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PPSA registrations and the need for perfection5 May, 2017
When registering security interests on the Personal Property Securities Register (PPSR) the financing statement must be accurate and knowing when to use the ACN and the ABN is critical.
Financing statements must list:
- ACN for corporations
- ABN for partnerships, trustees and body politics
- full name and date of birth for individuals even if they have an ABN.
The Supreme Court of New South Wales’ recent decision in Re OneSteel Manufacturing Pty Limited (administrators appointed)  NSWSC 21 serves as a reminder of how costly inaccurate information in financing statements can be.
Alleasing Pty Ltd (Alleasing) rented equipment and spare parts to OneSteel Manufacturing Pty Ltd (OneSteel) for mining operations under two agreements. Alleasing registered its security interest relating to each agreement on the PPSR within time but the registrations identified OneSteel by its ABN and not its ACN. Section 165(b) of the Personal Property Securities Act 2009 (Cwlth) (PPSA) provides that where the collateral is not required to be described by a serial number in the register, a search by reference to the grantor’s ACN must be capable of disclosing the registration.
When OneSteel’s administrators were appointed they asserted that Alleasing’s security interests in the equipment in OneSteel’s possession had vested in OneSteel.
They relied on section 267 of the PPSA which says in effect that an unperfected security interest vests in the grantor immediately before administrators are appointed. The administrators argued that the failure to use an ACN was a defect in registration under section 164 of the PPSA and the defect was ‘seriously misleading’ because the registration would not be discovered in a search of the PPSR using the grantor’s ACN. The defect meant the security interests were unperfected.
In response, Alleasing registered two new financing statements and amended the original registrations, this time using OneSteel’s ACN as the grantor identifier. However, this occurred after the 15 business day period permitted for a Purchase Money Security Interest (PMSI) registration and the 20 business day period allowed for other registrations. Alleasing subsequently applied to the court for an extension of time to register under section 588FM of the Corporations Act 2001 (Cwlth) and extension of time for perfecting a PMSI registration under section 293 of the PPSA.
The court refused the extension of time applications in the circumstances where the unperfected security interest had vested as a result of administration and so Alleasing lost its rights in the equipment.