How could one clerical mistake cost $23 million?
By now, most businesses have heard of the Personal Property Securities Register (PPS Register) and the importance it plays in securing interests over personal property. In fact, some businesses have employees dedicated to monitoring their registrations on the PPS Register. Whilst all may seem in order, it is becoming apparent that a number of registrations have been done incorrectly and as such, are deemed defective. The consequences of a defective registration can be catastrophic, as is illustrated in the recent matter of OneSteel Manufacturing Pty Limited (administrators appointed)  NSWSC 21.
In that case, the creditor, Alleasing Pty Limited, leased to OneSteel Manufacturing Pty Limited plant equipment said to be worth $23million. The equipment was covered by a written agreement and was registered on the PPS Register. However, Alleasing registered its interest against OneSteel’s ABN and not the ACN. Sometime soon after, administrators were appointed to OneSteel, they contacted Alleasing and informed its representatives that the registrations were defective. Whilst Alleasing attempted to rectify their registration, the critical time had passed and they were unable to perfect their registration.
The PPSA regime is clear that registration of a security interest where the grantor is a company (and is not trustee of a trust with an ABN) must be done by reference to the grantor company’s ACN. This is despite the fact that the ACN (being a nine digit number) is included in the ABN itself. Accordingly, a search of the PPS Register against OneSteel’s ACN did not reveal the registration held by Alleasing. It was on this basis that the court found for the administrators. The court also refused to retrospectively perfect the security interest, as the subsequent registration was done after the ‘critical date’ on which the administrators were appointed to OneSteel.
This decision is a reminder of how important it is to ensure that your registrations are done in accordance with the Personal Properties Securities Act 2009 (Cth). Ignorance to the situation or an argument of “but I own it” will not suffice and (like Alleasing) could leave you with a substantial financial loss.
If you require any assistance with managing your registrations on the PPS Register, please do not hesitate to contact Michael Turnell at our Griffith office on (02) 6962 3433.