023 – New South Wales Young Lawyers

June 2014 1

Contents

Introduction 2

Simplifying search results: A survey of information in financing statements 3

Simplifying search results: Survey results 4

Simplifying search results: Are uninformative collateral descriptions permitted under the PPS Act? 5

Simplifying search results: The problem of uninformative collateral descriptions 6

Simplifying search results: A proposal to include the value of the secured obligations in financing statements 7

Simplifying searching: Current search protocol – search on multiple identifiers 8

Simplifying searching: ASIC migration and multiple identifiers 10

Simplifying searching: A proposal for the Registrar to promote simple search protocols 10

Business non-compliance: Identifying companies by ABN 12

Simplifying PPS compliance for small business: Proposed carve-out for low-value transactions 13

Law Society of New South Wales, Young Lawyers Business Law Committee, PPS Act Review Working Group 15

Schedule 1 – Full survey results 16

Schedule 2 – Sample businesses 19

Schedule 3 – Extracts from financing statements 20

Schedule 4 – AFSA paper, 'Searching ASIC Migrated Data' 43

SUBMISSION TO THE STATUTORY REVIEW OF THE PERSONAL PROPERTY SECURITIES ACT

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Introduction

New South Wales Young Lawyers is pleased to make a submission to the statutory review of the Personal Property Securities Act. Many of the 15,000 members of our association have directly participated in the realisation of personal property securities reform. This began for the wider business and legal community with the commencement of the Personal Property Securities Register on 30 January 2012. From explaining to clients the new functional concept of a security interest, to daily staring at the new social network of security interests populated by financiers, lessors and suppliers on the PPS Register, young lawyers have with a mixture of enthusiasm and trepidation turned their knowledge and skills to a personal property securities law and registration platform that has been designed for the digital age.

It is the job of many junior lawyers to deal with the day-to-day operations of the PPS Register: searching the register, interpreting search results, making registrations, amending registrations, discharging registrations, and communicating the information required or obtained to their clients. This familiarity with using the PPS Register may position us to identify and explain opportunities for cost-effective and high-value reforms that the Review may consider recommending to the Australian Government.

In our submission, it could be simpler to perform a search on the PPS Register and to interpret search results. The current complexity of searching the register and interpreting search results is a barrier to small business using the PPS Register.

We discuss two areas where small changes to the PPS framework would have the largest impact in reducing complexity and costs, to the benefit of small business in particular:

1. Following PPS reform, information about security interests in personal property is now more extensive and more accessible to business and consumers. This information is not always useful; it is not uncommon for a business to have upwards of fifty registrations made against them and for many of these to have uninformative or absent collateral descriptions. The quantity of information on the PPS Register will only increase with time. Registrations are being made faster than they are being discharged on the PPS Register. The surplus of registrations over discharges in the most recent quarter was 480,576 registrations. This is a growth rate in the number of registrations of 6.3% per quarter or 25.2% per annum.1

Requiring secured parties to give an indication in financing statements of the value of the secured obligations owed to them would enable financiers, purchasers of businesses and small business trade creditors to distinguish between material and ordinary-course-of-business security interests registered on the PPS Register. Search results would be simpler to interpret. The credit profile of small businesses would be easier to assess, which should increase the availability of small business finance and facilitate sale of business transactions for small business.

2. Searching the register is complex and costly. There is an opportunity to simplify searching and reduce costs by ensuring the grantor details in migrated registrations meet the PPS Act standards. Widespread non-compliance by businesses using ABNs to identify company grantors can be eliminated by the Review and the PPS Registrar shining a spotlight on the problem.

1 Australian Financial Security Authority, 'Report: March 2014 PPSR quarterly statistics'.

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The PPS Registrar’s promotion of simple search protocols would increase accessibility to small business and reduce the costs of searching the PPS Register. Search costs in relation to companies can be reduced by around two-thirds, around approximately $3.8 million per annum in search fees alone.

We also discuss areas where the regulatory burden on small business of requiring them to register security interests under the PPS Act may outweigh the benefit to secured creditors and others of a public registration.

Simplifying search results: A survey of information in financing statements

PPS search results are complex because the PPS framework results in secured parties registering financing statements with uninformative collateral descriptions or no collateral description. NSWYL has conducted a survey of the information contained in financing statements registered in respect of a sample of small businesses. The results substantiate the claim that uninformative and absent collateral descriptions is the characteristic cause of complexity in PPS Register search results.

An obstacle to the technical evaluation of the success of PPS reform is the limited availability of empirical data. There is some information publicly available. The Australian Financial Security Authority publishes quarterly usage statistics for searches performed and registrations made on the PPS Register. Apart from that top-level data, there is little information about how financiers, lessors, suppliers and other secured parties are registering their security interests. We have conducted a survey to be a primary source of information on the registration practices that have developed in the years following the registration commencement time.

The survey has been designed to ensure that the results are representative of PPS Register registration practices in relation to small businesses generally. The sample size (20 small businesses) is large enough to capture registration practices that are not specific to any one business. The sample is made up of small businesses to enable an analysis of how the PPS reform has affected the ability of financiers to assess the credit of small businesses and to examine the information that a purchaser of a small business would obtain from a search of the PPS register, but in our experience registration practices in relation to small business are the same as in relation to business generally.

The businesses in the sample are based in various States and operate in diverse industries. They were winners of national business awards from 2010-2013 and are listed in Schedule 2. While the sample is not random in the sense that the businesses chosen are successful businesses, there is unlikely to be a correlation between business success and secured party PPS Register registration practices, so that the sample is random for the use that has been made of it.

The parameters of the survey were as follows.

Number of small businesses 20

Search type Organisation grantor

Organisation Identifier Primary identifier in accordance with the Personal Property Securities Regulations 2010 (Cth) – ACN for companies, ABN for trusts and partnerships

Selection criteria National winners of a national Australian business awards competition from 2010-20132

2 The Telstra Australian Business Awards. Eligibility criteria for the awards are available at www.telstrabusinessawards.com

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Number of employees Maximum 200 full-time equivalent employees, including a number with fewer than 5 full-time equivalent employees

Industries Agriculture, aviation, engineering, food, health, manufacturing, recycling, retail products, retail distribution and technology

Simplifying search results: Survey results

The results of the survey are presented in Schedule 1. Extracts of the collateral descriptions are set out in Schedule 3. Of the 20 businesses searched, 16 were grantors of a registered security interest.

In 39% of registrations the collateral the subject of the security interest was not identifiable from the information contained in the financing statement. As a searcher of the PPS Register, it was impossible to tell whether each of these security interests existed in a few items of property supplied on retention of title terms, or in hundreds of items of plant and equipment leased by the secured party that were necessary for the operation of the grantor's business.

The ways free text collateral descriptions in financing statements were uninformative fell into several categories.

Free text descriptions that referred to broad classes of collateral 'supplied by the secured party'. This was the most common type of uninformative collateral description. It was used in 20% of all registrations. Typical examples were:

- 'All equipment sold, leased, rented or otherwise made available to the grantor by the secured party'

- 'Collateral supplied by the secured party' - 'Goods sold from time to time' - 'All vehicles supplied by the secured party'

93% of the registrations that used this collateral description were purchase money security interests. This form of description informs the searcher of the existence of the relationship between the grantor and the PMSI secured party. It gives no indication as to how many goods or motor vehicles the PMSI secured party has supplied.

Blank collateral descriptions. 10% of registrations did not contain free text collateral descriptions. The information was not contained in any other part of the financing statement; no registrations with blank collateral descriptions attached the underlying security agreement (nor did any other registrations apart from migrated registrations).

Free text descriptions that referred to all-inclusive classes of collateral. 6% of registrations used this type of collateral description. Typical examples were:

- 'Except any personal property which is not from time to time subject to a security agreement in favour of the secured party (for registrations in the 'All present and after-acquired property – with exceptions' collateral class)'

- 'Any property which is subject to a security interest under [name of security agreement]' - 'All goods and services'

These descriptions are like those that refer to goods 'supplied by the secured party' but they are even broader. Describing the collateral as anything subject to a security interest, or as everything except

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anything subject to a security agreement, is tautologous. It adds no additional information. By definition, collateral is what is subject to the security agreement. These collateral descriptions are all-inclusive and give no indication of what the collateral actually is to the searcher.

Free text descriptions that referred to broad general classes of collateral. 3% of registrations used this type of collateral description. Typical examples were:

- 'Office machines and equipment' - A long list of the secured party's product categories

These descriptions give some information to the searcher. Typically they are not tailored to the grantor, so the secured party would use the same collateral description for all their registrations on the PPS Register.

The financing statements with uninformative or blank collateral descriptions did contain a collateral class for the security interest. They came from the following collateral classes. The proportion of collateral descriptions that were uninformative in that class is shown.

- All present and after acquired property with exceptions (14/14, 100%) - Other Goods (124/241, 51%) - Motor Vehicles (27/97, 28%) - Intangible property (3/4, 75%) - Financial property (1/1, 100%)

By contrast, the following types of registrations did have informative collateral descriptions:

- Those with free text descriptions that contained a serial number or related to particular items (28% of all registrations)

- Those which specified a serial number (20% of all registrations) - Migrated registrations (10% of all registrations), because the underlying security agreement

was attached, which provided more context for the grant of the security interest. - All present and after acquired property without exceptions (3% of all registrations), because

the security interest was in all the assets of the grantor.

