Our Alert of 21 September 2009 discussed Re Octaviar Ltd (No7)  QCA 282, an appeal from the decision of Re Octaviar Ltd; Re Octaviar Administration Pty Ltd  QSC 37. In that case, the Queensland Court of Appeal reversed the first instance decision. These cases dealt with the interpretation of section 268(2) of the Corporations Act 2001 (Cth) and the circumstances in which a "variation" to the terms of a registrable charge, which has the effect of increasing the amount of the debt or increasing the liabilities (whether present or prospective) secured by that charge, will occur and require registration with the Australian Securities and Investments Commission (ASIC).
Our previous Alert of 21 September 2009 mentioned that any application for special leave to appeal from the Queensland Court of Appeal decision to the High Court must be filed by 16 October 2009. An application for special leave to appeal was filed on 15 October 2009.
What is an application for special leave?
An application for special leave is an application requesting the High Court to hear an appeal from the judgment of another Australian court.
Although the High Court may take into account any matter it determines is relevant when considering an application for special leave, the Judiciary Act 1903 (Cth) lists the following specific criteria that the High Court must have regard to:
whether the relevant proceedings involve a question of law which is of public importance or where there has been differences of opinions in other judicial decisions; or
whether the "interests of the administration of justice" require the High Court to consider a particular appeal.
An application for special leave is not a decision on the merits of the case. It deals only with the question of whether the High Court will allow the appeal to proceed to a hearing.
When will a decision be made?
It is not possible to predict with certainty when a decision will be made by the High Court in relation to this application for special leave to appeal. It could be between six and nine months before a decision is made.
If the application is successful, the matter will then proceed to a hearing. It will therefore be an additional period of time before the substantive question of the appeal is heard and a determination made.
What does this mean?
Although the Queensland Court of Appeal decision supported the usual financing practices adopted before the time of the first instance decision, until the application for special leave is determined, prudence dictates a cautious approach.
When taking new security, give careful consideration to the terms of the "secured money" and associated definitions used in the security document to ensure these are as clear as possible. When amending or restructuring financing documents, analyse carefully whether the terms of any ASIC registered charge have been amended in a manner that is notifiable under section 268(2) of the Corporations Act 2001 (Cth).