Federal Court of Australia

Karageozis (Administrator) v Polymer Direct Pty Ltd, in the matter of Evolve Group Pty Ltd (Administrators Appointed) [2026] FCA 1660

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to the Corporations Act 2001 (Cth), Sch 2, s 90-15, upon the facts stated in the affidavits filed in this proceeding, the plaintiffs are justified in paying $329,415.17 to the defendant in discharge of any and all of its security interests over or in respect of the assets of Evolve Group Pty Ltd (in liquidation) (the Company).

2.    The plaintiffs’ costs of this proceeding be their costs in the liquidation of the Company and be paid out of the assets of the Company on the standard basis, prior to the distribution of the fund.

3.    The defendant’s costs of this proceeding be its costs in the liquidation of the Company and be paid out of the assets of the Company on the standard basis, prior to the distribution of the fund.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    By this application, the liquidators of Evolve Group Pty Ltd (Evolve Group) seek judicial directions or advice pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (IPSC), being Schedule 2 to the Corporations Act 2001 (Cth) (Corporations Act), to the effect that they are justified in paying the sum of $329,415.17 to the defendant, Polymer Direct Pty Ltd (Polymer Direct).

2    In general terms, Polymer Direct supplied raw resin and polymer to Evolve Group, which used those materials to manufacture plastic products. A substantial sum remains outstanding under unpaid invoices issued by Polymer Direct, though it claims that it holds a registered security interest over the material which it supplied to Evolve Group, and seeks to rely upon that security to recover the outstanding indebtedness. The sum which the liquidators propose to pay to Polymer Direct represents the value of the raw resin and polymer material held by Evolve Group as at the date of its administration, plus a portion of the proceeds of sales of finished products manufactured using resin and polymer for which Evolve Group had not paid.

3    Importantly, the creditors of Evolve Group, including the Commonwealth Bank of Australia (CBA), which is a substantial secured creditor, were all given notice of these proceedings. None opposes the relief sought.

4    Despite the unsatisfactory manner in which the application was made, the directions sought should be given. In reaching that conclusion, weight has been placed on the absence of any opposition to the proposed course of action by any creditor.

Background

5    Unfortunately, this application was advanced at an uncomfortably high level of abstraction. It is apparent that very little analysis of the underlying facts has been undertaken to date. That is particularly unusual in a case such as the present, in which, as will become clear, a detailed analysis of the circumstances is necessary. Nevertheless, the relevant circumstances may be described as follows.

6    From about January 2022, Polymer Direct supplied raw polymer and resin to Evolve Group, which used those materials to manufacture finished plastic products for sale to consumers.

7    The liquidators have identified that each shipment of resin or polymer was accompanied by a tax invoice. Attached to each invoice was a document entitled “Terms and Conditions of Sale”. Relevantly, those terms and conditions included the following:

1.    TERMS OF SUPPLY

These terms and conditions apply to all products (“Products”) sold or supplied by Polymer Direct Pty Limited or any related body corporate (“PD”) to its customers (each a “Customer”).

…

4.    PAYMENT

4.1    Unless otherwise agreed by PD and the Customer in writing, payment must be made within 30 days of the date of delivery.

4.2    PD may at any time without notice terminate or suspend any right of the Customer to purchase Products on credit. Where there are monies outstanding with respect to any invoice, PD reserves the right to require that any deliveries that have not yet been made be paid for in cash on delivery.

4.3    If at any time monies are due and owing by the Customer to PD with respect to any invoice, then the whole amount of all invoices then outstanding will become immediately due and owing.

4.4     PD reserves the right to charge the Customer interest at the rate of 10% per annum on any monies due to PD by the Customer that are unpaid, calculated daily from the due date for payment until payment is received.

…

6.     RETENTION OF TITLE

6.1    Full legal and equitable title in the Products and ownership of the Products will be retained by PD until such time as the whole of the purchase price for the Products (and associated costs, duties and charges invoiced for the Products) (the “Invoiced Cost”) have been received in clear funds by PD.

