In the matters of 4 in 1 Wyoming Pty Ltd & the companies listed in Schedule A to the Originating Process

1. [1]

   GLEESON JA: The plaintiff, Northern Managed Finance Pty Ltd, who as its name implies is a finance company, makes application under s 588FM of the Corporations Act 2001 (Cth) for orders extending the time for the plaintiff to register security interests granted to it in respect of certain collateral on the Personal Property Securities Register (the PPS Register) established under the Personal Property Securities Act 2009 (Cth) (PPSA). In addition, the plaintiff makes application under s 293 of the PPSA for orders extending the time for certain registrations on the PPS Register to have the benefit of “purchase money security interest” (PMSI) priority as set out in s 62 of the PPSA.

Background

1. [2]

   The plaintiff’s business includes providing equipment finance to its customers over a range of goods, including office equipment (such as computers, photocopiers, printers, software and general office furniture) and motor vehicles. It does so either by way of a rental agreement or a print plan management agreement, both of which, it is contended, are likely to give rise to a “security interest” for the purposes of the PPSA. So much can be accepted for the purposes of this application.

2. [3]

   A “security interest” as defined in the PPSA includes the interest of the lessor or bailor under a PPS lease (s 12(3)(c)). A PPS lease is defined in s 13(1) as meaning a lease or bailment of goods, relevantly, for a term of more than one year (s 13(1)(a)). There are some qualifications to the concept of a PPS lease in s 13(2), but it is not necessary to refer to these for present purposes. The plaintiff retains ownership of the relevant goods or equipment and the customer is only a bailee of the goods or equipment under the rental agreements (standard cl 8.1) and the print plan management agreements (standard cl 13.1). The plaintiff leases goods and equipment to customers under those agreements, for terms in excess of one year. Such leases are PPS leases and the interests of the plaintiff in the subject matter of those leases is a “security interest”, such subject matter being the “collateral”: PPSA ss 10 and 12(3)(c).

3. [4]

   Ms Eggermont, the plaintiff’s operations manager, gave affidavit evidence of the nature of the plaintiff’s contractual arrangements with its customers and its general practice in lodging financing statements on the PPS Register. She explained the circumstances in which the plaintiff had lodged financing statements (following the introduction of the PPSA) up to September 2016 and that a review of those registrations in October and November 2016 had revealed deficiencies of the type referred to below in respect of a large number of those registrations. According to the initial registration schedule which was in evidence (Ex 1, pp 29-33), those security interests were granted between March 2015 and September 2016.

4. [5]

   In the case of both rental agreements and print plan management agreements, Ms Eggermont said that it is generally the practice of the plaintiff to lodge a financing statement on the PPS Register contemporaneously with, or as close as possible to, entering into rental agreements and print plan management agreements and granting the customer possession of the goods or the equipment, as the case may be.

5. [6]

   Since early 2012 the plaintiff has lodged registrations on the PPS Register following a guide which it developed from a presentation it received from a third party Register portal, operated by a credit reference agency known as “Veda”. Following this presentation, an employee of the plaintiff prepared a “process flow” document which formed the basis of the plaintiff’s policy for registration of financing statements on the PPS Register. Among other things, the process flow document contained two significant defects.

6. [7]

   First, it instructed the plaintiff’s staff to answer the question whether a security agreement was transitional as “yes” and therefore transitional. Second, with respect to “Specific key registration details” where two boxes could be ticked, it did not provide for the box “PMSI applies” referring to a purchase money security interest to be ticked, rather it provided for “Proceeds to be claimed” to be ticked and for the description “All present and after acquired property” to be typed into the collateral field. The employees of the plaintiff responsible for entering the registrations on the PPS Register were not aware of the legal effect of the data inputted on each financing statement lodged with the PPS Register.

7. [8]

   Ms Eggermont said that as a consequence of following this guide:

   1. (1)

      on each occasion that the plaintiff would take a security interest it would indicate in its financing statement lodged with the PPS Register that the security interest was “transitional”, irrespective of whether it was in fact transitional or otherwise; and

   2. (2)

      some of the financing statements lodged on the PPS Register did not note the plaintiff’s security interest was a PMSI when it might be characterised as such.

