In the matter of Barclays Bank plc [2012] NSWSC 1095 Judge Black of the New South Wales Supreme Court made an order pursuant to section 588FM of the Corporations Act 2001 extending the time for registration of a security interest granted to Barclays Bank by a customer over certain trade marks and other property.

The security had not been registered within 20 business day period after the security agreement took effect as required by section 588FL(2) due to the error of a solicitor in the United Kingdom and a lack of understanding by the client of its significance.

Barclays provided a UK £8 million term loan facility to a UK publicly listed company, Sportingbet plc, in January 2012. The facility agreement contemplated that companies within the Sportingbet group, including the Australian company now known as Centrebet International Pty Ltd (“Centrebet”), would agree to the facility agreement and grant additional security by 24 April 2012.

Barclays were advised by their Australian lawyers of the 20 business day registration period but a financing statement was not registered until 9 August 2012. The UK solicitor gave evidence that she did not then appreciate the potentially serious consequences of non-registration within the 20 business day period.

The customers did not oppose the application. The court was provided with financial information relating to Centrebet for the period between 23 May 2012 (the end of the 20 business day registration period) to 9 August 2012 (the date of registration of the relevant security interests) (“relevant period”). A letter from a director of Centrebet indicated that, during the relevant period, there had been no material change in Centrebet’s financial position; Centrebet had not granted any security to any other creditor other than security that may have arisen by statute or law as a result of its normal business operations; and Centrebet had not incurred any debt of a material amount.

Judge Black stated:

“I am satisfied that the failure to register the relevant security interests in this case was due to inadvertence, which includes being not properly attentive, or failing, in this case, to understand the requirement to lodge notice of a security interest within the specified period and the consequences of failure to do so….

I consider that the delay of some two months between the last day of the 20 business day period and the date of registration is not a particularly long period…

The fact of demonstrated solvency of Centrebet and that no other security interests were registered, and the absence of any indication of any risk of winding up or administration in respect of Centrebet, are also highly relevant matters, and assist the court to conclude that late registration “will not disturb or affect an accrued or accruing rights meriting consideration” and support the making of the relevant order…

An extension of time may …be granted on terms that it is without prejudice to the rights of any person who has, between the date the security interest was granted and the date of registration, obtained any security over the assets subject to the security interest…. I …do not consider that such a condition is necessary or appropriate in this case, given the evidence of Centrebet’s financial position and that it has not granted a security interest other than arising by operation of law in the ordinary course of business in the relevant period. In my view, it is a proper case to make the orders sought unconditionally”