Federal Court of Australia

Clifford Hallam Healthcare Pty Ltd v IPG Rockhampton [2025] FCA 960

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 588FM of the Corporations Act 2001 (Cth) (the Act), 12 April 2025 is fixed as the later time for the purposes of s 588FL(2)(b)(iv) of the Act for the security interests granted to the Plaintiff in the collateral referred to in the following registration numbers in the register (the PPSR) established under the Personal Property Securities Act 2009 (Cth):

(a)    PPSR Registration Number 202504120006925 registered as against IPG Rockhampton Pty Ltd ACN 656 731 645;

(b)    PPSR Registration Number 202504120006939 registered as against Bundaberg PL Pharmacy Pty Ltd ACN 638 155 816;

(c)    PPSR Registration Number 202504120006941 registered as against IPG Gympie Pty Ltd ACN 612 446 474;

(d)    PPSR Registration Number 202504120006960 registered as against IPG Robina Pty Ltd ACN 609 960 858;

(e)    PPSR Registration Number 202504120006994 registered as against IPG Sunnybank Hills Pty Ltd ACN 605 187 371;

(f)    PPSR Registration Number 202504120007018 registered as against Vanguard Health Sunnybank Hills Pty Ltd ACN 605 171 257;

(g)    PPSR Registration Number 202504120007025 registered as against IPG Lennox Head Pty Ltd ACN 659 528 220;

(h)    PPSR Registration Number 202504120007041 registered as against Port Macquarie PL Pharmacy Pty Ltd ACN 653 316 495;

(i)    PPSR Registration Number 202504120007060 registered as against IPG Mandurah Pty Ltd ACN 656 000 190;

(j)    PPSR Registration Number 202504120007073 registered as against Beaudesert Pharmacy Pty Ltd ACN 628 552 465;

(k)    PPSR Registration Number 202504120007087 registered as against Jade Beaudesert Pty Ltd ACN 628 783 362;

(l)    PPSR Registration Number 202504120007094 registered as against Southport Park Pharmacy Pty Ltd ACN 167 131 053;

(m)    PPSR Registration Number 202504120007104 registered as against IPG Mudgee Pty Ltd ACN 605 627 727; and

(n)    PPSR Registration Number 202504120007115 registered as against IPG Moranbah Pty Ltd ACN 655 884 101.

2.    Liberty is granted to any liquidator, administrator, deed administrator, restructuring practitioner or unsecured creditor of any of the Defendants to apply, on two business days’ notice, to discharge order 1 if any winding up of any of the Defendants occurs, or an administrator is appointed to any of the Defendants under ss 436A, 436B or 436C of the Act, or a restructuring practitioner is appointed to any of the Defendants under s 435B of the Act, or any of the Defendants executes a deed of company arrangement or restructuring plan, within six months after 12 April 2025.

3.    There is no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

NESKOVCIN J

1    By originating process filed on 23 July 2025, the plaintiff, Clifford Hallam Healthcare Pty Ltd (CH2), applied for an order under s 588FM of the Corporations Act 2001 (Cth) fixing 12 April 2025 as a “later time” for the purposes of s 588FL(2)(b)(iv) for the registration of certain security interests within the meaning under s 12 of the Personal Property Securities Act 2009 (Cth) (PPSA). The security interests are held by CH2 in respect of certain collateral of 14 grantors who entered into a General Security Deed (GSD) with CH2 on 6 January 2025. The security interests were not registered on the Personal Property Securities Register (PPSR) until 12 April 2025.

2    The application came before me as the Victorian Corporations List Judge on 1 August 2025.

3    In support of the application, CH2 relied on:

(a)    an affidavit of Timothy Faulkner, Credit Manager of CH2, affirmed 21 July 2025;

(b)    an affidavit of Daniel Dai, solicitor, affirmed 18 July 2025;

(c)    an affidavit of Galen Maxwell-Leone, solicitor, sworn 18 July 2025; and

(d)    an affidavit of Ross Whyte McClymont, solicitor, affirmed 31 July 2025.

4    The grantors are defendants to the proceeding. Gilbert + Tobin confirmed that they had instructions to accept service of the originating process and supporting affidavits on behalf of the grantors. CH2’s solicitors asked Gilbert + Tobin to confirm whether they intended to appear at the hearing on 1 August 2025. At the time of hearing, CH2’s solicitors had not had a response from Gilbert + Tobin, nor had CH2 received notice of any opposition to the application.

5    On 1 August 2025, I made orders substantially in the form sought by CH2. These are my reasons for doing so.

background

6    CH2 is an integrated distributor and wholesaler of pharmaceuticals, medical consumables and medical equipment. Each of the grantors operates a pharmacy business. The grantors form part of a broader group of approximately 100 pharmacies known as the Infinity Group.

7    On 27 June 2023, CH2 and Infinity Pharmacy Holdings Pty Ltd entered into a Distribution Agreement under which CH2 agreed to supply pharmacy products to the pharmacies on credit terms.