8. [9]

   Counsel for the plaintiff accepted that two primary consequences flowed from the plaintiff’s registrations in the PPS Register.

9. [10]

   First, the effect of indicating a security interest is “transitional” when it is in fact non-transitional may render each affected registration entirely ineffective, Reference was made to PPSA, s 337A which provides that without limiting s 164 (concerning defects in registration), a registration that discloses that collateral is covered by a transitional security agreement is ineffective to the extent that it describes collateral that is not covered by a transitional security agreement. The term “transitional security agreement” is defined in PPSA, s 307 and refers to security agreements created and in force prior to the registration commencement time for the PPSA, which continue to have effect after that time. The “registration commencement time” is 30 January 2012: s 306.

10. [11]

    Second, the effect of indicating that a security interest is not a PMSI, when in fact it is, can result in an alteration of the priority position that might otherwise be enjoyed by the holder of a PMSI under s 62. Reference was made to PPSA, ss 55(4) and 62.

11. [12]

    PPSA, s 62(1) provides that a perfected PMSI takes priority over other perfected security interests granted by the same grantor in the same collateral that is not a PMSI. PPSA, s 62(3) provides that a PMSI arises when the interest is held over original collateral, other than as inventory, and the interest is perfected by registration (s 62((3)(a)). The financing statement must indicate that the interest is a PMSI (s 62(3)(c)). The perfection must occur before the end of 15 business days after the grantor relevantly for goods obtaining possession by the property by registration: (s 62(3)(b)).

12. [13]

    By contrast, PPSA, s 55 sets out the default priority rules between security interests in collateral under the PPSA when the PPSA provides no other way of determining that priority. Section 55(4) provides that priority between 2 or more security interests in collateral that are currently perfected is to be determined by the order in which the “priority time” for each security interest occurs. Subsection (5) provides that the “priority time” for a security interest in collateral is, subject to subsection (6), the earliest of the following times to occur in relation to the security interest:

13. [14]

    Subsection (6) provides that a time is a priority time for a security interest only if, once the security interest is perfected at or after that time, the security interest remains continuously perfected.

14. [15]

    As indicated, in October and November 2016, the plaintiff reviewed its registrations under the PPSA. This revealed that a large number of existing registrations (between March 2015 and September 2016) were not consistent with the underlying security interest taken by the plaintiff. The trigger for that review was correspondence received by the plaintiff from solicitors for voluntary administrators appointed to one of its customers in about mid-September 2016, asserting that the registration of the plaintiff’s security interest as “transitional” rendered the registration ineffective in circumstances where the relevant security agreement was not a transitional security agreement. Ms Eggermont gave evidence that prior to receiving this correspondence neither she nor anyone else employed by the plaintiff (to the best of her knowledge) was aware that noting a security interest as “transitional” on the PPS Register when the relevant agreement was not a transitional security agreement might result in the relevant registration being considered ineffective: see PPSA, s 337A.

15. [16]

    In addition, the review of existing registrations also indicated that:

    1. (1)

       some of the financing statements lodged on the PPS Register contained potential defects, in that while they were lodged against the Australian Company Number (ACN) of each relevant corporate entity or the Australian Business Number (ABN) of each individual who was a trustee, they were not registered against the ABN of the trust of which the grantor was a trustee (as required by Personal Property Securities Regulations 2010 (the PPS Regulations), Schedule 1, cl 1.5).

    2. (2)

       the plaintiff’s registrations utilised its ABN rather than its ACN (as required by PPS Regulations Schedule1, cl 1.3).

16. [17]

    On 1 and 2 November 2016, the plaintiff filed new financing statements on the PPS Register in respect of the existing security interests taken by the plaintiff against 260 grantors. Of these the plaintiff had existing registrations on the PPS Register for 255 grantors being the first defendants listed in schedule A to the originating process filed on 15 February 2017. There were a further five grantors identified in the review as not having an existing registration on the PPS Register. Those registrations are not the subject of the present application.

