0 Love 0 Pty Ltd (in liquidation) ATF Cooley Trust 1, Cooley Trust 2 & Cooley Trust 3 and Registrar of Personal Property Securities (Taxation)

[2021] AATA 397

0 Love 0 Pty Ltd (in liquidation) ATF Cooley Trust 1, Cooley Trust 2 & Cooley Trust 3 and Registrar of Personal Property Securities (Taxation) [2021] AATA 397 (5 March 2021)

Division:GENERAL DIVISION

File Number(s):      2020/1340

Re:0 Love 0 Pty Ltd (in liquidation) ATF Cooley Trust 1, Cooley Trust 2 & Cooley Trust 3

APPLICANT

AndRegistrar of Personal Property Securities

RESPONDENT

AndVolkswagen Financial Services Australia Pty Ltd

OTHER PARTY

DECISION

Tribunal:Deputy President Britten-Jones

Date:5 March 2021

Place:Adelaide

The reviewable decision is affirmed.

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Deputy President Britten-Jones

Catchwords

PERSONAL PROPERTY SECURITIES – amendment demand for a financing change statement to be registered to amend registration of security interest – whether there is a suspicion on reasonable grounds that the amendment is not authorised under s 178 of the Personal Property Securities Act 2009 - whether collateral described in the registration secures any obligation owed by debtor to secured party – whether the registrations are defective because they fail to record that the debtor company granted the security in its capacity as trustee – contractual documents name the debtor company in its own capacity and not as trustee – a suspicion arises on reasonable grounds that the other party had a security interest in the collateral described in the Registrations

Legislation

Personal Property Securities Act 2009

Personal Property Securities Regulations 2010

Cases

Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170

REASONS FOR DECISION

Deputy President Britten-Jones

5 March 2021

1. This application for review is brought by the liquidators of the applicant (the Company) with respect to vehicles purchased using money borrowed from the other party (VWFSA) who obtained security over those vehicles.  That security was registered under the Personal Property Securities Act 2009 (PPS Act).  The liquidators contend that the registrations are defective because they fail to record that the Company granted the security in its capacity as trustee.  The respondent as Registrar of Personal Property Securities has refused to remove the registration.  The applicant has applied to the Tribunal for review of that decision.  For the reasons that follow, I consider that the decision of the Registrar is the correct or preferable decision and should be affirmed.

2. The application proceeded on the papers.  The parties made submissions. No witnesses were called to give evidence. 

3. The applicant and the other party both contend that the documents and the mostly uncontested facts support each of their contentions.  The respondent took a neutral position for the purpose of the merits review. The following background facts arise from a consideration of the documents tendered by the parties. 

   Background

4. On 9 May 2013, the Company was incorporated and assigned an ACN.

5. On 10 May 2013, the Cooley Trust 1 (the Trust) was created by deed of trust (the Trust Deed) and assigned an ABN.

6. On 19 June 2013, the Company became the sole trustee of the Trust.

7. On 1 July 2013, the Trust was registered for GST and continued to trade as a business.

8. On 18 January 2019, the three vehicles were sold to the Company as evidenced by tax invoices from Cricks Springwood[1] (Sale Contracts).

   [1] Applicant documents at tab 27.

9. On the same day, security over those vehicles was granted in favour of VWFSA as evidenced by three chattel mortgage loans issued to the Company (Chattel Mortgages) which included direct debit requests.

10. The bank account nominated on the direct debit requests was in the name of the Company (Bank Account).

11. On 19 January 2019, VWFSA registered security interests against the Company as grantor on the Personal Property Securities Register in respect of the Chattel Mortgages.

12. On 25 January 2019, and 1, 8, 15, 22 and 28 February 2019, VWFSA received loan repayments from the Bank Account.

13. On 28 February 2019, the liquidators were appointed and as part of their statutory duty to realise the assets of the Company, took steps to have the registrations removed from the Personal Property Securities Register (PPSR).

    The Legislative Framework

14. Chapter 5 of the PPS Act provides for the establishment and maintenance of a register with respect to personal property securities.  Registrations require a financing statement.  Part 5.3 of the PPS Act deals with the registration of these statements.

15. Section 153(1) of the PPS Act provides that a financing statement with respect to a security interest consists of data that complies with a table set out thereunder.  Relevant to this case is item 2(c) in that table which provides that the grantor details are ‘as prescribed by the regulations.’

16. Schedule 1 of the Personal Property Securities Regulations 2010 (PPS Regulations) provides the financing statement matters for items of the table in s 153(1) of the PPS Act.

17. Clause 1.3 of Schedule 1 of the PPS Regulations applies if the secured party or grantor is a body corporate that is not a trustee of a trust that has an ABN. The prescribed details for a body corporate is its ACN.

18. Clause 1.5 of Schedule 1 of the PPS Regulations applies if the secured party or grantor is a body corporate that is a trustee of a trust that has an ABN. The prescribed details for a corporate trustee of a trust is its ABN.

19. Section 164 of the PPS Act provides as follows:

    1A registration with respect to a security interest that describes particular collateral ineffective because of a defect in the register if, and only if, there exists:

    (a)a seriously misleading defect in any data relating to the registration, other than a defect of a kind prescribed by the regulations; or

    (b)a defect mentioned in section 165.

    2In order to establish that a defect is seriously misleading, it is not necessary to prove that any person was actually misled by it.