6.2     Until such time as the Invoiced Cost has been paid in full, PD may enter the Customer’s premises (or the premises of any associated person where the Products are located) without liability for trespass or any resulting damage and retake possession of the Products. PD may resell any Products that have been repossessed.

6.3     If the Products are resold by the Customer, the Customer must hold such part of the proceeds of sale as represents the Invoiced Cost in a separate identifiable account as PD’s beneficial property and pay such amount to PD on request.

6.4     Despite clauses to 6.1 to 6.3 above, PD will be entitled to maintain an action against the Customer for the Invoiced Cost.

…

13.     PPS

13.1    This clause applies after the commencement of the Personal Property Securities Act 2009 (Cth) (“PPSA”) and to the extent that any agreement arising from the supply of Products by PD or PD’s interest in such agreement or in relation to any Products is or contains a security interest for the purposes of the PPSA.

13.2     If PD determines that any agreement arising from the supply of Products by PD (or a transaction in connection with it) or its interest in such agreement or in relation to any Products is or contains a security interest for the purposes of the PPSA, the Customer must do anything (such as obtaining consents, completing, signing and producing documents and supplying information) which PD requests and considers necessary for the purposes of:

a)    ensuring that such security interest is enforceable, perfected and otherwise effective; or

b)     enabling PD to apply for any registration, or give any notification, in connection with such security interest so that the security interest has the priority required by PD; or

c)     enabling the Owner to exercise rights in connection with such security interest.

13.3     To the extent that Chapter 4 of the PPSA applies, the Customer waives any right given to it under Chapter 4 that it is able to waive.

13.4     The Customer waives its right to receive any verification statement (as defined in the PPSA) in relation to any agreement arising from the supply of Products by PD or PD’s interest in such agreement or in relation to any Products.

13.5     For the purposes of these terms and conditions, terms defined in the PPSA have the meaning in these terms and conditions.

8    On 24 November 2025, Polymer Direct registered on the Personal Property Securities Register (PPSR) a financing statement in relation to its claimed security interests in the property of Evolve Group. The verification statement generated in respect of that registration describes the collateral as follows:

PPSR Registration number: 202511240034209     Change number: 90113435

…

Grantor Details

Organisation identifier:     653 006 083     Organisation identifier type:     ACN

Organisation name:     EVOLVE GROUP PTY LTD (Verified)

…

Description:     All goods, now and in the future, supplied by the secured parties to the grantor, including but not limited to Polyolefin … and in goods that become accessions or comingled with other goods.

Proceeds:         Yes - All present and after acquired property.

Inventory:        Yes

…

Purchase Money

Security Interest    Yes

9    However, a peculiarity of this case is that there is no evidence of any extant agreement creating the security interests which are the subject of that registration. In that regard, Mr Karageozis, one of the liquidators of Evolve Group, deposes in his affidavit of 8 July 2026 that he received an email from Polymer Direct’s solicitors, which stated that “our client is currently unable to locate the credit application in respect of Evolve Group” and “[a] copy will be provided should it become available”. That language tends to suggest that some form of relevant credit agreement existed but could not be located. Mr Karageozis also deposed that Polymer Direct had not furnished a copy of the credit application to date.

10    Polymer Direct claims that Evolve Group owes it $897,120.87 pursuant to 35 unpaid invoices issued between 17 December 2025 and 10 April 2026. The evidence indicates that each invoice incorporated Polymer Direct’s Terms and Conditions of Sale, as relevantly extracted at supra [7].

11    Administrators were appointed to Evolve Group on 10 April 2026, and on 16 July 2026, it was placed into liquidation by a resolution of its creditors. At the time of its administration, Evolve Group was in possession of $80,764.79 worth of unused resin, which now appears to have been used and sold.

12    Further, in the month preceding its administration, Evolve Group appears to have sold goods produced with materials from Polymer Direct for $621,625.95. In his affidavit, Mr Karageozis attempted to trace Polymer Direct’s claimed security interest into the proceeds of those sales. He calculated the value of that interest to be 40% of the total amount received, or $248,650.38.

