Recent Developments in Australian PPSA Case Law and Their Relevance to Other PPSA Jurisdictions

Duggan, Anthony

doi:10.1007/978-981-13-9246-7_2

Recent Developments in Australian PPSA Case Law and Their Relevance to Other PPSA Jurisdictions

Anthony Duggan⁴

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First Online: 04 October 2019

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Abstract

In this chapter, I discuss four recent Australian cases: the Hamersley Iron case; In the Matter of OneSteel Manufacturing Pty Limited; Allied Distribution Finance Pty Ltd v. Samwise Holdings Pty Ltd; and Re Amerind Pty Ltd. In the Hamersley Iron case, the main issue was whether the granting to A of a PPSA security interest in an account owing by B to C destroys mutuality between B and C so as to preclude B from asserting a right of set-off in C’s liquidation. In the OneSteel case, the issue was whether the inclusion of the grantor’s Australian Business Number (ABN) in the financing statement, rather than the Australian Company Number (ACN), as the statute requires, invalidates the registration. Samwise concerned the application of the purchase-money security interest (PMSI) priority rules in Australian PPSA, s.62 to a PMSI refinancer. In Re Amerind, the issue was whether, when parties contract for the supply of goods from time to time on title retention terms, there is: (1) a single security agreement which comes into effect once the requirements of offer and acceptance have been satisfied; or (2) a succession of separate security agreements which come into effect at the time of each new order or delivery. Hamersley Iron relied heavily on Canadian and New Zealand case law while in OneSteel, the court was influenced by New Zealand authority. By contrast, in Samwise there was no reference at first instance to any overseas authorities, even though the facts of the case were almost identical to the facts in the Nova Scotia Court of Appeal case, Macphee Chevrolet Buick GMC Cadillac Ltd v. SWS Fuels Ltd. The concern in Re Amerind was with an issue that is peculiar to Australian law and so there was no occasion for the courts to consider Canadian or New Zealand authorities. Nevertheless, all four cases raise interesting and novel points which make them instructive in other PPSA jurisdictions.