The results show that the problem of uninformative or blank collateral descriptions is spread across collateral classes.

Simplifying search results: Are uninformative collateral descriptions permitted under the PPS Act?

There is no requirement in the legislation that a financing statement describe the collateral the subject of the security interest in any detail.

Section 153 of the PPS Act provides that a financing statement consists of a collateral description in accordance with all of the following rules:

a) the collateral must be described as consumer property or commercial property; b) the collateral may or must be described by serial number, if allowed or required by the

regulations; c) the collateral must belong to a single class of collateral prescribed by the regulations; d) any description of proceeds must comply with the regulations.

There is no rule requiring a description beyond the inclusion of a collateral class. For that reason the 10% of registrations disclosed in the survey that had blank collateral descriptions are effective.

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A collateral description is useful to searchers of the PPS Register to the extent it limits the scope of the security interest. Searchers of the PPS Register are generally concerned to establish the degree to which the assets of the grantor are encumbered. Any registration on the PPS Register raises a red flag to a searcher that a substantial part of the grantor's property may be subject to a security interest. The significance of such a red flag can be lessened if the collateral class is narrow, such as motor vehicles, or if the collateral description limits the property covered by the security interest, such as by describing a particular item that has been leased to the grantor.

A collateral description is useful to secured parties to the extent it perfects any security interests that have been granted by the grantor to the secured party. To perfect a security interest, a registration must be effective 'with respect to the collateral'3. A broad collateral description is preferable, or the absence of any collateral description at all apart from the collateral class and whether the collateral is commercial or consumer property, as any specific collateral description limits the property that the registration can be 'with respect to'. If a secured party includes a detailed collateral description in a financing statement, it risks the non-perfection of its security interest in any collateral that does not fall within the description.

The current legislative framework gives secured parties an incentive to use uninformative collateral descriptions. The interests of secured parties diverge from the interests of searchers of the PPS Register in this instance.

Simplifying search results: The problem of uninformative collateral descriptions

The objects of the PPS Act and the PPS Register include:

1. To increase certainty around personal property security granted to financiers.

2. Through that, to increase the availability of finance to business, and in particular small business.

3. To foster the market for sales and purchases of businesses, and in particular small business.

4. To reduce legal and insolvency transaction costs for businesses and consumers, and in particular small business.

The PPS Act and PPS Register aim to achieve these objects by creating an online system of public registration of third party interests, and specifically security interests, in personal property. The scope of the term ‘security interest’ is defined by the PPSA. The Parliament adopted a functional definition, in order to make the substance of a transaction determinative as to whether it gives rise a security interest rather than its legal form.4 The security interest of a secured party who neglects to register their security interest is liable to loss of priority to competing secured and execution creditors, and ineffectiveness on the administration or liquidation of the grantor.

These reforms have resulted in the PPS Register becoming a valuable repository of information about security interests in personal property. The PPS Register is accessible almost 24 hours a day, seven days a week. The importance of the PPS Register to the functioning of the economy is demonstrated by the high volume of searches: 1,777,943 searches were performed in the March quarter of 2014.5

Uninformative collateral descriptions stymie the achievement of the objects of the PPS Act and the PPS Register. Financiers are unable to assess the materiality of registered security interests from the

3 PPS Act, section 21(2)(a). 4 PPS Act, section 12. 5 Australian Financial Security Authority, 'Report: March 2014 PPSR quarterly statistics'.

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over-broad or absent collateral descriptions that secured parties have every incentive to use. A prospective financier must scrutinise every prior registered security interest on the PPS Register to assess the value of any subsequent security interest it might be granted which will have a later registration time. The financier can always request the borrower to provide it with the security agreements that create the security interests registered on the PPS Register, or contact the secured parties individually, but either of these courses is inconsistent with the objects of the PPS Act and PPS Register, which can be achieved by having the PPS Register as an independent, accessible and efficient source of such information.

A purchaser of a business is in the same position as a prospective secured financier. It does not have the benefit of taking the personal property free of any security interests under Part 2.5 of the PPS Act simply from because it is a purchaser, because a purchase of a business would not be in the ordinary course of that business.6 It must scrutinise every registered security interest to ascertain how much of the property in the ostensible possession of the business is owned by the business free of encumbrances. The valuation of the business depends on this analysis. Uninformative collateral descriptions force the purchaser to undertake due diligence in respect of every registered security interest, unless the vendor can arrange to obtain deeds of release and discharges from the PPS Register of as many registrations as possible before settlement of the sale.

Insolvency practitioners are unable to prioritise their contact with secured parties in the absence of detailed collateral descriptions. Uninformative collateral descriptions prevent financiers, purchasers and insolvency practitioners from assessing the materiality of a security interest from the information contained in the financing statement. The result is the PPS Register is useful for identifying the relevant secured parties, but beyond that is not adapted to achieving its objects and the objects of the PPS Act.

Simplifying search results: A proposal to include the value of the secured obligations in financing statements

One response to the problem of uninformative collateral descriptions would be to require secured parties to describe the collateral with more particularity in financing statements. Section 2637 of the Corporations Act 2001 (Cth) required a 'short description of the property charged' in a notice of charge lodged with ASIC.

There are sound commercial reasons for not describing collateral more specifically in financing statements. First, security agreements often describe collateral by reference to broad classes. It would be onerous on secured parties to require them to describe collateral in a registration in more specific terms than they did in the underlying security agreement. In many cases, the lawyers or administrators providing the details for inclusion in the financing statement would not have access to the relevant information – it would require access to property or inventory records.8 Secondly, goods supplied by a secured party would, in many business contexts, change over time. A requirement to more particularly describe collateral would create a new requirement to amend or replace registrations frequently.

There is another piece of information that is determinable, within the secured party's knowledge and that would simplify interpreting search results for financiers and purchasers: the value of the secured

6 PPS Act, section 46. 7 Now repealed. 8 The secured parties of the Hastie Group generally did not respond or were unable to adequately particularise the equipment or security arrangements under which their registered security interests were said to arise: Carson, in the matter of Hastie Group Limited (No 2) [2012] FCA 717 (19 June 2012) at [12].

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obligations. An amendment to the PPS Act to require this information be included in financing statements would not be unprecedented or unfamiliar in the Australian business environment: notice of a company charge under the Corporations Act used to require 'a short description of the liability (whether present or prospective) secured by the charge'9. In practice, chargees used to include inflated prospective liabilities in such notices, but the concept was the same. Secured parties might be required to include the value of the secured obligations in the financing statement as reasonably calculated by them as at the date the security interest was created. A secured party would only have an obligation to amend the recorded amount of the secured obligations once it was double the original secured amount.

If this proposal were implemented, financiers and purchasers would know:

1. the value of the secured obligations as at the date the security interest was created; and 2. that the secured obligations may at the time of search be up to double the original amount but

would not be any more.

In the case of traditional security interests, like charges or equipment mortgages, secured obligations would refer to the amount of the loan secured by the security interest. In the case of the interest of a lessor, the value of the secured obligations would be the value of the leased property. In the case of the interest of a seller of goods on retention of title terms, the value would be the unpaid purchase price of the goods. There is a similar requirement in other jurisdictions.10

PPS reform has resulted in an abundance of registered information about security interests. That information can be more useful to financiers, purchasers, and unsecured small business trade creditors, if there is a means to assess the materiality of each security interest. Having a field for the value of the secured obligations in a financing statement would simplify search results and promote the objects of the PPS Act and PPS Register.

Simplifying searching: Current search protocol – search on multiple identifiers

AFSA has published fact sheets to inform business and consumers of how they should search the PPS Register. One of these is directed to the particular difficulties in conducting searches that will disclose all migrated registrations. It is entitled, 'Searching the PPS Register – Considerations regarding migrated registrations'.11

The fact sheet advises business and consumers to conduct multiple searches. It says,

The grantor details in migrated registrations will initially be recorded on the PPS Register as they were recorded on the transitional register. This may not accord with the way grantor details are required to be entered for new registrations on the PPSR. Accordingly, it may be necessary to conduct multiple searches to ensure there is no valid registration in respect of the relevant collateral. Over time, as migrated registrations are amended, replaced, or expire, the likelihood of these issues impacting searches will decrease.

A search protocol is described that would be suitable for organisation grantors:

you may wish to conduct the following searches:

9 Section 263(1)(a)(iv). 10 According to the '2004 Tennessee UCC Filing Guide', (document downloadable at www.tn.gov/sos/forms/fg-ucc2004) under the law of Tennessee as to UCC registrations at that time, where a UCC registration intended to secure an obligation other than for a specific amount of money, a valuation of the collateral contained in a Valuation Statement is to be filed with the UCC registration. 11 http://www.ppsr.gov.au/AsktheRegistrar/FactSheets/Documents/Searching%20the%20PPSR%20-%20Considerations%20regarding%20migrated%20registrations.pdf

http://www.ppsr.gov.au/AsktheRegistrar/FactSheets/Documents/Searching%20the%20PPSR%20-%20Considerations%20regarding%20migrated%20registrations.pdf

http://www.ppsr.gov.au/AsktheRegistrar/FactSheets/Documents/Searching%20the%20PPSR%20-%20Considerations%20regarding%20migrated%20registrations.pdf

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• Search by the identifier that should be used in accordance with the PPS Regulations (for example ARSN or ACN).

