Federal Court of Australia

Australian Financial Security Authority v Pedler [2026] FCA 1120

ORDERS

THE COURT DECLARES THAT:

1.    In its decision of 16 December 2025 in case 2024/2241, the Administrative Review Tribunal:

(a)    misapplied s 181 of the Personal Property Securities Act 2009 (Cth) thereby causing its decision to miscarry; and

(b)    denied the Registrar of Personal Property Securities procedural fairness by making adverse findings against the Registrar without affording the Registrar adequate prior notice.

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

REASONS FOR JUDGMENT

STEWART J:

Background

1    Samuel Pedler purchased a 2015 Mazda utility vehicle for $28,000 from Just Magic Plumbing Pty Ltd in June 2017. Unknown to Mr Pedler, the vehicle was subject to a security interest held by the Commonwealth Bank of Australia (CBA) that secured a loan to Just Magic for the original purchase of the vehicle. CBA’s security interest was registered on the Personal Property Securities Register.

2    Just Magic was wound up by Court order in 2018 and ultimately deregistered in January 2021.

3    In November 2019, the registration of CBA’s security interest was removed from the register in circumstances that are not presently relevant save to say that they did not involve Mr Pedler.

4    Approximately seven months later, in June 2020, CBA caused the security interest to be registered a second time. Mr Pedler, who by that time had owned the vehicle for three years, was not involved in the second registration and can be taken to have known nothing about it or CBA’s interest in the vehicle.

5    Still ignorant of the registered security interest in favour of CBA, Mr Pedler attempted to sell the vehicle in around November 2023. That is when he became aware of the registered security interest.

6    Mr Pedler sent CBA an “amendment demand” pursuant to s 178 of the Personal Property Securities Act 2009 (Cth) (PPSA) requiring the removal of the registration of the security interest on the basis that he owned the vehicle prior to the registration commencing and that the vehicle did not secure any debt. CBA did not remove the registration.

7    The Registrar of Personal Property Securities then issued an “amendment notice” to CBA pursuant to s 180(1) of the PPSA. The Registrar requested evidence of CBA’s underlying security interest and an ongoing debt or obligation.

8    CBA wrote to the Registrar saying that the amounts payable pursuant to the loan agreement with Just Magic, and secured by the vehicle, remained due and payable.

9    A delegate of the Registrar then made a decision under s 181(1) of the PPSA not to register a “financing change statement” on the basis they suspected on reasonable grounds that the amendment demand was not authorised under s 178 of the PPSA.

The Tribunal proceeding

10    Mr Pedler lodged an application for review of the delegate’s decision in the Administrative Review Tribunal. The Australian Financial Security Authority (AFSA) was named as the respondent. The proper respondent should have been the Registrar as it was a decision of the Registrar’s delegate that was sought to be reviewed. AFSA is an Executive Agency established pursuant to s 65 of the Public Service Act 1999 (Cth) to support the Inspector-General in Bankruptcy, the Official Receiver and the Official Trustee and to manage the Personal Property Securities Register. The PPSA does not confer on AFSA itself any decision-making power or statutory role in respect of the Registrar. Be that as it may, no one raised that as an issue and the review proceeded.

11    On a number of occasions, a representative of the Registrar invited CBA to join the Tribunal proceeding but CBA did not do so. Accordingly, AFSA appeared before the Tribunal representing the Registrar albeit as the named respondent in that proceeding, as it stated in correspondence, “to assist the Tribunal in coming to the correct or preferable decision”. I accept that that is a proper course for it to have taken as not being caught by the principle in R v Australian Broadcasting Tribunal; Ex parte Hardiman [1980] HCA 13; 144 CLR 13 at 35-36 notwithstanding that in some senses the Registrar may be regarded as being in a similar position to a tribunal in adjudicating between conflicting claims, here Mr Pedler’s and CBA’s. See Macedon Ranges Shire Council v Romsey Hotel Pty Ltd [2008] VSCA 45; 19 VR 422 at [25]-[39] per Warren CJ, Maxwell P and Osborn AJA; MetLife Insurance Ltd v Australian Financial Complaints Authority (No 3) [2022] FCA 849; 411 ALR 163 at [9]-[13] per Colvin J.