    3A registration that describes particular collateral is not ineffective only because the registration is ineffective with respect to other collateral described in the registration.

20. Section 165 of the PPS Act sets out when, for the purposes of s 164(1)(b), particular defects will render the registration of a financing statement ineffective.

21. Section 181(1) of the PPS Act requires the respondent as the Registrar of Personal Property Securities to decide whether to register a financing change statement to amend or remove a specified registration on or from the PPS Regulations. It provides as follows:

    If an amendment notice is given to a secured party under section 180, after the end of the period covered by subsection (3), the Registrar must (at his or her initiative) register a financing change statement amending the registration (including an amendment to remove the registration) in accordance with the amendment demand, unless the Registrar suspects on reasonable grounds that the amendment is not authorised under section 178.

22. An amendment is authorised relevantly under s 178(1) of the PPS Act if no collateral described in the registration secures any obligation owed by a debtor to the secured party.

    Applicant contentions

23. The liquidators contend that clause 1.5 of Schedule 1 of the PPS Regulations applies because the Company is a body corporate that is a trustee of a trust that has an ABN. It follows that an ABN is prescribed as a detail that should be included in the registration. Because the registration only includes an ACN (and not the ABN of the Trust) it is defective. The liquidators contend that an amendment is authorised under s 178(1) of the PPS Act because no collateral described in the registration secures any obligation owed by a debtor to VWFSA.

    Consideration

24. Clause 1.5 of the PPS Regulations should not be read in isolation but rather in context with clause 1.3. Together, these clauses prescribe the details that must be included in a registration where the grantor is acting in its personal corporate capacity or as a corporate trustee. The question as to which clause applies depends upon in what capacity the grantor is acting. The answer to that question is determined by considering the contract to grant the chattel mortgage and the parties to it. If the party to the contract is a corporate trustee expressed to be acting in its capacity as corporate trustee then clause 1.5 will apply and the ABN will be required. If the party to the contract is a body corporate and there is no expression that it is acting as trustee then clause 1.3 applies and it is sufficient to provide its ACN.

25. In this case the party named in the contractual documentation is a body corporate with no mention that it is acting in its capacity as trustee.  The Sales Contracts name the Company as the purchaser.  There is a space for ‘Trust details if acting in capacity of a trust’ but no details of a trust are provided. The Chattel Mortgages name the Company as the borrower. There is a space to ‘Complete if you are acting in capacity of a trust’ but the ‘Name of Trust’ and the ‘Trust ABN’ are left blank.  The contractual documentation establishes who the contracting parties are and the capacity in which they are acting. The question as to who is a party to a contract is “of course not what the parties subjectively intended, but what they should be taken to have agreed upon, viewing the matter objectively”.[2]  The naming of a party in a contract without any reference to a trust is objective evidence that the party was not acting in its capacity as trustee. If the Company was acting in its capacity as trustee then it would likely have given the trust details in the space provided.

    [2] Barroora Pty Ltd v Provincial Insurance Ltd (1992) 26 NSWLR 170 at 174.

26. The applicant contends that because the Company entered into a trust deed, and was a trustee, it was acting as trustee in these particular transactions. However, the contractual documentation establishes to the contrary because the Company is named as a party in its own capacity and not as trustee.  The applicant points to other evidence as to whether the Company was acting as trustee or not such as the bank account into which repayments were to be made.  The applicant relied upon ANZ bank statements naming the Company as trustee. It is submitted that this was enough to put VWFSA on notice that the Company was acting as trustee and not in its personal capacity.  I disagree because the contract to which VWFSA was a party was the Chattel Mortgage which names the Company as the borrower and was signed by a director for and on behalf of the Company. Further, the Company provided a direct debit authority to VWFSA on 18 January 2019 (the same date as the Chattel Mortgages) which named the Company as the customer in its own capacity and not as trustee of a trust.

27. In any event, it is not necessary for the Tribunal to make definitive findings of fact and law on these issues, but rather the test from s 181(1) of the PPS Act is whether the Tribunal suspects on reasonable grounds that the amendment is not authorised under s 178.  An amendment will not be authorised under s 178 if there is collateral described in the registration which secures an obligation owed, in this case, by the Company to VWFSA.  This issue as to authorisation requires consideration of the security interest; if there is evidence which causes me to suspect on reasonable grounds that VWFSA had a security interest in the three motor vehicles of the Company, the registrations should not be removed from the PPSR.  I consider that the Chattel Mortgages by which the Company grants security to VWFSA provide reasonable grounds for me to suspect that VWFSA has a security interest in the vehicles.  Those Chattel Mortgages name the Company and provide the terms by which the Company as the borrower gives security to VWFSA for its obligations over the vehicles.  My suspicion is strengthened by the Sale Contracts which name as the purchaser the Company in its own capacity and not as a trustee. 

28. The decision of the Tribunal is to affirm the decision of the Registrar to not amend the registration.

I certify that the preceding 28 paragraphs are a true copy of the reasons for the decision herein of Deputy President Britten-Jones.

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Associate

Dated: 5 March 2021

Date(s) of hearing:	13 November 2020
Counsel for the Applicant:	Mr E Belperio
Advocate for the Respondent:	Mr M Piotrowicz for the Registrar of Personal Property Securities
Solicitors for the Other Party:	Mr N Commins from Hunt & Hunt Lawyers