• Search by the alternate identifiers which may include ACN, ARBN, ARSN and ABN. • Search by organisation name (including the legal name of the entity, trading names, or a truncation

of the name).

The fact sheet does not recommend the search protocol. The language used in permissive (‘you may’, ‘it may be necessary’) rather than prescriptive or advisory. It serves as a disclaimer by AFSA that a search of the register using the organisation identifier that is required for a new registration may fail to disclose all migrated registrations.

The businesses and users who rely on the PPS Register have needed to determine for themselves, with the assistance of their advisors, how they should search the PPS Register in light of these concerns. The response has been an emerging market practice to conduct organisation grantor searches on the PPS Register using multiple organisation identifiers. It is becoming standard practice for practitioners to search in respect of an Australian company by ACN, ABN and Name.12

This market practice persists even though the main trigger for multiple identifier searches, the migration of ASIC charges using the ABN for the grantor details, has been resolved by the PPS Registrar. The experience of the contributors to this review has been that these additional ABN and Name searches for a company return a small fraction of the results returned on the correct identifier (ACN). Some results are returned due to non-compliance by business, as discussed below (Business non-compliance: Identifying companies by ABN). The residual inconsistency of grantors details in migrated registrations, as described in the Fact Sheet, and the common mistake of using an ABN to identify an Australian company instead of its ACN in a financing statement, has resulted in an environment where it will normally be in the interests of businesses to search on multiple organisation identifiers (ie perform multiple searches in respect of each grantor) to mitigate their PPS risk.

Each search incurs costs, in the search fee billed by AFSA, in the fee billed by the provider of the search platform (if a third-party provider is used) and in the fee billed for the time of the professional conducting the search, or in the opportunity cost of the time spent by the employee carrying out the search or the small business owner. The difficulties with migrated registrations and the market practice of searching on multiple identifiers has resulted in these costs being multiplied for businesses. Searching the PPS Register on multiple identifiers (and potentially with multiple grantors) is time consuming. Each search needs to be performed individually.

To take the example of a search on an Australian company, following the advice in the Fact Sheet, a search would be conducted on the PPS Register by ACN, ABN and Name. The costs to the searcher are tripled. If trading names are searched on as well, there are further costs.

Third party platforms that offer three-in-one searches have become popular. Search traffic is moving away from the AFSA PPS Register web user interface. This is reflected in the statistics, which show that only 19.2% of searches are performed through the AFSA web user interface. Searches conducted through third party platforms appear in the statistics as searches performed by a B2G customer, being the third party that provides the platform. The margins charged by third party platform providers are an additional avoidable cost of using the PPS Register that businesses and consumers are incurring.

12 ‘Practical Tips on Searching the PPSA Register’, Stephen Doyle, Warren Syminton Ralph, http://www.businessstrategyblog.com.au/4350/practical-tips-on-searching-the-ppsa-register/; ‘Everything you need to know about the Personal Property Securities Register’, InfoTrack, http://www.infotrack.com.au/enquiries/everything-you-need-to-know-about-ppsr.htm; VedaCheck product description, http://www.veda.com.au/business/company-and-business-information/ppsr-solutions.

http://www.businessstrategyblog.com.au/4350/practical-tips-on-searching-the-ppsa-register/

http://www.infotrack.com.au/enquiries/everything-you-need-to-know-about-ppsr.htm

http://www.infotrack.com.au/enquiries/everything-you-need-to-know-about-ppsr.htm

http://www.veda.com.au/business/company-and-business-information/ppsr-solutions

http://www.veda.com.au/business/company-and-business-information/ppsr-solutions

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Simplifying searching: ASIC migration and multiple identifiers

Those familiar with the history of personal property securities reform will recognise that searching on multiple identifiers became necessary at the registration commencement time on 30 January 2012. When the PPS Register was first opened to the public, it became evident that most registrations from the ASIC Register of Company Charges had been migrated to the PPS Register using the ABN of the company as the identifier of the grantor rather than the ACN. Where a company had an ABN as well as an ACN, the registration was migrated using the ABN of the company. Registrations in respect of companies without an ABN were unaffected.

This misidentification was remedied between 23 April 2012 and 14 May 2012.13 The Registrar registered financing change statements to amend the affected registrations and identify the grantor by ACN where the grantor had both an ABN and an ACN. The issue is now listed on the PPS Register website under ‘Migrated registrations – known issues resolved’.

There was also another issue in relation to data migrated from ASIC that was considered in the AFSA paper entitled, 'Searching ASIC Migrated Data' (set out in Schedule 4), published on 1 February 2012. We consider it here briefly to show that the issues around the identification of grantors in migrated registrations are relatively minor.

If a company was deregistered at the migration time (the months prior to the registration commencement time on 30 January 2012), the name of the company was recorded on any migrated registration in respect of it, rather than the ACN. ITSA advised users, "For certainty you would need to search on the company name if no results are returned from the ACN or ABN search."

It is hard to formulate scenarios where this issue would adversely affect a user of the PPS Register. Conceivably, the issue might arise where a company that was deregistered at the migration time subsequently was reinstated and the charge that was originally registered with ASIC continued to exist over property acquired by the company after its reinstatement, or over property that was continuously owned by the company during its deregistration. The issue continues to be described on the PPS Register website14, although the focus is on how to avoid confusion in cases where a currently-registered company may share the name of an unrelated deregistered company.

Simplifying searching: A proposal for the Registrar to promote simple search protocols

Security interests recorded on 23 Commonwealth, state and territory registers were transferred to the PPS Register. The task of conforming the migrated data to the requirements of the new PPS Register was substantial and is ongoing. The PPS Registrar and AFSA have worked steadily to resolve many of these anomalies: missing ASIC registrations, Hull Identification Number normalisation, migration of discharged registrations from ASIC, Queensland REVs and New South Wales REVs and the ASIC ABN/ACN switch.15 The PPS Registrar and AFSA continue to progress the ‘missing secured parties issue’. This relates to 27,000 migrated ASIC registrations that had more than one chargee when they

13 http://www.ppsr.gov.au/AbouttheRegister/MigratedRegistrations/Pages/Migratedregistrations-knownissuesresolved.aspx 14 ‘Deregistered grantor companies’, http://www.ppsr.gov.au/AbouttheRegister/MigratedRegistrations/Pages/default.aspx 15 http://www.ppsr.gov.au/AbouttheRegister/MigratedRegistrations/Pages/Migratedregistrations-knownissuesresolved.aspx

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were notified to ASIC. The second and later chargees are not named as secured parties on the migrated registration on the PPS Register. There is a substantial risk to affected businesses that those registrations may be discharged without the consent of the other secured parties. AFSA has convened a working group comprising representative of stakeholders to consider solutions to the issue.16

In our submission, a relatively small investment by AFSA could eliminate the need for financiers and businesses to use multiple identifiers when searching for security interests granted by Australian companies.

Our proposal is as follows:

1. The Registrar identifies all registrations on the PPS Register that are migrated from the ASIC Register of Company Charges. This is a simple matter as migrated registrations contain details of the source register.

2. The Registrar confirms that the organisation number type of the grantor on each registration is the ACN. This will be by way of confirmation that the ABN/ACN for ASIC migrated registrations is complete.

3. The Registrar identifies the ASIC migrated registrations that are missing an organisation number for the grantor and identify the grantor only by Name. This will be limited to companies that were deregistered at the migration time.

4. The Registrar cross-matches the ACN information recorded in the attachments to those registrations to the ASIC National Names Index. If the registration of the company has been reinstated, the Registrar uses its power under section 188 of the PPS Act to amend the registration to identify the grantor by its ACN.

5. The Registrar identifies any migrated registrations from other registers with organisation grantors. The Registrar cross-matches the grantor details to the National Names Index maintained by ASIC. If there are any matches, the Registrar uses the power under section 188 of the PPS Act to amend the registration to identify the grantor by its ACN.

We anticipate that this step is feasible, because it is an exercise in data matching and maintenance, an area well-understood by information technology professionals; and secondly, registration on the ASIC Register of Company Charges under the Corporations Act took precedence to registration of a charge on many of the transitional registers maintained under other Acts17, so resolution of the ASIC issues should account for the greater part of relevant registrations.

6. The Registrar issues public guidance that organisations that have identified an Australian company by ABN on a financing statement have not complied with the identification requirements in the PPS Act, their registrations are ineffective and they are advised to amend their registrations (discussed in the following section).

7. The Registrar issues new guidance that users of the system need only search by ACN to find registrations in respect of Australian companies, on the basis that:

a. All migrated registrations identify Australian company grantors by ACN; and b. All non-migrated registrations are required to identify Australian company grantors by

ACN.

16 http://www.ppsr.gov.au/AbouttheRegister/MigratedRegistrations/Pages/Migratedregistrations-knownissuesbeingprogressed.aspx 17 Corporations Act 2001 (Cth), section 273A (repealed): Bills of Sale Act 1898 (NSW), Liens on Crops and Wool and Stock Mortgages Act 1898 (NSW), Bills of Sale and Other Instruments Act 1955 (Qld), Liens on Crops of Sugar Cane Act 1931 (Qld), Bills of Sale Act 1886 (SA), Liens on Fruit Act 1923 (SA), Stock Mortgages and Wool Liens Act 1924 (SA), Bills of Sale Act 1899 (WA), Bills of Sale Act 1900 (Tas), Stock, Wool, and Crop Mortgages Act 1930 (Tas), Instruments Act 1933 (ACT), Instruments Act (NT).

