Highlighting the significance of defects in registrations on the PPSR is the recent case of In the matter of Transurban CCT Pty Limited and Transurban CCT Nominees Pty Limited in its own capacity and as Trustee of the Transurban CCT Trust NSWSC 1909 (Transurban).
In Transurban, the secured party registered against the ACN of the grantor who is a trustee rather than the ABN of the actual trust as required by the regulations. This is a common error. The financing statement with this error was registered on 4 July 2014. The secured party registered a new financing statement on 13 August 2014 to correct the error. The secured party applied under section 588FM of theCorporations Act 2001 (Cth) for an order fixing the later registration time as the time of registration.
The Court found that it was unnecessary to resolve whether and to what extent there were defects in the registration. But in making the order, the Court found that the “dominant factor” is that even if there was a defect (that is, registering against the ACN rather than the ABN), a search of the register any time from 4 July 2014 would have disclosed the security interest. The Court stated further: “No-one could have dealt with the defendants on the faith of the register believing that the plaintiff’s security interests did not exist or had not been registered. That is a most telling consideration.” Presumably the Court meant that the registration would have been disclosed by a search on the trustee’s ACN, so no harm done.
While it is true that a search of the register against the ACN would have disclosed the registration, the regulations identify the ABN as the correct detail to include in the registration. Pursuant to s 165(b) failing to register against the ABN is a defect that renders the registration ineffective because a search on the ABN will not disclose the registration. The fact that the registration could be disclosed by a search on the ACN is immaterial.
Section 171(1)(a) states that a person may search the register by reference to the grantor’s details as required to be included in a registered financing statement. In this case, this is the trust’s ABN not the trustee’s ACN. A person is entitled to rely on the search result produced from searching on the trust’s ABN. A person is not required to perform an additional search on the trustee’s ACN, though it is prudent to do so. Even if a person searches on the trustee’s ACN, discovers the registration and is not misled, the registration remains ineffective under s 165(b).
The Court in Transurban suggests that it is not fatal to register against the trustee’s ACN rather than the trust’s ABN. We would suggest otherwise.