17. [18]

    By the new registrations the plaintiff’s security interest was not shown as transitional; and the plaintiff registered financing statements in relation to the relevant collateral as both a PMSI and a non-PMSI. (Given the potential for a PMSI registration to be completely ineffective in respect of non-PMSI property, the plaintiff has taken the view that it ought to affect both registrations). Where the grantor is also a trustee of a trust, the new financing statement was registered over the ABN of the trust (where the trust has an ABN), in addition to the identifier of the trustee (being its ACN, for a corporation, or ABN for an individual).

18. [19]

    Following the lodging of the new financing statements, the plaintiff identified some defects in the November 2016 registrations and lodged further financing statements on the PPS Register as follows:

    1. (1)

       in respect of two grantors that had entered into rental agreements with the plaintiff in their own right and in their capacity as trustee, the new financing statements lodged in November 2016 did not include the ABN of the trust (as required by PPS Regulations, Sch 4, cl 1.5). The relevant Grantors were (a) Drinx Pty Ltd in its own capacity and as trustee of the Drinx Trust and (b) Stuart Dickson Produce Pty Ltd in its own capacity and as trustee of the Burgess Family Trust. On 11 November 2016, the plaintiff lodged two further registrations against the ABN of the relevant trust in addition to the existing two registrations against the ACN of the corporate trustee for those two grantors.

    2. (2)

       two of the new registrations lodged on 1 or 2 November 2016 contained a further error in describing the individual grantor, Felice Anthony Vitiello, by the wrong date of birth. (The grantor’s date of birth, where the grantor is an individual, is required by PPS Regulations Sch 1, cl 1.2). New registrations amending and correcting that error were lodged on 19 January 2017. There are no other registered parties on the PPS Register would might be prejudiced by that amendment.

Joinder of affected parties

1. [20]

   Consistently with remarks in earlier cases that applications under s 588FM ought generally not be brought ex parte, the plaintiff joined the grantors and other secured creditors of the grantors as defendants to the proceedings: Re Appleyard Capital Pty Ltd; 123 Sweden AB v Appleyard Capital Pty Ltd 9(2014) 101 ACSR 629; [2014] NSWSC 782 at [34] (Brereton J); Re Transurban CCT Pty Ltd (in its own capacity and as trustee of the Transurban CCT Trust) [2014] NSWSC 1909 at [16]-[17] (Brereton J).

2. [21]

   The first defendants are the 255 grantors in respect of which the plaintiff seeks relief under s 588FM of the Corporations Act (the Grantors).

3. [22]

   The second defendants are the 76 secured creditors of the various Grantors, who have registered in the PPS Register an earlier security interest to the plaintiff describing the class of collateral as “all present and after-acquired property” of the relevant Grantors (Earlier AllPAP holders).

4. [23]

   The third defendants are the 16 secured creditors of various Grantors, who have registered in the PPS Register a later security interest to the plaintiff’s registrations describing the class of collateral as “all present and after acquired property” of the relevant Grantors (Later AllPAP holders). Some of the second named defendants are also Later AllPAP holders. In such cases, they have been joined as a second defendant only.

5. [24]

   The term “all present and after-acquired property” or its common abbreviation, “AllPAP”, is not contained within the PPSA itself but is defined in the PPS Regulations. PPSA, s 153 provides that a financing statement with respect to a security interest consists of data that complies with the table to that provision. Item 4(c) in the table to PPSA s 153 provides that the relevant collateral must be described within one of the classes of collateral prescribed by the PPS Regulations. The prescribed classes of collateral include “all present and after acquired property”: PPS Regulations, Schedule 1, cl 2.3(1). That expression is defined in the PPS Regulations, Schedule 1, cl 1.6 as follows:

6. [25]

   On 14 February 2017 the court made orders permitting the plaintiff to serve the defendants to the originating process via email. All defendants were served by email on or before 5 PM on 17 February 2017 in accordance with those orders, however some of the email addresses resulted in a bounce-back which was not discovered until later. To address some of the technological difficulties and email bounce-backs on 24 February 2017, further orders were sought and obtained allowing the plaintiff to affect service on particular defendants by means of post. The evidence establishes that the relevant defendants were served by post in accordance with the orders of the court.