13    The present position of Evolve Group’s creditors is somewhat unclear. Nevertheless, it appears that CBA holds an “all present and after acquired property” (AllPAP) security interest in respect of a debt of $8 million. There are other secured debts claimed totalling $232,848.07, and priority employee and superannuation debts amounting to $289,002.07. These amounts are in addition to Polymer Direct’s claimed debt of $897,120.87. There are also several other unsecured trade creditors whose claims total more than $1.5 million.

Whether the Court should provide directions

14    Polymer Direct claims that it is a secured creditor by reason of its purchase money security interest registered on the PPSR, and further claims that it is entitled to recover a proportionate share of the proceeds of the sale of goods manufactured using the products it supplied. In those circumstances, the liquidators seek advice from the Court as to whether they would be justified in paying Polymer Direct an amount equal to Evolve Group’s stock of unused resin as at the time of the administrators’ appointment ($80,764.79) together with 40% of the proceeds of the sale of goods in the month preceding that appointment ($248,650.38), totalling $329,415.17. Whether that course is justified turns on whether Polymer Direct has an enforceable security interest and, if so, whether that interest vested in Evolve Group upon the appointment of the administrators. Obviously, if the liquidators were to adopt the incorrect course, they may be exposed to liability to either Polymer Direct or Evolve Group, with a consequent adverse effect on the interests of the other creditors.

Is the matter appropriate for judicial advice?

15    Whether a party is a creditor or secured creditor of a company in liquidation is generally an appropriate issue for an application under s 90-15 of the IPSC. If the liquidator errs in making that determination, they may be exposed to liability: Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 679. Further, the determination necessarily involves the resolution of a legal issue, rather than the exercise of commercial discretion: Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409, 428 [65] (Re Ansett (No 3)). In that respect, Gleeson J made the following relevant observations in Re Force Corp Pty Ltd (in liq) (2020) 149 ACSR 451 at 456 [19] – [20]:

[19]     The proper subject matter of an application for directions is to provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, but not a matter relating to the making or implementation of a business or commercial decision unless there is a particular legal issue raised or an attack on the propriety or reasonableness of the decision: Sanderson at 117; Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 686–7; 5 ACSR 673 at 684–5 (Re G B Nathan & Co); Re Ansett Australia Ltd at [65]; Re M F Global Australia Ltd (in liq) (2012) 267 FLR 27; [2012] NSWSC 994 at [7]. Assuming the liquidator has made full and fair disclosure to the Court of the material facts, he or she will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him or her in accordance with the direction: Re G B Nathan & Co at NSWLR 679; ACSR 677–8.

[20]    I am satisfied that this is an appropriate case for directions to be given to the liquidators. The issues in respect of which directions are sought do not involve business decisions or matters of commercial judgment. Rather, the directions sought would provide guidance on complex matters of law arising in the winding-up and will protect the liquidators against accusations that they have acted contrary to law with respect to the distribution of funds to priority creditors of Force Corp. Although the relevant creditors with an interest in the distribution in the winding-up have not expressed any opposition to the proposed course to be taken by the liquidators, the liquidators have expressed the concern that they cannot be certain that there is no other information “out there” which could affect the correctness of the agreed factual position as between the liquidators and Lease Collateral: Re Courtenay House Capital Trading Group Pty Ltd (in liq) (2020) 147 ACSR 1; [2020] NSWSC 780 at [7]. That concern is well-founded, given the receivers were in control of the assets of Force Corp at the time when the payments in issue occurred.

16    However, it does not follow that the Court should necessarily accede to the liquidators’ request in this case. Whilst courts should generally respond positively to applications for judicial advice in order to facilitate the expeditious completion of the relevant administration or liquidation, such applications are not a substitute for an external controller obtaining their own advice. Unfortunately, in recent times, applications under s 90-15 of the IPSC appear increasingly to be the primary response of external controllers when confronted with legal issues. In effect, the provision risks being used as a taxpayer-subsidised advice service by which an external controller may seek to insulate themselves from liability should circumstances not transpire as anticipated. Granted, judicial advice offers “qualified comfort” rather than total exculpation from liability: One T Development Pty Ltd v Krejci [2023] NSWCA 120 [36], [40]: but the provision of such advice necessarily erects a significant obstacle in the path of any person subsequently seeking to proceed against the external controller.

