Everlyte Ltd and Registrar of Personal Property Securities [2020] AATA 2584 (30 July 2020) K Parker, Member

PERSONAL PROPERTY SECURITIES REGISTER (PPSR) – Applicant registered security interest in collateral (helicopter) – helicopter stolen and sold to other party – other party on-sold helicopter to third party and applied to register financing change statement to end applicant’s interest – meaning of “security interest” – decision affirmed

This case concerned an (unsuccessful) application to the Commonwealth AAT for review of a decision by the registrar of the Personal Property Securities Register (PPSR) to permit registration of a financing change statement that caused the applicant’s registered security over specified collateral to end: Everlyte Ltd and Registrar of Personal Property Securities [2020] AATA 2584 (all paragraph references in this note are to paragraphs in the Tribunal’s reasons).

The collateral was a helicopter (a “Eurocopter model EC120B Colibri”, no less). The applicant (Everlyte) asserted that it was the helicopter’s true owner. It contended that one of its former directors had falsified documents to transfer the helicopter to a new company, which sold it to a third party (Nautilus), which in turn on-sold it. Everlyte alleged the former director’s conduct amounted to theft, and that it remained the helicopter’s true owner.

The helicopter was sold to Nautilus for $450,000 in around May 2014 (with no documented sale agreement). On 31 October 2014, Everlyte registered a financing statement on the PPSR, asserting its security over the helicopter. The financing statement identified the grantor by reference to Nautilus’ ACN.

Nautilus lodged an amendment statement, under s 180(3) of the Personal Property Securities Act 2009 (Cth) (PPSA), seeking to remove (administratively) Everlyte’s registration and stated there was “no collateral described in the registration that secures any obligation (including a payment) owed by a debtor to a secured party”. Everlyte issued a statement of objection to the amendment, asserting that it was the true owner of the helicopter. It submitted that Nautilus ought to have been alerted to several “issues” including the very low sale price and the absence of registration and airworthiness certificates: [17]. Nautilus in turn sought to satisfy the Registrar that its purchase was lawful.

On 7 December 2018, Everlyte applied to VCAT for an injunction “to stop further dealings with the helicopter” and claiming $900,000: [18]. The application was adjourned indefinitely, due to jurisdictional issues.

On 12 December 2018, the registrar removed Everlyte’s registration from the PPSR, by registering a “financing change statement” under s 181(1) of the PPSA.

Everlyte asserted that its registration ought not to have been removed, since it was and continued to be the legal owner of the helicopter.

The AAT considered several factors, including:

  1. the purpose of the PPSA;
  2. what interests may be registered, and what the PPSR may contain;
  3. what a “security interest” and a “secured party” are;
  4. the relevant process for amendment demands; and
  5. whether in the present circumstances, the relevant criteria were made out, and whether the relevant process should succeed.

It concluded that Everlyte did not hold any security interest in the helicopter. While Everlyte asserted that it was the true owner, the AAT found (as the registrar has contended), that Everlyte had not established that it held a security interest in the helicopter. Accordingly, the statement of objection failed.

Somewhat counter-intuitively, the registrar contended that there could not be a “suspicion on reasonable grounds” that the amendment statement was not authorised and that “this is true even if the collateral described in the Applicant’s registration is theirs and has been stolen from them”: [71]. Indeed, s 3 of the PPSA (and the definition of “security interest” in s 12) specifies that the existence of a security interest is not affected by “the identity of the person who has title to the property”. A mere equitable interest is not enough to establish a “security interest”. Rather, Everlyte was required to “point to some type of consensual transaction which took place between Everlyte Ltd and a third party, by which the Helicopter secures payment or the performance of an obligation by the third party to Everlyte Ltd’s benefit”: [74].

Disputed dealings were not adequate to establish a security interest: [79].[1] While Everlyte may have had a claim against various parties, that was insufficient for a finding it had a “security interest” in the helicopter.

Accordingly, the application was unsuccessful, and the Registrar’s decision was upheld.