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Notes

1.
Personal Property Securities Act 2009 (Cth) (‘PPSA’).
2.
Personal Property Securities Act 1999 (N.Z.) (‘New Zealand PPSA’).
3.
Personal Property Security Act 1993, S.S. 1993, c.P-6.2 (‘Saskatchewan PPSA’).
4.
See Duggan, A. & Brown, D. (2016). Australian Personal Property Securities Law (2nd edition). Australia: LexisNexis Australia., xix.
5.
[2017] WASC 152 (‘Hamersley Iron’).
6.
Ibid., [89]. The trial judge’s decision was reversed on appeal: Hamersley Iron Pty Ltd v. Forge Group Power Pty Ltd (in liq.) [2018] WASCA 163 (‘Hamersley Iron Appeal’). But the appeal court made no comment on the appropriateness of relying on authorities from overseas jurisdictions and so the trial judge’s remarks are still important.
7.
[2017] NSWSC 21 (‘OneSteel’).
8.
[2017] SASC 163.
9.
[2017] VSC 127 (‘Re Amerind’). For a discussion of three earlier Australian cases - Warehouse Sales Pty Ltd (in liq.) v. LG Electronics Australia Pty Ltd [2014] VSC 644; Re Renovation Boys Pty Ltd [2014] NSWSC 340; and Re Arcabi Pty Ltd [2014] WASC 310 - see Duggan, A. (2015). ‘The Trials and Tribulations of Personal Property Securities Law Reform in Australia’. Saskatchewan Law Review, 78(2)., 257, 280–286.
10.
Corporations Act 2001 (Cth).
11.
The other two-time frames are: six months before the appointment of the insolvency administrator; and such later time as the court may fix under s 588FM.
12.
Specifically, Polymers International Limited v. Interworld Plastics NZ Limited [2013] NZHC 1897 and sources there cited.
13.
MacPhee Chevrolet Buick GMC Cadillac Ltd v. SWS Fuels Ltd [2011] NSCA 35 (‘MacPhee’).
14.
Samwise Holdings Pty Ltd v. Allied Distribution Finance Pty Ltd [2018] SASCFC 95 [106]–[133].
15.
The following is adapted in part from Duggan, A. (2017). ‘Set-Off and the PPSA: A Note on Hamersley Iron Pty Ltd v. Forge Group Power Pty Ltd (in liq.)’. Companies and Securities Law Journal, 37., 74, 572.
16.
Derham, R. (2010). Derham on the Law of Set-Off (4th edition). Oxford: Oxford University Press.11.01.
17.
Telford v. Holt [1987] 2 SCR 193, [26]; Hamersley Iron Appeal, [290]–[291]; [394].
18.
Emphasis added. Section 80(2) provides that sub-section (1) does not apply if the account debtor agrees not to assert defences to claims arising out of the contract.
19.
The point was taken as given in the trial judgment, but it was expressly addressed on appeal, the court relying on the bracketed words in the opening part of the provision and also the general statutory context: Hamersley Iron Appeal, [204]–[223].
20.
Hamersley Iron Appeal, [84].
21.
Ibid, [86].
22.
Ibid, [86].
23.
This is a summary account only. For a fuller treatment of PPSA, Part 9.5., see Duggan, A. & Brown, D. (2016)., n 4. 13.20–13.27.
24.
Hamersley Iron Appeal, [101]–[132].
25.
Whittaker, B. (2015). Review of the Personal Property Securities Act 2009: Final Report (Commonwealth of Australia). 9.2.1.2. Retrieved from www.ag.gov.au
26.
For a fuller account, see Duggan, A. & Brown, D. (2016)., n 4. 4.45–4.55.
27.
The appeal court mentioned PPSA, s 32, but only in passing: [2018] WASCA 163, [135]; [136].
28.
See, e.g., PPSA, s 41(2) (Saskatchewan).
29.
A point noted in Gilmore, G. (1965). Security Interests in Personal Property. Boston: Little Brown & Company, Boston. 1089.
30.
Commercial Factors of Seattle LP v. Canadian Imperial Bank of Commerce (2010) ONSC 3516 [36], quoting Cameron, J. (2007) ‘Ontario Personal Property Security Act: Reform in 2006’. Retrieved from: http:/www.torys.com/Publications/Documents/Publications%20PDFs/AR2007-5T.pdf
31.
See Hamersley Iron Appeal [2018] WASCA 163, [219]: ‘the operation of s 80 … is, in broad terms, not dissimilar to the general law position’.
32.
Gullifer, L. (Ed.). (2017). Goode and Gullifer on Legal Problems of Credit and Security (6th edition). London: Sweet & Maxwell. 7-71–7-75.
33.
Ziegel J.S., & Denomme, D.L. (2000). The Ontario Personal Property Security Act: Commentary and Analysis (2nd edition). Toronto: Butterworths. 329. In the same connection, see Cuming, R.C., Walsh, C. & Wood, R.J. (2012). Personal Property Security Law (2nd edition) Toronto: Irwin Law. 664.
34.
[2018] WASCA 163, [42]–[48].
35.
Derham, R. (2010)., n 16., [17]–[12].
36.
Ibid., [17]–[35].
37.
Ibid.
38.
[2017] WASC 152., [210].
39.