17    This problem is exacerbated by the manner in which judicial advice applications are now made. This application is an apt example of what appears to be a growing trend: the external controller or their legal representative presents all available material to the Court, makes vague submissions at a high level of abstraction on the topic, and then asks the judge to work out the answer. That approach is worthy of admonition wherever it occurs. Courts simply do not have sufficient resources to sift through reams of material and undertake research of authorities and legislation to resolve the issues which external controllers think might impact their liability in the future.

18    Given the alacrity and frequency with which applications of this nature are now made, it is appropriate that courts exercise their discretion to refuse to provide directions where the external controller has not taken appropriate steps to satisfy themselves as to the correctness of their proposed course of action. In this respect, a starting point for any application must be the obtaining of independent advice from competent counsel. Such an approach was adopted by Young AJA in Re Westnet WA Infrastructure Holdings Ltd (2015) 106 ACSR 583 at 584 [7] (Re Westnet) where his Honour said:

[7]     When dealing with an application under s 511, in the same way as one deals with an application under s 63 of the Trustee Act 1925 (NSW), the court does not, at least, in the ordinary case, decide the matter. What the court does is to require the liquidator or trustee to obtain advice from competent counsel in the area. The court then considers counsel’s advice and, unless the court can see that further material is required, or that there is a real problem with counsel’s advice, the usual course that the court takes is to advise the liquidator, or direct the liquidator that he or she would be justified in acting on counsel’s advice.

19    Though that was an application under s 511 of the Corporations Act, the same considerations apply in relation to directions or advice sought under s 90-15 of the IPSC: see Re Octaviar Limited (in liq) [2019] QSC 235 [23].

20    It follows that, whilst s 90-15 of the IPSC is wider than its progenitor provisions and now permits the determination of substantive questions arising for external controllers, where the application is substantively for the giving of judicial advice or directions, it should be approached in a manner similar to that identified by Young AJA in Re Westnet. The external controller should approach the Court with a proposed course of action supported by the advice of competent counsel. They should then adduce, in an orderly manner, all information and authorities relevant to the issue to be determined. The areas in which doubt exists, and the competing points of view, should also be clearly articulated.

21    None of the above was supplied to the Court in this case. However, given that practitioners have hitherto become accustomed to the practice of filing an application without attending to the necessary prerequisites, that should not be a reason not to make the orders sought.

22    Nevertheless, one relevant issue is that no party appears to oppose the liquidators’ proposed course of action. In the course of creditors’ meetings, the creditors, including secured creditors, were informed of the liquidators’ intention to apply for directions, but none sought to oppose the application. Further, CBA’s solicitors queried the necessity for the application, given that “no priority creditor [had] opposed [the plaintiffs’] proposed payment”.

23    This absence of a relevant controversy provides a sound basis on which the Court might refuse to exercise its discretion to give directions or advice. Indeed, that would necessarily be the case if the Court determined that there was no “issue calling for the exercise of legal judgment”, no “legal issue of substance or procedure”, or no “issue of power, propriety or reasonableness”: Re Ansett (No 3) 428 [65]. However, here, as the following discussion reveals, the proposed course of action involves some legal uncertainty or ambiguity, particularly with respect to the operation of the Personal Property Securities Act 2009 (Cth).

24    Therefore, though not without some hesitation, it is appropriate to address the question raised by the liquidators.

The central issue: s 588FL of the Corporations Act

25    This case turns on the proper operation of s 588FL of the Corporations Act. It 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;

…

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

(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;

(iii)     if the security agreement giving rise to the security interest came into force under the law of a foreign jurisdiction, but the security interest first became enforceable against third parties under the law of Australia after the time that is 6 months before the critical time—the time that is the end of 56 days after the security interest became so enforceable, or the time that is the critical time, whichever time is earlier;

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

…

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.

