Does a right to seek relief from forfeiture transfer under ss 601FS and 601FT of the Corporations Act? Primary RE Ltd v Great Southern Property Holdings Ltd & Ors [2011] VSC 242

Primary RE replaced the old Great Southern RE of the schemes in this litigation.

Under s 601FS of the Corporations Act:

If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity.

The question in the case was whether a right to seek relief against forfeiture ‘becomes’ a right of the new RE under s 601FS.

A number of arguments were raised in relation to whether the right to seek relief from forfeiture transferred to the new RE. However, the Court ultimately decided that the new RE sought to exercise a right to seek relief against forfeiture under s 146(2) of the PLA and that the right under that statute was:

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… confined to the person against whom the “lessor is proceeding, by action or otherwise, to enforce or has enforced without the aid of the court …”

As the landlord had taken that action against the Great Southern RE, the Court found that Primary RE had no right to seek relief from forfeiture under s 146(2).

The Court’s reasons do not disclose:

• why a right in the hands of the former RE under s 146(2) of the PLA is any different to any other right, obligation or liability in the hands of the former RE; or
• whether a right to seek relief against forfeiture in the Court’s general equitable jurisdiction would transfer to the new RE.

The relevant discussion is at paragraphs [165] to [181] of the Judgment.