[2017] WASC 152., [222]; [223]; [224]. The court also held that, in any event, Hamersley’s rights must be determined within the context of Forge’s liquidation, ‘that is, they are to be determined by reference to the statutory provisions governing the admission to proof of debts and claims in the Corporations Act’.
40.
[2018] WASCA 163, [175]. ‘The position would be different if the chargee of the debt surrendered it and proved in the insolvent administration for its own debt. In that event, the liquidator would recover the insolvent company’s debt for the benefit of all the unsecured creditors including, in that circumstance, the (former) secured creditor’.
41.
[2018] WASCA 163, 176.
42.
Duggan, A. & Brown, D. (2016)., n 4. 3.58.
43.
Ibid., 10.3.
44.
See, e.g., Bangsund, C. (2017). ‘Deposit Account Set-Off Under the PPSA’. Saskatchewan Law Review, 80(1)., 11.
45.
[2017] WASC 152, [271].
46.
Royal Bank of Canada v. Sparrow Electric Corporation [1997] 1 SCR 411; Bank of Montreal v. Innovation Credit Union [2010] 3 SCR 3; Royal Bank of Canada v. Radius Credit Union Limited [2010] 3 SCR 38; iTrade Finance Inc. v. Bank of Montreal [2011] 2 SCR 360; Commissioner of Inland Revenue v. Stiassny [2012] NZCA 93.
47.
(1998) 41 OR (3d) 632.
48.
[2017] WASC 152, [378]–[382].
49.
[2017] WASC 152, [384]. See generally, Duggan, A. & Brown, D. (2016)., n 4. 4.45–4.55.
50.
[2013] NSWSC 852.
51.
[2013] NSWSC 1741.
52.
[2014] WASC 310.
53.
[2014] VSC 217.
54.
[2017] WASC 152, [89].
55.
[2018] WASCA 163, [137].
56.
Duggan, A. & Brown, D. (2016)., n 4. xix.
57.
PPSA, s 153(1) Table, Item 2; Personal Property Securities Regulations 2010 (Cth), reg.1.6, Schedule 1, c.1.3. See Duggan, A. & Brown, D. (2016)., n 4. 6.33.
58.
OneSteel [2017] NSWSC 21, [5].
59.
The ABN is the primary search point where the grantor is the trustee of a trust that has been allocated an ABN: see PPSA, s 153(1) Table, Item 2; Personal Property Securities Regulations 2010 (Cth), Schedule 1, c.1.5. See Duggan, A. & Brown, D. (2016)., n 4. 6.34. But it is not a search point for corporate grantors.
60.
[2017] NSWSC 21, [30], citing Personal Property Securities (Approved Form) Instrument 2013, cl.8(2)).
61.
Ibid., 32.
62.
[2013] NZHC 1897.
63.
New Zealand PPSA, ss 142(1)(c) and 172(d).
64.
[2013] NZHC 1897, [23] (footnotes omitted).
65.
[2017] NSWSC 21, [39] (footnotes omitted).
66.
(2010) 319 DLR (4th) 618.
67.
Personal Property Security Act R.S.O 1990, c.P-10, s 46(4).
68.
(2010) 319 DLR (4th) 618 [16].
69.
Ibid., [18].
70.
Ibid., [19], quoting McLaren, R.H. (1989). Secured Transactions in Personal Property in Canada (2nd Edition). Scarborough: Carswell. 30.01.
71.
Ibid., [21].
72.
The alternative is close similar match, where a search will disclose exactly matching registrations and also closely similar ones. All PPSA jurisdictions in Canada except Ontario employ a close similar match system. For the pros and cons of each system, see Duggan, A. & Brown, D. (2016)., n 4. 6.31–6.32.
73.
For arguments in support of these outcomes, see Duggan, A. & Brown, D. (2016)., n 4. 6.59.
74.
The following is adapted from Duggan, A. ‘Refinancing Purchase Money Security Interests: A Note on Allied Distribution Finance Pty Ltd v. Samwise Holdings Pty Ltd’ (2018)., 36 Companies and Securities Law Journal 74.
75.
PPSA, s 161 allows for registration of a security interest in advance of attachment.
76.
[2011] NSCA 35.
77.
Personal Property Security Act, SNS 1995–96, c 13, s 35(1).
78.
See Cuming, R.C., Walsh, C. & Wood, R.J. (2012)., n 33. 450–451.
79.
See Duggan, A. & Brown, D. (2016)., n 4. [8.31].
80.
[2018] SASCFC 95, [106]–[133].
81.
[2017] SASC 163, [23].
82.
[2017] SASC 163, [33].
83.
[2017] SASC 163, [83].
84.
[2017] SASC 163, [90]–[92]; [96]–[98].
85.
[2017] SASC 163, [93].
86.
[2017] SASC 163, [95].
87.
[2017] SASC 163, [99].
88.
[2018] SASCFC 95, [81]–[85].
89.
[2018] SASCFC 95, [68]; [69].
90.
[2018] SASFC 95, [86]. The passage appeared in Duggan, A. ‘Refinancing Purchase Money Security Interests: A Note on Allied Distribution Finance Pty Ltd v. Samwise Holdings Pty Ltd’ (2018)., n 74. 76 (this was a case note on the decision at first instance).
91.
See Duggan, A. & Brown, D. (2016)., n 4. 8.28–8.30. The provision derives from Revised Article 9, s 9–103(f)(3), but the words ‘(whether or not by the same secured party)’ do not appear in the Revised Article 9 version.
