December 5, 2018
Failing to correctly register a security interest on the Personal Property Security Register (PPSR) can be just as dangerous as not registering it at all.
A defective registration may mean your protection is ineffective and unenforceable requiring you to re-register the security interest. In doing so, you potentially lose any existing priorities in relation to other perfected interests, including those which arose after your security was granted.
Taking a “measure twice and cut once” approach will help ensure that you do not run the risk of defective registrations and additional fees.
REVIEW EXISTING REGISTRATIONS
Registrations on the PPSR must contain specific information to ensure that they are not defective. Some recent court cases have provided valuable insight into mistakes that have been made when registering on the PPSR. For example, in one recent case registering interest by a company’s ABN rather than its ACN was found to be a seriously misleading defect and cost the secured creditor its interest when the company entered into voluntary administration.
Using these recent insights, we recommend taking some time to review existing security interests, to ensure that they are correct. If any issues are identified in the review, you should take steps to amend the registration (where possible) to ensure it is not defective going forward.
We note that the PPSR only allows specific attributes to be amended. These include:
- changing the end date of the security interest;
- adding or removing grantors; and
- amending limited fields as outlined on the PPSR website such as free text, attachments and proceeds indicators.
If any errors fall outside of these categories, you may need to re-register your security interest.
WHAT CANNOT BE AMENDED ON A REGISTRATION?
Some of the attributes that are not able to be amended include:
- grantor identifier, DOB or name;
- serial numbers;
- whether the security interest is a purchase money security interest (PMSI);
- collateral type or class; and
- registration number.
If you are not able to amend the defect in the registration, to protect your security interest, you must pay a new registration fee and re-register on the PPSR. This brings with it the risk that other, later registered or granted security interests will have priority over your security interest.
The Personal Property Securities Act 2009 (Cth) places a strong emphasis on registrations and time, so it is important to remember to measure twice and cut once. Double check your registrations before completing and paying the registration fee.
A security interest that must be re-registered may mean other creditors will leapfrog you and take priority. Similarly, security interests that are incorrect may be unenforceable. In either case, we advise that you amend or re-register any incorrect details within the permitted limits.
HOW CAN MCINNES WILSON LAWYERS HELP?
McInnes Wilson Lawyers are able to assist you with:
- reviewing the terms and conditions of trade and other documents to determine whether security interests arise and whether they need to be registered;
- reviewing existing registrations to decide whether or not they are effective and enforceable;
- determining whether incorrect attributes of your security interest are able to be amended or whether they must be re-registered;
- amending registrations – including stepping you through how to do it so that you can do this for all necessary registrations; and
- registering and re-registering security interests.
If you require further information on any of the abovementioned material, please contact: