The Personal Property Securities Register (“PPSR”) is a register administered by the Australian Government which allows banks, other financiers and businesses to register their security interests over personal property. The PPSR also allows parties to search and view these security interests.
Whilst it is considered a form of ‘noticeboard’ of security interests, there can be severe consequences for companies and individuals who do not accurately register their interests on the PPSR. The importance of accurately recording security interests has been demonstrated very clearly in the recent Supreme Court of NSW (“the Court”) case of OneSteel Manufacturing Pty Ltd (administrators appointed)  NSWSC 21.
Alleasing Pty Ltd (“Alleasing”) was in the business of asset financing and leasing. It provided funding to OneSteel Manufacturing Pty Ltd (“OneSteel”) for the leasing of crushing and screening equipment and associated parts worth approximately $25 million from a third party. Alleasing registered a PPS Lease on the PPSR, referencing OneSteel’s ABN only.
Under the Personal Property Securities Act 2009 (“PPSA”) a grantor must be identified by the “prescribed details” in accordance with the Personal Property Securities Regulations 2010 (Cth) (“PPS Regulations”). The PPS Regulations provide that where a grantor of a security interest is a body corporate with an ACN, the ACN must be used in the registration on the PPSR. A separate but important note is where the grantor is a corporate trustee on behalf of a trust that has been allocated an ABN, the ABN of the trust must be used in the registration on the PPSR not the ACN of the corporate trustee.
OneSteel was not the trustee of any trust. Accordingly the Administrators who were appointed to OneSteel took the stance that as Alleasing’s registration was defective for not referencing OneSteel’s ACN, the equipment therefore vested in OneSteel upon their appointment pursuant to Section 267 of the PPSA.
With the Administrators’ position in mind Alleasing subsequently registered amended registrations on the PPSR which referenced OneSteel’s ACN. However the amended registrations were also considered defective as they were registered outside of the 20 business day timeframe stipulated by Section 588FL of the Corporations Act 2001.
When assessing whether the defects in Alleasing’s registrations rendered the registrations ineffective, the Court found that registering against OneSteel’s ABN did not enable a person searching the PPSR by reference only to OneSteel’s ACN to find Alleasing’s registrations. As a result the defects in Alleasing’s registrations were deemed ineffective as they were ‘seriously misleading’.
As a consequence of Alleasing’s registrations on the PPSR being ineffective the crushing and screening equipment was not returned to Alleasing and instead became assets of the administration.
The Court’s decision in Re OneSteel Manufacturing Pty Ltd (administrators appointed) is a timely reminder of the importance of secured parties ensuring that their security interests are properly registered on the PPSR and the potentially significant consequences of failing to do so. It is crucial that lessors register their security interests on the PPSR within the statutory timeframe and include all of the prescribed information.
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