Public Trustee of Queensland v Fortress Credit Corporation (Aus) 11 Pty Ltd & Ors [2010] HCATrans 49 (12 March 2010)

Last Updated: 15 March 2010

[2010] HCATrans 049

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B40 of 2009

B e t w e e n -

PUBLIC TRUSTEE OF QUEENSLAND

Applicant

and

FORTRESS CREDIT CORPORATION (AUS) 11 PTY LTD

First Respondent

OCTAVIAR LIMITED (FORMERLY MFS LIMITED)

Second Respondent

OCTAVIAR ADMINISTRATION PTY LTD (FORMERLY MFS ADM)

Third Respondent

OPI PACIFIC FINANCE LIMITED

Fourth Respondent

WELLINGTON CAPITAL LIMITED

Fifth Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 12 MARCH 2010, AT 11.48 AM

Copyright in the High Court of Australia

__________________

MR W. SOFRONOFF, QC: May it please the Court, I appear with my learned friend, MR D.B. O’SULLIVAN, for the applicant. (instructed by Clayton Utz Lawyers)

MR D.F. JACKSON, QC: May it please the Court, I appear with my learned friend, MS M.J. LUCHICH, for the first respondent. (instructed by Baker & McKenzie Solicitors)

FRENCH CJ: Mr Jackson, the Court would be assisted, perhaps, if you could address us first.

MR JACKSON: Your Honours, as the Court will have seen from our written submissions, the contention which we seek to make is that the decision of the Court of Appeal is not attended by sufficient doubt to merit the grant of special leave. Could I say two things particularly. Your Honours will see that in the application book between pages 86 and 233 there have been set out a number of notes and articles by the applicant.

FRENCH CJ: It generated a lot of prose.

MR JACKSON: Indeed, your Honour, but could I just say this. It is said that that material shows that the form of documentation presently in question was in widespread use in the commercial community. One accepts that, your Honour. What it also shows is that the decision of the primary judge went against an interpretation of the provisions of the Corporations Act which had been adopted for quite a long time, that there is a part of the material which is in those passages, some of it reasoned, regarded the primary judge’s decision as erroneous. None of the material, your Honours, actually supports the primary judge’s reasoning, although it recognised, of course, that it had to be respected, but the decision of the Court of Appeal was regarded as expeditiously and properly putting down the heresy created by the judgment at first instance. Your Honour, I do not want to provoke the Court by those words, but that is what I seek to note.

KIEFEL J: What is the difficulty, do you say, with the primary judge’s decision? Does his Honour’s reasons take the variation of the term as being answered by the effective increase in the liabilities secured, that is to say, that it merges two aspects of section 268(2)?

MR JACKSON: Yes. What we say, your Honours, is that the terms of the provision make it apparent that it is dealing with variations in the - - -

FRENCH CJ: Just a minute. I think, Mr Sofronoff, you are turning pages close to a microphone. You may be generating more noise than we need. Yes, Mr Jackson.

MR JACKSON: Your Honours, what I was going to say was this, that what the primary judge’s reasons did was to have the effect that the words “the terms of the charge”, in effect, in section 268(2) were left out. That has very significant effects.

KIEFEL J: His Honour held that the increase in liability was sufficient to effect a variation.

MR JACKSON: Yes. Your Honours, one can give many examples, some arising in the enforcement of charges, some arising outside the enforcement of charges and circumstances that are not covered by the particular provision of section 268(3) where it would require there to be further documents lodged with the consequence of the charge or the increase being invalidated if the further thing was not lodged. If one takes, for example, provisions in an agreement that provide for changes in interest rates, they may well bring about a situation where there would have to be further documents lodged even though the change in the interest rate occurred automatically by reference to outside matters.

If one takes things like the amounts payable for early redemption that would have to be lodged, if one takes things that occur in the course of enforcing charges, for example, if there is default and default interest added, if there are costs of enforcing the charge which by the terms of the charge can be added, then the amount of the debt secured is increased. The point we seek to make really, your Honours, is that – I do not think I need to go to the detail of that material at all – but could I just give one reference, your Honours, and that is page 96. If one goes to page 96 in the left column at about line 35, it says:

Market upheaval followed the handing down of the first instance decision. Principles emerging from that decision brought into question decades of market practice –

et cetera, and that goes on, your Honours, down to about line 42. On the next page, page 97, under the heading “Implications” on the left there is a reference to the view about the decision of the Court of Appeal. Now, your Honours, could I just say this about the substance of the matter. This was an existing registered charge. The particulars of it required by section 263 had been filed. Any requirement for further lodgement could only arise under section 268(2). That required that there be a variation in the terms of the charge having an effect set out in the subsection.

Your Honours, we would invite the Court to note, as the Court of Appeal did, the words “variation in the terms of the charge” and the requirement that the variation in the terms of the charge have one or other of the effects and, in our submission, the Court of Appeal was correct in taking the views which we have endeavoured to summarise at page 239 in paragraph 18 of our submissions. Could I just say, your Honours, in addition to that, if one looks at the reasons of Justice Muir, for example, at page 53, those matters are, in our submission, very clearly set out in paragraph 90, and I am referring to the sentence commencing about line 28, and also in the same paragraph the sentence on the last four lines of that paragraph.

KIEFEL J: His Honour is really saying that it has to be something – effective change to the words used in the charge, which is a rather narrower approach than the other members of the Court of Appeal.

MR JACKSON: I think it is a more specific statement, your Honour, rather than different because the members of the Court of Appeal recognise that one can have charges annulled in writing and that they have terms and if there is a change in the terms of those, then the appropriate course has to be taken, but - - -

KIEFEL J: Is the key to the reasoning of the Court of Appeal contained in your paragraph 18(e), or the essential aspect of it? All that occurred was to have identified the deed:

identify a particular liability as falling within the category of liabilities - - -

MR JACKSON: Yes, your Honour. There is perhaps an element of flourish in the last two lines starting at “any” on that page, but leaving aside that fall from grace, otherwise we would submit that is correct. Your Honours, those are our submissions.

FRENCH CJ: Thank you. There will be a grant of special leave in this matter. Will this be encompassed within a day or will it need a day and a half?

MR SOFRONOFF: Your Honour, I suspect it might go over into a second day.

MR JACKSON: Your Honour, I think that is right.

FRENCH CJ: Yes, all right. Thank you.

AT 11.57 AM THE MATTER WAS CONCLUDED