This case considers the calculation of time for the purpose of s 588FL(2) of the Corporations Act 2001 (Cth) which applies to PPSA security interests if “the registration time for the collateral [was] after… six months before the critical time”. The critical time in this instance was 10 May 2016, and the security interest had been registered on 10 November 2015, at 4.18 pm. The question was whether this registration was “six months before” the critical time. Justice Henry considered the appropriate statutory provisions under the Corporations Act 2001 and the Acts Interpretation Act 1901 (Cth), and found that the six-month count was “back to and inclusive of all of 10 November 2015”. Accordingly, to be “before” the six months, the registration was required to be before the beginning of that day.
9 May 2017
The applicants, the liquidators of Overflow FNQ Pty Ltd (“Overflow”), sought a declaration that the respondent’s security interest under its terms of trade agreement had vested in Overflow. . The issue which arose was whether the respondent had registered its security interest prior to the administration of the company, “so as to avoid the interest being statutorily deemed to have vested in Overflow”. .
The relevant interest was a security interest within the meaning of the Personal Property Securities Act 2009 (Cth) (“PPSA”) and a PPSA security interest within the meaning of the Corporations Act 2001 (Cth). . Section 588FL(4) of the Corporations Act had the effect “that a PPSA security interest granted by a company to which an administrator is subsequently appointed is deemed to have vested in the company from immediately before the appointment of the administrator if it is a PPSA security interest covered by s 588FL(2)”. . The relevant aspect of that section, s 588FL(2)(b), provided that the subsection covered a PPSA security interest if “the registration time for the collateral [was] after … six months before the critical time”, as defined in s 588FL(7). .
In the present case, by virtue of ss 513B and 513C of the Corporations Act, the “critical time” was the day on which the winding up was taken to have begun, namely, when the applicants were first appointed as administrators of Overflow at 8.00 am on 10 May 2016. . The security interest was registered on 10 November 2015 at 4.18 pm. . The issue therefore was whether the registration time occurred “after six months before the critical time”. . If it did, the security interest vested in Overflow. .
Henry J noted a calculation of time provision in s 105 of the Corporations Act, however, held that, pursuant to s 5C of the Corporations Act, the appropriate section which applied was s 36 of the Acts Interpretation Act 1901 (Cth). –. The effect of this section was that “to ascertain the point in time six months before the critical time, the day of the critical time, 10 May 2016, should not be included in the count six months backwards in time”. . The six month count was therefore “back to and inclusive of all of 10 November 2015”. . Accordingly, the “point in time ‘six months before the critical time’ was … the stroke of midnight on the night of the ninth into the tenth of November 2015”. The registration time of 10 November 2015 at 4.18 pm was “after the beginning of that day” and as such “after six months before the critical time”. .
His Honour also considered whether the position would be any different if calculated by reference to months rather than days. . Relevantly, s 22(1)(g) of the Acts Interpretation Act provided that a “calendar month” meant “a period commencing at the beginning of a day on one of the 12 months of the year and ending immediately before the beginning of the corresponding day of the next month”. . Here, the “corresponding day” was 10 May 2016, “and the period of six months before it necessarily ended immediately before 10 May 2016 began, namely at the end of 9 May 2016”. . “Counting back, the six month period therefore started at the beginning of 10 November 2015”, with the consequence that the respondent needed to have registered its interest “before ‘the beginning’ of 10 November 2015”. . As the registration did not occur before the beginning of 10 November 2015, but rather after the beginning of 10 November 2015, in the afternoon, registration was held to have occurred “after six months before the critical time”. . The result was that s 588FL(2) did cover the PPSA interest, and the security interest therefore vested in Overflow. , .
His Honour did not consider it necessary to determine whether the relevant time falls to be determined by reference to specific times of day. –. On the facts of this case, it would not have changed the outcome. .