Check your PPSR registrations!
The Personal Property Securities Register (PPSR) is a national system for recording security interest in personal property. Personal property includes nearly all kinds of property (other than land).
Recording an interest on the PPSR register is a simple way to secure your interest in property as:
the timing of registration determines the priority of the security interest; and
registration ensures the security interest survives the bankruptcy or insolvency of the grantor.
Interested parties can search the PPSR to obtain information about security interests affecting grantors and their collateral.
The importance of using the correct reference in PPSR registrations
On 31 January 2017, the Supreme Court of New South Wales confirmed that an administrative error, which resulted in the PPSR registration being recorded over a customer ABN rather than ACN, resulted in the loss of a $23m ore crusher.
In that case, Alleasing leased an ore crushing plant and parts to OneSteel. Alleasing also loaned OneSteel $23m for the design, supply and installation of an ore crusher. The arrangements were entered by OneSteel in its corporate capacity.
An Alleasing employee registered its rights in the crusher and its parts on the PPSR, but the employee responsible did not understand the importance of using the ACN. Instead they used the OneSteel’s ABN.
An ABN should only be used where the grantor is a partner in a partnership, a trustee, or a body politic (as required by the Personal Property Securities Act).
OneSteel appointed administrators in April 2016. The administrators considered Alleasing’s registrations defective and therefore ineffective. The Supreme Court held that Alleasing lost its rights in the crusher and parts because it had registered against OneSteel’s ABN, not ACN.
Alleasing has a right to appeal and has indicated it will do so but the grounds of appeal are yet to be seen.
Creditors and lessors take note….
It is vital to ensure the correct identifier is used in PPSR registrations (and any other statutory requirements are met). A failure to do so could result in the loss of rights and assets.