The Supreme Court of Queensland decision in Kirk v Moreton Resources Limited[1] highlights the risks of relying exclusively on Personal Property Securities Act (PPSA) definitions in security deeds and agreements. The case demonstrates that even a first‑ranking security interest over all present and after-acquired property may not guarantee a secured creditor a first‑ranking claim to future property. The case is a timely reminder for anyone dealing with securities, especially in an insolvency context, to carefully draft and review documents to ensure security extends to the intended assets.
Facts
Moreton Resources Limited commenced two tribunal proceedings relating to tax assessments. A successful outcome was expected to generate at least $2.8 million in R&D tax refunds for Moreton. The Receiver of Moreton sought declarations from the Supreme Court authorising them to conduct these proceedings on Moreton’s behalf, as well as any future tax proceedings relating to the relevant assessment year.
The declarations were opposed by Elks Co, who had taken an assignment of the potential benefits of the tax-related proceedings from Moreton’s former liquidator.
The Receiver was appointed under a security deed entered into with Moreton around October 2019. By that deed, Moreton gave security over all its present and after-acquired property. The security deed used definitions from the PPSA dictionary, including the definition of ‘security interest’ and ‘after-acquired property’. Importantly, the security deed did not contain any reference to future property or any assignment of future property or expectancies.
Subsequently, Moreton entered liquidation. During the winding up, on 9 April 2021, Moreton’s liquidators assigned the potential future benefits from the tribunal proceedings to Elks Co. Moreton then entered voluntary administration, followed by a deed of company arrangement. Once that deed was fully effectuated, Moreton’s winding up was terminated, but the security interest remained in place.
Both the Receiver and Elks Co agreed on a critical point: the potential benefit from the tribunal proceedings was not personal property but was an expectancy. As Justice Wilson explained, ‘An expectancy is a right or title in property which one has not yet acquired and lacks a legal right to acquire but which one may (or may not) acquire in the future.’
The issue
The core issue in the case was whether the security deed, which applied to ‘after-acquired property’, included expectancies. If it did, the Receiver claimed priority over Elks Co. The Receiver argued that, as the security deed was prior in time, it had priority over the assignment. The Receiver contended that:
- The expression ‘after-acquired property’ was synonymous with ‘future property’.
- There was no distinction to be drawn between an expectancy and future property; an expectancy is a species of future property to which the security deed would attach once it came into existence.
- As a prior interest in time, the security would have higher priority than the assignee’s interest.
In response, Elks Co claimed that if the expectancy fell in and became property, the assignment deed would immediately assign the benefit to Elks Co, meaning the benefit was never Moreton’s property to which the security could attach (assignment issue).
As an alternative argument, Elks Co also submitted that the deed of company arrangement had released the secured debt, preventing the security deed from attaching to the tribunal refund if it came into existence (DOCA issue).
The decision
Justice Wilson declined to decide the DOCA issue, finding that the case could be resolved on the assignment issue.
In deciding the assignment issue, Justice Wilson rejected the Receiver’s arguments. Her Honour found that the security deed, as drafted, did not cover expectancies because expectancies are not ‘property’ under the PPSA. By relying on PPSA definitions, the security deed excluded rights that might arise in the future but did not yet exist.
Justice Wilson also clarified that ‘after-acquired property’ in the PPSA is not the same thing as ‘future property’. Her Honour noted that the definition of ‘after-acquired property’ in the PPSA was limited to ‘personal property acquired by the grantor after a security agreement is made’.[2] The expression ‘future property’ was not defined in the PPSA and was, at general law, a synonym for an expectancy rather than a form of property.[3] Her Honour held that ‘the phrase “future property”, properly construed in the context of equitable assignments, does not contemplate “property” at all but rather the equitable notion of an expectancy’.[4] Her Honour found that, while it may be correct that there is no distinction between future property and expectancies, it was incorrect to say that there is no distinction between expectancies and after-acquired property.[5]
Justice Wilson held that if the expectancies fell in and became property, they would be immediately assigned to Elks Co without ever becoming Moreton’s property. Consequently, the security could never attach under the PPSA, as Moreton would never be the beneficial owner of the tax refunds if they were realised.[6]
Comments
The key lesson from the case is clear: security documents must be drafted with care to capture all intended assets. Where documents incorporate PPSA definitions, even a first-ranking PPSA security may not outrank an assignment transaction if the security document does not go beyond those definitions.
Justice Wilson’s decision highlights the need for intentional drafting to expressly cover future property and expectancies in security arrangements. As her Honour noted, parties can bargain for security over expectancies but must do so expressly. Had the secured creditor done so, the outcome in the case might have been different.[7]
The decision is a cautionary tale for secured creditors and those dealing with securities, especially in insolvency contexts. Relying solely on statutory definitions in security deeds and agreements can lead to unintended outcomes. Securities are interpreted according to the words used, and if that language is clear and unambiguous, courts will not expand definitions to cover what was not expressly included.
Cooper Grace Ward has successfully represented clients in security and PPSA disputes. Our expertise ensures that we can effectively navigate the complexities of insolvency litigation, providing strong representation for our clients.
If you wish to discuss any of the matters contained in this article or would like any further information, please contact a member of our litigation and insolvency team.
[1] [2026] QSC 66
[2] at [94].
[3] at [95].
[4] at [98].
[5] at [106].
[6] at [118] and [119].
[7] at [84] to [86].
