Trenfield v HAG Import Corporation (Australia) Pty Ltd

CITATION [2018] QDC 107
JUDGE/S MCGILL SC, DCJ

HAG supplied goods to Lineville Pty Ltd on retention of title terms. Lineville had signed a credit application in 2011 (before the PPSA registration commencement date) providing that goods would be supplied on attached terms (which included the ROT security interest), or as amended by HAG from time to time. HAG made a PPSA registration specifying the security interest as ‘transitional’. Goods were supplied after the registration commencement date.

Lineville paid HAG for goods, then went into liquidation. Trenfield, Lineville’s liquidator, sought to recover payments made to HAG as preferential payments in respect of an unsecured debt, contending that that the transitional registration was ineffective to perfect the security interests in the goods.

The court found, unlike the position in Central Cleaning Supplies (Aust) Pty Ltd v Elkerton [2015] VSCA 92, that the credit application was not a contract providing for security interests. Rather, it was a non-contractual document containing terms that would later apply, if not changed. Accordingly the transitional registration was ineffective to perfect the security interests that were created when goods were supplied after the registration commencement date.

But the payments made had not been made in respect of an unsecured debt, and so were not preferential. Whether security existed had to be tested at the time the payment was made, not when liquidation later occurred. At the point of payment, despite not being perfected, the security was effective between its parties. (And even on liquidation, the security interest did not become void; rather, it vested in the grantor.) However, HAG had received payments exceeding the value of its security, and was required to refund the excess.


The summary of the pertinent points in this legal case update has been provided by Steve Pemberton, Lawyer and Consultant, as an extract from his digest of PPSA cases.