Re Octaviar Ltd (No 7)

Case [2009] QCA 282

SUPREME COURT OF QUEENSLAND

CITATION:

Re Octaviar Ltd (No 7) [2009] QCA 282

PARTIES:

THE PUBLIC TRUSTEE OF QUEENSLAND
(applicant/third respondent)
v
OCTAVIAR LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (RECEIVERS AND MANAGERS APPOINTED) ACN 107 863 436
(respondent/first respondent)
OCTAVIAR ADMINISTRATION PTY LIMITED (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) ACN 101 069 390
(respondent/second respondent)
FORTRESS CREDIT CORPORATION (AUSTRALIA) II PTY LIMITED ACN 114 624 958
(respondent/appellant)

FILE NO/S:

Appeal No 3432 of 2009
SC No 1848 of 2009
SC No 1850 of 2009

DIVISION:

Court of Appeal

PROCEEDING:

General Civil Appeal

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

18 September 2009

DELIVERED AT:

Brisbane

HEARING DATE:

26 August 2009

JUDGES:

Holmes and Muir JJA and White J
Separate reasons for judgment of each member of the Court, each concurring as to the orders made

ORDERS:

1.   Appeal allowed;

2.   Judgment at first instance set aside;

3.   Declared that the execution by the appellant and first respondent of the deed dated 22 January 2008:

(a)   was not a variation in the terms of the charge dated 1 June 2007 made between the first respondent as chargor and the appellant as chargee for the purposes of s 268 of the Corporations Act 2001 (Cth) so as to require a lodgment of notice under that section;

(b)  did not create a charge between the first respondent as chargor and the appellant as chargee for the purposes of s 263 of the Corporations Act 2001 (Cth) so as to require lodgment of notice pursuant to that section.

4.   Third respondent pay appellant’s costs of the appeal and of the separate hearing at first instance on 2, 3 March 2009 as to the validity of the charge.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – OTHER MATTERS – where first respondent guaranteed a company’s liability to appellant under a loan agreement (“YVE Guarantee”) – where first respondent (and a related company) guaranteed a subsidiary’s (the borrower) liability to appellant under a loan facility agreement (“facility agreement”) – where first respondent charged its property as security for the latter liability – where deed of charge provided that the charge extended to any liability arising under a “Transaction Document” – where facility agreement defined “Transaction Document” as, inter alia, any document which the appellant and the borrower or first respondent agreed in writing was a “Transaction Document for the purposes of this Agreement” – where appellant, borrower and first respondent agreed in writing that the YVE Guarantee was a Transaction Document – whether YVE Guarantee was a Transaction Document “for the purposes of” the facility agreement

CORPORATIONS – CHARGES, DEBENTURES AND OTHER BORROWINGS – CHARGES – VALIDITY – OF CHARGES IN FAVOUR OF CERTAIN PERSONS – where s 263 of Corporations Act 2001 (Cth) requires a company that creates a charge to lodge a notice setting out particulars of the charge – where s 266(1) renders a charge void as against administrators of a company if notice…

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Details
AGLC
Re Octaviar Ltd (No 7) [2009] QCA 282
Case
[2009] QCA 282
Decision Date

CaseChat Overview and Summary

The appeal before the court involved the appellant, Octaviar Limited, and the first respondent, a company which had guaranteed the liability of another company under a loan agreement. The dispute centred around the interpretation of the terms of the guarantee and the effect of this on the security provided by the first respondent for its obligations. The court also considered whether the designation of the guarantee as a "Transaction Document" created a new charge under the Corporations Act 2001 (Cth), which would have required the lodgement of a notice of the charge. The matter was ultimately decided by the High Court of Australia.

The central legal issues before the court were whether the guarantee constituted a "Transaction Document" under the facility agreement for the purposes of the security charge, and if so, whether it triggered the requirement to lodge a notice of the charge under the Corporations Act. Additionally, the court needed to determine whether the execution of the deed, which designated the guarantee as a Transaction Document, constituted a "variation in the terms of the charge" requiring notice under section 268(2) of the Act. The validity of the charge itself was also a question before the court, as was the applicability of sections 263 and 266 of the Corporations Act.

The court found that the execution of the deed did not constitute a variation in the terms of the charge, nor did it create a charge requiring the lodgement of a notice under section 263 of the Corporations Act. The court held that the designation of the guarantee as a Transaction Document did not alter the nature of the security already provided by the first respondent. Consequently, the court concluded that the charge remained valid, and no notice was required under section 268(2) of the Act. The appeal was allowed, and the judgment at first instance was set aside. The court also declared that the execution of the deed did not create a charge or require notice under the relevant sections of the Act.

In addition to setting aside the judgment at first instance, the court ordered that the third respondent pay the appellant's costs of the appeal and of the separate hearing on the validity of the charge. This ruling clarified the legal position regarding the interpretation of guarantees and security charges under the Corporations Act, and provided guidance for future cases involving similar factual circumstances.

Orders

Orders of the court

1. Appeal allowed;

2. Judgment at first instance set aside;

3. Declared that the execution by the appellant and first respondent of the deed dated 22 January 2008:

(a) was not a variation in the terms of the charge dated 1 June 2007 made between the first respondent as chargor and the appellant as chargee for the purposes of s 268 of the Corporations Act 2001 (Cth) so as to require a lodgment of notice under that section;

(b) did not create a charge between the first respondent as chargor and the appellant as chargee for the purposes of s 263 of the Corporations Act 2001 (Cth) so as to require lodgment of notice pursuant to that section.

4. Third respondent pay appellant’s costs of the appeal and of the separate hearing at first instance on 2, 3 March 2009 as to the validity of the charge.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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