Concerning the Personal Property Securities Register
('PPSR'), the courts have reminded us recently of the
generally, where the grantor is a company, using the
grantor's ACN to identify it on the PPSR; but
where the grantor is doing business with you as the trustee of
a trust (for example, a self-managed superannuation fund or a
discretionary family trust), identifying it by the trust's ABN
rather than the trustee company's ACN.
This reminder was forcefully given in the recent case of One
Steel Manufacturing Pty Ltd (administrators appointed)
 NSWSC 21. In that case, the confusion between ACN and ABN
cost the secured party $23 million!
As lawyers, we can think of many steps that the secured party
could have taken in that case to ensure that its security interest
was properly registered. This may well have enabled that party to
protect its interest in the $23 million worth of goods that
instead, vested in the liquidator for distribution amongst the
insolvent grantor's priority creditors. Clearly, any such steps
would have been worth the cost and effort to protect such valuable
However, where a secured party is smaller and its asset holdings
are not valued in the millions of dollars, a secured party may find
it harder to justify the cost of engaging lawyers to undertake such
investigations with respect to each individual
We at HHG Legal Group appreciate that smaller operators need a
way to balance their need to protect payment and property rights
against the constraints on expenditure that are part of the reality
of running a small business.
In finding that balance, a small business will probably not be
able to eliminate entirely, the risk of getting caught by the
sometimes highly technical provisions of the Personal Property
Securities Act 2009 ('PPSA'). However, a small
business may be able to reduce its exposure to an acceptable level
by taking the following practical steps at least:
Register security interests against both the ACN and the ABN of
any grantor company that identifies itself as a company 'as
trustee for' (often abbreviated to 'ATF') a trust in
its own letterhead, purchase orders, receipts, etc.
When you are doing business with a new customer, particularly
if you are not entirely sure of its credit-worthiness, ask its
representative whether it trades as a trustee for another company
and ask that question in writing, so that you have some evidence of
conduct a current company search in relation to a new corporate
customer. Check under the heading 'Current
(Shareholder/Member)' (usually on the second page of the
search) whether an 'N' or a 'Y' appears next to the
words: 'Beneficially Owned'. If the letter 'N'
appears next to those words, this means that the named shareholder
is holding the shares as a trustee on trust for another person or
entity, which you should take as a warning sign and investigate
Check where the registered office address of the company is. If
it appears to be an accountant's firm (and most Proprietary
Limited companies are registered at their accountant's office),
ask the company's authorised representative to permit you to
speak to its accountant. Then contact the accountant and ask
whether the company trades as a trustee or in its own right.
As a matter of commercial risk management, you may decide to
take all, some or none of these steps in any particular case,
the value of the collateral you are trying to protect;
the amount of credit you are trying to secure;
your assessment of your customer's credit-worthiness;
your relationship and trading history with the customer.
Ultimately, these are commercial rather than legal
considerations. However, they still need to be made with the
benefit of good legal advice.
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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