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The implementation of these steps would be a significant and valuable reform of the PPS Register. The benefits to users of the PPS Register would accrue from the time of implementation of the reform and throughout the life of the PPS Register. Migrated registrations from the ASIC Register of Company Charges do not have an in-built registration end time – the problems associated with them, in the absence of reform, will continue to exist for the foreseeable future. The load on the IT infrastructure of the PPS Register would be greatly reduced.

Simple search protocols would lead to efficiency gains that would increase productivity in the financial, legal and insolvency sectors of the economy. Businesses that are mistakenly registering their security interests using the ABN to identify an Australian company grantor would be given the opportunity to remedy their error before it results in substantial property loss. The search conventions for the PPS Register would be clarified and the PPS Register would be made more accessible to casual users.

If only a third of organisation grantor searches currently conducted on the PPS Register relate to multiple identifiers (the true figure is likely to be half to two-thirds), the number of unnecessary searches being performed is 237,593 per quarter.18 The savings to business and consumers from this measure would be $3,801,488 in search fees per year. The time savings would be worth significantly more.

Business non-compliance: Identifying companies by ABN

A number of businesses are incorrectly identifying the grantor of the security interest in financing statements they register on the PPS Register. In the experience of the contributors to this submission, it is not uncommon to find Australian companies identified by their Australian Business Number (ABN) rather than their Australian Company Number (ACN).

This innocent error unfortunately has serious consequences. The design of the legislation is that a person searching for security interests in the property of a relevant person need only use as the search criteria the identification details for that person as are prescribed in the PPS Act. The legislation allocates the risk of misdescription to the secured party. Section 165(b) of the PPS Act provides:

… a defect in a registration that describes particular collateral exists at a particular time if:

(b) … no search of the register by reference to that time, and by reference only to the grantor’s details (required to be included in the registered financing statement under section 153), is capable of disclosing the registration;

Section 153 and the regulations made under it prescribe a scheme by which there is a single identifier, at any time, by which a grantor is to be identified in a financing statement. For a body corporate that has an ACN, the prescribed details are the ACN from the National Names Index maintained by ASIC.19

A registration with a defect is ineffective.20 A registration that is ineffective does not perfect the underlying security interest.21 A person who on the basis of their search, subsequently takes and perfects a new security interest in property of the relevant person, or purchases the property of the relevant person, can be assured that their new security interest or interest as purchaser is not in competition with a pre-existing security interest that is perfected by registration (and if they take or inspect the collateral or the documents that constitute the collateral, in the case of financial or

18 Australian Financial Security Authority, 'Report: March 2014 PPSR quarterly statistics'. 19 Personal Property Securities Regulations 2010, Schedule 1, cl 1.3. 20 PPS Act, section 164. 21 PPS Act, section 21(2)(a).

13

intangible property, they can be assured no such interest has been perfected by control or possession either).

A search of the PPS Register by the ABN of an Australian company is not capable of disclosing a registration made on the ACN of the Australian company. The PPS Register uses an ‘exact match’ search system. The PPS Register will only return registrations to a search where the identification details for the grantor in the search exactly match the identification details for the grantor used in the financing statement. This makes searches easier to conduct and understand but it is unforgiving of errors. The design is modified in only a few instances, none of which are relevant here. For example, spaces and punctuation in search criteria or financing spaces are ignored for the purposes of matching registrations to searches.22

The result is that the security interests of the businesses who have registered a financing statement on the PPS Register that includes the additional two digits in the ABN of an Australian company in front of the nine-digit ACN are not perfected by the registration. They stand to lose priority to other secured parties, purchasers or lessees of the same collateral, or to become ineffective on the appointment of an administrator or a liquidator to the grantor company.

The error is a small one and easily made. The problem is widespread and has been made by multiple stakeholders acting independently; it is systemic. From the experience of the contributors, some of the businesses whose processes have resulted in them making this error include FlexiRent, Schneider Electric, BP Australia, Lion Nathan, Fuji Xerox, Goodyear & Dunlop Tyres and Hastings Deering.

We submit that AFSA should publicise this problem in conjunction with promoting simple search protocols.

Simplifying PPS compliance for small business: Proposed carve-out for low-value transactions

Prior to the introduction of the PPS Act, registration of security interests under many of the personal property securities laws was cumbersome and confusing. The focus was on the registration of instruments and the required documentation could involve unnecessary delays.23 One of the driving forces behind the PPS Act was to simplify the registration of securities, and minimise transaction and administrative costs for businesses and in particular small business. However, at the same time, the PPS Act has expanded the scope of registrable transactions in the sense that many more transactions create registrable security interests.

In particular, the requirement to register for some leases and bailments, and sales on consignment or retention of title terms, means for the first time there is a registration requirement for common, low-value, commercial transactions that are undertaken by small business and individuals who do not have any intention to create a security interest. Non-registration risks the small business or individual being deprived of their property in favour of an all-assets secured creditor or unsecured creditors on the insolvency of the grantor.24

For many small businesses, it would be impossible to comply with the registration requirements of the PPS Act without incurring substantial expenses to obtain legal advice and develop registration 22 ‘Matching criteria for grantor searches’, http://www.ppsr.gov.au/EventUpdates/Announcements/Documents/Matching%20criteria%20for%20grantor%20searches.pdf 23 Craig Wappett, Essential personal property securities in Australia (2012), 17. 24 The leading Australian case on loss of title by a lessor concerned property (heavy machinery) of substantial value: In the matter of Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852 (27 June 2013).

14

processes. The costs of registering against each customer would also quickly become significant in low-value transactions. For these reasons, there is a case that security interests for which the value of the secured obligations is below a certain threshold should automatically be perfected by force of the PPS Act at the time of creation of the security interest without any action being required on the part of the small business owner or individual. This would preserve the framework of the PPS Act and result in other creditors taking a position that is no worse than their position was under pre-PPSA law.

Some examples of where small business rely on low-value security interests are as follows:

• supply of trading stock on consignment or retention of title terms; • agistment of livestock by farmers for greater than a year or an indefinite term that may

constitute a PPS lease (agistment agreements are typically bailments agreements, where the owner of land upon which livestock is agisted is responsible for the care of the animals25);

• supply of materials secured by an interest in the product; and • escrow arrangements where source code is transferred to one party on default of another.26

The Act already contains carve-outs for certain commercial transactions.27 In our submission, it would be a logical extension to include a carve-out for low value transactions generally. This would be consistent with our proposal for the value of the secured obligations to be included in financing statements. It would ensure that the PPS Act and PPS Register were sensitive to the issues of cost and materiality that must be balanced by small businesses in particular.

25 Big Top Hereford Pty Ltd v Gavin Thomas as Trustee of the Bankrupt Estate of Douglas Keith Tyler [2006] NSWSC 1159. 26 It has been noted that it is not settled as to whether a security interest arises in this situation, and this creates uncertainty for start-ups: John Swinson and Patrick Gunning, The Personal Property Securities Act 2009 (Cth) and Its Impact on Intellectual Property (2010) 22(10) IPLB 190 27 See PPS Act, eg section 8(1)(f).

15

Law Society of New South Wales, Young Lawyers Business Law Committee, PPS Act Review Working Group

Committee Chair: Vivian Michael – [email protected]

Author: David Allen – [email protected]

Contributors: Miguel Cruz, Jared Bennett, Lisa Duong, Svetlana Collantes, Francois Brun

16

Schedule 1 – Full survey results

Number of businesses searched 20

Number of businesses named as grantors in at least one registration

16

Number of registrations 429

Maximum number of registrations 211

Median number of registrations 7

Number of migrated registrations 45 10%

Number of transitional registrations 190 44%

Purchase Money Security Interests 256 52%

Number of all assets registrations28 38 9%

- Fixed and floating charges 12 3%

- All PAAP no exceptions 12 3%

- All PAAP with exceptions 14 3%

Number of tangible property registrations

386 90%

- Other Goods 241 56%

- Motor Vehicles 97 23%

- Fixed Charges 33 8%

- Aircraft/Watercraft 15 3%

Number of intangible property registrations

4 1%

Number of financial property registrations

1 -

Number of registrations where collateral identifiable

260 61%

- Migrated registrations ('M') 45 10%

- All PAAP no exceptions 12 3%

28 Migrated registrations that relate to fixed charges are included in ‘Number of tangible property registrations’.

17

registrations ('NE') - Serial number registrations ('SN')

84 20%

- Free text descriptions that contained a serial number or related to particular items ('FT')

119 28%

Number of registrations where collateral not identifiable

169 39%

- Free text descriptions that referred to broad classes of collateral 'supplied by the secured party' ('S')

86 20%

- Blank collateral descriptions ('B')

43 10%

- Free text descriptions that referred to all inclusive classes ('I')

26 6%

- Free text descriptions that referred to broad general classes of collateral ('G'),

