New HCA Judgment: Public Trustee v Fortress Credit Corp

This decision was handed down on Wednesday:

Public Trustee of Queensland v Fortress Credit Corporation (Aus) 11 Pty Ltd [2010] HCA 29

The High Court has dismissed this appeal against a decision of the Full Court of the Queensland Supreme Court. The case concerns what constitutes “a variation in the terms of a registrable charge” for the purpose of the registration requirements in the Corporations Act 2001 (Cth).

A variation in the terms of a charge must be registered under the Act or else it is void. In this case, a "Charge Document" secured any amount payable under what it called “Transaction Documents”. “Transaction Documents” were defined in another document, called the “Facility Agreement”, to include anything that the parties agree in writing to be a Transaction Document.

Subsequent to the registration of that charge the parties entered into a deed which deemed a particular guarantee to be a “Transaction Document” for the purposes of the "FAcility Agreement" and therefore the charge. This therefore resulted in an increased amount of money secured by the charge. The Court found that the phrase “terms of the charge” referred to the terms of the written instrument representing the charge and not necessarily to the scope of the charge or to the amount charged. Accordingly, this transaction did not constitute “a variation in the terms of a registrable charge” or a “creation of a charge” and so there was no requirement to register.