Ability of future chose in action to be secured under charges

The Victorian Supreme Court has delivered a judgement which considered whether a future chose in action can be secured by a charge. Ferguson J, in Australian Property Custodian Holdings Ltd v Capital Finance Australia Ltd & Ors [2012] VSC 124, dealt with an application for declarations that a proposed proceeding did not involve property charged to a secured creditor and thus, required no consent from the creditor in order to prosecute the claim.

Her Honour held that the securities of the secured creditors encompassed all future chose in action relating to the property regardless of the fact that they did not exist at the time the charges were secured. The court would not intervene in this instance as that would interfere in the receiverships.

This case demonstrates that a future chose in action can be secured by a charge and that the court strictly will not permit a liquidator to deal with that asset if a receiver has been appointed. Also, an application under s588FF of the Corporations Act 2001 can be prosecuted by a liquidator regardless of a secured chose in action under power of a receiver.