7. [26]

   A notice of appearance was filed by three of the second named defendants, Westpac Banking Corporation, St George Finance Ltd and Capital Finance Australia Ltd. Those defendants submitted to the making of all orders sought by the plaintiff, save as to costs. All but one of the AllPAP security interests held by Westpac, St George and Capital Finance Australia fall into the category of an Earlier AllPAP security interest. The one exception is Westpac in respect of one Grantor (The Tearoom Pty Ltd in its own capacity and as trustee for the Grand Pacific Group Unit Trust) for two registrations of a Later AllPAP security interest.

8. [27]

   A submitting appearance, save as to costs, was also filed by another second named defendant, Moffat Pty Ltd.

Section 588FM application

1. [28]

   Section 588FL deals with the vesting of PPSA security interests in the grantor if collateral is not registered within the latest of certain specified times. It has been said that s 588FL deals with late registration as distinct from failure to register: Re Cardinia Nominees Pty Ltd [2013] NSWSC 32 at [11]. The court’s extension power under s 588FM is given in relation to the registration time for collateral referred to in s 588FL(2)(b).

2. [29]

   Corporations Act, s 588FL, relevantly provides as follows:

3. [30]

   The effect of s 588FL(2) is that when a company is being wound up, an administrator is appointed, or a deed of company arrangement executed, any PPSA security interest which was perfected, registered, or enforceable against a third party after the latest of six months before the “critical time” or 20 days after the security agreement came into force or such later time as the Court may fix under s 588FM, vests in the company, for the benefit of creditors generally, and the secured creditor loses the benefit of the security: Cardinia Nominees at [11]; Re Black Opal IP Pty Limited [2013] NSWSC 1225 at [6]; Appleyard at [8].

4. [31]

   Section 588FM provides for fixing a later time under s 588FL as follows:

5. [32]

   The effect of s 588FM is to confer on the Court a discretion to fix a later time for the purposes of s 588FL(2)(b)(iv) if satisfied of any one of three grounds - that the failure to register the collateral earlier was accidental, or was not of such a nature to prejudice the position of creditors or shareholders, or that on other grounds it is just and equitable to do so. In addition, the Court may make the order on terms and conditions: Appleyard at [9]. Such conditions may address the risk that an order under s 588FM can operate to the detriment of unsecured creditors, if the company is placed in liquidation or administration within six months of the security interest being perfected and, but for the extension of time, the security interest would have vested in the grantor under s 588FL.

6. [33]

   The plaintiff seeks the following orders under s 588FM(1):

7. [34]

   The plaintiff primarily relies upon the “inadvertence” ground in subs (2)(a)(i) of s 588FM. The plaintiff also relies on the no prejudice ground in subs 2(a)(ii) and the just and equitable ground in subs 2(b).

8. [35]

   The meaning of the expression “inadvertence” for the purposes of s 588FM of the Corporations Act is well established. It is sufficient to refer to the following authorities. In Appleyard, Brereton J said at [10]:

9. [36]

   In Cardinia Nominees, Black J said at [15] that inadvertence goes beyond ignorance of the requirement to register entirely and “may also be established where a party operates under a mistake as to the consequences of failing to register a security interest”. His Honour continued at [15]:

10. [37]

    Brereton J returned to the issue of inadvertence in Re Accolade Wines Australia Ltd [2016] NSWSC 1023 at [14] where his Honour said:

11. [38]

    In the present case, the plaintiff was aware of the requirement for registration under the PPSA within the specified period of the security interest taken by it, and lodged the initial financing statements, it seems, within the 20-day period. However, the process flow document prepared for use by the plaintiff’s employees when lodging financing statements contained the defects identified at [7] above; and the plaintiff was unaware of those deficiencies. The plaintiff was also unaware of the legal significance of indicating that a security interest was “transitional” when it was not covered by a transitional security agreement: (PPSA, s 337A), and of failing to indicate that the security interest was a PMSI when it could be properly characterised as such.