12    Mr Pedler’s essential contention before the Tribunal was that CBA’s second security registration in June 2020 was invalid because at that time Just Magic was not the owner of the vehicle, he was. Mr Pedler made no criticism of the Registrar beyond contending that the delegate’s decision was erroneous, and he made no contention that the Registrar or CBA was, or might be, liable to him in damages.

13    AFSA sought an order affirming the delegate’s decision on the basis that, as referred to in s 181 of the PPSA, “the Registrar suspects on reasonable grounds that the amendment is not authorised under section 178”. AFSA’s essential contention was that the liquidation of Just Magic and the removal or lapsing of the first registration of a security interest did not invalidate CBA’s security interest in the vehicle, which was again perfected by the second registration. Needless to say, AFSA did not make any criticism of the Registrar and neither AFSA nor Mr Pedler contended that CBA may be liable to Mr Pedler in damages.

14    On 16 December 2025, the Tribunal set aside the delegate’s decision and substituted it with a decision under s 181(1) of the PPSA that the Registrar immediately register the financing change statement to remove the second registration. The Tribunal also recorded in a note to the decision that Mr Pedler may have a right to recover damages from CBA for failing to comply with a duty and obligation under the PPSA to remove the second registration, and that in refusing to remove the second registration CBA breached s 111 of the PPSA as it failed to act honestly and in a commercially reasonable manner.

The Court proceeding

15    AFSA and the Registrar bring this proceeding as an appeal against the decision of the Tribunal under s 172 of the Administrative Review Tribunal Act 2024 (Cth) (ART Act) seeking declarations that the Tribunal:

(1)    misconstrued and misapplied s 181 of the PPSA; and

(2)    denied the Registrar procedural fairness by making adverse findings against them without affording them adequate prior notice.

16    The applicants seek the above relief as they do not wish to disturb the Tribunal decision in circumstances where Mr Pedler was successful and the proper contradictor, being CBA, chose not to participate in those proceedings. However, as an alternative to declarations, the applicants seek orders that the Tribunal decision be set aside and the matter be remitted to be decided again by the Tribunal differently constituted.

17    Mr Pedler has elected not to actively participate in the proceeding and did not appear at the hearing of the appeal on 21 July 2026. That was because his understanding was that the principal relief sought was in the form of declarations which would not disturb the decision of the Tribunal.

18    In the result, only the applicants appeared and made submissions at the hearing. During the hearing, I invited the applicants to provide further written submissions on some issues on which I was not satisfied. The applicants accepted that invitation and provided further written submissions on 31 July 2026.

The grounds of appeal

19    The amended notice of appeal contains three grounds of appeal but only grounds 1 and 3 are presently relevant.

20    Ground 1 underpins the first declaration sought by the applicants. It is that the Tribunal misconstrued and misapplied s 181 of the PPSA by failing to apply the “reasonable suspicion” threshold contemplated by s 181 and erroneously treating s 181 as requiring the Tribunal’s affirmative satisfaction of certain facts and a standard of evidence sufficient to meet that threshold. The ground also contends that the Tribunal engaged in extraneous considerations including whether the Registrar had acted negligently, the adequacy of CBA’s conduct and whether CBA was negligent, whether CBA and the Registrar can be held liable for damages in tort and whether the Tribunal has power to award damages, whether CBA had acted in a “commercially reasonable way”, the application of equitable principles to the proceeding and whether CBA had contravened the civil penalty provisions in s 151 of the PPSA.

21    Ground 3 underpins the second declaration sought by the applicants. It is that the Tribunal denied the Registrar procedural fairness by making adverse findings against them without affording them adequate prior notice or affording them a proper opportunity to address the Tribunal on those matters.

