ASSIGNMENT OF EXPECTATIONS AND PPSRs: KIRK V MORETON RESOURCES

Many would assume that a registered Personal Property Security Interest (PPSI) always ranks above a deed of assignment in a liquidation. Kirk v Moreton Resources Limited & Ors [2026] QSC 66 shows that this is not always so. The case illustrates a rare circumstance, which all businesses (and especially creditors) should be aware of, where a deed of assignment will effectively rank above a registered PPSI in a liquidation. This article summarises the case and its implications.  

Case Summary 

The central legal issue in Kirk centred on two documents:  

1. The first was a deed of assignment (assignment deed) entered into in 2021 between the liquidators of two related entities, Moreton Resources Limited (Moreton) and Elks Co (Elks). The deed purported to assign to Elks Moreton's expected receipt of certain personal property (tax refunds) that were due to Moreton contingent on the outcome of Tribunal proceedings.  

2. The second document was a security trust deed (trust deed) entered into in 2019 between Moreton and the trustee of the Moreton Security Trust (Melgear) to facilitate Moreton's issuance of secured debentures. 

   
   

The trust deed provided that the 'Secured Property' included Moreton's present and 'after-acquired' property, the standard definition used in the PPSA.  

On 25 May 2022, Melgear appointed a liquidator over Moreton's property, enlivening the security agreement between Moreton, Melgear and the debenture holders. 

All parties admitted that:  

1. at the time of the trial, the tax refunds were mere expectations and were not yet the property of Moreton; and  

2. Moreton’s liquidator had the power to do all things appropriate to create property for Moreton. 

   
   

Issue  

The central disagreement was whether the tax refunds would become Moreton's property on receipt, so that the security interest would 'attach' to them. If not, and the assignment deed prevailed, the security interest would not operate over the refunds, because the grantor of the security interest would never receive clear title to them. 

By way of brief refresher, the PPSA distinguishes between a security interest being enforceable, attached and perfected. Under s 19 of the Personal Property Securities Act 2009 (Cth), a security interest is enforceable against the grantor once it has attached to the collateral – here, the tax refunds. Attachment occurs when the grantor has rights in the collateral (or the power to transfer rights in it) and value has been given, or the grantor has done an act by which the interest arises. Perfection is a separate step: a security interest is perfected if it has attached, is enforceable against third parties (typically by a written security agreement signed by the grantor under s 20), and one of the perfection methods has been satisfied – usually registration on the PPSR, but also possession or control of the collateral. Priority between competing security interests over the same collateral is then generally determined by perfection status and timing.  

Findings 

Justice Wilson found that the security interest would not attach to the tax refunds on receipt, and that the assignment deed therefore operated to assign the refunds to Elks in priority to the trust deed despite the trust deed having been agreed two years earlier. 

The key factor in Justice Wilson's finding was that the assignment deed assigned an equitable interest in a mere expectation. It did not assign personal property. Nor did it assign 'after-acquired property' as contemplated by the trust deed, because what was assigned was not 'property'.   

Because the assignment was equitable, on receipt the refunds would immediately be assigned to Elks and, if necessary, held on bare trust by Moreton for Elks until the assignment was completed. This reflects the way rights in equity operate in assignment deeds: the obligation to assign does not require any act by the assignor to complete the transfer (which would be a contractual, not equitable, right). Instead, the obligation operates automatically and immediately on the assignor acquiring the property, without any further act on its part.

If the secured creditors were allowed to access the tax refunds, they would effectively 'double dip' and obtain a windfall, because they would have already received the benefit of the consideration paid by the assignee for the assignment, as well as the value of what was assigned.  

Accordingly, the refunds would never become Moreton's property and the security interest would never attach. In effect, the deed of assignment ranked above the trust deed and its registered security interests, because it was an equitable assignment of an expected receipt.  

Implications 

It follows from this decision that, in ordinary circumstances, a registered security interest over expected future property can be defeated by an equitable assignment of that expectation by the grantor of the security interest.  

What can parties to a security agreement do? One option is to broaden the security agreement beyond 'current' and 'after-acquired property' to include 'future expectancies'. Justice Wilson observed at [85]–[86] that if Melgear had obtained security over mere expectancies before the assignment deed, its equitable right to the refunds would likely have prevailed over Elks' on a 'first in time' basis. A security interest over 'future expectancies' of this kind would be an equitable interest and would need to be entered into before any competing deed or agreement.  

It should also be noted that the 'voidable transaction' regime under the Corporations Act 2001 (Cth) still applies. An equitable assignment of a future expectancy cannot be used to side-step the statutory liquidation process; the transaction may still be set aside.  

Overall, the case highlights how important it is for creditors, and others regularly involved in security agreements, to seek specialist legal advice to ensure their security agreements are drafted clearly and with unambiguous wording about what they are intended to cover.  

How GML can help   

It is important that creditors and debtors understand their rights against one another, including both their contractual and equitable rights. GML can help creditors and debtors fully exercise those rights to achieve their desired business outcomes. 

GML has successfully represented clients in security interest disputes, and in PPSA disputes and enforcements. Our expertise allows us to manage complex litigation, insolvencies and restructurings efficiently and commercially, delivering strong outcomes for our clients. 

If you would like to discuss how GML can assist you or your organisation, or to obtain advice on any of the matters in this article, please contact our team.