Ipswich Earthmoving Machinery Pty Ltd v Austral Bricks (Qld) Pty Ltd & Ors [2026] QDC 26

Julie Whitehead | Elissa Morcombe | Joseph Ryan

Key takeouts

This case serves as a reminder of the complexities that can arise in dealing with property that is subject to a registered security interest. 

A buyer of personal property that is subject to a registered security interest may take the property free of that interest under s 46(1) of the Personal Property Securities Act 2009 (Cth) if the property was sold ‘in the ordinary course of the seller’s business of selling personal property of that kind’.

Businesses that hold a registered a charge over all present and after-acquired personal property of a grantor’s assets, and buyers of assets from a grantor subject to such an interest, should carefully consider whether a sale transaction has the hallmarks of an ‘ordinary course of business’ sale, particularly where the seller is in financial difficulty and the buyer is a related party.

Facts

Background

Perry O’Brien Engineering Pty Ltd (in liq) (POE) carried on an earthworks business. Its directors were Mr Perry and Mr O’Brien. Austral Bricks (Qld) Pty Ltd (Austral) was the registered proprietor of a clay shale mine site. Until August 2024, mining was carried out by POE pursuant to an informal licence granted by Austral. RBP Civil Pty Ltd (RBP) was incorporated in December 2020. Its sole director was Mr Perry.

On 27 April 2020, POE and Merit Lining Systems Pty Ltd (Merit) executed an Acknowledgement of Debt (Acknowledgement) by which POE acknowledged a debt to Merit of $250,523 and undertook to grant security for payment of the debt, including a fixed and floating charge over personal property of POE capable of being granted under the Personal Property Securities Act 2009 (Cth) (PPSA). On 20 August 2020, POE granted Merit a charge over all present and after-acquired personal property (AllPAAP), registered on the Personal Property Securities Register (PPSR security).

On 23 August 2024, POE and RBP entered into a written sale agreement (Sale Agreement) under which RBP acquired 15 items of earthmoving plant and equipment (Contested Items) from POE for $230,000 plus GST. Title passed on 23 August 2024, with the purchase price paid in instalments from October 2024 until final payment on 26 June 2025.

On 28 August 2024, 5 days after the Sale Agreement, POE entered into voluntary administration. On 2 October 2024, POE was wound up by resolution of creditors.

After completion of the Sale Agreement, RBP took over the mining operations with Austral’s consent. On 15 November 2024, Merit assigned by deed the debt under the Acknowledgement and the PPSR security to Ipswich Earthmoving Machinery Pty Ltd (IEM) (Assignment).

On 13 December 2024, IEM’s solicitor gave notice of the Assignment to POE and on the same day served two notices of seizure at the premises of the liquidator, purporting to seize the collateral under the PPSR security pursuant to sections 123 and 126 of the PPSA. The Court observed that the notices were not in forms provided for under the PPSA and that it was unclear how the statutory preconditions for seizure had been met. IEM’s solicitor wrote to Austral on 12 December 2024 demanding access to the mine site to take possession of the personal property it contended was collateral under the PPSR security. Austral denied entry and stated that it was an innocent third party caught between competing claims to the same equipment.

On 21 December 2024, IEM sent 4 men to attend the mine site and enter without Austral’s consent. Police attended and declined to act on the ‘notices of seizure’, observing that they were not Court orders.

The proceedings

On 16 June 2025, IEM commenced proceedings against Austral, seeking an order permitting IEM to enter the mine site for the purpose of taking possession of its personal property subject to the PPSR security. On 27 July 2025, the Court ordered the joinder of RBP and the Liquidator.

RBP’s defence alleged that, to the extent the PPSR security attached to the Contested Items, it attached subject to sections 45 and 46 of the PPSA, and that POE sold the Contested Items in the ordinary course of its business such that RBP took them free of any security interest under section 46(1) of the PPSA. In its reply, IEM denied that the Sale Agreement was in the ordinary course of POE’s business, alleging among other things that POE’s business was not selling equipment of the type sold, that the sale price was below market value and to a related party.

IEM applied for summary judgment. The Court was required to determine whether RBP had no real prospect of establishing that it took the Contested Items under the Sale Agreement free of the PPSR security. The Court noted that it would not ordinarily resolve contested questions of fact on a summary judgment application, and that while complex or novel legal issues do not necessarily bar summary judgment, the factual context must be sufficiently articulated to permit their proper resolution.

Decision

The Court dismissed IEM’s application for summary judgment, finding that RBP had a real prospect of establishing that it took the Contested Items free of IEM’s security interest under s 46(1) of the PPSA.

Issue 1: Contested Items were sold ‘in the ordinary course of the seller’s business of selling personal property of that kind’

The central issue was whether RBP could establish that the Contested Items were sold ‘in the ordinary course of the seller’s business of selling personal property of that kind’ within the meaning of section 46(1) of the PPSA. The Court identified several factors favouring RBP’s position, including:

1. There was evidence that POE had sold plant and equipment in the course of its business regularly up to 2019, and the Court observed that it was scarcely surprising that an earthmoving company would do so.
2. There was evidence that the equipment was sold at market value based on a valuation from ‘Grays’, though the administrator’s report stated the market value was higher than the sale price which is an issue for resolution at trial.
3. The Court noted authority for the proposition that a sale to a related entity is not necessarily outside the ordinary course of business, though it may attract greater scrutiny.
4. POE did not sell all its equipment in the transaction.
5. A number of the key allegations relied upon by IEM, including that the sale brought an end to POE’s business, that the sale was made when POE was likely insolvent, and that POE intended to defeat the security interest, were not pleaded in the statement of claim, and the Court observed that an applicant for summary judgment is ordinarily confined to its pleaded case.
6. IEM’s allegation that the transaction was unduly favourable to RBP was also problematic on summary determination. The allegations regarding the interest rate, immediate transfer of title and payment plan were not particularised, and the Court was not taken to any evidence that made them out.

The Court was not sufficiently confident that the sale terminated POE’s business, which was necessary to conclude that RBP had no real prospect of establishing the ordinary course of business defence. IEM submitted that it was plainly a breach of the security agreement for POE to sell the Contested Items with the intention of defeating the security interest. The Court identified two problems with that submission: first, neither the implied term nor the alleged intention was pleaded; and second, having found that RBP had a real prospect of establishing the sale was in the ordinary course of business, the Court did not find that the sale breached the security agreement.

The Court also considered whether the exception in section 46(2)(b) of the PPSA applied, which provides that the ordinary course of business defence does not apply if the buyer had actual knowledge that the sale constituted a breach of the security agreement. While RBP conceded that Mr Perry knew of the security provisions in the Acknowledgement and the PPSR security, the Court noted that whether a particular sale constitutes a breach of a security agreement is ultimately a question of law, and that a person cannot actually know that a sale constitutes a breach prior to authoritative determination by a Court.    

Issue 2: Financial stress

On the question of financial stress, the Court found that RBP had no real prospect of avoiding a finding that the board of POE (of which Mr Perry was a member) resolved on 28 August 2024 that POE was or was likely to become insolvent. However, the Court was not prepared to infer on a summary basis that POE was under financial stress and likely insolvent on 23 August 2024 simply from the appointment of the administrator five days later. The resolution recited that the company was ‘likely to become insolvent at some future time’, which did not compel the conclusion that the company was under financial stress at the time of the Sale Agreement. While both propositions, that the Sale Agreement occurred at a time of financial stress and would not have been entered into but for that stress, seemed likely to be established at trial, that was not the test on a summary judgment application.