12. [39]

    The financing statements initially lodged by the plaintiff which contained the defects referred to above, were not discovered until more than 20 business days after the security interests were created. The plaintiff then lodged further financing statements on 1, 2 and 11 November 2016 and on 15 February 2017 applied for an extension of time under s 588FM. Here, as in Transurban CCT, a bona fide attempt was made by the plaintiff to register its security interests as they were created by the respective Grantors between March 2015 and September 2016. The defects first came to the notice of the plaintiff in mid-September 2016 in the circumstances referred to at [15] above. The errors of the plaintiff in indicating that its security interests were “transitional”, when they were not, and in failing to indicate that the plaintiff’s security interest was a PMSI when it might be characterised as such, were innocent and did not result from any disregard of its statutory obligations: Appleyard at [14].

13. [40]

    I am satisfied that the failures of the plaintiff were accidental or due to the inadvertence of those persons employed by the plaintiff with responsibility for lodging financing statements.

14. [41]

    That conclusion means that it is not necessary to address the “no prejudice” ground or the “just and equitable” ground relied upon by the plaintiff.

15. [42]

    As the Court’s discretion to extend time for registration is enlivened, the next question is whether to make the order sought, and if so, whether to impose any terms and conditions under s 588FM(3).

16. [43]

    In Appleyard at [13] Brereton J explained the purpose and effect of an order under s 588FM as follows:

17. [44]

    Thus, an extension order under s 588FM can operate to the detriment of unsecured creditors, if the grantor goes into liquidation or administration within six months of the security interest being perfected, because it avoids the consequence that the security interest would otherwise vest in the grantor for their benefit: Appleyard at [16].

18. [45]

    In the present case, accepting that registration was not effected within the 20 day period because the initial registrations were defective, if a Grantor goes into liquidation or administration within six months after the date of the new registrations, being either 1 or 2 November 2016 or 11 November 2016 (as the case may be), the plaintiff’s security interest will vest in the relevant Grantor for the benefit of creditors generally, unless the extension order sought is made.

19. [46]

    The relevant prejudice to other creditors is that which arises from the delay in registration of the security interest rather than from the making of the order: Appleyard at [30], and the length of delay prior to registration of the security interest in the collateral is a relevant factor for the exercise of the Court’s discretion under s 588FM, just as it was under its predecessor provisions, relevantly, s 266 of the Corporations Act: Cardinia Nominees at [18], and the cases there cited.

20. [47]

    As indicated, the practice of the plaintiff was to lodge a financing statement on the PPS Registrar contemporaneously with, or as close as possible to, entering into the rental agreements and print plan management agreements and giving the customer possession of the relevant goods or equipment. The delay between the date of grant of the security interests (between March 2015 and September 2016) and the lodging of new financing statements in November 2016 has been adequately explained. Up until mid-September 2016, the relevant employees of the plaintiff responsible for lodging registrations on the PPS Register were unaware of the deficiencies in the initial registrations. Steps were taken by the plaintiff to review the initial registrations, with some assistance from Bridges Lawyers, in October and November 2016. That review, it may be accepted, was a time-consuming process having regard to the number of customer contracts and registrations required to be reviewed. The new financing statements were lodged for registration at the beginning of November 2016. With respect to two Grantors, four further financing statements (correcting some deficiencies in the new registrations) were lodged for registration on 11 November 2016. I do not consider the short further delay in registration of those four new financing statements to be material.

21. [48]

    Insofar as the delay between the date of the new registrations in November 2016 and the making of this application on 15 February 2017 is relevant (cf Appleyard at [30]), that delay has also been adequately explained. The plaintiff instructed new lawyers on 30 November 2016 to take over the conduct of court proceedings from Bridges Lawyers, and taking into account the interruption of the Court vacation, the application was filed early in the new Court term in mid-February 2017.

