A recent NSW Supreme Court decision in the matter of
OneSteel Manufacturing Pty Limited (administrators
appointed)  NSWSC 21 ("the
decision") has stressed the importance of registering
security interests correctly. In this case, Alleasing P/L
("Alleasing") registered a security
interest against the ABN of a company instead of the ACN in an
asset financing arrangement and as a result lost all of its rights
in relation to the equipment.
Alleasing rented a crusher and certain spare parts for the
crusher to Onesteel Manufacturing P/L
("Onesteel"). Alleasing spent
$23,329,764.00 in the design, supply, installation, assembly,
construction and commissioning of the crusher. Alleasing registered
its security interest on the PPSR but incorrectly included
OneSteel's ABN in the registration, rather than its ACN.
When OneSteel went into administration on 7 April 2016, the
administrators of Onesteel claimed that Alleasing's
registrations were defective and that Alleasing's interest in
the crusher had passed to OneSteel.
Alleasing then commenced proceedings and the Court was asked to
decide whether Alleasing's registrations were defective.
KEY POINTS YOU NEED TO KNOW FROM THE DECISION
The Court found that Alleasing's registrations were
defective because the registrations did not include OneSteel's
ACN. As a result, when Onesteel went into administration,
Alleasing's security interest in the crusher vested in the
Administrator and Alleasing had no further interest in it.
The Court confirmed this position, despite Alleasing contending
that the 9 digit ACN was included within the 11 digit ABN.
It did not matter that Alleasing's security interest could
be discovered by other searches of the PPSR.
Section 165(b) the Personal Property Securities Act
2009 (Cth) ("the Act") makes a
registration ineffective if a search of the PPSR by reference to
the details required under the Personal Property Securities
Regulations 2010 (Cth) ("the
regulations") (here the details required were
OneSteel's ACN and not ABN) was not capable of disclosing the
The decision reinforces the position Courts will take in
strictly interpreting the legislation even where the result may
seem commercially unfair or lead to an unexpected windfall for
administrators and liquidators.
Other registration traps that you can fall into include:
Registering as a Purchase Money Security Interest
("PMSI") when you don't have a PMSI.
This could even be the case if you have a PMSI interest but
don't register it in time;
Failing to register against the ABN of a trust where you are
dealing with a trust and that trust has an ABN;
For an individual, not registering exactly in accordance with
the details as contained in their current driver's
HOW CAN WE HELP?
If you are a secured party and are concerned about your
registrations on the PPSR we can do a PPSA health check for you. If
you think you have issues with any of your registrations don't
vary them or lodge new ones without getting advice first as this
may make the situation worse rather than fixing it.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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