Realtek Semiconductor Corporation v Jones (Administrator) - [2024] FCA 1321

FEDERAL COURT OF AUSTRALIA
Realtek Semiconductor Corporation v Jones (Administrator) [2024] FCA 1321

File number: WAD 254 of 2024

Judgment of: FEUTRILL J

Date of judgment: 22 October 2024

Date of publication of reasons: 14 November 2024

Catchwords: CORPORATIONS – application for order pursuant to s 588FM of the Corporations Act 2001 (Cth) – security interest in assets, rights and property of company – failure to register collateral due to inadvertence – prejudice to unsecured creditors

Legislation:
Corporations Act 2001 (Cth) ss 436A, 440D, 470, 588FL, 588FL(1), 588FL(2)(a), 588FL(2)(b), 588FL(2)(b)(iv), 588FL(4), 588FM, 588FM(2), 588FM(2)(b), 588FN

Personal Property Securities Act 2009 (Cth) ss 10, 18(1)m 19, 20, 21, 267

Federal Court Rules 2011 (Cth) Sch 3

Personal Property Securities Regulations 2010 (Cth)

Cases cited:
Bluewaters Power 1 Pty Ltd v Griffin Coal Mining Company Pty Ltd [2019] WASC 438

K.J. Renfrey Nominees Pty Ltd (Trustee), in the matter of OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 325; 120 ACSR 117

Pit N Portal Mining Services Pty Ltd v Aurora Metals Ltd (admins apptd) [2023] FCA 762

Re Accolade Wines Australia Ltd [2016] NSWSC 1023

Re Appleyard Capital Pty Ltd [2014] NSWSC 782; 101 ACSR 629

Re Transurban CCT Pty Ltd [2014] NSWSC 1909

Squadron Resources Pty Ltd v Highlake Resources Pty Ltd [2018] FCA 1292

Division: General Division

Registry: Western Australia

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Number of paragraphs: 47

Date of hearing: 22 October 2024

Counsel for the Plaintiff: Mr D Banda

Solicitor for the Plaintiff: Bennett + Co

Counsel for the Defendant: Ms CC Spencer

Solicitor for the Defendant: Thomson Geer

ORDERS

WAD 254 of 2024

BETWEEN:
REALTEK SEMICONDUCTOR CORPORATION

Plaintiff

AND:
MARTIN JONES, MATTHEW WOODS AND CLINT JOSEPH IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF NUHEARA LIMITED (ACN 125 167 133) (ADMINISTRATORS APPOINTED)

Defendant

ORDER MADE BY:

FEUTRILL J

DATE OF ORDER:

22 OCTOBER 2024

THE COURT ORDERS THAT:
1.To the extent necessary, the plaintiff have leave pursuant to s 440D of the Corporations Act 2001 (Cth) to commence the proceeding on 12 September 2024.
2.The company Nuheara Limited (ACN 125 167 133) (Administrators Appointed) be joined as the second defendant in the proceeding, the defendants be renamed the first defendants in the proceeding, and service of the originating process and other materials filed in the proceeding on the second defendant be dispensed with.
3.Pursuant to s 588FM of the Corporations Act, 15 March 2024 be fixed as the time for the plaintiff to register on the Personal Property Securities Register (PPSR) established under the Personal Property Securities Act 2009 (Cth), PPSR Registration Number 202403150083941 registered against Nuheara Limited (ACN 125 167 133) (Administrators Appointed) for the purposes of s 588FL(2)(b)(iv) of the Corporations Act.
4.The plaintiff pay the first defendants’ costs of the proceeding fixed in the sum of $4000.00.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT
(REVISED FROM 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: [2024] FCA 1321
Decision Date: 22 October 2024

CaseChat Overview and Summary

Realtek Semiconductor Corporation brought an application against Jones, the administrator of Nuheara Limited, seeking to enforce a security interest in assets, rights, and property of the company due to a failure to register the collateral. The dispute was heard in the Federal Court of Australia. The primary legal issues centred on the enforceability of the security interest under section 588FM of the Corporations Act 2001 and whether the failure to register the collateral due to inadvertence caused prejudice to unsecured creditors. The court considered the circumstances surrounding the inadvertent failure and whether the plaintiff could still enforce the security interest despite the non-registration.