14 3%

Collateral not identifiable Percentage of registrations in same

class

Number of registrations 169/429 39%

Non-transitional registrations 74/239 31%

All assets registrations29 14/38 37%

- Fixed and floating charges 0/12 0%

- All PAAP no exceptions 0/12 0%

- All PAAP with exceptions 14/14 100%

Tangible property registrations 151/386 39%

- Other Goods 124/241 51%

- Motor Vehicles 27/97 28%

- Fixed Charges 0/33 0%

- Aircraft/Watercraft 0/15 0%

Intangible property registrations 3/4 75%

29 Migrated registrations that relate to fixed charges are included in ‘Number of tangible property registrations’.

18

Financial property registrations 1/1 100%

19

Schedule 2 – Sample businesses

1. iKOU – ABN 76 699 058 597

2. Bruny Island Cheese Co. – ABN 52 184 148 844

3. Becker Helicopter Services Pty Ltd – ACN 067 130 992

4. NIA Health Pty Ltd – ACN 150 171 181

5. Eniquest – ACN 071 484 878

6. Bike Exchange Pty Ltd – ACN 114 947 116

7. Sitemed – ACN 154 364 664

8. Shima Wasabi – ACN 128 404 777

9. UON Pty Ltd – ACN 099 963 354

10. FORACO Australia Pty Ltd – ACN 137 031 782

11. Australian Pressure Testing Services - ACN 096 934 815

12. Darwin Day Surgery – ACN 117 084 885

13. Flash Fotos – ACN 112 522 184

14. Colmax Glass Pty Ltd – ACN 111 033 026

15. Janison Solutions Pty Ltd Pty Ltd – ACN 081 897 494

16. BAE Systems Australia (NSW) Pty Ltd – ACN 003 890 515

17. Teachers On Net (Australia) Pty Ltd – ACN 098 005 988

18. City Ceramics – ACN 009 650 953

19. Soprano Design – ACN 066 450 397

20. Kelly Engineering – ABN 89 964 026 574

20

Schedule 3 – Extracts from financing statements

PPS Registration Number

Collateral Class

Collateral Description Collateral Description Code

201112131189289 AllPapNoExcept MI

201112202033042 MotorVehicle

Vehicles and their associated parts, accessories and equipment, supplied by the secured party, or any party for which the secured party is nominated to act, to the grantor, including without limitation: cars, utilities, trucks and trailers and including the following vehicles: access; air and

air compression; compaction; earthmoving; generators and power distribution; lighting; materials handling; offshore; pumps & fluid management; traffic management & road barrier. S

201112202033144 OtherGoods

Equipment & other goods including without limitation: air/air compression; compaction; concrete; earthmoving; generators & power; ground & shoring; scaffolding; propping; lighting; materials handling; pumps & fluid management; safety; portable buildings & toilets; tools & similar goods;

traffic management including road barriers; trucks, vehicles & trailers; welding; any other goods hired in respect of any security interest; & any related goods including parts & accessories for the foregoing. I




201112280154820 AllPapWithExcept

Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will be a breach of the security agreement if certain dealings in the collateral (including selling or leasing it) occur without the secured party’s

consent I



consent I

201201030182932 OtherGoods FANS, VENTILATION, SOUND ATTENUATION, AIR HANDLING, DIFFUSION, FILTRATION AND ANCILLARY/ASSOCIATED PRODUCTS G

201201051007697 OtherGoods

Any equipment that can be hired for use in Access, Brick & Paving, cleaning & floor care, concrete, cooling, heating, entertainment, earth moving & compaction, generators,landscaping & gardening,Lifting, lighting, plumbing, pumping, sawing, site equipment, tools, traffic control,

vehicles & trailers. G

201201060114953 OtherGoods Crane/Trans/Logistic Hire Svcs G

201201100409722 MotorVehicle SN

21


Collateral Class
















201201100487485 OtherGoods B

201201100487526 OtherGoods B

201201100487561 OtherGoods B

201201100489043 OtherGoods B

201201100489089 OtherGoods B

201201100489129 OtherGoods B

201201100489164 OtherGoods B

201201100489186 OtherGoods B

22


Collateral Class


201201100489223 OtherGoods B

201201100489268 OtherGoods B

201201100489309 OtherGoods B

201201100492367 OtherGoods B

201201100492997 OtherGoods B

201201100494321 OtherGoods B

201201100501142 OtherGoods B

201201100506703 OtherGoods B

201201100507503 OtherGoods B

201201100507542 OtherGoods B

201201100507574 OtherGoods B

201201100507617 OtherGoods B

201201120639120 OtherGoods B

201202020024790 OtherGoods All equipment sold, leased, rented or otherwise made available to the grantor by the secured party S

201202020025095 MotorVehicle All equipment sold, leased, rented or otherwise made available to the grantor by the secured party S


201202200081083 OtherGoods All goods and service provided by the Secured Party to the Debtor from time to time including any proceeds thereof. S

201202220078020 OtherGoods B

201202240077871 OtherGoods 1 X C110D5B-STK CUMMINS GENERATOR

S/N: H082801811 FT

201202240077885 OtherGoods 1 X C125D5-STK1 CUMMINS GENERATOR

S/N: A09S803132 FT

201202240077892 OtherGoods 1 X C125D5-STK1 CUMMINS GENERATOR

S/N: J08S802451 FT

23


Collateral Class


201202240077902 OtherGoods 1 X C110D5KO-8525 CUMMINS GENERATOR

S/N: G08KAQY690 FT

201202240077918 OtherGoods 1 X C110D5KO-8525 CUMMINS GENERATOR

S/N: I08KASD100 FT

201202250003899 OtherGoods 1 Cummins Generator Serial Number D10KBFB160 FT

201202270055367 OtherGoods B

201203010003086 OtherGoods Ongoing Supply of Metal products; accessories; fittings & Tools. S

201203210065065 OtherGoods GENSET/PLANT EQUIPMENT SERIAL NUMBER J08S802451 FT

201203210075477 OtherGoods GENSET

SERIAL A098803132 FT

201203280133070 OtherGoods USED CUMMINS GENERATOR

SERIAL NO: H11I067925 FT

201204030124497 AllPapNoExcept NE

201204120015388 OtherGoods

Pipes, pipe fittings, pipe joints, ancillary pipe products, valves, valve fittings, ancillary valve products, pumps and pumping systems, ancillary pumping products, tanks, tank components and ancillary tank products, water irrigation related products and systems, air/gas/water monitoring and measuring products and telemetry products, thermal control products, controllers, clamps and couplings, actuators, turbines and turbine

systems, flexible piping products and back flow controls G

201204120070630 OtherGoods CUMMINS GENERATOR

SERIAL NUMBER:A12K295623 FT


SERIAL NUMBER: A12K297158 FT


SERIAL NUMBER: I11KBSP890 FT


SERIAL NUMBER: I11KBSP880 FT




24


Collateral Class




201204260080725 OtherGoods All goods, material & services including all metal, metal products & related products I

201204270095201 OtherGoods GENERATOR FT

201204270095217 OtherGoods GENERATOR H11KBSD160 FT

201204270095229 OtherGoods GENERATOR I11KBRS290 FT

201204270095238 OtherGoods GENERATOR B12K300563 FT

201205140084907 OtherGoods CUMMINS GENERATOR SPRC28D5IC-1 X 2.5, 20KVA, PRIME RENTAL

SERIAL NO: H11I067932 FT

201205140084911 OtherGoods CUMMINS GENERATOR SPRC28D5IC-1 X2.5, 20KVA, PRIME RENTAL SERIAL NO: H11I067933 FT




201205140085094 OtherGoods 1 GENERATOR FT





201205290063917 OtherGoods B

201206010027606 OtherGoods MASTER DIESEL STORAGE TANK FT

201206010027889 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C21152 WTA0108 FT

201206010028085 OtherGoods SLAVE SELF BUNDED DIESEL STORAGE TANK C2-1156 WTA 0107 FT

201206010028367 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C2-1154 WTA0048 FT

25


Collateral Class


201206020012184 OtherGoods All goods sold, leased, rented, bailed, consigned or otherwise made available to the grantor by the secured party including but not limited to

electrical cable, leads and associated items. S



201206090003085 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK FT

201206090003092 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C21153 FT

201206090003102 OtherGoods SELF BUNDED STORAGE DIESEL TANKS C21156 FT

201206090003118 OtherGoods SELF BUNDED DIESEL STORAGE TANK FT

201206120011019 OtherGoods AUTOCAD ELECTRICAL 2013 COMMERCIAL NEW STANDALONE NA Serial No.: 225E15452111701 FT

201206120011026 OtherGoods AUTOCAD ELECTRICAL NETWORK LICENSE ACTIVATION FEE NA Serial No.: 225E10002511711 FT

201206150029837 OtherGoods MYOB EXO FINANCE MODULE X 6 PLEASE REFER TO ATTACHED ANNEXURE Serial No.: PLEASE REFER TO ATTACHED ANNEXURE FT

201206150029844 OtherGoods MYOB EXO COSTING MODULE PLEASE REFER TO ATTACHED ANNEXURE Serial No.: PLEASE REFER TO ATTACHED ANNEXURE FT

201206150029859 OtherGoods MYOB EXO CRM X 6 PLEASE REFER TO ATTACHED ANNEXURE Serial No.: PLEASE REFER TO ATTACHED ANNEXURE FT

201206150029863 OtherGoods EXO PAYROLL PLEASE REFER TO ATTACHED ANNEXURE Serial No.: PLEASE REFER TO ATTACHED ANNEXURE FT

