Unless there is a variation in the terms of the charge, then the
lodgement requirements of s 268(2) Corporations Act 2001
are not triggered even if there is an increase in the liability
secured by the charge. However, an application to appeal to the
High Court could be lodged.
In Re Octaviar Ltd (No. 7)  QSC 037, 18 September
2009, a registered fixed and floating charge secured Octaviar's
guarantee of a loan from Fortress to an Octaviar subsidiary.
Octaviar charged all of its present and future property for the
payment of the "Secured Money" which was defined as all
monies that are, or may in future become, due under a
"Transaction Document". "Transaction Document"
was defined as including a document which the parties agreed is a
Subsequent to registration of the charge, the parties agreed
that a guarantee by Octaviar for another loan ("YVE
Guarantee") was a Transaction Document
("Agreement"). Administrators were then
appointed to Octaviar.
The Supreme Court of Queensland held that the Agreement was a
variation of the terms of the charge as the charge now secured a
new obligation, increasing the liabilities secured by it. As no
notice of variation was lodged with ASIC, the charge was void to
the extent it would secure the liability of Octaviar under the YVE
Guarantee as against the administrator.
After this judgment, there was concern that an ASIC notification
would have to be lodged every time a chargor incurred a liability
to the chargee which did not exist at the time of registration of
the charge. Receivers were also concerned about the validity of
their appointments under charges which may have been void in light
of this decision.
Court of Appeal
The Court of Appeal found that the Agreement was not a variation
of the charge, and no new charge was created. The Agreement was
merely the application of an existing contractual arrangement which
allowed the parties to designate the YVE Guarantee as a Transaction
Document. The terms of the charge remained unchanged after the
Section 268(2) Corporations Act 2001 requires a company
to lodge a notice with ASIC within 45 days after a "variation
in the terms of the charge" which increases the amount of the
liabilities secured by the charge. The Court of Appeal held that
this section is directed at changes in the terms of the charge, and
not at changes to the amount of liabilities secured in accordance
with those terms.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On 12th November 2016, new laws will commence to protect small businesses from unfair terms in standard form contracts.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).