CBP Centre v VentureCrowd Holdings

Core Question

If VCH argues that new investors (who contributed $2.8M in capital since settlement) should rank ahead of VCC's security interest, does VCC's position hold?

The Seven Arguments

1. PPSA Registration Priority (s 55): VCC's AllPAP registration (28 Jan 2025) perfects the security interest. No competing PPSR registration by any investor. First-to-register rule is absolute.
2. GSA Contractual Supremacy: The GSA creates a charge over all present and after-acquired property. New equity investors are subordinate to prior secured creditors as a matter of law.
3. Permitted Money Triple Breach: GSA cl 3.1(d) limits aggregate borrowings to $6M. VCH raised ~$2.8M in new capital while owing $2.5M+ to VCC. If total indebtedness exceeds $6M, every capital raise was in breach — making the security immediately enforceable.
4. No PMSI Exception: New investor funds are not Purchase Money Security Interests. PPSA s 62 super-priority only applies to acquisition financing for specific collateral, not general equity subscriptions.
5. Deed of Priority: The executed Deed of Priority (23 Jan 2025) explicitly subordinates all other security interests to VCC's GSA. Any subsequent charge is contractually junior.
6. Equity is Not Debt: Shareholders rank behind all creditors on insolvency (Corporations Act s 563A). Share subscriptions create equity, not secured debt. VCC's secured debt ranks first by statutory waterfall.
7. Knowledge / Constructive Notice: PPSR registration constitutes constructive notice to all parties (PPSA s 300). Any investor who failed to search the PPSR before investing cannot claim ignorance of VCC's security.

Key Authorities

• Corporations Act 2001 (Cth) s 563A — shareholders rank after creditors
• PPSA s 55 — priority of security interests by registration time
• PPSA s 62 — PMSI super-priority (inapplicable here)
• PPSA s 300 — constructive notice by registration

Core Question

The Supreme Court awarded $2,431,903.57 + interest in CBP Centre v VentureCrowd [2024] QSC 139. The parties then settled. If VCH defaults on settlement, can VCC revive the original judgment, or is it extinguished?

Analysis: Accord and Satisfaction

Under McDermott v Black (1940) 63 CLR 161, a settlement deed operates as an "accord and satisfaction" — the new agreement replaces the old cause of action. The original judgment debt merges into the settlement obligations.

Why This Doesn't Matter

1. GSA Independence: The General Security Deed is an independent instrument. It secures the "Settlement Sum" (a new obligation), not the original judgment debt. The GSA survives regardless of what happened to the judgment.
2. Settlement Sum is Larger: The settlement sum ($2,849,511.94) exceeds the original judgment ($2,431,903.57) because it includes pre-judgment interest, post-judgment interest, and costs. VCC is better off enforcing under the deed.
3. Default Triggers GSA Enforcement: Under Settlement Deed cl 2.6, default allows enforcement of the GSA directly. VCC doesn't need to go back to court — the GSA provides a self-executing enforcement mechanism via receiver appointment.
4. PPSR Protection: The security interest is perfected by three PPSR registrations. This gives priority regardless of the source obligation.

Key Authorities

• McDermott v Black (1940) 63 CLR 161 — accord and satisfaction doctrine
• CBP Centre v VentureCrowd [2024] QSC 139 — original judgment, Freeburn J
• Tallerman & Co v Nathan's Merchandise (1957) 98 CLR 93 — conditional vs absolute satisfaction

Core Question

VCH may argue it is merely a holding company with no realisable assets — that all value sits in subsidiaries and SPVs. Can VCC recover meaningful value?

Seven Counter-Arguments

1. $10.39M Net Assets (FY24): VCH's own financial statements show $10,390,469 in net assets as at FY24. Even with the $9.3M decline from FY23, this is not an empty shell.
2. Subsidiary Shares Are Assets: VCH holds shares in VentureCrowd Property Australia, VentureCrowd Pty Ltd, VentureCrowd Services Australia, and others. VCC's PPSR registration covers these shares. A receiver can sell or exercise rights over them.
3. Shareholder Loans / Receivables: VCH has made intercompany loans to subsidiaries and SPVs. These receivables are "property" caught by the AllPAP security interest. A receiver can call in these loans.
4. $2.8M Capital Raised (FY25-26): VCH raised approximately $2.8M in new share capital in the past year. This capital inflow means there is (or was recently) cash available.
5. Buzzle Operations Principle: Under Buzzle Operations Pty Ltd v Apple Computer Australia Pty Ltd [2011] NSWCA 109, directors cannot strip assets from a company to defeat creditors. If assets have been moved to subsidiaries to avoid VCC's security, this is voidable.
6. $31.6M Paid-Up Capital: VCH has $31,650,036.46 in paid-up share capital per current ASIC records. The company has received substantial investor funds over its lifetime.
7. Property Development Pipeline: VCH subsidiaries hold property development assets (Albany Creek, others). As holding company, VCH's equity interest in these developments has value.

