On 1 September 2010 the High Court handed down its much
anticipated decision in the appeal from Re Octaviar Ltd
(No 7)  QCA 282. The High Court, consisting of Chief Justice
French, and Justices Gummow, Hayne, Kiefel and Bell, unanimously
dismissed the appeal in Public Trustee of Queensland v Fortress
Credit Corporation (Aus) 11 Pty Ltd  HCA 29.
In our Alert of 17 March 2010
we summarised the background to the Octaviar appeal.
Essentially it involved a charge which secured all moneys owing
under "Transaction Documents" and a deed which designated
a document to be a Transaction Document, but which was not
registered on the ASIC Charges register. Was failure to register
the designation deed fatal under section 268(2) of the Corporations
The High Court has found that failure to register in these
circumstances was not fatal, as the designation deed did not
constitute either a variation in the terms of a charge or a new
The High Court said that section 268(2) is directed at
variations in the terms of a charge and not changes imposed, in
accordance with those terms, on the burden of liability under a
charge. The execution of the designation deed was no more than the
application of the mechanisms in the Charge to identify particular
liabilities as falling within the category of liabilities which the
Charge, in general terms, already secured.
The Public Trustee argued that failure to lodge a notice of
variation under section 268 would offend the policy of registration
laid down in Chapter 2K of the Corporations Act. However the Court
rejected this argument. In doing so it emphasised that the
registration provisions of the Corporations Act do not purport to
create a perfect and complete register of all the details of a
registrable charge; such details could only be discovered by
looking to the document creating the Charge.
Furthermore any person searching the register would have
encountered the Charge and would have realised that, given the
definition of "Secured Money" and the inclusion of clause
1.2 in the Charge (which cross-referred to the Facility Agreement),
there was a need to look elsewhere to ascertain the precise nature
and details of the liability secured under the Charge.
The High Court saw no policy offence in this.
With this appeal decided, the remaining uncertainty relating to
document designation mechanisms and registration on the ASIC
charges register has been laid to rest. Drafters of charges should
still note however the criticism made of the practice of not
setting out key definitions in the charge itself.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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