The court determined that while the failure to register the collateral was inadvertent, it still caused prejudice to unsecured creditors, as required by section 588FM of the Corporations Act. The court emphasised the importance of registration in protecting the interests of creditors and ensuring transparency in financial transactions. The court granted the application, ordering the plaintiff to register the collateral on the Personal Property Securities Register by a specified date and fixed the costs of the proceeding. This decision underscores the necessity for parties to comply with statutory requirements to avoid potential legal consequences.

The orders included granting leave for the plaintiff to commence the proceeding, joining Nuheara Limited as the second defendant, and setting a deadline for the plaintiff to register the security interest. The court also fixed the costs of the proceeding at $4000, to be paid by the plaintiff. These orders ensure that the plaintiff can proceed with their application and that the interests of all parties are adequately protected.

Orders

Orders of the court

1. To the extent necessary, the plaintiff have leave pursuant to s 440D of the Corporations Act 2001 (Cth) to commence the proceeding on 12 September 2024.

2. The company Nuheara Limited (ACN 125 167 133) (Administrators Appointed) be joined as the second defendant in the proceeding, the defendants be renamed the first defendants in the proceeding, and service of the originating process and other materials filed in the proceeding on the second defendant be dispensed with.

3. Pursuant to s 588FM of the Corporations Act, 15 March 2024 be fixed as the time for the plaintiff to register on the Personal Property Securities Register (PPSR) established under the Personal Property Securities Act 2009 (Cth), PPSR Registration Number 202403150083941 registered against Nuheara Limited (ACN 125 167 133) (Administrators Appointed) for the purposes of s 588FL(2)(b)(iv) of the Corporations Act.

4. The plaintiff pay the first defendants’ costs of the proceeding fixed in the sum of $4000.00.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

File number:	WAD 254 of 2024
Judgment of:	FEUTRILL J
Date of judgment:	22 October 2024
Date of publication of reasons:	14 November 2024
Catchwords:	CORPORATIONS – application for order pursuant to s 588FM of the Corporations Act 2001 (Cth) – security interest in assets, rights and property of company – failure to register collateral due to inadvertence – prejudice to unsecured creditors
Legislation:	Corporations Act 2001 (Cth) ss 436A, 440D, 470, 588FL, 588FL(1), 588FL(2)(a), 588FL(2)(b), 588FL(2)(b)(iv), 588FL(4), 588FM, 588FM(2), 588FM(2)(b), 588FN Personal Property Securities Act 2009 (Cth) ss 10, 18(1)m 19, 20, 21, 267 Federal Court Rules 2011 (Cth) Sch 3 Personal Property Securities Regulations 2010 (Cth)
Cases cited:	Bluewaters Power 1 Pty Ltd v Griffin Coal Mining Company Pty Ltd [2019] WASC 438 K.J. Renfrey Nominees Pty Ltd (Trustee), in the matter of OneSteel Manufacturing Pty Ltd v OneSteel Manufacturing Pty Ltd [2017] FCA 325; 120 ACSR 117 Pit N Portal Mining Services Pty Ltd v Aurora Metals Ltd (admins apptd) [2023] FCA 762 Re Accolade Wines Australia Ltd [2016] NSWSC 1023 Re Appleyard Capital Pty Ltd [2014] NSWSC 782; 101 ACSR 629 Re Transurban CCT Pty Ltd [2014] NSWSC 1909 Squadron Resources Pty Ltd v Highlake Resources Pty Ltd [2018] FCA 1292
Division:	General Division
Registry:	Western Australia
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	47
Date of hearing:	22 October 2024
Counsel for the Plaintiff:	Mr D Banda
Solicitor for the Plaintiff:	Bennett + Co
Counsel for the Defendant:	Ms CC Spencer
Solicitor for the Defendant:	Thomson Geer

ORDER MADE BY:	FEUTRILL J
DATE OF ORDER:	22 OCTOBER 2024