…

(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.

26    This provision relevantly deals with the efficacy of the security against a company in administration or liquidation. Though its language is not entirely straightforward, its effect is that any security interests granted by the company (which are enforceable and perfected by registration only) will vest in it when the company enters administration (being the “critical time” per s 588FL(7)(b)), if they were registered after the latest of:

(a)    20 business days after the security agreement under which the security interest arose came into force;

(b)    six months before the date of administration; and

(c)    any later time ordered by the Court under s 588FM.

27    The operation of s 588FL in this case is complicated by the absence of any initial agreement creating security interests in the goods supplied by Polymer Direct. Though Polymer Direct registered its financing statement on the PPSR on 24 November 2025, there is no evidence as to what agreement, if any, created or was intended to create the security interest. The liquidators submitted in writing that “[t]here is no overarching credit agreement”. However, it became apparent at the hearing that this absolute statement was unsustainable. As a matter of fact, the evidence was not that no credit agreement existed, but simply that none could be located. There is otherwise no evidence that Polymer Direct did not enter into credit agreements containing security terms. That being so, the evidence was insufficient to support the liquidators’ contention. Moreover, in evidence was a “Customer Statement” issued by Polymer Direct to Evolve Group which identified a “Credit Limit” of $1.3 million. That limit may well have been set by a credit agreement between the parties.

28    If a credit agreement did exist and was the subject of the financing statement registered on 24 November 2025, and assuming that it came into force more than 20 business days before that date, any security interests created by it would be ineffective as against the liquidators, since registration occurred less than six months prior to the critical time of 10 April 2026: see s 588FL(2)(b)(i) of the Corporations Act.

29    Conversely, if no credit agreement existed to grant Polymer Direct a security interest in the goods supplied by it, that is also problematic for the liquidators. As extracted at supra [8], the collateral was described in the financing statement as being “[a]ll goods, now and in the future” supplied to Evolve Group. In the absence of an effective security agreement between the parties creating an interest in goods supplied in the future, Polymer Direct had no relevant security interest in the identified collateral at the time the financing statement was registered. In this regard, s 12(1) of the PPSA defines “security interest” as follows:

12 Meaning of security interest

(1)    A security interest means an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).

30    Assuming, despite the paucity of evidence on the point, that no overarching credit agreement was in place between the parties, the central issue is whether Polymer Direct’s registration of the financing statement was effective in respect of security interests created thereafter, such that the registration time for the collateral preceded the time specified in subparagraph 588FL(2)(b)(ii) of the Corporations Act. If so, the security interests did not vest in Evolve Group upon its administration. Unfortunately, the parties offered the Court very little assistance in resolving this question. However, they referred to two cases which, as will become clear, appear to suggest that prior registration in respect of subsequently created security interests is possible.

Re Gelpack Enterprises Pty Ltd (in liq)

31    Both parties relied on the decision in Re Gelpack Enterprises Pty Ltd (in liq) [2015] NSWSC 1558 (Gelpack). Though it does not deal precisely with the issue under consideration here, it does bear some resemblance to the present circumstances. In that case, the plaintiff, Primaplas Pty Ltd (Primaplas), manufactured and supplied resins. One of its customers was Gelpack Enterprises Pty Ltd (Gelpack). By the time Gelpack went into liquidation, it owed Primaplas some $1,026,000 for resins supplied. Primaplas contended that it supplied its resins to Gelpack upon terms which conferred a security interest on it for the purposes of the PPSA. The liquidator rejected that contention.