201206260056453 OtherGoods PDFV CONVERTER ENTERPRISE SOFTWARE NA Serial No.: PF1206070001 FT

201206280042442 OtherGoods 1 Supply, Delivery&Intall APC Storage Serial Number REFER INVOICE SIN023287 FT

201206280042490 OtherGoods 1 APC Storage Pallet Racking Serial Number REFER INVOICE SIN024506 FT

201206280042540 OtherGoods 1 APC Storack&APC UNI-Stack Racking Serial Number REFER INVOICE SIN024505 FT

201206280042572 OtherGoods 1 3 x J10 High Density Cabinets Serial Number REFER INVOICE SIN024410 FT

201207020022026 OtherGoods SB: ACADE SU ACE 22500-ACE-130-S001 Serial No.: 371-35138422 FT

201207110010846 OtherGoods 8 X MICROSOFT PROJECT PROFESSIONAL 3 USER NA Serial No.: NA FT

201207110010851 OtherGoods 30 X MICROSOFT HOME AND BUSINESS 8022757 Serial No.: NA FT

201208020006236 OtherGoods 10 X PRO STEEL SOFTWARE LICENSE X& 30 PRO STEEL SELECT LICENSES AS PER ATTACHED INVOICE NA Serial No.: NA FT


26


Collateral Class


201208150100470 OtherGoods 1 X C110D5B-STK CUMMINS GENERATOR S/N: H082801811 FT

201208150100489 OtherGoods 1 X C125D5-STK1 CUMMINS GENERATOR S/N: A09S803132 FT

201208150100491 OtherGoods 1 X C125D5-STK1 CUMMINS GENERATOR S/N: J08S802451 FT

201208150100502 OtherGoods 1 X C110D5KO-8525 CUMMINS GENERATOR S/N: G08KAQY690 FT

201208150100518 OtherGoods 1 X C110D5KO-8525 CUMMINS GENERATOR S/N: I08KASD100 FT

201208150113413 OtherGoods CUMMINS GENERATOR SERIAL NUMBER:A12K295623 FT

201208150113421 OtherGoods CUMMINS GENERATOR SERIAL NUMBER: A12K297158 FT

201208150113432 OtherGoods CUMMINS GENERATOR SERIAL NUMBER: I11KBSP890 FT

201208150113445 OtherGoods CUMMINS GENERATOR SERIAL NUMBER: I11KBSP880 FT

201208160093133 OtherGoods GENERATOR FT

201208160093146 OtherGoods GENERATOR H11KBSD160 FT

201208160093151 OtherGoods GENERATOR I11KBRS290 FT

201208160093167 OtherGoods GENERATOR B12K300563 FT





201208160111994 OtherGoods MASTER DIESEL STORAGE TANK FT

201208160112004 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C21152 WTA0108 FT

201208160112015 OtherGoods SLAVE SELF BUNDED DIESEL STORAGE TANK C2-1156 WTA 0107 FT

201208160112027 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C2-1154 WTA0048 FT

201208160129306 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK FT

27


Collateral Class


201208160129310 OtherGoods MASTER SELF BUNDED DIESEL STORAGE TANK C21153 FT

201208160129323 OtherGoods SELF BUNDED STORAGE DIESEL TANKS C21156 FT

201208160129334 OtherGoods SELF BUNDED DIESEL STORAGE TANK FT

201208300059721 OtherGoods B

201209140021914 MotorVehicle 2012 TOYOTA HILUX FT


201209250042937 OtherGoods 1 X NEW CUMMINS GENERATOR

VIN/SERIAL : F11KBRA130 FT

201209270011527 OtherGoods All goods sold hired leased rented bailed or otherwise made available by the secured party to the grantor S


201210090052457 OtherGoods All goods sold hired leased rented bailed or otherwise made available by the secured party to the grantor. S


201210110085492 MotorVehicle All equipment leased, rented or otherwise made available to the grantor by the secured party. S

201210240007746 OtherGoods SGE550 GENSET ENGINE DC1644A, ALTERNATOR HCI534E DC1644A Serial No.: SGE550 FT

201210250057073 MotorVehicle All motor vehicles (as defined in the PPSA and Regulations) rented, leased, bailed, supplied on consignment or sold subject to a conditional

sale agreement, including retention of title, or otherwise made available to the grantor by the secured party S

201210300052174 OtherGoods B

201210310093276 OtherGoods Electrical Engineering Products G

201211010075652 OtherGoods GENSET SGE 250 UE148734 Serial No.: ENG 6330860 FT


201211050005226 OtherGoods RENTAL SPEC GENERATOR C80D2RKC-1 Serial No.: C12K321566 FT

201211050005235 OtherGoods QSB5G3, 64W, PRIME, 50HZ NA Serial No.: C12K320871 FT

201211090033365 OtherGoods GENSET 44KW 4BT3 3G2 4KW 4BT3 Serial No.: A07KAAN750 FT

201211210134401 AllPapWithExcept Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will

I

28


Collateral Class


be a breach of the security agreement if certain dealings in the collateral (including selling or leasing it) occur without the secured party's consent.

201211290036856 OtherGoods CUMMINS GENERATOR SET C150D2RKC2 Serial No.: C12K312721 FT

201211290036860 OtherGoods CUMMINS GENERATOR SET C150D2RKC2 Serial No.: C12K320858 FT






201301110053672 OtherGoods 1 Transtank 2000L Cube with Pump Serial Number 120751 FT

201301110053686 OtherGoods 1 Transtank 2000L Cube with Pump Serial Number 120753 FT

201301160029112 OtherGoods B

201301160055355 MotorVehicle B

201302010043376 OtherGoods Supply and install water tanks G

201302110059161 OtherGoods 2007 SGE550 GENSET ALTERNATOR

SERIAL NO: S550-0314-08 FT

201302140048398 OtherGoods All goods sold, leased, rented, bailed, consigned or otherwise made available to the guarantor by the secured party including but not limited to

pipes, fittings, reels, grates, coils and associated items. S

201302200019217 OtherGoods 1 Custom Built Pump Testing Tank Serial Number CUSTOM BUILT REF ANNEX. A FT

201303080027662 OtherGoods Collateral supplied by the Secured Party S

201303190006180 OtherGoods CUMMINS 120 KW PRIME 50 HZ GENERATOR QSB7GS Serial No.: D12K322122 FT

201303190006198 OtherGoods CUMMINS 120 KW PRIME 50 HZ GENERATOR QSB7GS Serial No.: D12K328787 FT

201305300059819 OtherGoods All equipment leased, rented or otherwise made available to the grantor by the secured party S

201305310134130 OtherGoods MCGEN SGE550 GENERATOR SERIAL NO. 1053094 FT

29


Collateral Class


201307080033535 OtherGoods GENERATOR SERIAL NUMBER: C12K312721

AND NO.C12K320858 FT

201307270010388 OtherGoods

All goods, equipment and/or other tangible property (including any accessions to those goods, equipment and/or property) sold, leased, hired, rented, bailed, supplied on consignment, sold subject to a conditional sale agreement including retention of title or otherwise made available by

the secured party to the grantor. S


All motor vehicles (as defined in the Personal Property Securities Act and Regulations) and their associated parts, accessories and equipment - rented, leased, hired, bailed, supplied on consignment, sold subject to a conditional sale agreement including retention of title, or otherwise

made available to the grantor by the secured party S


201308260058326 OtherGoods All goods sold, leased, rented, bailed or otherwise made available to the grantor by the secured party including but not limited to portable

buildings and associated ancilliaries whether fixtures or chattels. S

201309040004845 OtherGoods GENSET QSB7G5 Serial No.: D12K327951 FT

201309040004866 OtherGoods GENSET QSB7G5 Serial No.: D12K327953 FT

201309040004878 OtherGoods GENSET QSB5G3 Serial No.: E12K337216 FT

201309040004897 OtherGoods GENSET QSB5G3 Serial No.: E12K343418 FT

201310100025853 OtherGoods All goods sold, leased, rented, bailed, consigned or otherwise made available to the grantor by the secured party. S


201310210059423 OtherGoods SERIAL# G12I071025 FT


201311010082966 OtherGoods Substation - Inventory number THP48111 3500kVA 11kV / 433V Dyn11 transformer serial number 2008-131, with Merlin Gerin Ringmain unit

Type RN6C, cabled together and mounted on a galvanised oil containment base. FT

201312090078864 OtherGoods B

201312160054113 OtherGoods 2x 2013 Generators SERIAL NOS CN20120542001P,CN20120780001P FT




30


Collateral Class


201402110027984 OtherGoods Inventory I

201402180062899 OtherGoods



201402180063079 OtherGoods



201402200022781 OtherGoods MPC2003SP FT


201403140081012 OtherGoods B

201404110038549 MotorVehicle All motor vehicles sold, leased, rented, bailed, consigned or otherwise made available to the grantor by the secured party. S


Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will be a breach of the security agreements if certain dealings in the collateral (including selling or leasing it) occur without the secured party's

consent. I

201405140063082 MotorVehicle All motor vehicles (as defined in the PPSA and Regulations) rented, leased, bailed, supplied on consignment or sold subject to a conditional

sale agreement, including retention of title, or otherwise made available to the grantor by the secured party S

201405140063095 OtherGoods All goods and equipment sold, leased, rented, bailed or otherwise made available by the secured party to the grantor S