22    For completeness, I mention that appeal ground 2 contends that the Tribunal made a number of errors in its treatment of CBA’s security interest in the vehicle. They include that the Tribunal misapprehended that for a security interest to be enforceable against a third party the third party must be a party to the loan agreement that gives rise to the security interest, that the liquidation or deregistration of a company necessarily has the effect of terminating or extinguishing security interests in respect of the company’s debts, and conflating the existence of a security interest with its registration. Because the applicants claim no relief based on ground 2, and because it raises novel questions about the construction of provisions of the PPSA and their interaction with provisions of the Corporations Act 2001 (Cth), in the absence of a contradictor I consider it both inadvisable and unnecessary to consider ground 2.

Consideration: ground 1

23    The Tribunal commenced its reasons by identifying 12 “issues for consideration by the Tribunal”. None of the identified issues is the inquiry mandated by s 181 of the PPSA. The identified issues ranged beyond the issues identified in the statements of facts, issues and contentions filed by the parties and their written and oral submissions.

24    The Registrar (and hence the Tribunal on the review to it) was required to register a financing change statement amending CBA’s registration (by, relevantly, removing the registration) in accordance with the amendment notice made by the Registrar, “unless the Registrar suspects on reasonable grounds that the amendment is not authorised under section 178” (s 181 (1)).

25    Section 178 relevantly provides:

(1)    A person with an interest (including a security interest) in collateral described in a registration with respect to a security interest may give a demand (an amendment demand), in writing, to the secured party for a financing change statement to be registered to amend the registration as authorised by the following table:

26    At no point in its reasons did the Tribunal directly confront the critical question posed by s 181: whether there was a basis for a reasonable suspicion that the collateral identified in the registration secured an obligation owed by a debtor to the secured party. Although the Tribunal referred to submissions by AFSA identifying this as the “central question” (at [58]), the Tribunal never engaged with that question; the Tribunal never identified what material could or could not found the suspicion, and never explained why the Registrar could not reasonably suspect the registration was not authorised on the material before the Registrar at the time.

27    In places, the Tribunal positively stated that the security interest had ended. Whether or not that is correct (being a matter on which the Court is not required to decide), the conclusion itself does not answer the question posed by s 181. A reasonable suspicion does not demand proof or certainty. A decision-maker’s satisfaction that, on the balance of the evidence, something does not exist does not exclude the possibility of a reasonable suspicion, on reasonable grounds, that it does. The Tribunal had before it material capable of grounding such a suspicion, including a letter from CBA in which it asserted that “amounts remain due and payable by the Borrower under the Loan Agreement” and that those amounts were “secured by CBA’s security interest in the Motor Vehicle” (at [35]). Whether the Tribunal accepted that assertion was not the s 181 question. The s 181 question was whether there were reasonable grounds for a suspicion that the collateral secured an obligation. The Tribunal did not consider that question.

28    For those reasons, the Tribunal asked itself the wrong question and pursued the wrong inquiry, and in doing so its decision miscarried. Ground 1 is therefore made out.

Consideration: ground 3

29    The Tribunal made a number of highly critical findings of the Registrar, including that:

(1)    The Registrar was negligent in the discharge of their functions and had abrogated their responsibilities (at [189]-[190]); and

(2)    Mr Pedler would be able to seek compensation because of the Registrar’s “administrative error” (at [191]).

30    Those findings were not sought by either party to the proceeding and none was foreshadowed in the hearing before the Tribunal. The Tribunal did not give the Registrar any notice that such findings might be made. Although during the course of the hearing the Tribunal expressed grave misgivings about the conduct of CBA (which was not a party), in relation to the Registrar the Tribunal said the following in discussion with the Registrar’s counsel: “But I’m not blaming the registrar. I think the registrar has done what most sensible registrars would do.”

31    The Tribunal was required to afford the Registrar procedural fairness. An elementary feature of that duty was the requirement to give the Registrar prior notice of, and an opportunity to respond to, any adverse conclusion that did not arise from an obvious and natural evaluation of the material known to the Registrar: Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 293; 49 FCR 576 at 591 per Northrop, Miles and French JJ. The Tribunal’s findings adverse to the Registrar did not arise in that way.