32    The principal issue was whether Gelpack was bound by Primaplas’s “general terms and conditions of trade”. In 2007, the finance manager of Gelpack executed, on its behalf, a credit account application form on Primaplas’s letterhead and transmitted it to Primaplas. That application form included the general terms and conditions of trade, which relevantly included a retention of title clause. Goods were supplied pursuant to those terms. On or about 1 August 2012, Primaplas sent Gelpack a letter advising that it had registered its security interests under the PPSA (as it in fact had on 16 July 2012), and that new terms and conditions of trade were to apply to future deliveries. Those terms also included a retention of title clause. Further, cl 11 charged the customer’s interest in any property with payment of the price and all charges under the agreement. The terms also provided that Gelpack granted, as security for the price and charges, “a security interest in all of [its] present and after-acquired property in which [it] has rights and a PMSI in all the goods supplied to [it] pursuant to the terms and conditions of trade”. A copy of the letter and its terms and conditions was signed by Gelpack’s Operations Manager and returned to Primaplas in early 2013. Thereafter, when goods were delivered, a pallet docket or similar delivery document indicated that the goods were delivered pursuant to Primaplas’s terms and conditions of trade and, in particular, referred to the retention of title clause.

33    As a starting point, Brereton J accepted that Primaplas was entitled to alter its terms and conditions by reason of the power reserved to it in the earlier version of the terms (at [21]). Further, his Honour held that Gelpack was bound by the new terms because the Operations Manager held the necessary authority to accept them (at [25]) and, in any event, Gelpack continued to place orders and receive goods, which, by the operation of cl 2 of the new terms, amounted to acceptance of them (at [24]). His Honour also considered that Gelpack had ratified the Operations Manager’s acceptance of the new terms (at [26]).

34    It is apparent from his Honour’s reasons that the relevant security agreement, for the purposes of s 20 of the PPSA, arose from Gelpack’s acceptance of the new terms and conditions. In that context, the note on the delivery dockets referring to the retention of title clause was not a new contractual term, but merely a reminder of the clause contained in the terms and conditions of trade. His Honour expressed his conclusions in this way:

27    The better view, I think, is that, at least in this case, the note at the foot of each invoice did not amount to a new contractual term but reminded the recipient that the retention of title clause contained in the terms and conditions of trade that were incorporated in every purchase included such a clause. By continuing to pay those invoices and re-order further goods, knowing that the terms and conditions included such a clause, Gelpack either ratified Mr Hone’s entry into the 2012 terms and conditions or, by the repeated course of dealing, incorporated into each separate contract between them the retention of title clause.

28     Accordingly, in my view, Gelpack did agree in a binding way to grant a security interest at least in the nature of a retention of title clause in respect of goods supplied to it by Primaplas. Moreover, the conclusion I have reached concerning the effect of the 1 August 2012 letter means that it also agreed to grant a security interest in all present and after-acquired property in the terms of the 2012 terms and conditions.

35    The parties relied on that passage in the present case. Despite their submissions to the contrary, there is nothing in paragraph [27] which suggests that his Honour considered that each delivery constituted a separate agreement based upon the delivery docket and its terms. In fact, the converse is true. His Honour was there identifying that Gelpack, by its conduct, incorporated the new terms and conditions of trade into the sale transactions. So much is confirmed by paragraph [28], in which his Honour recognises that the terms and conditions of trade in the credit agreement, even as varied in 2012, comprised part of the terms on which the goods were supplied. Indeed, they had to be in order for the AllPAP security interest to be granted.

36    The significance of that conclusion is apparent from paragraph [34] of the reasons, where his Honour identified that Primaplas’s registration of its security interest was effective in circumstances where the description of the collateral was:

All goods supplied by the secured party to the grantor, including but not limited to resins and film, for the manufacture of plastic products and related goods.

37    Much reliance was placed on what his Honour then said at paragraph [35]:

[35]    That description captures all the security interests claimed in this case. It is permissible for one registration to cover security interests created by multiple contracts if it be necessary to rely on the repeated series of invoices to find the relevant security interest.

38    The second sentence of that paragraph is slightly ambiguous, though it tends to suggest that security interests can be covered by a registration that precedes their creation. However, it should be noted that the remarks were obiter and not what might be described as “considered obiter”. The proposition was not necessary to the resolution of the proceedings which, in the circumstances, called for no further explanation.

