Case note: correcting the PPS Register

Complexity of the registration process and the PPS Register is identified as an issue in the PPS Act Interim Review Report.

In SFS Projects Australia Pty Ltd v Registrar of Personal Property Securities [2014] FCA 846 Justice Gleeson of the Federal Court decided that the Registrar of Personal Property Securities has power under s 186 of the Act to restore data to the register that was incorrectly removed as a result of an error on the part of the person who made an application for its removal.

In a transaction in which security interests were being transferred by a secured party, instead of seeking to amend the registered financing statements to reflect the transfer of the security interests from the assignor to the second applicant, the assignor actually applied to amend the register to record that the security interests were released.

The Registrar registered the financing change statements in accordance with the applications, as required by s 150(3) of the PPS Act. According to the Registrar, the effect of registering the financing change statements is that the registrations for the security interests are no longer “effective” within the meaning of the PPS Act.

The applicants contended that the registrations have been “removed” from the register. They sought orders under s 186 of the PPS Act to compel the Registrar to “restore” the registrations to the register.

Both the assignor and the grantor of the security interests consented to the restoration and correction.

The Registrar contended that he did not have power to do what was sought.

The assignor’s error was identified within an hour of the lodgement of the applications.

The applicants stated that registration was discharged by accident through training a new staff member.

Counsel for the applicants argued that data may be found to have been “incorrectly removed” from the register even though there was no error on the part of the Registrar. In this regard, section 188 empowers the Registrar to correct errors or omissions made by him or her. Accordingly, they argued that section 186 must be directed towards the removal of data by the Registrar in circumstances not involving error or omission by him or her.

Justice Gleeson agreed. He concluded that:

“In my opinion, the word “incorrectly” does not require the identification of an error on the part of the Registrar in removing data from the register. What is required is that data has been removed from the register which ought correctly to be included in the register. This interpretation reflects the difference in language between s 186 and s 188, which concerns the correction of errors and omissions by the Registrar….

In this case, the removal of the data was only correct in the narrow sense that it conformed to the financing change statement that the Registrar was obliged to register….

However, the data was “incorrectly removed” from the register in the sense that the removal resulted from the lodgement of an application which did not correctly reflect the intentions of the person making the application. …

Of course, the Registrar must be satisfied that data has been incorrectly removed before the power under s 186 may be exercised. But the mere fact that the data has been removed in conformity with a financing change statement will not necessarily mean that the data has been correctly removed. If the application to register a financing change statement is found to have been submitted in error or found to have contained data different from that which was intended to be included by the person making the application, then the Registrar may be satisfied that relevant data has been incorrectly removed from the register.

The Registrar has power to register a financing change statement to restore data comprising the original end times to the register if it appears to the Registrar that the data was incorrectly removed from the register under the PPS Act.

Data may be incorrectly removed from the register under the PPS Act if it is removed for the purpose of including amended data in accordance with s 150(3) where the financing change statement contains an error as a result of a mistake by a person submitting the application to register financing change statement.”

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