92.
[2018] SASCFC 95, 103 citing with approval Duggan, A. ‘Refinancing Purchase Money Security Interests: A Note on Allied Distribution Finance Pty Ltd v. Samwise Holdings Pty Ltd’ (2018)., n 15. 74.
93.
The leading Canadian case is Unisource Canada Inc. v. Laurentian Bank of Canada (2000) 47 O.R. (3rd) 616 (Ontario C.A.). For discussion, see Duggan, A. & Brown, D. (2016)., n 4. 8.28 and Duggan, A. (2000). ‘Hard Cases, Equity and the PPSA’. Canadian Business Law Journal, 34(3)., 129.
94.
See Duggan, A. & Brown, D. (2016)., n 4. 8.30–8.31.
95.
MacPhee Chevrolet Buick GMC Cadillac Ltd v. SWS Fuels Ltd [2011] NSCA 35.
96.
As in Ontario, where the relevant provision refers expressly to the debtor’s possession ‘as a debtor’: Personal Property Security Act R.S.O. 1990, c, P-10, s 33(2). But see MacPhee, [37]–[40].
97.
The corresponding Australian provision is PPSA, s 60.
98.
[2017] SASC 163, [103]; [2018] SASCF 95, [105]; [132].
99.
In this connection, it is worth noting that the Full Court in Samwise concluded that it was ‘unable to discern any basis for such a legislative policy in the Australian legislation’: [2018] SASCFC 95, [132]. This statement reinforces the point made in the text; namely, that legislative reform is necessary to implement the policy.
100.
Report to the Canadian Conference on Personal Property Security Law on Proposals for Changes to the Personal Property Security Acts. (21–23 June 2017). Prepared by a Working Group of the CCPPSL for presentation at its Annual Meeting. Edmonton, Alberta.
101.
Whittaker, B. (2015). Final Report., n 25. 7.7.8.7.
102.
[2017] SASC 163, [94].
103.
For discussion of section 161 and the advantages of advance registration, see Duggan, A. & Brown, D. (2016)., n. 4. 6.17. The point was picked up by the Full Court on appeal: [2018] SASFC 95 [88].
104.
2017 SASC 163, [100].
105.
PPSA, s 21.
106.
See Duggan, A. & Brown, D. (2016)., n. 4. 5.1.
107.
Re Amerind.
108.
[2015] VSCA 92.
109.
In this connection, the court held that Swan was bound by the retention of title provision even though the provision was not set out in the credit application form and whether or not Swan was aware of it. By signing the credit application form, Swan agreed to be bound by Central’s standard terms and conditions whatever they might say: [2015] VSCA 92, [35]–[37].
110.
See also Re Carpenter International Pty Ltd (2016) 307 FLR 37.
111.
The Whittaker Report recommends repealing Corporations Act, section 588FL, mainly because it unnecessarily duplicates PPSA, section 267: Whittaker, B. (2015). Final Report., n 25. 9.2.2. But it may be some time before the government acts on this proposal, if it does so at all.
112.
See Carrafa, Gountzos & Lofthouse (as liquidators of Relux Commercial Pty Ltd. (in liq)) v Doka Formwork Pty Ltd. [2014] VSC 570 [48]; Citadel Financial Corporation Pty Limited v Elite Highrise Services Pty Limited (No.3) [2014] NSWSC 1926; In the matter of Lelpack Pty Ltd. (In liq.) [2015] NSWSC 1558 [32]; Re Amerind Pty Ltd. [2017] VSC 127. See generally, Bruce Whittaker, B. (2010). ‘Retention of Title Clauses under the Personal Property Securities Act 2009 (Cth)’. Journal of Banking and Finance Law and Practice, 21., 273, 277–80.
113.
Bankruptcy and Insolvency Act, R.S.C. 1985, c.B-3, section 97(3) provides simply that (in effect), the law of set-off applies in bankruptcy proceedings in the same manner as it does outside bankruptcy. See also Companies’ Creditors Arrangement Act, RSC 1985, c.C-36, s.21.

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Faculty of Law, University of Toronto, Toronto, Canada
Anthony Duggan

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Faculty of Law, Bond University, Gold Coast, QLD, Australia
John H. Farrar
Faculty of Law, Bond University, Gold Coast, QLD, Australia
Vai Io Lo
Southern Cross University, Gold Coast, QLD, Australia
Bee Chen Goh

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Duggan, A. (2019). Recent Developments in Australian PPSA Case Law and Their Relevance to Other PPSA Jurisdictions. In: Farrar, J., Lo, V., Goh, B. (eds) Scholarship, Practice and Education in Comparative Law. Springer, Singapore. https://doi.org/10.1007/978-981-13-9246-7_2

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