8    In or around June 2024, CH2 and Infinity Pharmacy Holdings entered into an agreement to convert certain amounts of trade debt owing by the pharmacies (including certain of the grantors) into loans payable to CH2. As part of that transaction, it was agreed that CH2 would take security over the grantors in the form of a general security deed to secure the CH2 loans and other amounts owing to CH2 under the Distribution Agreement.

9    On 2 December 2024, CH2 instructed its solicitors, Ashurst, to prepare the GSD and, once the GHD was executed, to have it registered on the PPSR. The GSD was to secure all amounts payable, owing but not payable, or that otherwise remain unpaid by any Obligor (as defined in the GSD) to CH2 on any account at any time under or in connection with the Distribution Agreement or any other Transaction Document (as defined in the GSD) or any transaction contemplated by them. The GSD was an all present and after acquired property (AllPAAP) security interest.

10    On 24 December 2024, a junior solicitor at Ashurst was instructed by a more senior solicitor at Ashurst to arrange for execution of the GSD and, once executed, to attend to the relevant registrations on the PPSR. The more senior solicitor then went on leave until late January 2025.

11    On 6 January 2025, the junior solicitor at Ashurst received the GSD, executed on behalf of Ch2 and by the grantors.

12    The junior solicitor overlooked the supervising solicitor’s instructions to attend to the relevant registrations and, when other members of the law firm returned from leave in the New Year, there was no follow up to check that the GHD had been registered.

13    After business hours on 11 April 2025, CH2 sought confirmation from Ashurst that the GSD had been registered on the PPSR. Searches were carried out immediately and established that the registrations had not in fact been made.

14    On 12 April 2025, the necessary financing statements were registered on the PPSR.

15    CH2 did not instruct Ashurst to make a s 588FM application at that time as it was not thought that the grantors were at risk of entering into liquidation or voluntary administration within the next six months.

16    In mid to late June 2025, CH2 instructed another law firm to send letters of demand in respect of outstanding debts to a number of pharmacies in the Infinity Group. CH2 did not receive a substantive response to the letters of demand. On 8 July 2025, CH2 instructed Ashurst to send letters of demand to other pharmacies in the Infinity Group, including the grantors.

17    By 21 July 2025, CH2 was owed a total of $51,031,080.35 by the pharmacies within the Infinity Group. Amounts owed by nine of the grantors, in respect of overdue trade debts and the CH2 loans, ranged between $117,793.70 and $842,863.43. In those circumstances, CH2 said it had recently developed concerns as to the solvency of the pharmacies including the grantors and instructed Ashurst to bring the present application.

relevant PRINCIPLES

18    Section 588FL of the Corporations Act relevantly provides:

588FL    Vesting of PPSA security interests if collateral not registered within time

Scope

(1)    This section applies if:

(a)    any of the following events occurs:

(i)    an order is made, or a resolution is passed, for the winding up of a company;

(ii)    an administrator of a company is appointed under section 436A, 436B or 436C;

(iii)    a company executes a deed of company arrangement under Part 5.3A;

(iv)    a restructuring practitioner for the company is appointed under section 453B;

(v)    a company makes a restructuring plan under Division 3 of Part 5.3B;

(vi)    section 842A, or Subdivision C of Division 9 of Part 7.3B, begins to apply to a body corporate; and

(b)    a PPSA security interest granted by the company in collateral is covered by subsection (2).

Note:     A security interest granted by a company in relation to which paragraph (a) applies that is unperfected at the critical time may vest in the company under section 267 or 267A of the Personal Property Securities Act 2009.

(2)    This subsection covers a PPSA security interest if:

(a)    at the critical time, or, if the security interest arises after the critical time, when the security interest arises:

(i)    the security interest is enforceable against third parties under the law of Australia; and

(ii)    the security interest is perfected by registration, and by no other means; and

(b)    the registration time for the collateral is after the latest of the following times:

(i)    6 months before the critical time;

(ii)    the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier;

…

(iv)    a later time ordered by the Court under section 588FM.

Note 1:    For the meaning of critical time, see subsection (7).

Note 2:    For when a security interest is enforceable against third parties under the law of Australia, see section 20 of the Personal Property Securities Act 2009.

Note 3:    A security interest may become perfected at a particular time by a registration that is made earlier than that time, if the security interest attaches to the collateral at the later time (after registration). See section 21 of the Personal Property Securities Act 2009.

Note 4:    The Personal Property Securities Act 2009 provides for perfection by registration, possession or control, or by force of that Act (see section 21 of that Act).

…

Vesting of security interest in company

(4)    The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of section 588FN:

(a)    if the security interest first becomes enforceable against third parties at or before the critical time—immediately before the event mentioned in paragraph (1)(a);

(b)    if the security interest first becomes enforceable against third parties after the critical time—at the time it first becomes so enforceable.

Note:    For the meaning of critical time, see subsection (7).

…

(7)    In this section:

critical time, in relation to a company, means:

(a)    if the company is being wound up—when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day under section 513A or 513B; or

(b)    if the company is under administration or is subject to a deed of company arrangement—when, on a day, the event occurs by virtue of which the day is the section 513C day for the company; or

(c)    if the company is under restructuring or is subject to a restructuring plan—when, on a day, the event occurs by virtue of which the day is the section 513CA day for the company.

