at the critical time' (in this case, at the time of the appointment of an administrator).[34] As no financing statement was registered in respect of the Rental Agreements in favour of NFT as at the Appointment Date, no security interest was perfected under the PPSA by registration and the requirements of s 588FL(2)(a) were not met.
[34] Section 588FL(2)(a)(ii) of the PPSA.
NFT refers to Mentha, in the matter of Arrium Ltd, as authority for the proposition that an extension can be granted under s 588FM in respect of a security interest created after the Appointment Date. NFT says that it is beyond doubt that the Rental Agreements terminated by force of cl 20 of the Rental Agreements at the appointment of the administrators;[35] any security interest thereby arising from Machforce's continued possession of the cranes would, as was the case in Mentha, in the matter of Arrium Ltd, arise after the Appointment date and would properly be the subject of s 588FM.
[35] Applicant's outline of submissions dated 10 November 2016 [68].
The decision in Mentha, in the matter of Arrium Ltd is not applicable here.
The security interest in Mentha, in the matter of Arrium Ltd, was in fact created after the critical time and in favour of the party seeking relief under s 588FM. In this case, NFT's security interests (being its interests in the cranes under the Rental Agreements), arose before the critical time for the purposes of s 588FM(2)(a). The same security interests then vested under s 267 of the PPSA. After vesting, new security interests did not arise in favour of NFT from Machforce's continued possession of the cranes.
Even if it is accepted that the Rental Agreements were terminated upon the Appointment Date and immediately replaced with new security interests in favour of NFT, the 'new' security interests were not perfected by registration when the security interest arose, and therefore the requirements of s 588FL(2)(a)(ii) were not met.
In any event, even if it were the case that an order under s 588FM could be made in the circumstances of this case, in all of the circumstances I find that order would not be justified on the basis of inadvertence.
Section 588FM of the Corporations Act provides for extensions of time to register in certain circumstances. In 123 Sweden AB v Appleyard Capital Pty Ltd,[36] Brereton J:
Thus s 588FM confers on the court a discretion to fix a later time if satisfied of any one of three grounds, namely that the failure to register the collateral earlier was accidental, or was not of such a nature to prejudice the position of creditors or shareholders, or that on other grounds it is just and equitable to do so. The section also permits the court to make the order on terms and conditions.
[36] 123 Sweden AB v Appleyard Capital Pty Ltd [2014] NSWSC 782 [9] (Appleyard).
The concept of 'inadvertence' has been considered in the case law dealing with the former s 266 of the Corporations Act, and recently in case law relating to s 588FM of the PPSA. In Sanwa Australia Finance Ltd v Ground‑Breakers Pty Ltd (in liq),[37] Kelly SPJ (with whom Macrossan CJ & Connolly J agreed) said:
The question of whether an omission to carry out a statutory obligation because of ignorance of the law may amount to inadvertence has been considered by courts on several occasions and the weight of authority is that it may do so.
[37] Sanwa Australia Finance Ltd v Ground‑Breakers Pty Ltd (in liq) (1990) 2 ACSR 692, 695.
In Re Enviro Pallets (NSW) Pty Ltd,[38] Philippides J said:
A lack of legal understanding as to the requirements of registration, and the implications of late registration, has also been held to amount to inadvertence.
[38] Re Enviro Pallets (NSW) Pty Ltd [2013] QSC 220 [45].
In Appleyard,[39] Breteton J stated:
For the purpose of s 588FM(2)(a)(i), 'inadvertence' includes failure to advert to or understand the requirement for registration within the specified period, and innocent error in the sense of failure to register through ignorance of the legal requirement to do so, or of the consequences of not doing so [Sanwa Australia Finance Ltd v Ground‑Breakers Pty Ltd (in liq) [1991] 2 Qd R 456 ; (1990) 2 ACSR 692; Campbell Finance Pty Ltd v Vivstan Packaging (Aust) Pty Ltd (in liq) [1998] 2 VR 340 ; (1996) 22 ACSR 109; Freightlines Northern Territory Pty Ltd (1999) 32 ACSR 573 at 576; In the matter of Cardinia Nominees Pty Ltd [2013] NSWSC 32, [14]–[16]].