32    The Tribunal embarked upon a procedurally unfair process by reaching adverse conclusions against the Registrar which had not been contended for by Mr Pedler and in respect of which the Registrar was given no notice. Ground 3 is therefore made out.

Relief

33    The errors by the Tribunal that are the subject of grounds 1 and 3 would ordinarily be sufficient to justify the Tribunal’s decision being set aside and the matter being remitted to the Tribunal to be decided again, according to law, by a differently constituted Tribunal. However, as mentioned, the applicants do not seek that relief. In view of the supine attitude of CBA and the unfairness – in a general sense – that would be visited upon Mr Pedler, the applicants are to be commended by taking that approach. Nevertheless, that raises the question whether any relief should be granted to the applicants. More specifically, should the Court make declarations upholding appeal grounds 1 and 3 in circumstances where the applicants do not seek any consequential relief?

34    Section 172(1) of the ART Act provides that a party to a proceeding in the Tribunal may appeal to the Court, “on a question of law”, from the decision of the Tribunal in the proceeding. Such an appeal, as with an appeal under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (repealed) which it replaced, comes to the Court in its original, not appellate, jurisdiction in a proceeding which is in the nature of judicial review; s 172 confers a judicial power to examine the Tribunal’s decision for legal error: Sunlite Australia Pty Ltd v Federal Commissioner of Taxation [2023] FCAFC 43; 296 FCR 600 at [49] per Colvin, O’Sullivan and Feutrill JJ. If an appeal is made under ss 172-175 (ie Subdiv A of Div 2 of Pt 7), the Court “has jurisdiction to hear and determine the appeal”, it “must hear and determine the appeal” and it “may make any order it considers appropriate because of its decision” (s 176).

35    I do not have any doubt that the appeal before me was properly brought. In those circumstances, I must determine the appeal and, in doing so, I may make declarations if I consider it “appropriate” to do so. A consideration is that the Court should not be thought to be encouraging appeals to it under the ART Act for the correction of error in a Tribunal’s reasons when no consequential relief is sought against the Tribunal’s decision.

36    I am satisfied that the declaratory relief sought by the applicants is directed to the determination of a real controversy, rather than to abstract or hypothetical questions: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 582. In Ainsworth, the Commission’s report about which the appellants complained as having contained adverse findings against them without them having been afforded procedural fairness had no legal effect and carried no legal consequences, whether direct or indirect (at 580); it did not legally affect the appellants’ rights (at 581). Nevertheless, the reputational damage to the appellants as a consequence of the findings expressed in the report was found to give the appellants a “real interest” in the questions to be determined and to be a sufficient basis to justify declaratory relief (at 582). The relevant controversy was the Commission’s duty of fairness (at 582). It was found to be appropriate to make a declaration in terms indicating that the appellants were denied natural justice (at 582).

37    The present is a similar case. However, in addition to the adverse findings against the Registrar, the legal errors made by the Tribunal could have adverse effects on the public interest in the proper administration of the Personal Property Securities Register. In that regard, it is recognised that there is value in the Tribunal making consistent decisions across different cases even though a decision on a point of law by one member is not binding on another: Re Drake and Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634 at 639 and 645 per Brennan J; Re Littlejohn and Secretary, Department of Social Security (1989) 10 AAR 220 at 224 per Thompson DP. Indeed, where inconsistencies arise from a failure to understand and apply the correct principles of law it is appropriate for the Court to clarify the applicable principles: Paramananthan v Minister for Immigration and Multicultural Affairs [1998] FCA 1693; 94 FCR 28 at 54 per Merkel J. There is therefore value in correcting the Tribunal’s legal errors.

38    I am persuaded that the limited declaratory relief sought by the applicants should be granted. That is both to protect the reputation of the Registrar which has otherwise been sullied by a procedurally unfair process and to clarify the nature of the task under s 181 of the PSA.

39    The applicants do not seek an order for costs.

Associate:

Dated: 13 August 2026