22. [49]

    In Cardinia Nominees at [20], Black J described the type of steps that might be taken to protect the interest of unsecured creditors of the grantor as follows:

23. [50]

    Black J emphasised at [21] that an order for extension would not generally be made, even where it would merely put the secured creditor in the position it would have been had there been no inadvertence, if there was a danger that claims of unsecured creditors would not be met owing to the insolvency, or likely insolvency, of the company. Reference was made to Re Flinders Trading Co Pty Ltd [1978] 20 SASR 14 at 49; (1978) 3 ACLR 218 at 223.

24. [51]

    In Appleyard at [25] and [28] Brereton J explained the circumstances in which the Court might impose “a Guardian Securities condition” to protect the interests of the unsecured creditors as follows:

25. [52]

    Ms Eggermont gave evidence that only one customer was in arrears (as at 31 January 2017) in their payment obligations to the plaintiff. The amount of the arrears was relatively small ($916.99) and the amount was overdue by 29 days. Three of the plaintiff’s customers have entered into external administration – Pumpkin Patch Originals Ltd (Pumpkin Patch) was placed in receivership on 26 October 2016; Beaton Pumping Group Pty Ltd (Beaton) was placed into voluntary administration on 7 November 2106; and Online Performance Autos Pty Ltd (Online Performance) was placed in liquidation on 14 November 2016. The plaintiff does not seek an extension order under s 588FM in relation to Pumpkin Patch.

26. [53]

    The evidence establishes that the administrators of Beaton Pumping continued to pay ongoing rental payments pursuant to the relevant rental agreement with the plaintiff, at least up until November 2016, and the relevant goods remain in the possession of Beaton Pumping.

27. [54]

    The liquidator of Online Performance has informed the plaintiff that he does not intend to exercise any right in respect of the property subject to the relevant agreement and has given a notice of disclaimer of onerous property under s 568 of the Corporations Act.

28. [55]

    It is well established that the power to make an order under s 588FM is available where a company is in liquidation or administration: Re Quality Blended Liquor Pty Ltd [2014] QSC 234; (2014) 102 ACSR 451 at [83]; Re Carpenter International Pty Ltd [2016] VSC 118 at [127].

29. [56]

    Neither the administrators of Beaton Pumping nor the liquidator of Online Performance have appeared in the proceedings or indicated any objection to the relief sought by the plaintiff with respect to the security interests granted by those companies.

30. [57]

    Other than the limited material referred to above, the plaintiff has not sought to demonstrate by evidence, the financial position of each Grantor or their ability to pay their debts as and when they fell due. This is unsurprising given the large number of the plaintiff’s customers to which this application relates. Recognising the absence of such evidence, counsel for the plaintiff submitted that it would be appropriate in the present case to impose a condition of relief similar to that in Bevillesta Pty Ltd v Imagine UN Ltd [2009] VSC 50; (2009) 69 ACSR 574. There the Court granted an extension on terms that reserved liberty to the company, any liquidator, administrator, deed administrator or creditor of the company to apply to discharge or vary the order if any winding up of the company commenced or an administrator of the company was appointed under ss 436A, 436B or 436C, or the company executed a deed of company arrangement within six months of the date on which the new financing statements were lodged in the PPS Register in November 2016.

31. [58]

    Given the state of the evidence, an order under s 588FM should be made, but only on a basis that reserves the ability of a liquidator, administrator, deed administrator or other unsecured creditor to apply to discharge it within a six-month period from the date of registration of the security interest in the collateral. As indicated, the plaintiff accepted that the extension order sought should be made subject to such a condition.

Section 293 application

1. [59]

   Section 293(1)(a) of the PPSA relevantly provides that on application, a court may make an order extending the number of business days in a period specified in par 62(3)(b) for the perfection of a purchase money security interest, if satisfied that it is just and equitable to do so. Such an order may be made even if the period has ended: s 293(2).

