Newsroom

    DANGER: Registering Security Interests against the ABN instead of the ACN can be Fatal!

    Author //

    • Miles Anderson Partner
      Phone: 61 2 8235 1244
      Email: m.anderson@clarkekann.com.au

    A recent NSW Supreme Court decision in the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] 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 registration.
    • 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 licence.

    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.

    ClarkeKann is a commercial law firm with offices in Brisbane and Sydney. Our expertise covers commercial & corporate transactions, employment & IR, financial services, litigation, risk management and insolvency, property transactions and resources projects, across a range of industries. For a full list of our legal services, please visit our website at www.clarkekann.com.au. To update your contact details or unsubscribe to any of our publications, email us at ck@clarkekann.com.au

    This bulletin is produced as general information in summary for clients and subscribers and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. ClarkeKann asserts copyright over the contents of this document. This bulletin is produced by ClarkeKann. It is intended to provide general information in summary form on legal topics, current at the time of publication. The contents do not constitute legal advice and should not be relied upon as such. Formal legal advice should be sought in particular matters. Liability limited by a scheme approved under professional standards legislation. Privacy Policy
    < Back to Articles

People

Partners, Steven Cardell and Paul O’Dea were recently listed in Doyle’s Guide to the Australian Legal Profession - Leading Property and Real Estate Lawyers – Brisbane 2016. To make this list requires feedback from various sources but most importantly our clients. We thank our clients for that valuable input and look forward to assisting in your continued property growth.  VIEW MORE

Expertise

ClarkeKann has received the Australia-Taiwan Business Excellence Award for our efforts promoting and advising on most of the major investments from Taiwan into Australia over the last 20 years. Click below for more details about Foreign InvestmentVIEW MORE

Subscribe

Click below to subscribe to our publications and to receive the latest news VIEW MORE