19    The effect of s 588FL(2) is that when a company is being wound up, an administrator has been appointed or a deed of company arrangement executed, any PPSA security interest which was perfected, registered, or enforceable against a third party after the latest of six months before the critical time or 20 days after the security agreement came into force or such later time as the Court may fix under section 588FM, vests in the company, for the benefit of creditors generally, and the secured creditor loses the benefit of the security: Re Appleyard Capital Pty Ltd; 123 Sweden AB v Appleyard Capital Pty Ltd [2014] NSWSC 782; (2014) 101 ACSR 629 at [8] (Brereton J, as his Honour then was).

20    Provision for the Court to fix a later time for registration is made by s 588FM of the Corporations Act, which provides:

588FM Extension of time for registration

(1)    A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv).

Note:    If an insolvency‑related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company.

(2)    On an application under this section, the Court may make the order sought if it is satisfied that:

(a)    the failure to register the collateral earlier:

(i)    was accidental or due to inadvertence or some other sufficient cause; or

(ii)    is not of such a nature as to prejudice the position of creditors or shareholders; or

(b)    on other grounds, it is just and equitable to grant relief.

(3)    The Court may make the order sought on any terms and conditions that seem just and expedient to the Court.

21    Section 588FM confers on the Court a discretion to fix a later time for registration if satisfied, relevantly, that the failure to register the security interest earlier was accidental or due to inadvertence. Only one of the three grounds in s 588FM(2) needs to be satisfied: Appleyard at [9]; Caason Investments Pty Ltd v Ausroc Metals Ltd [2016] WASC 267 [10] (Sanderson M); Bluewater Power 1 Pty Ltd v Griffin Coal Mining Company Pty Ltd [2019] WASC 438 at [39] (Vaughan J, as his Honour then was). Section 588FM(3) also permits the Court to make the order on any terms and conditions that seem just and expedient to the Court.

22    The effect of not registering the security within 20 days is to expose the secured creditor to the loss of its security if the company goes into liquidation within six months of the actual date of registration. The purpose and effect of an order under s 588FM is to avoid the vesting of the security interest in the company if it goes into liquidation or administration within six months after the actual date of registration, and thereby preserve the secured creditor’s security, to the necessary detriment of unsecured creditors for whose benefit the security interest would otherwise vest in the company. The only utility of such an order is in the event that the company does go into liquidation or administration within six months: Appleyard at [13].

23    The principles relevant to accident and inadvertence under s 588FM(2)(a)(i) were considered in Bluewater Power, where Vaughan J stated at [40] – [41] (footnotes omitted):

A lack of legal understanding as to the requirements for registration may amount to 'inadvertence'.  The concept is concerned with human error or oversight or being 'not properly attentive'.

Inadvertence will readily be found where an error of a secured creditor in not attending to registration of its security within time is innocent and does not result from any disregard of statutory obligations.

disposition

24    I was satisfied that the Court’s jurisdiction to make the order sought was enlivened and that, as a matter of discretion, the extension of time for the registration of the security interests was appropriate and should be granted, for the following reasons.

25    First, the failure to register the GHD earlier was due to the inadvertence or oversight by a junior solicitor. Because of his limited experience, the junior solicitor did not appreciate the need to make the registrations within 20 business days after the GSD came into force; nor did he fully appreciate the consequences of not doing so. This oversight was compounded by the fact that there was no follow up by other members of the firm when they returned from leave.

26    Second, insofar as delay is relevant to the exercise of the discretion, the delay in bringing the application was limited and had been explained.

27    Third, insofar as prejudice to the interests of unsecured creditors is a relevant discretionary consideration, at the time of the registrations, each of the grantors had other earlier-registered AllPAAP securities registered against them on the PPSR. Some grantors had more than one earlier-registered AllPAAP securities, but all grantors had earlier registered AllPAAP securities which had been registered before 6 January 2025. Unsecured creditors of the grantors who had searched the PPSR between 7 January 2025 and 12 April 2025 would have seen the earlier-registered securities on the PPSR.

28    There was no evidence before the Court in relation to the solvency of the grantors, which might have allayed concerns of prejudice to the interests of unsecured creditors. In the circumstances, it was appropriate to include a ‘Guardian Securities condition’, which takes its name from Re Guardian Securities Ltd [1984] 1 NSWLR 95; (1985) 8 ACLR 822 (McLelland J), to protect the interests of unsecured creditors. They will have liberty to apply to discharge the order granting the extension of time to register the security interests if there is a winding up, an administrator or restructuring practitioner is appointed, or any of the defendants executes a deed of company arrangement or restructuring plan, within six months after 12 April 2025.

29    Fourth, the grantors were given notice of the application and did not appear to oppose it.

30    Accordingly, I made orders substantially in the form sought on behalf of CH2.

Associate:

Dated:    15 August 2025

SCHEDULE OF PARTIES