Case note: ABN instead of ACN makes equipment lease registration defective

In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21 the Supreme Court of NSW decided that the registrations of leases of crushing and screening plant and parts by Allstate Leasing Pty Limited to OneSteel were defective as they did not include OneSteel’s ACN.

An application for an extension of time to register correctly was rejected.

A challenge on constitutional grounds was also rejected.

OneSteel, which has the ACN 004 651 325 and the ABN 42 004 651 325, operates the Iron Knob mine in South Australia. On 16 October 2014 Alleasing registered a financing statement on the Personal Property Securities Register in respect of the crusher and on 7 July 2015 in respect of the parts. The equipment cost $23,329,764.

On 7 April 2016, OneSteel appointed administrators. On 10 June 2016, the administrators informed Alleasing that they considered the registrations to be defective and ineffective, and that as a result of PPSA s 267, Alleasing’s security interest had vested in OneSteel.

A search of the PPS register by reference only to OneSteel’s ACN did not reveal the registrations, as they were against the ABN.

Justice Brereton concluded:

“PPSA s 153 requires a financing statement to include “the grantor’s details as prescribed in the regulations”. PPS Regulations Sch 1 cl 1.3 has the effect that where the grantor is a body corporate that has an ACN, the prescribed details are the ACN of the grantor. As the grantor OneSteel had an ACN, the effect of PPSA s 153 and PPSR Sch 1 cl 1.3 was that the financing statements were required to include its ACN. However, this requirement was not understood by the employee of Alleasing responsible for making the registrations, who, using not the PPS Register portal but a third-party “business-to-government” (B2G) platform linked to the PPS Register, registered them by reference to OneSteel’s ABN and not its ACN.

An ABN is an 11 digit number, being the entity’s number shown in the Australian Business Register established under (CTH) A New Tax System (Australian Business Number) Act 1999. An ACN is a 9 digit number given to a corporation by the Australian Securities and Investments Commission (ASIC), upon registration under (CTH) Corporations Act 2001 (“CORPA”). Where a corporation with an ACN also has an ABN, the last 9 digits of the ABN may (but need not) correspond with the ACN. At least in OneSteel’s case they do: its ABN 42 004 651 325 incorporates as its last nine digits its ACN 004 651 325.

PPSA s 164(1) provides that a registration with respect to a security interest that describes particular collateral is ineffective because of a defect if and only if there is a seriously misleading defect in the registration, or a defect mentioned in s 165. PPSA s 165(b) mentions circumstances, in a case in which the collateral is not required to be described by a serial number, where no search of the register by reference only to the grantor’s details required under s153 is capable of disclosing the registration. Thus where the grantor’s details required by s 153 are its ACN, if the financing statement does not include the ACN, a search of the register by reference only to the grantor’s ACN would not disclose the registration, and accordingly the registration would be ineffective.”

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