Three Enforcement Pathways

Pathway A: Standard Default (24 Feb 2026)

• Settlement Deed cl 2.6 permits default notice after the 12-month anniversary (24 Feb 2026)
• Default notice must specify the breach and give "reasonable time" to cure
• Upon expiry of cure period, GSA cl 7.1 enforcement rights activate
• Receiver can be appointed under GSA cl 7.2

Pathway B: Insolvency Event (Immediate)

• If VCH is insolvent or an Insolvency Event has occurred, the default notice and waiting period are bypassed entirely
• Evidence of insolvency: net losses of $7.35M (FY24), declining net assets, non-payment of settlement instalments
• Risk: VCH could dispute insolvency, requiring court determination and delay

Pathway C: Repudiation (Arguable Now)

• VCH has only paid $200K of $2,849,511.94 (one payment, 66 days late)
• 11 consecutive monthly instalments unpaid since May 2025
• Continued capital raising while not paying VCC suggests deliberate non-compliance
• Under Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61, renunciation of obligations can constitute repudiation

Core Question

The Settlement Deed contains mutual releases (cl 7). If VCH has breached the deed by non-payment, does the release still protect VCH? Can VCC revive pre-settlement claims?

Analysis

The release clause in cl 7.1 releases each party from claims "arising out of or in connection with" the original proceedings. This is a conditional release — it was given in exchange for VCH's promise to pay the Settlement Sum.

Asymmetric Protection

The Settlement Deed architecture provides asymmetric protection for VCC:

• VCC's release of VCH is conditional on payment of the Settlement Sum
• VCH's obligations under the GSA are independent of the release clause
• Even if the release survives, the GSA enforcement rights are a new cause of action, not one covered by the release
• The settlement created new obligations ($2,849,511.94 Settlement Sum) secured by new instruments (GSA, PPSR)

Key Authorities

• Perri v Coolangatta Investments (1982) 149 CLR 537 — conditional settlements and revival
• MacDonald v Shinko Australia Pty Ltd [1999] 2 Qd R 152 — construction of release clauses
• Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 — total failure of consideration

The October 2025 Information Memorandum

In October 2025, VCH issued an Information Memorandum to raise capital from investors. The IM failed to disclose:

• The existence of VCC's $2.95M settlement debt
• The General Security Deed granting VCC a charge over all VCH assets
• The three PPSR registrations perfecting VCC's security interest
• That VCH was in default on instalment payments
• That VCC had enforcement rights activating February 2026

ASIC v Mayfair Precedent

In ASIC v Mayfair Wealth Partners Pty Ltd [2021] FCA 1630, the Federal Court found that failure to disclose material risks to investors in an information memorandum constituted misleading and deceptive conduct. The court imposed significant penalties and compensation orders.

Director Personal Liability

Directors Maarbani and Tasker face personal exposure under:

• Corporations Act s 184 — Good faith, use of position (criminal, 5 years)
• Corporations Act s 1041G — Dishonest conduct re financial products (15 years)
• Corporations Act s 1041H — Misleading conduct re financial products (civil)
• ASIC Act s 12DA — Misleading or deceptive conduct in financial services

Strategic Value

This research establishes "nuclear leverage" — the threat of an ASIC referral for director misconduct provides significant negotiating power. Key evidence package:

1. Copy of the October 2025 Information Memorandum
2. Settlement Deed (proving the undisclosed obligation)
3. GSA and PPSR registrations (proving the undisclosed security)
4. Payment timeline showing default
5. Investor list from the IM raise (proving affected persons)
6. Director knowledge evidence (they signed the settlement documents)

Core Strategy

Contractual enforcement via GSA cl 7.1(d) private receiver appointment. Default Notice served under cl 2.6(b) on 24 February 2026. 14-day cure period expires 5:00 PM AEST, 10 March 2026. Roland Robson (Robson Cotter) appointed as administrator under s436C. No court involvement required.

Key Evidence Added to Documents (v2)

• October 2025 Convertible Note pitch deck: $46.6M enterprise valuation while $2.95M debt unpaid
• Unanswered GSA compliance email (Marc to Steve, 26 May 2025): evidence of deliberate concealment
• GPS Development Finance paid out October 2025: VCC now sole-ranking on PPSR
• Intercompany transfer warning: s596AB creditor-defeating dispositions (10yr imprisonment)
• Irremediable breach doctrine: capital raised and spent elsewhere cannot be "remedied"

War Game Results (Red/Blue consensus)

• Pitch deck evidence: INCLUDE (10/10 — transforms "strong" to "overwhelming")
• $100K settlement offer: EXCLUDE (without prejudice privilege — 10/10 vulnerability)
• 9 prior GSAs from WP letter: EXCLUDE (use PPSR evidence independently)
• Keep/VA intelligence: EXCLUDE from documents (save for receiver — revealing figures warns directors)
• Valuation confirmation: Separate GSA 5.2(a) letter (not in Default Notice)

Timing

Instrument of Appointment executed on or after 11 March 2026 (after cure period expiry at 5:00 PM AEST 10 March). Contractual appointment under GSA cl 7.1(d) — no court application or hearing required.