In the matter of OneSteel Manufacturing Pty Ltd (administrators appointed)

Case •

[2017] NSWSC 21

•

31 January 2017

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21
Hearing dates: 19, 20 December 2016
Date of orders: 31 January 2017
Decision date: 31 January 2017
Jurisdiction:Equity - Corporations List
Before: Brereton J
Decision:

The court:
1. orders that the originating process be dismissed.
2. declares that the interest of the plaintiff as lessor of the Striker crushing and screening plant referred to in Rental Schedule E2N0157602 and in the spare parts referred to in Rental Schedule E2N0158455 under the rental agreement dated 16 October 2014 between the plaintiff and the first defendant has vested in the first defendant.
3. orders that the plaintiff pay the first and second defendants’ costs of the proceedings (including the cross-claim).

Catchwords:

SECURITIES – personal property – registration – where financing statements did not include grantor’s ACN but ABN – whether registrations defective – whether search of PPS register by reference only to grantor’s ACN would not reveal the registrations – held, it would not – where defect was such that searchers using one of the authorised modes of search would not discover the registration – whether defect was seriously misleading – held, it was – held, registrations were ineffective

 

CONSTITUTIONAL LAW – legislative power – compulsory acquisition of property – Constitution s 51(xxxi) – whether PPSA s 267 is disapplied pursuant to PPSA s 252B – whether s 267 effects an acquisition of property within s 51(xxxi) – held, it does not effects an acquisition of property, but if it does it is not one within the meaning of s 51(xxxi), because it is not an acquisition for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor’s own purposes, and represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property – whether s 267 would be a valid exercise of power under Constitution s 51(xvii) and s 51(xxxvii) if it effected an acquisition of property within the meaning of s 51(xxxi) other than on just terms – held, although the heads of power that support s 267 sufficiently manifest an intention that at least to that extent they not be constrained by the indirect operation of s 51(xxxi), PPSA s 252B nonetheless would disapply a provision of PPSA if effects an acquisition of property within the meaning of s 51(xxxi) other than on just terms regardless of its constitutional validity – PPSA s 252B is not engaged, and so does not affect the operation of s 267.

 

CORPORATIONS – securities – personal property securities – registration and perfection of security interests – where security interest not perfected by registration or otherwise before grantor has administrators appointed – where no effective registration within time referred to in s 588FL – application to fix later time under s 588FM – whether relief under Corporations Act s 588FM is available – held, it is not, because the relevant security interest was unperfected at the “critical time” – whether relief under s 588FM if available would reverse vesting under s 267 – held, even if relief could be given under s 588FM, it would not divest an unperfected security interest that has already vested under s 267

