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PPSR peculiarities

We’ve previously written on our website about the peculiarities of the PPSR system and how it contains traps for the unwary. The recent decision of the NSW Supreme Court In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21 shows just how dangerous those traps can be.

A company called Alleasing Pty Limited leased a striker crushing and screening plant to OneSteel manufacturing for a term of six years at quarterly rent of $1,000,000. To protect their right to recover the striker crushing and screening plant, Alleasing registered a security interest on the PPSR. When doing so, they identified OneSteel by its ABN. Unfortunately, the PPSR legislation required that OneSteel be identified by its ACN.

OneSteel later ran into financial trouble and administrators were appointed. A dispute arose over whether Alleasing had the right to recover the striker crushing and screening plant.

The Supreme Court found that, by registering their security interest using OneSteel’s ABN rather than ACN, Alleasing had made it was impossible for other users of the PPSR to identify Alleasing’s security interest when conducting a proper search (ie. a search of Onesteel’s ACN). The Court therefore held that Alleasing’s security interest was ineffective. Alleasing had no right to recover the  striker crushing and screening plant from Alleasing’s administrators.

It’s easy to see from this decision that simple mistakes when dealing with the PPSR can have very serious consequences. The PPSR system is not forgiving. Anyone in the business of leasing assets or taking security over items of personal property should be very careful to make sure they use the system in the correct manner.

FWO routinely assists clients with PPSR, loan and security matters. If you require assistance in that regard, please call our loans and securities solicitor Jay Clowes on 6650 7016.




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