Mr Andersson had not previously conducted business in Australia. He dealt with Appleyard Capital without the benefit of Australian legal assistance or advice. While the term sheet imposed on Appleyard Capital an obligation to register the security interest, but Mr Andersson says that he was not aware of any legislative or regulatory requirement for registration under Australian law, or the consequences of failing to register within time. ... I am satisfied that the failure to register the collateral earlier was accidental or due to inadvertence or some other sufficient cause within s 588FM(2)(a)(i).
[39] Appleyard [10] ‑ [11].
In the present case, NFT was aware of the PPSA and the PPSR as early as 30 January 2016. In his affidavit sworn 9 May 2016, Mr Loreno deposes that on 30 January 2016, he received email correspondence from Albert Stazzonelli (the former general manager of Machforce) in respect of the importance of registering NFT's interest on the PPSR in the following terms:[40]
Hello Clifford,
Further to our telephone conversation I have attached some information regarding PPSA in Australia. It is important that NFT understands the implications should Machforce go into Administration. In short the liquidator could sell the tower cranes as if owned by Machforce and take the proceeds if NFT has not registered its interest in the cranes as per the lease agreement.
While I appreciate some concern regarding the importation documentation and seeking advice my understanding this is primarily for the payment of taxes etc.
I can only recommend that you act promptly on this matter as the legal argument of ownership may be irrelevant in an official Administration.
The information that I have attached is from an advisory company EDX (WA) in Perth who specialise in registration of PPSA. They provided advise [sic] to me previously at D&G. I can send you their details if you require. The Principal Director Simon Read is also a connection on my LinkedIn if you want to connect.
I can also provide you with a solicitor in Perth if required.
[40] Loreno affidavit 'CCL‑5', page 101.
In all of the circumstances, NFT knew, or ought to have made itself aware, of the requirements of registration and the implications of late registration. This distinguishes the present matter from the cases referred to above in which inadvertence was also claimed. The present circumstances do not come within the concept of 'innocent error', where there has been no disregard of statutory obligations.
It is NFT's position that if satisfied that NFT is entitled to relief pursuant to s 588FM of the Corporations Act, then I would likewise be satisfied that relief pursuant to s 293(1)(a) of the PPSA is appropriate, noting that the requirements to obtain relief are substantively in the same terms. In all of the circumstances, I am not satisfied that the need to extend the period has arisen as a result of an accident, inadvertence or some other sufficient cause. Having made such a finding, I need not go on to consider whether extending the period would prejudice the position of any other secured parties (in this case, Westpac), or other creditors; nor whether any person has acted, or not acted, in reliance on the period having ended.
In all of the circumstances, I am not satisfied that NFT is entitled to relief pursuant to s 588FM of the Corporations Act, nor s 293(1)(a) of the PPSA.

Conclusion

The application by NFT for relief fails. In light of the various findings above, it is not necessary for me to opine on the question of the appropriateness of the Machforce Registrations, nor the Liquidator Registrations.[41] I will hear from the parties as to the appropriate form of order.
[41] As those terms are defined in Schedule A.

SCHEDULE A
1.Leave of the Court to proceed against the Respondent, a company in liquidation, pursuant to section 471B of the Corporations Act;
2.An order extending the time for the Applicant to commerce [sic] this proceeding pursuant to rule 14.1(2)(b) of the Corporations Rules;
3.A declaration that the 'Rental Agreement' entered between the Applicant and the First Respondent on:
a.1 September 2014;
b.19 September 2014;
c.24 September 2014;
d.3 November 2014;
e.23 December 2014;
f.11 June 2015; and
g.9 July 2015
(together, the Rental Agreements),
were each terminated on 16 January 2016 (the Termination).
4.An order that the Second and Third Respondents deliver up to the Applicant:
a.MC125 Upper Machine (Serial Number 603707);
b.CTT561-32 HD 23 Upper Machine (Serial Number 8908015);
c.Potain Tower Crane type MC85 (Serial Number 402404);
d.Potain Tower Crane type MC310K12 (Serial Number 604450);
e.Potain Tower Crane type MR160 (Serial Number 41420); and
f.Potain Tower Crane MC175 Upper Machine (Serial Number 351319),
(together, the Property),
being the Property the subject of the Rental Agreement.
