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Re Bellerine Heights Pty Ltd

Re Bellerine Heights Pty Ltd

Case [2020] VSC 874 21 December 2020

Personal Property Securities

Statutory Interpretation

Corporate Compliance

Corporate Law & Governance

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 03869

IN THE MATTER of BELLERINE HEIGHTS PTY LTD (ACN 615 582 968)

BETWEEN :

AUSTIN FINANCE PTY LTD (ACN 632 635 771) in its own capacity and as trustee for the AUSTIN FINANCE UNIT TRUST (ABN 33 253 937 970)

Plaintiff

- and -

BELLERINE HEIGHTS PTY LTD (ACN 615 582 968) in its own capacity and as trustee for the BELLERINE HEIGHTS DEVELOPMENT TRUST (ABN 38 756 008 210) & ORS (as set out in the attached schedule)

First defendant

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JUDGE:	SLOSS J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 December 2020
DATE OF JUDGMENT:	21 December 2020
CASE MAY BE CITED AS:	Re Bellerine Heights Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 874

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CORPORATIONS − Where lender failed to register security interests on the Personal Property Securities Register within the prescribed time —Where lender made application for extension of time for registration pursuant to Corporations Act 2001 (Cth) s 588FM — Whether failure to register in timely way was accidental or due to inadvertence — Where borrowers and grantors were joined as defendants and afforded an opportunity to be heard − Where secured creditors were notified and afforded an opportunity to be heard —Where Court satisfied that failure to register security interests on the Personal Property Securities Register within the prescribed time was accidental or due to inadvertence − Held, appropriate to exercise discretion under s 588FM to fix later time for registration, and to reserve liberty to unsecured creditors and any liquidator or administrator to apply to set aside the order in the event of a liquidation or insolvency.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms V E Bell of counsel	Norton Rose Fulbright Australia
For the Defendants	No appearance

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Relevant factual background........................................................................................................... 5

Relationship between the parties................................................................................................ 5
The Austin Finance transaction.................................................................................................. 7
Prior Monark transaction........................................................................................................... 10
Subsequent Ritz Furniture transaction.................................................................................... 11
No subsequent security interests have been registered on the PPS Register over Bellerine Heights, Bell Heights or the Grantors............................................................................ 11

Relevant legal principles................................................................................................................ 12

Inadvertence................................................................................................................................ 13
No prejudice to creditors or shareholders............................................................................... 14
Discretionary factors................................................................................................................... 17

Consideration of present application........................................................................................... 18

Was the failure to register the collateral accidental and due to inadvertence?................. 18
Whether there is any prejudice to the position of creditors or shareholders..................... 19
Bellerine Heights................................................................................................................ 19
Bell Heights........................................................................................................................ 20
Bell-East............................................................................................................................... 21
Bayview Geelong............................................................................................................... 22
Moorabool........................................................................................................................... 22
Ritz Geelong....................................................................................................................... 23

Conclusion......................................................................................................................................... 26

HER HONOUR:

Introduction

By originating process filed on 7 October 2020, the plaintiff seeks an order pursuant to section 588FM(1) of the Corporations Act 2001 (Cth) (Corporations Act) extending the time for registration in respect of certain registrations of security interests on the register established under the Personal Property Securities Act 2009 (Cth) (PPSA and PPS Register).

Under the PPSA, where a company grants a PPSA security interest, it must be registered on the PPS Register within the time…

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.

Continue reading Re Bellerine Heights Pty Ltd

Details

AGLC: Re Bellerine Heights Pty Ltd [2020] VSC 874
Case: [2020] VSC 874
Decision Date: 21 December 2020

CaseChat Overview and Summary

Re Bellerine Heights Pty Ltd involved a dispute between a lender and borrowers regarding the registration of security interests under the Corporations Act 2001 (Cth). The lender had failed to register the security interests within the prescribed timeframe, leading to the borrowers and grantors being joined as defendants. The lender subsequently applied for an extension of time for registration under section 588FM of the Act. Secured creditors were also notified and given the opportunity to be heard. The primary issue before the court was whether the lender's failure to register the security interests was accidental or due to inadvertence, which would warrant an extension of time.

The court examined the evidence presented to determine whether the lender's failure to register the security interests within the prescribed time was accidental or due to inadvertence. The court took into account the lender's explanations, the borrowers' and grantors' responses, and the secured creditors' submissions. The court found that the lender's failure to register the security interests was indeed accidental or due to inadvertence. The court was satisfied that the lender had acted in good faith and that there was no evidence of deliberate or reckless conduct.

In light of its findings, the court exercised its discretion under section 588FM of the Corporations Act 2001 (Cth) to fix a later time for registration of the security interests. The court also reserved the liberty to unsecured creditors and any liquidator or administrator to apply to set aside the order in the event of a liquidation or insolvency. This decision ensures that the lender has the opportunity to rectify its error while also protecting the interests of unsecured creditors and other stakeholders.

Orders