2. [60]

   The reference in PPSA, s 293(1)(a) to the number of business days in a period specified in par 62(3)(b) is a reference to the perfection of a PMSI by registration before the end of 15 business days after, relevantly, for goods - the day the grantor, or another person at the request of the grantor, obtains possession of the goods, or for any other property - the day the interest attaches to the property (as the case may be).

3. [61]

   The plaintiff seeks an order pursuant to PPSA, s 293(1)(a), extending the number of business days specified in PPSA, s 62(3)(b) for perfection of its PMSIs by registration against each of the Grantors, for the purposes of s 62(3).

4. [62]

   In making an order under s 293(1) to extend the 15 business days specified in s 62(3)(b), s 293(3) requires that the Court must take into account the following:

5. [63]

   For the reasons already given in respect of s 588FM, I am satisfied that the need to extend the 15 business days specified s 62(3)(b) arises as a result of inadvertence by the plaintiff as referred to in s 293(3)(a). The employees of the plaintiff responsible for lodging financing statements on the PPS Register did not understand the legal significance under s 62 of failing to indicate that the interest is a PMSI when it is capable of being characterised as such.

6. [64]

   In Accolade Wines, after noting the absence of direct authority, Brereton J expressed the view at [27] that the prejudice referred to in s 293(3)(b) is prejudice “from extending the period” under s 62(3)(b). His Honour continued at [27]:

7. [65]

   According to the evidence of Ms Eggermont, while no competing security interests have been granted to other secured parties specifically over any particular collateral in which the plaintiff has a PMSI, some of the Grantors have granted AllPAP security interests to other secured parties; in some cases before and in others after the date on which the plaintiff made its initial registrations. In Accolade Wines at [28] Brereton J observed with respect to a similar factual position that:

8. [66]

   Importantly, Brereton J added at [29] that “such prejudice, while not irrelevant, is not conclusive”. After referring to Appleyard at [27] for the proposition that, in relation to s 588FM, prejudice to other creditors could not be conclusive because otherwise an order would never be made in any case in which it mattered, since in any case where an extension was of utility, there would inevitably be prejudice by removing the collateral from the pool available to satisfy unsecured creditors generally, and enabling that result was the fundamental purpose of the extension provision in s 588FM, Brereton J expressed the view in Accolade Wines at [29] concerning PPSA, s 293:

9. [67]

   It has been said that an AllPAP is always liable to be trumped, in respect of specific after-acquired collateral, by a PMSI in respect of that collateral and to the extent that an Earlier AllPAP holder will be prejudiced, it is only by losing a windfall arising from inadvertence: Accolade Wines at [52(2)-(3)].

10. [68]

    Notice of the application has been given to the all Earlier AllPAP holders and the Later AllPAP holders. Other than the four parties who have filed submitting appearances, none of the other parties have appeared or objected to the extension sought under PPSA, s 293(1).

11. [69]

    It has been said that the kind of “reliance” contemplated by s 293(3)(c) is where a third party has dealt with the grantor by, for example, taking a security interest over property that includes the property subject to the PMSI, in the belief that there was no perfected PMSI that would trump its interest: Accolade Wines at [30].

12. [70]

    In Accolade Wines at [31] Brereton J remarked as follows:

13. [71]

    None of the Later AllPAP holders have asserted prejudice or reliance of the kind referred to above. Although there is no expert evidence in this case concerning the types of searches of the PPS Register that a reasonably prudent financier would have done (cf Accolade Wines at [32], [33] and [35]), it can be inferred that the Later AllPAP holders would not have had notice of the plaintiff’s PMSI when acquiring their security interests, assuming they had conducted a search of the PPS Register. That is because the plaintiff’s initial registrations did not refer to a PMSI.

14. [72]

    Nonetheless, had the secured parties who hold Later AllPAPs in respect of Grantors conducted a search of the PPS Register the results would have identified the plaintiffs’ security interest in the specific goods or equipment described in the financing statement and that the class of collateral was over “all present and acquired property”. None of the Later AllPAP holders assert that this mis-description in the plaintiff’s registrations was material to its decision to provide financial accommodation and to take the AllPAP security from the Grantors.

