By Roberta Hosikian
In the case of Alleasing Pty Ltd, in the matter of OneSteel Manufacturing Pty Ltd -v- Onesteel Manufacturing Pty Ltd  FCA 656 the Court fixed the date of registration of a security interest at a later date in order to give effect to a settlement agreement made between the parties to resolve a dispute arising from a defective registration of a security interest.
Alleasing had leased crushing and screening equipment to OneSteel, the operator of the Iron Knob mine site in South Australia. Alleasing registered leases relating to the crusher on the Personal Property Security Register (PPSR). After OneSteel appointed administrators a dispute arose concerning the registrations, which identified OneSteel by its ABN rather than ACN.
The New South Wales Supreme Court held the registrations of the leases were defective. It held that the interest in the crusher had vested in OneSteel upon the appointment of administrators pursuant to Section 267 of the Personal Property Securities Act 2009 (Cth) (PPSA). Alleasing sought to appeal the decision.
The parties entered a settlement on the condition that OneSteel and the administrators would transfer the interest in the crusher to Alleasing and OneSteel and Alleasing would enter a new lease, which would give rise to security interests that could be registered on the PPSR.
Alleasing sought an order pursuant to Section 588FL(2)(b) of the Corporations Act 2001 (Cth) (Act) fixing 12 May 2017 as the later time for the registration of its security interests to prevent the operation of Section 588FL(4) of the Act vesting the new security interests in OneSteel. Alleasing also sought an order pursuant to Section 293 of the PPSA to extend the time for the registration of the new security interest to 12 May 2017 so that it would gain priority to it in respect of its Purchase Money Security Interests (PMSIs).
In deciding whether to grant the extension of time, Justice Davies held that the failure to register the interest earlier was not of such a nature as to prejudice the position of other creditors or shareholders. In the circumstances, His Honour was satisfied that it would be just and equitable to fix a later time for the registration of the new security interests.
Justice Davies also granted an order under Section 293 of the PPSA to extend the period of registration for any PMSIs granted by OneSteel in favour of Alleasing relating to the lease in accordance with Section 62(3)(b) of the PPSA.
The failure to properly register a security interest on the PPSR may have serious consequences. However, this case highlights the ability of the Courts to remedy a defective registration and extend the period of registration, where other interested parties are not improperly prejudiced.
If you have any concerns or queries about the strength of your PPS registrations, please contact Peter North (Director, Business Practice Group) or Amanda Carruthers (Director, Insolvency Practice Group) on 03 9629 9629.
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