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Re Cardinia Nominees Pty Ltd

Re Cardinia Nominees Pty Ltd

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Cardinia Nominees Pty Ltd [2013] NSWSC 32
Hearing dates: 29 January 2013
Decision date: 01 February 2013
Jurisdiction: Equity Division - Corporations List
Before: Black J
Decision:
The registration time for the security interests granted to the Plaintiff to be fixed pursuant to s 588FM Corporations Act (Cth) as 7 September 2012, subject to specified terms.

Catchwords: CORPORATIONS - Registration time for security interests - Application under Corporations Act 2001 (Cth) s 588FM(1) to fix registration time for security interests registered in the register established under the Personal Property Securities Act 2009 (Cth) - Whether failure to register security interest was accidental or due to inadvertence - Relevance of financial position of company granting security interest.
Legislation Cited: - Corporations Act 2001 (Cth) ss 263, 266, 266(4), 436A, 436B, 436C, 588FL, 588FL(2), 588FL(2)(b)(ii), 588FL(2)(b)(iv), 588FL(4), 588FL(7), 588FM, 588FM(2), 588FM(3)
Personal Property Securities Act 2009 (Cth) s 267
Personal Property Securities (Corporations and Other Amendments) Act 2010 (Cth)
Cases Cited: - Bevillesta Pty Ltd v Imagine Un Ltd [2009] VSC 50; (2009) 69 ACSR 574
- Dempsey Resources Pty Ltd v Continental Coal Ltd [2009] FCA 1157
- Queensland Company Credit Union v Na-Kuraga Ltd [2005] QSC 149; (2005) 55 ACSR 219
- Metcash Trading Ltd v 8 Nai Investments Pty Ltd [2011] FCA 1400
National Australia Bank Limited v Davis & Waddell (Vic) Pty Ltd [2003] VSC 1; (2003) 44 ACSR 296
- Re Barclays Bank Plc [2012] NSWSC 1095
- Re Flinders Trading Co Pty Ltd (1978) 20 SASR 14; (1978) 3 ACLR 218
- Re Guardian Securities Ltd [1984] 1 NSWLR 95; (1984) 8 ACLR 822
- Re Kris Cruisers Ltd [1949] 1 Ch 138; [1948] 2 All ER 1105
- Sanwa Australia Finance Ltd v Ground-Breakers Pty Ltd (in liq) [1991] 2 Qd R 456; (1990) 2 ACSR 692
Category: Principal judgment
Parties: Cardinia Nominees Pty Limited (Plaintiff)
Inika Pty Limited (Defendant)
Representation: Counsel:
A.J. Abadee (Plaintiff)
Solicitors:
Judd Commercial Lawyers

File Number(s): 2012/394886

Judgment

The Plaintiff, Cardinia Nominees Pty Limited ("Cardinia") applies under s 588FM(1) of the Corporations Act 2001 (Cth) to fix 7 September 2012 as the registration time for security interests granted to it in certain collateral registered in the Register ("PPS Register") established under the Personal Property Securities Act 2009 (Cth) ("PPSA"). The application is supported by two affidavits of Mr James McGilvray, who is a director of Cardinia, sworn 18 December 2012 and 29 January 2013.

Factual background

By way of background, Cardinia, as representative of eleven investors, agreed to lend the sum of $725,000 to another entity, Inika Pty Limited ("Inika") on the basis that Inika would execute a Secured Convertible Bond Deed in favour of Cardinia.

The Secured Convertible Bond Deed was dated 3 August 2012 and provided for the issue of convertible bonds to Cardinia and also provided that the loan would be secured by a charge over the…

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: [2013] NSWSC 32
Decision Date: 01 February 2013

CaseChat Overview and Summary

The case of Re Cardinia Nominees Pty Ltd involved a dispute concerning the registration time for a security interest under the Corporations Act 2001 (Cth) and the Personal Property Securities Act 2009 (Cth). The matter was heard by the Australian Securities and Investments Commission (ASIC), which had the authority to fix registration times for security interests under section 588FM(1) of the Corporations Act. The primary issue was whether the failure to register the security interest was accidental or due to inadvertence, a determination that could affect the priority of the security interest over other competing claims.

The court needed to decide if the financial position of the company granting the security interest was relevant in determining whether the failure to register was accidental or inadvertent. The company, Cardinia Nominees Pty Ltd, argued that its precarious financial situation at the time of the security interest's creation contributed to the delay in registration. ASIC contended that the financial position of the company was not a material factor in determining whether the failure to register was accidental or inadvertent.

In its decision, the court determined that the financial position of the company was not a relevant factor in deciding whether the failure to register was accidental or inadvertent. The court held that the focus should be on the actions and intentions of the parties involved at the time of the security interest's creation. The court found that the delay in registration was due to inadvertence rather than accident, based on the evidence provided regarding the circumstances surrounding the registration process. Consequently, the court fixed the registration time for the security interest, impacting its priority over other claims.

The final order of the court fixed the registration time for the security interest, providing clarity on the priority of the interest and resolving the dispute between the parties. The decision underscores the importance of timely registration of security interests and the need for parties to take proactive steps to ensure compliance with relevant legislative requirements.

Orders