201405150045444 OtherGoods 1. 2014 CUMMINS C150D2R GENERATOR SERIAL NO: J12K407382 FT

201405150045664 OtherGoods 2. 2014 CUMMINS C150D2R GENERATOR SERIAL NO: J12K407381 FT


Vehicles and their associated parts, accessories and equipment, supplied by the secured party, or any party for which the secured party is nominated to act, to the grantor, including without limitation: cars, utilities, trucks and trailers and including the following vehicles: access; air and

air compression; compaction; earthmoving; generators and power distribution; lighting; materials handling; offshore; pumps & fluid management; traffic management & road barrier. S

201112202320673 OtherGoods


traffic management including road barriers; trucks, vehicles & trailers; welding; any other goods hired in respect of any security interest; & any related goods including parts & accessories for the foregoing. G

201112212401523 OtherGoods UDR 1000 MARK 6 DRILL RIG FT


31


Collateral Class




201202010266369 OtherGoods Imdex Limited retains title to goods sold until fully paid for. S

201202020000074 OtherGoods Imdex Limited retains title to goods sold until fully paid for. S





201202270081190 OtherGoods B







201204100131477 OtherGoods MPC2800 COPIER~ Serial No.: V1406710252 FT

201204300099668 OtherGoods B

201206070051641 OtherGoods Cranes/Trans/Logistic Hire SVCS G

201206280041762 OtherGoods B

201208230043072 OtherGoods

All goods sold, leased, rented, bailed, consigned or otherwise made available to the grantor by the secured party including but not limited to parts, consumables and equipment other than such property released by the secured party (expressly or by its terms). The property may include

inventory, and may be subject to control. The grantor breaches the security agreement if, without the secured party's consent or agreement, it disposes of collateral (even in the ordinary course of business). S


parts, consumables and equipment other than such property released by the secured party (expressly or by its terms). The property may include inventory, and may be subject to control. The grantor breaches the security agreement if, without the secured party's consent or agreement, it

S

32


Collateral Class


disposes of collateral (even in the ordinary course of business).

201210170066884 OtherGoods All goods and services supplied by Alanco Australia Pty Ltd S


All Vehicles and their associated parts, accessories and equipment, hired to the Grantor by the Secured Party, or any party for which the Secured Party is nominated to act, including without limitation: cars, utilities, trucks and trailers and including the following vehicle types: access;

air compressors; compaction; earthmoving; generators; lighting towers; materials handling; pumps; traffic management & sign boards. S

201301230071190 OtherGoods

All equipment & other goods, including parts & accessories, hired to the Grantor by the Secured Party, or any party for which the Secured Party is nominated to act, including without limitation: air/air compression; compaction; earthmoving; generators & power; ground & shoring;

scaffolding; propping; lighting; materials handling; pumps; safety; portable buildings & toilets; tools & similar goods; traffic management including road barriers; trucks, vehicles & trailers; welding. S

201310150042603 OtherGoods GOODS SOLD FROM TIME TO TIME S

201312070013997 OtherGoods




All motor vehicles (as defined in the Personal Property Securities Act and Regulations) and their associated parts, accessories and equipment - rented, leased, hired, bailed, supplied on consignment, sold subject to a conditional sale agreement including retention of title, or otherwise

made available to the grantor by the secured party S

201401290612704 OtherGoods All goods now and in future supplied bailed or otherwise made available by the secured party to the grantor including but not limited to all gas

bulk gas facilities exchange cylinders equipment consumables and rental cylinders S






201202080033502 OtherGoods

Any property which is from time to time subject to a security interest under an Asset Finance Agreement (AFA) entered into on or after Tuesday, 7 February 2012 (except where the goods are a motor vehicle, aircraft or watercraft) in accordance with the Master Asset Finance Agreement (MAFA) between the Grantor and the Secured Party dated on or around Wednesday, 10 June 2009 contract ML1891554, or any other security

agreement replacing the AFA or MAFA. I


Any property which is from time to time subject to a security interest under an Asset Finance Agreement (AFA) entered into on or after Tuesday, 7 February 2012 for a motor vehicle in accordance with the Master Asset Finance Agreement (MAFA) between the Grantor and the Secured

Party dated on or around Wednesday, 10 June 2009 contract ML1891554, or any other security agreement replacing the AFA or MAFA. I

33


Collateral Class








All present and after-acquired property except any which the secured party expressly agrees is not included or released. It may include inventory, and may be subject to control. Subject to certain exceptions, the grantor breaches a security agreement if, without the secured party's

consent or agreement, it disposes of collateral (even in the ordinary course of business). I

201206070086283 Account Subject to certain exceptions, the grantor breaches a security agreement if, without the secured party's consent or agreement, it disposes of

collateral (including disposal in the ordinary course of business). B


201202160005480 OtherGoods All of the present and after acquired goods supplied by Redox to the Purchaser, any goods into which they are commingled by the Purchaser

and any Proceeds of the sale of those goods and all present and future rights in relation to any of those goodssupplied by Redox Pty Ltd S



201306200068156 OtherGoods Beer, wine, spirits and other beverages G








201112280146441 AllPapWithExcept Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will be a breach of the security agreement if certain dealings in the collateral (including selling or leasing it) occur without the secured party’s

I

34


Collateral Class


consent



consent I



consent I



consent I




consent I




201211020018085 Helicopter SN









35


Collateral Class





















201401210061104 Watercraft SN

201401210069125 OtherGoods

14 sets of Night Vision Goggles. Model Identification NL94AU

Each pair of Night Vision Goggles has its own serial number: 1003 1004 1005 1053 1029 1030 1009 1010 1007 1008

FT

36


Collateral Class


901 1001 1032 1033

201112212719281 OtherGoods Office Machines and Equipment G

201202020049891 OtherGoods All goods sold, leased, rented, bailed or otherwise made available to the grantor by the secured party S





201209060033127 OtherGoods All goods sold, leased, rented, consigned or otherwise made available to the grantor by the secured party, including but not limited to diesel

engines, engine parts, marine & industrial generators, pump sets, propellers, wind generators and associated equipment and parts. S

201301170066253 OtherGoods B

201302250031156 OtherGoods All goods & services provided by the Secured Party to the Debtor from time to time including any proceeds thereof. S











201112201098095 OtherGoods All gas supplies, cylinders, vessels for containing gas and ancillary equipment sold, rented or otherwise made available to the grantor by the

secured party S

201112202013485 MotorVehicle Vehicles and their associated parts, accessories and equipment, supplied by the secured party, or any party for which the secured party is

nominated to act, to the grantor, including without limitation: cars, utilities, trucks and trailers and including the following vehicles: access; air and air compression; compaction; earthmoving; generators and power distribution; lighting; materials handling; offshore; pumps & fluid

S

37


Collateral Class


management; traffic management & road barrier.

201112202013588 OtherGoods


traffic management including road barriers; trucks, vehicles & trailers; welding; any other goods hired in respect of any security interest; & any related goods including parts & accessories for the foregoing. G



consent I

201201060119860 OtherGoods Crane/Trans/Logistic Hire Svcs G


201202020024892 OtherGoods All equipment sold, leased, rented or otherwise made available to the grantor by the secured party S

201202020025198 MotorVehicle All equipment sold, leased, rented or otherwise made available to the grantor by the secured party S

201202150147716 OtherGoods All of the present and after acquired goods supplied by Redox to the Purchaser, any goods into which they are commingled by the Purchaser

and any Proceeds of the sale of those goods and all present and future rights in relation to any of those goodssupplied by Redox Pty Ltd S

201204100183487 OtherGoods MPC2051 COPIER~ Serial No.: V9716190187 FT

201205180126230 OtherGoods POWER TOOLS, ACCESSORIES, PARTS AND SERVICES G

201206010062881 OtherGoods Cevol Pallets, Stillages, Cages and associated products G

201208160121486 OtherGoods All goods supplied by the secured party to the grantor including but not limited to fasteners and related goods. S

201208160122668 OtherGoods All goods supplied by the secured party to the grantor including but not limited to fasteners and related goods. S


Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will be a breach of the security agreement if certain dealings in the collateral (including selling or leasing it) occur without the secured party's

consent. I

201301160014728 OtherGoods B

201301160040849 MotorVehicle B

201307300080227 OtherGoods 2011 GPM UNIT 225HP serial# 8362 FT

201307300080317 OtherGoods 2012 XYLEM PUMP serial# S5083901C6M03406 FT

38


Collateral Class


201308130032525 OtherGoods 2013 28,000 LITRE SITE TANK, COMPLETE WITH NEW 6 FEET INLET AND OUTLET FITTINGS, SN:CPIU7830810 FT

201308130032539 OtherGoods 2012 20 FOOT DRY CONTAINER TIMBER FLOOR, FITTED WITH 2.7 KW WINDOW WALL UNIT AIRCON, PA DOOR SLIDING WINDOW,

FLY SCREEN, ELECTRICAL FITOUT FT


201309240077859 OtherGoods 2013 SPECK PUMPSET FT

201309250072505 OtherGoods 2013 HYDRATRON SAFETY RELIEF VALVE TEST BENCH. SERIAL: 13062. COMPLETE WITH HYDRAULIC CLAMPING FT