SECURITIES – personal property – perfection of security interests – vesting of unperfected security interest in grantor upon insolvency event – where security interest not perfected by registration or otherwise when grantor has administrators appointed – whether extension under PPSA s 293(1)(a) of period for registration referred to in s 62(3)(b) would divest vested unperfected security interest – held, it would not.
Legislation Cited: (CTH) A New Tax System (Australian Business Number) Act 1999, s 24, s 41
(CTH) Constitution, s 51(xvii), s 51(xxxi), s 51(xxxvii)
(CTH) Corporations Act 2001, s 9, s 118, s 123, s 588FK, s 588FL, s 588FM, s 601BD, s 1344
(CTH) Judiciary Act 1903, s 78B
(CTH) Personal Property Securities (Approved Form) Instrument 2013, cl 8
(CTH) Personal Property Securities (Corporations and Other Amendments) Act 2010
(CTH) Personal Property Securities Act 2009, s 13, s 21, s 62, s 153, s 164, s 165, s 170, s 171, s 218, s 252B, s 267, s 293, s 302
(CTH) Personal Property Securities Regulations 2010 cl 5.5, Sch 1 cl 1.3, 1.4, 1.5
(CTH) Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009
(NZ) Personal Property Securities Act 1999
Cases Cited: Accolade Wines Australia Ltd, Re [2016] NSWSC 1023
AirServices Australia v Canadian Airlines International Ltd (1999) 202 CLR 133
Attorney-General (Cth) v Schmidt (1961) 105 CLR 361; (1961) 35 ALJR 54; [1961] ALR 806
Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480
Business Development Bank of Canada v ABN Amro Leasing (2003) PEIJ No 22; [2003] PESCAD 5
Commcorp Financial Services Inc v R & R Investments Corp (1995) 31 Alta LR (3d) 393
Director of Public Prosecutions, Re; Ex parte Lawler (1994) 179 CLR 270
Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297
Health Insurance Commission v Peverill (1994) 68 ALJR 251; 119 ALR 675
Jenkins v Commonwealth (1947) 74 CLR 400
Maiden Civil, Re (2013) 277 FLR 337
McClintock v Commonwealth (1947) 75 CLR 1
Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155; (1994) 119 ALR 577; (1994) 68 ALJR 216; [1994] HCA 9
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134; [1994] HCA 27
PJ Magennis Pty Ltd v Commonwealth (1949) 80 CLR 382; [1950] ALR 33; (1949) 23 ALJR 564
Polymers International Ltd v Toon [2013] NZHC 1897
R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207; [1964] ALR 918; (1964) 37 ALJR 503
Rabobank New Zealand Ltd v Stockco Ltd [2011] 13 TCLR 191
Telstra Corp Ltd v Commonwealth (2008) 234 CLR 210; (2008) 243 ALR 1; (2008) 82 ALJR 521; [2008] HCA 7
Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397
Valley Vista Golf Course Ltd (Receiver of) v Maxium Financial Services Inc [2003] NSSC 97
White v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214; [2014] WASC 139
WH Blakeley & Co Ltd v Commonwealth (1953) 87 CLR 501; [1953] ALR 293; (1953) 26 ALJ 672
Texts Cited: Dixon R, “Overriding Guarantee of Just Terms or Supplementary Source of Power?: Rethinking s 51(xxxi) of the Constitution” (2005) 27 Syd Law Rev 639
Gault T (ed), Gault on Commercial Law (online loose-leaf ed, Brookers
Widdup L, Personal Property Securities Act: A Conceptual Approach (3rd ed, LexisNexis, Wellington, 2013)
Category:Principal judgment
Parties: Alleasing Pty Limited (Plaintiff)
OneSteel Manufacturing Pty Limited (administrators appointed) (First Defendant)
Mark Mentha, Cassandra Mathews, Martin Madden and Bryan Webster in their capacities as administrators of OneSteel Manufacturing Pty Limited (Second Defendants)
BGC Contracting Pty Ltd (Third Defendant)
Striker Australia Pty Limited (Fourth Defendant)
Registrar of Personal Property Securities (Intervener)
Representation:

Counsel:
A. Archibald QC w P Kulevski & N Mirzai (Plaintiff)
NC Hutley SC w J Hyde Page, B Lim & L McGovern (First and Second Defendants)
PA Horobin (Intervener)

  Solicitors:
Henry Davis York (Plaintiff)
Arnold Bloch Liebler (First and Second Defendants)
Clifford Chance (Third Defendant)(submitting)
Bowen Buchbinder Vilensky (Fourth Defendant)(submitting)
Australian Government Solicitor (Intervener)
File Number(s): 2016/242112

Judgment

  1. The plaintiff Alleasing Pty Limited (“Alleasing”) is in the business of asset financing and leasing. The first defendant OneSteel Manufacturing Pty Limited (“OneSteel”), which has the ACN 004 651 325 and the ABN 42 004 651 325, operates the Iron Knob mine in the South Middleback Ranges in South Australia. On 16 October 2014, Alleasing and OneSteel entered into a master lease agreement, the effect of which was that upon entry into a “rental schedule” in respect of particular goods, the terms of the master lease would apply subject to the applicable rental schedule. Pursuant to one such rental schedule (number E2N0157602), with effect from 1 May 2015 OneSteel commenced renting from Alleasing a Striker crushing and screening plant, for a term of six years at a quarterly rental of $1,008,321 (“the crusher lease”). The design, supply, installation, assembly, construction and commissioning of the crusher, by the fourth defendant Striker Australia Pty Limited, [1] had been funded by Alleasing at OneSteel’s request, at a total cost of $23,329,764. Pursuant to a second rental schedule (number E2N0158455), with effect from 1 July 2015 OneSteel commenced renting from Alleasing spare parts for the crusher, for a term of six years at a quarterly rental of $5,924 (“the parts lease”). The acquisition of the parts from Striker had also been funded by Alleasing at OneSteel’s request.

    1. Striker filed an appearance but did not take an active part in the proceedings.

  2. It is uncontroversial that the crusher lease and the parts lease are PPS leases within the meaning of (CTH) Personal Property Securities Act 2009 (“PPSA”), s 13. On 17 October 2014, Alleasing registered a financing statement in respect of the crusher (registration number 201410170012815), [2] and on 7 July 2015 it did so in respect of the parts (registration number 201507070059923) (“the original registrations”).

    2. On 1 May 2015, Alleasing amended the registration in respect of the crusher, more precisely to describe the subject property; it is not suggested that this has any present significance – the registration remained one against OneSteel’s ABN.

