Bargara Esplanade Management Pty Ltd as trustee QLD Aqua Trust & Ors v Department of Agriculture and Fisheries [2016] QCAT 17

CITATION: Bargara Esplanade Management Pty Ltd as trustee QLD Aqua Trust & Ors v Department of Agriculture and Fisheries [2016] QCAT 17 PARTIES: Bargara Esplanade Management Pty Ltd as trustee QLD Aqua Trust Pristine Oceans Pty Ltd Pristine Oceans IP Pty Ltd as trustee for Pristine Oceans IP Trust B & B Russell No2 Pty Ltd as trustee for the B & B Russell Family Trust No2 (Applicants) v Department of Agriculture and Fisheries (Respondent) APPLICATION NUMBER: GAR318-14 MATTER TYPE: General administrative review matters HEARING DATE: 16 November 2015 HEARD AT: Brisbane DECISION OF: Member Allen, Presiding Member Coolican Member LeMass DELIVERED ON: 19 January 2016 DELIVERED AT: Brisbane ORDERS MADE: 1. The decision of the Chief Executive’s delegate on 26 August 2015, to cancel the Authorities is confirmed. CATCHWORDS: APPLICATION TO REVIEW– where chief executive cancelled resource allocation authorities – where holder of authorities corporation in liquidation – where competing security interests and questions of perfecting those interests - whether holder of security interest proper applicant Corporations Act 2001 (Cth), s 58AA, s 588FL Fisheries Act 1994 (Qld), s 3, s 63, s 67, s 185 Personal Property Securities Act 2009 (Cth), s 245, -- 1 of 6 -- 2 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 17, s 19, s 20, s 24 REPRESENTATIVES: APPLICANT: Bargara Esplanade Management Pty Ltd as trustee QLD Aqua Trust represented by Mr Russell and Mr Duncombe RESPONDENT: Chief Executive, Department of Agriculture and Fisheries represented by Mr McLeod of Counsel, with Ms Thea Johnson REASONS FOR DECISION History [1] The Applicants are, for these purposes the original owners of Authorities briefly referred to as A 811 and A 812. These are licences to operate in the Hervey Bay area and take certain fish. [2] The applicants also are the successor to Queensland Sea Scallops Pty Ltd (‘QSS’) as the replacement trustee and also the holders of what were Registered Security interests (analogous to mortgages) over the Authorities. [3] The Department issued the above Authorities to QSS as trustee, over an area of some 40sq kilometres of the Hervey Bay seabed for exclusive aquaculture rights upon certain conditions. [4] QSS needed to borrow funds to operate the aquaculture business and entered a Fixed and Floating Mortgage Debenture with Westpac Bank over the assets of the Company and Trust, the Authorities being specifically charged. [5] QSS experienced financial difficulties and on 7 September 2012 the bank appointed Administrators to the Company. Those Administrators were ultimately appointed Liquidators on 10 December 2012 and proceeded to wind up the assets of the business. The Decision [6] The Applicants seek a review of the Decision made by the Respondent on 26 August 2014 to cancel the Authorities. This Tribunal is authorised to conduct a review of that Decision by way of a fresh hearing on the merits.1 The Tribunal's role is set out below: 20 Review involves fresh hearing 1 Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’), s 20. -- 2 of 6 -- 3 (1) The purpose of the review of a reviewable decision is to produce the correct and preferable decision Standing [7] The applicants have standing to bring this Application as persons who are suffering severe personal hardship as a direct consequence of the decision as set out in s 185 of the Fisheries Act 1994 (Qld) (‘Fisheries Act’).2 The Applicants’ Case [8] The Applicants contentions are considerable, contained in the Application, Submissions filed 3 March 2015 and 22 April 2015 and accompanying documents. The affidavit of Mr Russell 8 July 2015 (40 pages) and accompanying documents (267 pages). They can be summarized as follows: 1. The Applicants are valid security holders of the Authorities and registered in accordance with the Personal Property Securities Act 2009 (Cth) (‘PPSA’); 2. Whilst Westpac was first registered, the Applicants hold superior interests because Westpac failed to register against the new trustee in accordance with the PPSA; 3. The Applicants are holders of the reversionary or remaining security interest in the Authorities, because, upon Westpac agreeing to surrender the Authorities for cancellation, this enlivened their second interest. Section 245 of the PPSA is given as authority for this proposition; 4. They have already exercised their security rights as Mortgagee in Possession and have sold the authorities for value to a third party. 5. They are requesting that the Decision of the Department be varied to reinstate the Authorities as the correct and preferable decision to allow the Applicants to perfect the transfer of those Authorities; 6. The interests of the Applicants are superior to those of the Bank pursuant to s 588FL of the Corporations Act 2001 (Cth) (‘Corporations Act’); 7. If the Applicants were to apply for authorities afresh they would be on less advantageous terms and conditions to the current ones. 2 185 Who may apply for review (1) A person who is dissatisfied by an order, direction, requirement or other decision of the chief executive may apply, as provided under the QCAT Act, to QCAT for a review of the decision on 1 or more of the following grounds— (a) the decision of the chief executive was contrary to this Act; (b) the decision of the chief executive was manifestly unfair; (c) the decision of the chief executive will cause severe personal hardship to the person. -- 3 of 6 -- 4 For all of the above reasons the Applicants submit the Department is in error and has made the wrong decision in cancelling the Authorities. The Respondent’s Case [9] The