15. [73]

    Turning to the Grantors who have entered into external administration. Neither Beaton Pumping nor Online Performance have appeared or otherwise objected to the extension sought under s 293. As indicated, the entry of a grantor company into external administration does not preclude the court making an order under s 588FM. Brereton J held in Re Appleyard at [30] that the same principle applied with regard to s 293:

16. [74]

    I am satisfied that it is just and equitable to make an order extending the number of business days in the period specified in s 62(3)(b) for the perfection by registration of the plaintiff’s interests which may be characterised as PMSIs to the dates of the new registrations in November 2016 or January 2017 (as the case may be). For simplicity, the plaintiff seeks an extension to the later date of 2 November 2016 for the new registrations which occurred on either 1 or 2 November 2016. An extension is sought to 11 November 2016 for the two Grantors referred to at [19(1)] above. An extension is sought to 19 January 2017 for the Grantor referred to at [19(2)] above. In each case those later dates are appropriate, being the dates of the plaintiff’s further registrations correcting defects in the earlier (new) registrations lodged on either 1 or 2 November 2016 relating to those Grantors.

17. [75]

    One further matter should be mentioned. The plaintiff’s proposed orders make provision for liberty to apply by any person who has a perfected security interest over collateral the subject of any of the registrations set out in Schedules 1 or 2 to the orders below (other than any second defendants or third defendants) to set aside, amend or vary any of orders 1, 2 or 3 of the orders below on three days’ written notice to the plaintiff. A similar order, although not in exactly the same terms, was made in Accolade Wines at [53(8)]. It is appropriate to make such an order here to guard against the possibility that the plaintiff’s searches of the PPS Register for the purposes of this application may have not identified a person or entity (other than the second defendants or third defendants) having a perfected security interest over collateral the subject of the plaintiff’s new registrations in November 2016 and in one case in January 2017.

Orders

1. [76]

   Accordingly, I make the following orders and directions:

   1. (1)

      Pursuant to s 588FM of the Corporations Act 2001 (Cth) (Corporations Act), 2 November 2016 is fixed as the time for the plaintiff to register on the Personal Property Securities Register (PPSR) each PPSR registration referred to in Schedule 1 to this judgment for the purposes of s 588FL(2)(b)(iv) of the Corporations Act;

   2. (2)

      Pursuant to s 588FM of the Corporations Act, 11 November 2016 is fixed as the time for the plaintiff to register PPSR registration numbers:

   3. (3)

      Pursuant to s 293(1) of the Personal Property Securities Act 2009 (Cth) (PPSA), the number of business days set out in s 62(3)(b) be extended by the appropriate number of business days relevant such that:

   4. (4)

      If, within 6 months of 2 November 2016, any winding up of any of the first defendants occurs, or an administrator is appointed to any of the first defendants under ss 436A, 436B or 436C of the Corporations Act, or any of the first defendants execute a deed of company arrangement, liberty is reserved to any liquidator, administrator or deed administrator of any of the first defendants to apply to discharge or vary orders 1 and 2.

   5. (5)

      If, within 6 months of 11 November 2016 any winding up of Drinx Pty Ltd or Stuart Dickson Produce Pty Ltd occurs, or an administrator is appointed to any of those first defendants under ss 436A, 436B or 436C of the Corporations Act, or any of those first defendants execute a deed of company arrangement, liberty is reserved to any liquidator, administrator or deed administrator of any of those first defendants to apply to discharge or vary orders 1 and 2.

   6. (6)

      Any person or entity who has a perfected security interest over collateral the subject of any of the registrations set out in Schedules 1 or 2 to this judgment, other than any of the second defendants or third defendants to these proceedings, has liberty to apply to set aside, amend or vary any of orders 1, 2 or 3 of these orders on three days’ written notice to the plaintiff.

   7. (7)

      The plaintiff has liberty to apply on three days' notice.

   8. (8)

      These orders be entered forthwith.