The case of Re Brookfield Multiplex Capital Management Ltd [2009] NSWSC 1014 concerned a secured lender’s (Bank) and Multiplex Capital Management Ltd’s (Multiplex) application for orders pursuant to section 266(4) of the Corporations Act (Cth) 2001 (CA) extending the time for lodgement and registration of a charge pursuant to section 264 of the CA.
Facts
The Acumen Capital Property Securities Fund (Fund) was established in April 2003. At the time of its inception, Acumen Capital Securities Ltd (Acumen) was the responsible entity and Permanent Trustee Australia Ltd (Permanent) was the custodian of the Fund. In the period December 2003 to April 2004 the Fund obtained a number of loans from different lenders. However, by mid 2005 the Fund had refinanced its loans so that the Bank was the only remaining lender. At that time, the Bank held six registered charges over the assets of Permanent and Acumen in their capacity as responsible entity and custodian of the Fund.
In March 2005, the Bank lodged notification of a seventh charge over Permanent in its capacity as custodian of the Fund with ASIC. The seventh charge was lodged within the requisite period; however, it was not lodged with a Form 350 ‘certification of compliance with stamp duty’ and as such the seventh charge was removed from the ASIC register of charges.
In April 2005, ANZ Nominees Ltd (ANZ) replaced Permanent as custodian of the Fund. At this stage the securities beneficially owned by the Fund were still registered in the name of Permanent.
In October 2007, Multiplex Capital Management Ltd became the new responsible entity of the Fund and pursuant to section 601FC(2) of the CA it also held property of the Fund. Section 264 of the CA required ANZ and Multiplex to lodge with ASIC a notice of acquisition of the Fund’s property within 45 days. These notices were not filed. Effectively, this meant that although ANZ and Multiplex had taken over as custodian and responsible entity of the Fund, Acumen and Permanent (mistakenly) remained as the registered responsible entity and custodian of the Fund.
ANZ and Multiplex’s failure to lodge notices with ASIC pursuant to section 264 of the CA was only discovered by the Bank in January 2009. At this time it was also discovered that due to non-lodgement of Form 350 by the Bank, the seventh charge over the Fund remained unregistered.
By March 2009 all requisite notices had been lodged with ASIC and the Bank and Multiplex applied to the Court for orders extending the period for lodgement and registration of a charge pursuant to section 264 of the CA. This was to allow its charge over the Fund to become registered and consequently for its interests to be secured.
Held
Bergin CJ made orders extending the period for lodging the requisite notices. In reaching his decision, Bergin CJ was satisfied that the failure by the Bank to lodge the requisite notices was accidental or due to inadvertence within the meaning of those expressions in section 266(4) of the CA.
The central issue for Bergin CJ to consider was whether exercising his discretion would cause prejudice to any other creditors within the purview of the protection of the statutory scheme. This required consideration of the prospects of the winding up or administration of the Fund and the existence of other registered charges. Bergin CJ gave the following reasons for extending the time period:
Conclusion
Re Brookfield Multiplex Capital Management Ltd highlights the importance of lenders ensuring that charges are registered with ASIC within the required time frame. Under section 264 of the CA charges are required to be lodged with ASIC within 45 days after the creation of the charge. If they fall outside of this period then lenders face the real possibility that their charge will remain unregistered and as such they will remain vulnerable if the borrower becomes insolvent.
If you have any queries regarding this matter then please do not hesitate to contact Dean Hely on 9288 6772 or Joseph Abberton on 9288 6765.
