Registering your security interest on the Personal Property Securities Register (PPSR) correctly is a critical step in perfecting your security interest under the Personal Property Securities Act 2009 (Cth) (PPSA).
A recent NSW Supreme Court case, In the matter of Assta Labels Pty Ltd  NSWSC 1094 (Assta Labels) provides a good practical example of the consequences of making an error in the registration of a security interest on the PPSR.
Assta Labels Pty Ltd, Dashing Print Pty Ltd and PMP Print Pty Ltd (together, the Grantors), granted purchase money security interests (PMSIs) in favour of HP Financial Services (Australia) Pty Ltd (HPFS).
Staff members at HPFS then registered the security interests on the PPSR. However, the staff members were not aware of the specific requirement under section 153 of the PPSA to register against a company’s ACN rather than its ABN and proceeded to register against the Grantors’ ABNs. Accordingly the registrations were invalid.
After the errors were discovered by HPFS, compliant registrations were made. However, the complaint registrations were made outside of the 15 business day period for PMSI registrations required under section 62(3)(b) of the PPSA (PMSI Registration Period).
HPFS sought orders pursuant to section 293(1)(a) of the PPSA to extend the PMSI Registration Period in respect of the registrations.
A court may make an order extending the time for registration of a PMSI under section 293 of the PPSA if it is satisfied that it is ‘just and equitable’ to do so. In determining whether to make such an order, a court is required to take into account the matters set out in section 293(3) of the PPSA, which provides that:
(3) In making an order to extend a period under subsection (1), the court must take into account the following:
(a) whether the need to extend the period arises as a result of an accident, inadvertence or some other sufficient cause;
(b) whether extending the period would prejudice the position of any other secured parties or other creditors;
(c) whether any person has acted, or not acted, in reliance on the period having ended.
Did the need to extend the period arise as a result of an accident, inadvertence or some other sufficient cause?
The Court accepted that the need to extend the period in the present case arose as a result of inadvertence. There was a lack of understanding on the part of relevant HPFS staff members that it was necessary to effect the registrations by reference to the Grantors’ ACNs rather than the ABNs.
Would extending the period prejudice the position of any other secured parties or other creditors?
The Court considered the other registrations made against the Grantors and concluded that extending the period in this case would not prejudice the position of any other secured parties or other creditors.
Had any person acted, or not acted, in reliance on the period having ended?
The Court was comfortable that where a search of the PPSR would have revealed HPFS’s interest in the case of each Grantor, no relevant act or failure to act had occurred in reliance on the period having ended.
Accordingly, the Court granted the relief sought by HPFS and extended the PMSI Registration Period so that the compliant registrations were deemed to be made within the required time.
While ultimately HPFS was successful in extending the period for registration of its security interests, given the likely significant time, delays and costs that would have been incurred in following this process, Assta Labels provides a key lesson in the importance of registering security interests accurately the first time round.
If you have any concerns regarding your security interest registrations or the impact of the PPSA on your business, we recommend seeking legal advice to address those concerns sooner rather than later.
Elliot Raleigh, Partner
Gregory MacCallum, Associate