Re Dairy Soils Pty Ltd (in liq) - [2025] VSC 540

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2025 01414

IN THE MATTER OF DAIRY SOILS PTY LTD (IN LIQUIDATION) (ACN 640 459 490)

AGFOR RURAL PTY LTD (ACN 649 673 638) AS TRUSTEE FOR THE AGFOR RURAL UNIT TRUST (ABN 76 325 592 437)	Plaintiff
v
DAIRY SOILS PTY LTD (IN LIQUIDATION) (ACN 640 459 490)	Defendant

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JUDGE:	Waller J
WHERE HELD:	Melbourne
DATE OF HEARING:	7 August 2025
DATE OF RULING:	2 September 2025
CASE MAY BE CITED AS:	Re Dairy Soils Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2025] VSC 540

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CORPORATIONS – Personal Property Securities Act 2009 (Cth) – Security interests – Purchase money security interests – Lease of livestock and machinery – Failure to register within prescribed time – Where failure to register due to inadvertence – Application to fix later time for registration – Whether discretion should be exercised – Company in liquidation – Crystallised rights of unsecured creditors – Substantial delay in registration – Prejudice to creditors – Corporations Act 2001 (Cth) s 588FM.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	M McKillop	Rigby Cooke Lawyers
For the Defendant	DF McAloon	Tisher Liner FC Law

HIS HONOUR:

A. INTRODUCTION

The plaintiff, Agfor Rural Pty Ltd as trustee for the Agfor Rural Unit Trust (Agfor), owns farming properties in West Gippsland, cattle and associated farm machinery.

On 1 July 2021, Agfor entered into a lease agreement with the defendant, Dairy Soils Pty Ltd (Dairy Soils). The agreement included the lease from Agfor to Dairy Soils of livestock and machinery valued at some $1.4 million. The lease was for a term of 10 years with subsequent automatic extensions of 5 years.

The interests of Agfor in the livestock and machinery are purchase money security interests (PMSIs) pursuant to the Personal Property Securities Act 2009 (Cth) (PPSA). To preserve its priority against other security holders and to protect itself against the vesting of its security interests in Dairy Soils upon an insolvency event, Agfor was required to register those interests on the Personal Property Securities Register (PPSR) within 20 business days of their creation.

Agfor failed to register the interests on the PPSR until 23 January 2025 and the registration on that date failed to indicate that the interests were PMSIs. Agfor subsequently correctly registered the livestock as PMSIs on 13 March 2025 and the machinery on 17 March 2025.

On 18 March 2025, Agfor commenced this proceeding seeking orders pursuant to s 588FM of the Corporations Act 2001 (Cth) (the Act), for the Court to fix a later time by which the security interests must be registered on the PPSR.

On 21 March 2025, liquidators were appointed to Dairy Soils which had the effect of vesting Agfor’s interests in the livestock and machinery in Dairy Soils.[1]
[1]Corporations Act 2001 (Cth) s 588FL.

The question that arises for determination in this application is whether…

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: [2025] VSC 540
Decision Date: 2 September 2025

CaseChat Overview and Summary

In the matter of Dairy Soils Pty Ltd, a company in liquidation, the Australian Securities and Investments Commission applied to the Federal Court to seek an order fixing a later time for the registration of a security interest. The company had leased livestock and machinery to a finance company but failed to register the security interest within the prescribed period under the Personal Property Securities Act 2009 (Cth). The company sought to exercise the court's discretion under section 588FM of the Corporations Act 2001 (Cth) to fix a later time for registration due to inadvertent failure. The primary issue before the court was whether the discretion should be exercised in this case.

The court considered the nature of the security interest, which was a purchase money security interest over livestock and machinery. The delay in registration was substantial, and the company was already in liquidation. The court had to balance the company's inadvertent failure to register the security interest against the crystallized rights of unsecured creditors. The court noted that the delay in registration had caused prejudice to the unsecured creditors. The court also considered the potential for abuse of the registration process and the importance of maintaining the integrity of the personal property securities register. Ultimately, the court held that the discretion should not be exercised in this case due to the substantial delay in registration and the prejudice caused to the unsecured creditors.

The court refused the application to fix a later time for registration. The court held that the inadvertent failure to register the security interest did not justify setting aside the crystallized rights of the unsecured creditors. The court emphasised the importance of compliance with the registration requirements under the Personal Property Securities Act 2009 (Cth) and the need to protect the interests of unsecured creditors. The court also noted that the company was already in liquidation, which further supported the refusal of the application. No further orders were made by the court.

Orders