Department’s contentions are more fundamental: a) The Department was aware of the first registered charge of the Bank; b) In September 2012 the Department was contacted by liquidators assessing the assets of the company;3 c) Formal notification of the position of the liquidators was received from the Solicitors for them on 25 March 2013; d) The Department formed a view that the holder of the Authorities was in liquidation and effectively unable to fulfil the conditions of the Authorities. e) The liquidators had made application to surrender the authorities which could not be accepted for technical reasons. f) In the circumstances, cancellation of the Authorities pursuant to s67 of the Fisheries Act was necessary for the best management of the fishery resources;4 Assessment of the Applicant’s case and Findings [10] Upon its face, the Applicant's case has merits. It has standing, because it only needs to demonstrate that it is aggrieved, albeit severely, and we accept that they are.5 Further, the decision from the point of view of the Applicants would appear on its face to be manifestly unfair. [11] Where a liquidation takes place, the assets of the company are usually sold in order to repay creditors. In this matter despite the protestations of the Applicant to both the Department and the liquidators, the asset represented by the authorities was effectively destroyed by their cancellation. [12] The actions of the Bank and liquidator vis-à-vis the authorities and the affect of those actions on the interests of the Applicant while matters for consideration are not the primary consideration when determining whether the Department made the correct and preferable decision. [13] Any assessment as to whether a decision was manifestly unfair must be made not just with regard to the Applicant but the circumstances and legislative framework within which the decision was made. [14] These relevant circumstances are as follows: 3 Exhibit “KB-4” to the Affidavit of Beattie sworn 10 April 2015. 4 See the six reasons and four sub-reasons letter, dated 26 August 2014. 5 Fisheries Act, s 185. -- 4 of 6 -- 5 1. The objects of the Fisheries Act include to ‘promote ecologically sustainable development’;6 2. The Department was on notice that the registered holder of an Authority is under the formal control of a liquidator appointed by first security holder registered with the Department. [15] With respect to 1 above, it is in the opinion of the Tribunal entirely appropriate that an Authority would be cancelled if it could not be exploited because of liquidation of the holder. Such a decision ‘promotes ecologically sustainable development’, because like mining tenements these resources are valuable for all the population of Queensland and should be available to those capable of exploiting those benefits and not the subject of waste by being held by a holder who is not in a position to exploit them. [16] It is specifically 2 above which the Applicant has singled out as the grounds of the Department's error. The Applicants’ arguments in this regard present difficulty for the Tribunal. [17] Indeed, such arguments may well be valid and strike at the fundamental correctness of the decision. Troubled as these arguments may be by delay and novelty they may have real merit particularly with respect to the relationship of co security holders when one decides to deal with an asset to the detriment of another. [18] Nevertheless, the determination of how these competing interests should be treated is a matter for Courts of competent jurisdiction and not any part of this Tribunal's jurisdiction. Indeed the claim pursuant to the Corporations Act7 defines court8 as follows: 58AA Meaning of court and Court (1) Subject to subsection (2), in this Act: court means any court. Court means any of the following courts: (a) the Federal Court; (b) the Supreme Court of a State or Territory; (c) the Family Court of Australia; (d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act. [19] Hence, being unable to adjudicate the issues put forward by the Applicant we must assess the decision of the Department without regard to those matters and therefore accept that the Liquidator of the company was the entity to whom the Department must look to determine whether or not the conditions of the Authorities could be fulfilled. 6 Fisheries Act, s 3(1)(b). 7 Corporations Act, s 588FL. 8 Ibid, s 58AA. -- 5 of 6 -- 6 [20] The Department has made a decision based upon its only relevant knowledge. The bank was a first mortgagee of the Authorities as specifically charged and registered over the Authorities with the Department. It is then formally advised of the liquidation. It acts in accordance with the directions of the entity who is apparently, and on the face of the available documentation standing in the shoes of the Holder. It consults with the Applicant and their then representatives.9 [21] The department invited the Applicants submissions and considered them, following which a determination was made to cancel the Authorities, and provide the parties with reasons. [22] It is the determination of this Tribunal that absent an order of a court of competent jurisdiction, the Department was in a position where it had no choice but to act in accordance with law and accept the instructions and directions of those persons and entity representing the legal holder of the Authorities, it being open at all times for the Applicant to obtain a remedy from a court to direct the Department otherwise, but this did not take place. [23] The decision of the Department of the 26 August 2015 is confirmed. 9 See letter dated 21 July 2014, ‘…as you have previously indicated you have some kind of interest in these authorities’. -- 6 of 6 --