TGIF 9 October 2026 – Queensland Court of Appeal restores the reach of all-assets security

This week’s TGIF considers the Queensland Court of Appeal’s recent decision in Kirk v Moreton Resources Pty Ltd [2026] QCA 186, which unanimously reversed the first instance decision in Kirk v Moreton Resources Limited [2026] QSC 66. The Court held that a security interest over all present and ‘after-acquired’ property captures property arising from a ‘mere expectancy’, takes priority over a later outright assignment of that property, and can still be enforced after a deed of company arrangement (DOCA) has released the secured debt.

Key takeaways

• Property that arises from a ‘mere expectancy’ will be caught by a security interest over all present and after-acquired property. A contested tax refund claim is not itself property, but if the refund becomes payable, the right to payment (and then the refund once paid) is after-acquired property to which the security attaches automatically under the Personal Property Securities Act 2009 (Cth) (PPSA).
   
• A registered all-assets security interest will take priority over a later outright assignment of the same future property. As the Court observed, allowing the later assignment to prevail would create a ‘last in time’ priority rule. Assignees of future rights should search the Personal Property Securities Register (PPSR) before taking an assignment.
   
• A DOCA that releases a secured debt does not also release the underlying security interest. The secured creditor’s personal claim for the debt is released, but its proprietary right in the secured property is preserved by section 444D(2) of the Corporations Act 2001 (Cth) (Corporations Act) and can be exercised to recover the released amount. Where the security extends to after-acquired property, as an all-assets security does, this includes property the company acquires after the DOCA is effectuated.

Background

In 2017, Moreton Resources Pty Ltd (Moreton) granted a security interest over all of its present and after-acquired property under a Secured Debenture Deed which it registered on the PPSR. The security interest came to be held by Melgear Pty Ltd (Melgear) as security trustee. In 2024, Moreton commenced two proceedings in the Administrative Review Tribunal against the Commissioner of Taxation, claiming research and development tax refunds of up to approximately $7.5 million. All parties accepted the refund claims were ‘mere expectancies’, not property.

In 2021, while Moreton was in liquidation, its liquidators assigned Moreton’s interest in the refund claims, and any refund received, to MRL Moreton Resources Pty Ltd (Elks Co) for $100,000. Elks Co is controlled by Moreton’s director, Mr Elks.

In 2022, Moreton was placed into voluntary administration and Melgear appointed receivers, including the appellant, Mr Kirk. Creditors then approved a DOCA proposed by Mr Elks, under which Elks Co acquired all of Moreton’s shares. Melgear did not lodge a proof of debt, and the DOCA was declared wholly effectuated in December 2022.

The receiver sought declarations he was entitled to pursue the refund proceedings on Moreton’s behalf. At first instance, Wilson J refused them. Her Honour held the refund claims were expectancies rather than after-acquired property and that, because of the assignment, any refund would pass straight to Elks Co without ever becoming Moreton’s property, so Melgear’s security could never attach. Her Honour did not decide the DOCA issue. The receiver appealed.

Court of Appeal’s decision

The Court of Appeal (Thomson AJA, with whom Boddice JA and Crowley J agreed) allowed the appeal. There were two central issues: whether Melgear’s security would capture any refund in priority to Elks Co’s assignment; and whether the DOCA prevented Melgear from enforcing its security.

After-acquired property and priority

The Court held the distinction between an expectancy and after-acquired property did not affect the outcome. If the refund proceedings succeeded, Moreton would acquire an enforceable right to payment and, once paid, the refunds themselves. Both would be “personal property acquired by the grantor after a security agreement is made”, and therefore after-acquired property to which Melgear’s security would attach automatically under the PPSA.

Mr Elks and Elks Co argued the assignment would create a ‘bare trust’ in Elks Co’s favour the instant any refund came into existence, so the refund would never become Moreton’s property. The Court accepted that an assignment for value of future property takes effect when the property comes into existence. However, this was a contest between two third parties claiming the same property at the same instant, and Melgear’s security had statutory force under the PPSA, so it was not simply a contest between competing equities.

The Court found the PPSA’s statutory policy favoured Melgear, for at least three reasons:

• the PPSA provides that a security agreement is effective according to its terms, including over after-acquired property, and a later equitable interest should not remove that property from the security at the instant it arises;

• equity should not interfere with a specific legislative policy laid down by Parliament; and

• otherwise, security over after-acquired property could generally be defeated by a later outright assignment, creating a ‘last in time’ priority rule.

The DOCA

Mr Elks and Elks Co argued, because the DOCA had released Melgear’s secured debt, Melgear could no longer enforce its security. Section 444D(1) of the Corporations Act binds creditors to a DOCA, but section 444D(2) provides that this does not prevent a secured creditor from realising or otherwise dealing with its security, unless the creditor voted for the DOCA and the deed so provides, or the Court orders otherwise.

The Court held, while the DOCA released Melgear’s debt, that release did not also release the underlying security interest. Following Australian Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA 95 and Blackbird First Mortgage Corporation Pty Ltd v Jacobs [2025] FCAFC 136, the Court treated section 444D(2) as concerned with preserving property rights. A secured creditor’s personal claim against the company is released, but its proprietary right in the secured property remains and can be exercised to recover the released amount and any liabilities outside the DOCA.

The Court also held the preserved security extends to property acquired after the DOCA was effectuated, including any refund. In doing so, it declined to follow ReBluenergy Group Ltd [2015] NSWSC 977, where Black J had confined the preserved security to property to which it could attach when the DOCA release took effect, so as not to impede the company’s ‘fresh start’.

While acknowledging the force of that commercial concern, the Court considered reading down section 444D(2) would interfere with the property rights the parties had agreed. It noted the security may only be used to recover the secured debt released by the DOCA and any debts outside it, which limits the concern about a security extending indefinitely into the company’s future.

Comment

The decision will be welcomed by lenders who rely on standard all present and after-acquired property security. It confirms that such security captures property arising from expectancies and cannot be sidestepped by a later outright assignment.

The decision also underlines that, while a DOCA may release the company from a secured creditor’s personal claim for the debt, it will not by itself free the company’s assets from the security. Where the secured creditor stands outside the DOCA, it retains recourse to the secured property (including, under an all-assets security, property the company acquires later) to recover the released amount.

DOCA proponents, purchasers of deed companies and incoming financiers should therefore obtain an express release of existing security, or consider whether an order under section 444F(2) of the Corporations Act is available, rather than relying on effectuation of the DOCA.