Carrafa (as liquidators of Relux Commercial Pty Ltd) (in liq) v Doka Formwork Pty Ltd

39    The parties also relied upon the decision of Sifris J in Carrafa (as liquidators of Relux Commercial Pty Ltd) (in liq) v Doka Formwork Pty Ltd (2014) 104 ACSR 163 (Carrafa). That case concerned the leasing of formwork and associated equipment by Doka Formwork Pty Ltd (Doka) to Relux Commercial Pty Ltd (Relux). Relevantly, the “critical time” was 7 April 2014, being the commencement of Relux’s administration.

40    On 20 February 2014, a security interest claimed by Doka in commercial property held by Relux was registered on the PPSR. The registration described the collateral as “Equipment Rental and Sales especially in Formwork”. Prior to that date, leases of formwork equipment had occurred since March 2013. Further leases were also made thereafter, on 26 February and 14 March 2014.

41    An important issue was whether the leased formwork vested in Relux on the date of its administration. For the purposes of s 588FL of the Corporations Act, the security interest was registered well after six months before the critical time. Therefore, the question was whether registration occurred before the end of 20 business days after the security agreement that gave rise to the security interest came into force, within the meaning of subparagraph 588FL(2)(b)(ii).

42    The leases which commenced before 21 January 2014 (being 20 business days prior to the date of registration) did not fall within subparagraph 588FL(2)(b)(ii), such that the security interests created by them vested in Relux on its administration. However, the security interests arising under the leases which commenced after registration were held not to vest in Relux. As Sifris J observed at 173 [56] – [57]:

Lease commencing on 26 February 2014

[56]    In relation to the formwork equipment leased on February 2014, 20 business days after 26 February 2014 is 27 March 2014. As this is earlier than the critical time of 7 April 2014 and later than 6 months before the critical time (which was 7 October 2013), the time within which these interests were required to be registered was 27 March 2014. Given that the security interests were registered on 20 February 2014, this lease does not vest in Relux.

Lease commencing 14 March 2014

[57]     In respect of the formwork equipment leased to Relux by Doka on 14 March 2014, 20 business days after 14 March 2014 is 11 April 2014. As this is later than the critical time of 7 April 2014, but later than 6 months before the critical time (which was 7 October 2013), the time by which these interests were required to be registered was 7 April 2014. Given that the security interests were registered on 20 February 2014, this lease does not vest in Relux.

(Footnotes omitted).

43    From those paragraphs, it is evident that his Honour considered the registered financing statement sufficient to cover security interests created subsequently. Those security interests were created by leases which did not exist when the financing statement was registered, and there is nothing in his Honour’s reasons to suggest that any overarching agreement existed which granted security interests in equipment to be leased in the future. The clear implication is that, whilst the security interests were created by the individual subsequent leases, the prior registration was sufficient for the purposes of subparagraph 588FL(2)(b)(ii).

Evaluation

44    It is relevant that neither Gelpack nor Carrafa contained any discussion of the manner in which the PPSA operates in circumstances where there exists no overarching agreement creating the relevant security interests. There was no real explanation of the conclusory statements made as to the results of the respective dealings. Of course, that is by no means a criticism, for the real issue in those cases was whether the security interests vested in the company in administration by s 588FL, and they were held not to have done so. Nevertheless, there was no real consideration in either case of the efficacy of registering a financing statement in respect of security interests which may be created in the future.

45    However, those cases do suggest that the registration of a security interest prior to its creation is possible. The validity of such a course also appears to be supported by s 151(1) of the PPSA, which suggests that a person may register a financing statement if they have reasonable grounds to believe that they will become a secured party in relation to the collateral:

151 Registration—belief about security interest

Requirements for collateral to secure obligation etc.

(1)    A person must not apply to register a financing statement, or a financing change statement, that describes collateral, unless the person believes on reasonable grounds that the person described in the statement as the secured party is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself).

Civil penalty: 50 penalty units.

46    Similarly, s 161 of the PPSA permits collateral to be described in a registration with respect to a security interest before or after a security agreement is made covering the property or a security interest attaches to the property.

47    In those circumstances, it may be accepted that registering a financing statement in respect of security interests which may be created in the future is efficacious and that, for the purposes of s 588FL, the prior registration prevents those interests from vesting in the company at the critical time.

