If you incorrectly remove a registration from the Personal Property Securities Register, you can get it restored if you act quickly and give the Registrar the right information.
Given the highly technical nature of the Personal Property Securities Register, it is not unsurprising that a registration could be incorrectly removed from the register.
Although it is uncommon, the Registrar of Personal Property Securities may be prepared to restore the registration, even if a third party (rather than the Registrar) caused the incorrect removal. Having succeeded in getting a client's registration restored, we have gained some valuable insights into how this can be done.
The rule on restoration to the PPS Register
The Registrar has authority to restore a registration incorrectly removed from the Register at its discretion under section 186 of the Personal Property Securities Act 2009 (PPSA):
"Incorrectly removed data - restoration
(1) The Registrar may (at his or her initiative) register a financing change statement to restore data to the register (including an entire registration) if it appear to the Registrar that the data was incorrectly removed from the register under this Act.
(2) If data is restored to the register under subsection (1), for the purposes of this Act the data is taken never to have been removed from the register."
How is the power to restore a registration interpreted?
Initially, the Registrar took the view that the discretion in section 186 only applied to the restoration of data that the Registrar has incorrectly removed from the register, but not data that a third party has incorrectly removed.
In SFS Projects Australia Pty Ltd v Registrar of Personal Property Securities (2014) 226 FCR 188, however, the Federal Court took an expansive view. It held that it extended to data incorrectly removed from the register as a result of an error on the part of a third party (being a person making an application to register a financing statement under section 150) and is not confined to data which the Registrar has incorrectly removed.
The final report on the statutory review of the PPS recommends that section 186 be amended to confine the Registrar's discretion to data that the Registrar has incorrectly removed (rather than third parties). This recommendation was based on a view that the Registrar is not the appropriate person to adjudicate on whether a secured party had removed data in error, or the appropriateness of restoring data in any particular circumstance, given the effect that the restoration of data may have on third parties.
If this recommendation is implemented, there will be no avenue to make applications to the Registrar for a mistake made as a third party user of the register to be corrected.
The process for restoring a registration incorrectly removed from the PPS Register
Clayton Utz has recently acted for a secured party in having a registration which that secured party mistakenly discharged successfully reinstated.
Before exercising its discretion under section 186 to restore a registration incorrectly removed from the register by a third party, the Registrar will need to be satisfied that no third party will suffer disadvantage as a result of the original data being restored. In order to make such an assessment, the Registrar will require at least two crucial things.
First, there must be a written statement from the grantor of the security interestconfirming the security interest has not been discharged and they do not object to reinstatement of the registration.
Secondly, the Registrar must have information about the identity and rights of third parties who may be affected by the restoration of the registration to the register. This will include:
- evidence that a third party has not been provided with search results that will be rendered incomplete if the registration is restored and the priority of any registration disclosed by the searches is changed; and
- evidence that a third party who created a registration after a security interest was incorrectly discharged will not object if the registration is restored; and
- if it appears a third party may be affected, a written statement from the affected third party confirming they would not object if the Registrar decides to restore the registration to the register.
There will also be additional information required if a liquidator has been appointed to the grantor.
What you should do if you have incorrectly removed a registration from the PPS Register
If you have incorrectly removed a registration from the register you should:
- immediately create a new registration with respect to the same secured party, grantor and collateral as was included in the mistakenly discharged registration. This will mitigate the likelihood that any subsequent activity on the register will be taken as an indication of potential disadvantage to third parties if the original registration is restored; and
- as soon as possible notify the Registrar of the error by completing a Request to remove, restore or correct data form and attaching the information set out above.