In general, you are more likely to be affected by a defective registration if you have the benefit of migrated security interests from pre-existing registers.
Late in 2016, the PPS Registrar appears to have written to thousands of businesses telling them to check the Personal Property Securities Register (PPSR) before 31 January 2017 to find their unclaimed PPSA registrations and ensure that these registrations are effective. That date has passed, but all is not lost if you received a letter like this but have done nothing about it yet.
What is the issue and how does it arise?
Some of the registrations migrated to the PPS Register from pre-existing registers in 2012 ‒ like the ASIC Register of Company Charges and State Registers of Encumbered Vehicles (REVS) ‒ were defective when migrated. This is because those registrations failed to contain information that the PPS Act requires for PPS registrations. Those defects may mean that you won't be able to rely on your migrated registration to perfect your security interest.
To address those defects temporarily, the PPS Registrar made a determination in 2011 to ensure that migrated registrations were effective, despite defects that might otherwise make those registrations defective. But the Registrar's determination only cured registration defects in migrated registrations until:
- if the financing statement, as initially registered, states an end time ‒ the end time of the registration, or an earlier end time, if the registration is amended to state an earlier end time; or
- if the financing statement, as initially registered, does not state an end time ‒ 31 January 2017.
Am I affected?
Despite the letter from the Registrar, there may not be an issue with your migrated registrations that needed to be dealt with on or before 31 January 2017 or at all. The previous examples given by the Registrar suggest that defects may have arisen in specific and limited instances in the course of migration of security interests from a pre-existing register to the PPS Register. In particular, there appears to be no defect that generally affects the bulk of the security interests migrated from the ASIC Register of Company Charges
The previous examples of defects given by the PPS Registrar include:
- the notation "unknown" in the field for the collateral type for the registration (instead of specifying either "commercial property" or "consumer property") ‒ according to the Registrar, this defect affected security interests migrated from the Tasmanian Motor Vehicle Securities Register, the Victorian Register of Stock Mortgages, the VicRoads Vehicle Securities Register, and the Western Australian Register of Encumbered Vehicles
- the notation "unknown" in the field for the collateral class for the registration (instead of specifying one of the nine collateral classes available for a PPS security interest registration, eg. "all present and after acquired property with no exceptions" or "other goods" or "motor vehicles" and so on) ‒ the Registrar has not specified what pre-existing registers' migrations to the PPS Register have been affected by this defect
- the notation "unknown" in the field for the serial number type for the registration ‒ according to the Registrar, this affects security interests migrated from REVS, or comparable registers, in New South Wales, Queensland, South Australia, Tasmania, Victoria and Western Australia.
The fact that a security interest was migrated from the ASIC Register of Company Charges to the PPSR with the notation "no stated end time" in the "end time for registration" field of the financing statement is not a defect.
In general, you are more likely to be affected by a defective registration if you have the benefit of migrated security interests from pre-existing registers like REVS, and less likely to be affected if you have the benefit of a migrated security interest from the ASIC Register of Company Charges.
How do I check if I am affected?
It appears that the Registrar sent letters to secured parties who had already "claimed" migrated registrations by the process outlined below, as well as to secured parties who have not yet claimed their registrations. Also the Registrar only sent letters to the first person noted on the relevant register so that if there are more than one secured party (eg. a joint venture) not all secured parties may have received a letter.
If you have already claimed your migrated registrations, you should obtain advice on whether any of those migrated registrations have defects that should be addressed by amending the migrated registrations (or making new registrations) or both.
If you have not yet "found and claimed" your migrated registrations, you need to do this as a first step: quite apart from the issue of identifying any defects your registrations, you can't deal with your migrated registrations at all (to amend or even to release them) until then. The "find and claim" process essentially requires you to find your migrated registrations and attach those registrations to a PPS "Secured Party Group" (SPG) by providing the PPS Registrar with an email address for service and other information.
What if there are defects in my registration?
Defects in your migrated registration will not necessarily make your registration ineffective to perfect your security interest.
However, if the defects make your migrated registration ineffective to perfect your security interest, you won't be able to rely on your migrated registration to perfect that security interest until you make an effective registration. This is because the PPS Registrar's determination ceased to operate to cure those defects with effect from 1 February 2017.
If you received a letter from the PPS Registrar and know nothing about the PPSA, it is most likely that you have not "found and claimed" your migrated security interests yet. You must now do this regardless of whether there are defects in your registrations. The fact you have not done this before 31 January 2017 will not affect your ability to do this.
To "find and claim" your migrated security interests you need to set up an SPG, identify your migrated security interests and then claim them for your SPG. Be aware that you need to search separately for migrated registrations from each pre-existing register on which you may have had security interests. So if you suspect that you may have security interests under multiple registers, you need to search separately for security interests migrated from each of those registers, such as:
- the ASIC Register of Company Charges;
- the Australian Shipping Register;
- the New South Wales and Queensland Registers of Encumbered Vehicles (REVS);
- the Victorian and South Australian Vehicles Security Registers; and
- the New South Wales Security Interests in Goods Register.
As a general rule, your migrated registration will be ineffective to perfect your security interest if it has a defect that makes it undiscoverable on a search of the PPSR:
- by grantor name, where the secured property is not required to be described by serial number
- by serial number, where the secured property is required to be described by serial number (for example, a motor vehicle that is consumer property).
Over and above these general rules, it is not easy to identify which defects will make your registration ineffective to perfect your security interest and which defects won't. So the safest course is, generally, to amend your registrations, or make new registrations, or both, to address any potential defects that you identify in your migrated registrations.