48    In this regard, Polymer Direct’s General Manager, Mr Nirav Shah, swore an affidavit for the purposes of these proceedings, in which he claimed to have knowledge of the operations of the business. However, he said nothing about the financing statement or the circumstances in which it was created and registered. Nor did he assert that, as at 24 November 2025, Polymer Direct believed that it would become a secured creditor of Evolve Group. That is curious, given that the financing statement was registered less than a year before the hearing.

49    That aside, for present purposes, and despite the absence of evidence on the point, it is appropriate to proceed on the assumption that Polymer Direct registered its financing statement on 24 November 2025 because it believed that it would acquire a security interest in goods supplied by it in the future.

50    In the result, and in the absence of any submissions that the PPSA operates otherwise, it can be assumed that Polymer Direct’s security interests, created under the Terms and Conditions of Sale incorporated into the invoices for deliveries made between 17 December 2025 and 10 April 2026, did not vest in Evolve Group upon its administration by reason of the prior registration of the financing statement.

51    Moreover, though no mention was made of it by the parties, Polymer Direct’s security interests are purchase money security interests (PMSIs). As such, they are afforded “super priority” pursuant to s 62(3)(b) of the PPSA: Commonwealth Bank of Australia v HM Aircraft Holdings Pty Ltd (2021) 152 ACSR 63, 74 [72]; Toll Energy and Marine Logistics Pty Ltd v Conlon Murphy Pty Ltd (2019) 137 ACSR 328, 331 [29]; Great Energy WA Pty Ltd v Northern Iron Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2026] FCA 81 [49] – [50]. That being so, the security interests take priority over CBA’s AllPAP security interest.

Tracing into the goods which were sold

52    The next question is the appropriateness of the amount sought to be paid to Polymer Direct.

53    Polymer Direct’s security interests do not extend to the whole of the goods produced by Evolve Group using its polymers and resins. Indeed, no submission is advanced to the contrary. However, it can be accepted that an enforceable security interest in goods that become part of a processed or commingled mass will continue in the product or mass, though limited to the value of the goods when they became part of the mass: see PPSA ss 99 – 101. That interest continues when the product is sold: see PPSA ss 31, 32.

54    Here, the liquidators have calculated Polymer Direct’s interest in the proceeds of the sale of the finished products as being $248,650.38. That is based on the liquidators’ assumption that the value of the polymer materials supplied by Polymer Direct accounts for 40% of the total proceeds ($621,625.95). Though this analysis is somewhat general, it is sufficient in the circumstances where there is no opposition to the application. There is, however, no evidence as to when the resin used to manufacture those products was delivered and, therefore, whether Polymer Direct held an effective security interest in it. Nevertheless, adopting a broad-brush approach, there is logic in the assumption that Evolve Group used its raw materials on a “first in first out” basis, such that it is more likely that the goods used were the subject of effective security interests.

55    As mentioned, the liquidators also propose to pay Polymer Direct the amount of $80,764.79, which represents the value of unused resin and polymer held by Evolve Group as at 10 April 2026. There is no real doubt that the liquidators would be justified in making that payment, given that the resin and polymer remained unmixed and unused at that time.

56    In all of the circumstances, there is sufficient evidence to establish that the liquidators would be justified in paying Polymer Direct $80,764.79, representing the value of the goods on hand which were subject to its security interests, plus $248,650.38, being 40% of the proceeds of the finished products sold.

Conclusion

57    In the result, the Court should advise the liquidators that, based on the information and evidence provided, they would be justified in paying Polymer Direct $329,415.17 in discharge of its claimed security interests in or over the assets held by Evolve Group.

Costs

58    The parties sought orders that their respective costs be paid out of the assets of Evolve Group on an indemnity basis prior to distribution of the fund. Whilst it is appropriate that they recover their costs, for the reasons given above, the application could have been conducted in a more precise and coherent manner. Therefore, it is appropriate that the parties recover their costs on the standard basis only.

Associate:    

Dated:    6 November 2026