201310090046357 OtherGoods

2 X RPO 10 PRESSURE RECORDER RANGE 0 to 160,000 KPA

CONNECTION: HIGH PRESSURE AUTOCLAVE 9/16 inch UNF FT

201310290065382 OtherGoods 2013 10 FEET HC CONTAINER, ERIAL NO.RWTU1231756 FT

201310290065395 OtherGoods 2013 CUMMINS DIESEL 220KVA, SILENCED SET FOR APTS JOB 10 FT CONT, SERIAL NO. PL57944, ENG NO.87621028 FT

201311140046489 OtherGoods All ‘Other Good’ collateral supplied under BOQ Master Rental Agreement S

201311220026129 MotorVehicle All equipment sold, leased, rented or otherwise made available to the grantor by the secured party. S

201311220026138 OtherGoods All equipment sold, leased, rented or otherwise made available to the grantor by the secured party. S

201311260086877 OtherGoods 2013 OTTOWAY ENGINEERING 400N CLEANING HEADER FT


201401220011862 Account B

201401220011891 ChattelPaper B

201401220011901 GeneralIntangible B



201404020015326 OtherGoods All steel, steel products and associated products supplied by Vulcan Steel Pty Ltd, and its trading divisions, together with the proceeds

generated by such supply. S


201112280981277 AllPapWithExcept Except any personal property of the grantor which is not from time to time subject to a security agreement in favour of the secured party. It will

I

39


Collateral Class


be a breach of the security agreement if certain dealings in the collateral (including selling or leasing it) occur without the secured party’s consent

201207050024322 OtherGoods FIT OUT OF PREMISES AT CASURINA NT FT


EXCEPT ANY PERSONAL PROPERTY OF THE GRANTOR WHICH IS NOT FROM TIME TO TIME SUBJECT TO A SECURITY AGREEMENT IN FAVOUR OF THE SECURED PARTY. IT WILL BE A BREACH OF THE SECURITY AGREEMENT IF CERTAIN DEALINGS

IN THE COLLATERAL ( INCLUDING SELLING OR LEASING IT ) OCCUR WITHOUT THE SECURED PARTY'S CONSENT I

201209170042260 OtherGoods COMPLETE SURGERY FITOUT LOCATED AT FIRST FLOOR CNR VANDERLIN DRIVE, GSELL STREET, CASUARINA NT 0810 I

201209260022354 OtherGoods Master PMSI all goods finance under E000017494 I

201209280008390 OtherGoods Master non PMSI - all goods finance under E000017494 I

201310080048302 OtherGoods All goods supplied by the secured party to the grantor including but not limited to medical devices and related goods. S













201202020178888 OtherGoods All goods supplied by the secured party to the grantor including but not limited to compaction and related equipment. S

201202020178985 MotorVehicle All vehicles supplied by the secured party to the grantor including but not limited to compaction and related equipment. S

201202020185083 MotorVehicle All vehicles supplied by the secured party to the grantor including but not limited to compaction and related equipment. S

40


Collateral Class


201202020186148 OtherGoods All goods supplied by the secured party to the grantor including but not limited to compaction and related equipment. S

201202080059035 OtherGoods

Any property which is from time to time subject to a security interest under an Asset Finance Agreement (AFA) entered into on or after Tuesday, 7 February 2012 (except where the goods are a motor vehicle, aircraft or watercraft) in accordance with the Master Asset Finance Agreement

(MAFA) between the Grantor and the Secured Party dated on or around Friday, 18 June 2010 contract ML1984726, or any other security agreement replacing the AFA or MAFA. I


Any property which is from time to time subject to a security interest under an Asset Finance Agreement (AFA) entered into on or after Tuesday, 7 February 2012 for a motor vehicle in accordance with the Master Asset Finance Agreement (MAFA) between the Grantor and the Secured

Party dated on or around Friday, 18 June 2010 contract ML1984726, or any other security agreement replacing the AFA or MAFA. I


201303050034987 Account Spiral Duct & Fittings supplied to 42 Stephen Rd, Dandenong & to Unit 1,7 Davids Close, Somersby FT



201401210147242 OtherGoods

Weighbridge (Model No: MW4000E, 40 tonne capacity, Serial No: MW1104) with Rinstrum digital indicator (Model No: R420-K401, Serial No: 3287692) as per Tax Invoice No: 00018151 dated 30 April 2011 and emails dated 13 September 2011 to and from Peter Harkins of Colmax Glass. Delivered by Railroad Transport Pty Ltd (or associated company or nominee) to Colmax Glass at 13 Glassford Road, Kewdale WA

6105. FT











41


Collateral Class


201112212734080 OtherGoods Collateral and all Goods and Services I

201202020167491 OtherGoods All tangible assets, which include goods and equipment, that is sold, rented, leased, bailed or otherwise made available to the grantor by the

secured party S

201202150106843 OtherGoods B

201202160033451 OtherGoods B

201203270113236 OtherGoods All goods supplied by the secured party to the grantor S

201203300131766 OtherGoods B







201308220060481 OtherGoods All present and future Equipment including accessories provided pursuant to Rental Agreement ID01198855 as security on a continuing basis. I


201112201343512 OtherGoods All gas supplies, cylinders, vessels for containing gas and ancillary equipment sold, rented or otherwise made available to the grantor by the

secured party S

201202270112136 OtherGoods All goods sold, leased, rented, bailed or otherwise made available to the grantor by the secured party. S

201308200017498 OtherGoods 1 Genie 2669 Terrain Scissor Lift Serial Number GS6911101 FT





201401140156579 MotorVehicle All motor vehicles or other goods leased or bailed to the grantor. The grantor breaches the security agreement which provides for the lease or bailment if, without the secured partys consent or agreement, it disposes of the collateral (including, without limitation, by selling or leasing it). S

42


Collateral Class






All motor vehicles or other goods leased or bailed to the grantor (including, without limitation, under novated lease arrangements). The grantor breaches the security agreement which provides for the lease or bailment if, without the secured party's consent or agreement, it disposes of the

collateral (including, without limitation, by selling or leasing it). S










43

Schedule 4 – AFSA paper, 'Searching ASIC Migrated Data'

Searching ASIC Migrated Data

Issue

Based on investigations ASIC has provided ABNs and ACNs for Grantor companies for the purposes of data migration. The expectation was that ACNs were to be provided where they existed. The Data Migration Team has undertaken an analysis of the ASIC data provided for migration and advise that there were:

• 994 377 registrations with ABNs for the Grantors; • 632 189 registrations with ACNs for the Grantors.

Given this wasn’t expected, industry have experienced issues in searching for migrated ASIC registrations by ACN.

This is only an issue for migrated data as the new PPSR rules will apply to any new registrations and this is clearly set out in the register.

Note: PPSR has been designed to store a single organisation number. As a consequence it is unable to store both the ACN and ABN for a Grantor.

Impact

The main impact for industry is that they may need to conduct multiple searches in order to be satisfied whether there are any ASIC registrations against a company in PPSR.

Stakeholders have raised concerns about the effectiveness of the ASIC registrations where the company Grantor is identified by ABN. The PPS regulations provide that grantor companies for migrated registrations are to be identified as they are identified on the migrating register. We are confirming how the grantor companies are identified on the ASIC register. In any event, any defects in the migration process will be cured by the Registrar’s determination under s337 of the PPS Act until the end time or five years if no stated end time.

Solution

Whilst further investigations continue around possible solutions we recommend the following for conducting organisation Grantor searches for bodies corporate:

Search first by ABN, as more were migrated with ABNs than ACNs.

You will need to select one of the other organisation types that allow you to enter an ABN such as partnership or trust.

Should you not get a result you should then search by the ACN.

If you still don’t get a result then for additional certainty you may then want to search by name. To do this you will need to select “other” organisation type in order to enter the name.

We recognise that this is an inconvenience and will incur additional search fees. However, the need to do multiple searches to find all migrated registrations, from all transitional registers, had previously been highlighted to industry.

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De-registered Companies

ASIC confirmed that all current charges were migrated, including charges against deregistered companies. The status of a company is separate to the status of a charge, so it is possible for companies to have been deregistered with current charges.

One of the business rules for data migration was that if a corporate identifier such as an ACN is supplied and is successfully validated, the number will be loaded to PPSR, and if an identifier is supplied but fails validation, the company name will be loaded to PPSR. So, either the identifier or the name is stored, depending on whether the number is validated.

For certainty you would need to search on the company name if no results are returned from the ACN or ABN search.

Note: PPSR has been designed to store a single organisation number. As a consequence it is unable to store both the ACN and ABN for a Grantor.

Searching ACNs and ABNs

Whilst not an issue specifically around the actual data, another issue was raised around the number of characters in the ACNs and ABNs being less than expected ie less than 9 and 11 respectively.

PPSR has been designed to strip leading zeroes (0) and white space when searching. Searching with or without the leading zeroes and spaces will still find a registration against the number.

Example: Searching on ACN 000 123 456 will find a match on 123456 and vice versa.

Find and Claim Processing Reports

The question has been asked as to why the find and claim catalogues (pre and post RCT) contain ACNs for which a PPSR search may return a nil result. There is no issue. SPGs and Grantors are being confused; the ACNs in the find and claim catalogue are for SPGs whereas the PPSR search is against the Grantors, not SPGs.

023 – New South Wales Young Lawyers

Documents

Transcript of 023 – New South Wales Young Lawyers