5.Further, and in the alternative to paragraphs 3 and 4:
a.An order, pursuant to section 588FM of the Corporations Act fixing 11 May 2016 as the time for the applicant to register:
i.PPSR Registration Number: 201605110054399;
ii.PPSR Registration Number: 201605110054404;
iii.PPSR Registration Number: 201605110054415;
iv.PPSR Registration Number: 201605110054427;
v.PPSR Registration Number: 201605110054436; and
vi.PPSR Registration Number: 20160511005443;
(together, the Applicant Registrations)
for the purposes of section 588FL(2)(b)(iv) of the Corporations Act; and
b.An order, pursuant to section 293(1)(a) of the [Personal Properties Security Act 2009 (Cth) (PPSA)] extending the time to perfect the Applicant Registrations to 11 May 2016.
6.An order that the First, Second and Third Respondents, jointly and severally, pay damages to the Plaintiff for loss suffered as a consequence of the failure of the First Respondent delivering up to the Plaintiff the Property on and from the Termination.
7.A declaration that the security interest(s) registered in favour of the First Respondent against the Property, and as against a further piece of equipment of the Applicant 'Amco Veba Crane 810‑3S RR (ZX100‑3S) Serial number: 25616' (the Amco), being the security interest(s) registered by the First Respondent against itself on the Personal Properties Securities Register (PPSR), under:
a.PPSR registration Number: 201601180061839;
b.PPSR registration Number: 201601190033880;
c.PPSR registration Number: 201601190033898;
d.PPSR registration Number: 201601190033908;
e.PPSR registration Number: 201601190033912;
f.PPSR registration Number: 201601190033920; and
g.PPSR registration Number: 201601190035291;
(together, the Machforce Registrations)
is/are void and of no effect and otherwise set aside.
8.An order that the Fourth Respondent, established under the PPSA, register a financing change statement or financing change statements, as required, to remove the Machforce Registrations from the PPSR and any record thereof pursuant to section 184(1)(a) of the PPSA and regulation 5.10 of the Personal Property Securities Regulations 2010 (Cth) (PPS Regs) or section 184(1)(e) of the PPSA.
9.A declaration that the First Respondent, through each of the Machforce Registrations, has breached section 151 of the PPSA.
10.A declaration that the security interest(s) registered in favour of the Second and Third Respondents against the Property and the Amco, being the security interests(s) the subject of the PPSR registration number:
a.PPSR registration Number: 201603290077645;
b.PPSR registration Number: 201603290077650;
c.PPSR registration Number: 201603290077666;
d.PPSR registration Number: 201603290077678;
e.PPSR registration Number: 201603290077684;
f.PPSR registration Number: 201603290077697;
g.PPSR registration Number: 201603310006202; and
h.PPSR registration Number: 201603310006239,
(together, the Liquidators Registrations)
is/are void and of no effect and otherwise set aside.
11.A declaration that the security interest registered in favour of the Second and Third Respondents as against all present and after‑acquired personal property of the First Respondent (the Liquidators' AllPAP), being the security interest referred to in PPSR registration number: 201603290073095, is void and of no effect and otherwise set aside.
12.An order that the Fourth Respondent register a financing change statement or financing change statements to remove the Liquidators Registrations and the Liquidators' AllPAP from the PPSR and any record thereof pursuant to section 184(1)(c) of the PPSA and regulation 5.10 of the PPSR Regs or section 184(1)(e) of the PPSA.
13.An order that each of the First, Second and Third Respondents, whether by themselves, by their agents or on behalf of any other person or corporate entity be restrained from registering or causing to be registered on the PPSR any financing statement claiming an interest in any of the Property or any AllPAP security interest granted by the First Respondent without further order of the Court.
14.A declaration that the Second and Third Respondents, through each of the Liquidators Registrations and Liquidators' AllPAP, have breached section 151 of the PPSA.
15.Interests.
16.Costs.
17.Interest on costs.
18.Such further order or other direction, declaration or order as this Honourable Court deems fit.

Rental Agreement Date	Delivery Date	Reference
19 September 2014	3 November 2014	First Agreement
24 September 2014	27 October 2014	Second Agreement
3 November 2014	22 December 2014	Third Agreement
23 December 2014	16 March 2015	Fourth Agreement
11 June 2015	3 August 2015	Fifth Agreement
9 July 2015 (varying an agreement dated 1 September 2014	6 October 2014	Sixth Agreement