The recent New South Wales Supreme Court judgment of In the
matter of OneSteel Manufacturing Pty Limited (administrators
appointed)  NSWSC 21 highlights the critical importance
of getting your Personal Property Securities Register
(PPSR) registrations right if you are the lessor
of plant and equipment or other goods.
In that case, Alleasing Pty Limited (Alleasing)
had leased a crusher and spare parts to OneSteel Manufacturing Pty
Limited (OneSteel). The crusher lease and spare
parts lease were PPS leases within the meaning of section 13 of the
Personal Property Securities Act 2009
(PPSA) and Alleasing had registered a financing
statement in respect of the crusher, and later the spare parts.
However, the registrations were against OneSteel's 11 digit
Australian Business Number (ABN) and not its 9
digit Australian Company Number (ACN) as
prescribed by the Personal Property Securities Regulations
2010 (Cth) (Regulations).
For a financing statement to be registered in accordance with
section 153 of the PPSA and Schedule 1 of the Regulations it must
contain the correct details of the grantor. These include:
the ACN of a company grantor;
an individual grantor's name and date of birth; and
the ABN of a partnership or a trust grantor.
When OneSteel subsequently appointed administrators, the
administrators informed Alleasing that the registrations were
ineffective. As a result of section 267 of the PPSA which deals
with the vesting of unperfected security interests in the grantor
upon the appointment of an administrator to the grantor,
Alleasing's interest in the crusher and spare parts had vested
in OneSteel. Alleasing responded by amending the original
registrations to include OneSteel's ACN and by registering new
registrations using OneSteel's ACN.
In deciding this matter, the Court was required to
whether the original registrations were valid because
OneSteel's ABN included its ACN;
if the original registrations were ineffective, whether
Alleasing should be entitled to an extension of time to allow the
registrations registered after OneSteel's administrators were
appointed to be declared effective; and
whether the vesting of the crusher was unconstitutional as an
acquisition of property on unjust terms.
The court found:
the original registrations were ineffective under section 165
of the PPSA as they did not include OneSteel's ACN as required
and notwithstanding OneSteel's ACN was contained in its ABN, a
search of the PPSR for OneSteel's ACN would not have revealed
the original registrations;
the later registrations were also ineffective because when
OneSteel's administrators were appointed Alleasing's
security interest was unperfected meaning that under section 267 of
the PPSA the crusher and the spare parts had already vested in
the vesting provisions of the PPSA do not result in 'an
acquisition of property' so Alleasing's constitutional
argument also failed.
The Court also considered whether the defect in the first
registrations were seriously misleading so as to render them
ineffective under section 164(1)(a) of the PPSA. The Court
concluded that they were because the omission of the ACN meant that
searchers would not discover these registrations.
Alleasing had funded the design, supply, installation, assembly,
construction and commissioning of the crusher at a cost of over $23
million and had also funded the acquisition of the parts which were
ultimately declared to have vested in OneSteel. This case is a
cautionary tale for lessors and other secured parties of the
serious consequences that can flow from a simple mistake made when
registering a security interest and from not amending it in a
If an owner wants to remove a caveat, issuing a lapsing notice is a quick and easy way to shift the problem to the caveator.
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