In the matter of Mehajer Brothers Pty Limited (as trustee for Mehajer Bros Trust) [2017] NSWSC 1852

In the matter of Mehajer Brothers Pty Limited (as trustee for Mehajer Bros Trust) [2017] NSWSC 1852

The Court held it was just and equitable to extend the period under PPSA s 293(1)(a) only for the timely but defectively registered third and fourth chattel mortgages due to inadvertence, but not for the substantially and unexplainedly late first and second chattel mortgages, where extension would substantially prejudice the second defendant. Under Corporations Act s 588FM, the Court fixed a later time for all four mortgages, as even though no inadvertence was established for the first and second, the delay was not prejudicial to the interests of creditors or shareholders.

Parties
Plaintiff: BMW Australia Finance Ltd; First Defendant: Mehajer Brothers Pty Ltd (as Trustee for Mehajer Bros Trust); Second Defendant: ACE Demolition & Excavation Pty Ltd; Third Defendant: CEG Direct Securities Pty Ltd
Jurisdiction
Australia
Judgment Date
20 December 2017
Procedural Posture
Commercial Law / Equity – Corporations List – Originating Process / Judgment and Orders After Hearing
Outcome
Extension of time granted under PPSA s 293(1)(a) for third and fourth chattel mortgages only; refusal of extension for first and second chattel mortgages under PPSA; time fixed under Corporations Act s 588FM for all four mortgages; costs awarded against plaintiff two-thirds.
Legal Topics
Personal Property Securities Act 2009 (cth) – Extension of Time for PMSI Registration, Corporations Act 2001 (cth) S 588 FM Application, Priority of Security Interests, Registration Defects and Consequences
Commercial Law Corporations Law Personal Property Securities Personal Property Securities Act 2009 (cth) – Extension of Time for PMSI Registration Corporations Act 2001 (cth) S 588 FM Application Priority of Security Interests Registration Defects and Consequences

Case Brief

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Parties

BMW Australia Finance Ltd

Plaintiff

Mehajer Brothers Pty Ltd (as Trustee for Mehajer Bros Trust)

First Defendant

ACE Demolition & Excavation Pty Ltd

Second Defendant

CEG Direct Securities Pty Ltd

Third Defendant

Procedural Posture

Commercial Law / Equity – Corporations List – Originating Process / Judgment and Orders After Hearing

Legal Issues

  1. 1 Whether extensions of time should be granted for registration of PMSIs under s 293 of the PPSA for four chattel mortgages
  2. 2 Whether time for registration should be fixed under Corporations Act s 588FM for certain chattel mortgages
  3. 3 Whether prejudice arises to other secured parties or creditors by such extensions

Ratio Decidendi

The Court held it was just and equitable to extend the period under PPSA s 293(1)(a) only for the timely but defectively registered third and fourth chattel mortgages due to inadvertence, but not for the substantially and unexplainedly late first and second chattel mortgages, where extension would substantially prejudice the second defendant. Under Corporations Act s 588FM, the Court fixed a later time for all four mortgages, as even though no inadvertence was established for the first and second, the delay was not prejudicial to the interests of creditors or shareholders.

Court Disposition

Extension of time granted under PPSA s 293(1)(a) for third and fourth chattel mortgages only; refusal of extension for first and second chattel mortgages under PPSA; time fixed under Corporations Act s 588FM for all four mortgages; costs awarded against plaintiff two-thirds.

Orders

  • Pursuant to PPSA s 293(1)(a), time for perfection by registration of PMSIs created by the third (dated 27 February 2015, Toyota Kluger YBQ81C) and fourth (dated 11 May 2015, Land Rover SALGA2JE3FA20834) chattel mortgages is extended to 24 November 2017.
  • Pursuant to Corporations Act s 588FM, 24 November 2017 is fixed as the registration time for the purposes of sub-paragraph 588FL(2)(b)(iv) for all four chattel mortgages detailed in the judgment.