  3. The third defendant BGC Contracting Pty Ltd, [3] a mining services contractor, holds a security interest registered on 11 July 2014 over “all present and after acquired personal property” (“AllPAP”) of OneSteel. On 29 October 2014, BGC released the crusher from its AllPAP security.

    3. BGC has filed a submitting appearance.

  4. PPSA s 153 requires a financing statement to include, relevantly, “the grantor’s details as prescribed in the regulations” – that is to say, (CTH) Personal Property Securities Regulations 2010 (“PPSR”). PPSR 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. [4] 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.

    4. PPS Reg Sch 1 Pt 1 cl 1.3 Table item 3, which under cl 1.3(3)(b) takes priority over item 4.

  5. 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. [5] 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”). [6] 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. [7] 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.

    5. (CTH) A New Tax System (Australian Business Number) Act 1999 s 24, s 41.

    6. (CTH) Corporations Act 2001 s 9, s 118, s 601BD.

    7. See, for example, (CTH) Corporations Act 2001, s 123 and s 1344.

  6. 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 s 153 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. [8]

    8. See Re Accolade Wines Australia Ltd [2016] NSWSC 1023 at [3].

  7. On 7 April 2016, OneSteel appointed administrators; the second defendants are the current administrators, having replaced the original administrators on 12 April 2016. On 10 June 2016, the administrators informed Alleasing that they considered the first registrations to be defective and ineffective, and that as a result of PPSA s 267, Alleasing’s security interest – which in the context of a PPS Lease is the lessor’s interest in the goods – had vested in OneSteel. On 14 June 2016, Alleasing lodged new financing statements in respect of the crusher (registration no 201606140047841) and the parts (registration no 201606140047839), this time using OneSteel’s ACN as the grantor identifier (“the second registrations”). On 17 June 2016, Alleasing amended the original registrations to include the 9-digit ACN of OneSteel.

  8. Pursuant to an originating process filed on 11 August 2016 and amended on 29 August 2016, Alleasing claims (1) declarations to the effect that its security interests in the crusher and the parts are validly perfected and have not vested in OneSteel pursuant to PPSA s 267; (2) alternatively, orders pursuant to (CTH) Corporations Act, s 588FM, fixing as the registration time for its security interests the date on which the second registrations were made, and pursuant to PPSA s 293(1)(a) extending to that date the period for registration referred to in s 62(3)(b); and (3) declarations to the effect that PPSA s 267 is invalid to the extent that it operates to vest Alleasing’s security interests in OneSteel, as it effects an acquisition of property other than on just terms. By interlocutory process filed on 5 September 2016, OneSteel and its administrators cross-claim for declarations to the effect that Alleasing’s security interests were not validly perfected on or prior to the appointment of administrators to OneSteel on 7 April 2016, and vested in OneSteel immediately prior to that appointment.

  9. Alleasing, for whom Mr Archibald QC, with Mr Kulevski and Mr Mirzai appeared, contend that (1) there was no defect in the original registrations; (2) if there was, it was not such as to render the registrations ineffective; (3) in any event, there has been no vesting because in the circumstances of this case a vesting under s 267 would be an acquisition of property on other than just terms, and PPSA s 252B means that the PPSA does not operate to that effect; and (4) alternatively, time for registration of the second registrations should be extended. OneSteel and its administrators, for whom Mr Hutley SC, with Mr Hyde Page, Mr Lim and Ms McGovern appeared, contend that there has been no effective registration, and that Alleasing’s security interest in the crusher and the parts has vested in OneSteel. The PPS Registrar intervened, pursuant to PPSA s 218(1), to make submissions relevant to the manner of operation of the PPS Register, without seeking to address the consequences for the positions of the respective parties. In this respect, the court was assisted by the submissions of Mr Horobin.

Was there a defect in the first registrations?

  1. PPSA s 153(1) provides:

153  Financing statements with respect to security interests

(1)  A financing statement with respect to a security interest (including such a financing statement as amended by the registration of a financing change statement) consists of data that complies with the following table: …

  1. Item 2 in the table stipulates, as the requisite data about the grantor:

Whichever of the following is applicable:

(a) if the collateral is consumer property, and is required by the regulations to be described by serial number—no grantor’s details;

(b) if the collateral is consumer property, and is not required by the regulations to be described by serial number—the grantor’s name and date of birth, as evidenced in accordance with the regulations, and no other details;

(c) in any other case—the grantor’s details as prescribed by the regulations.

  1. Thus a financing statement in respect of collateral being the crusher and the parts – not being “consumer property” – was required to contain “the grantor’s details as prescribed in the regulations”. In that regard, PPSR reg 5.5 relevantly provides:

5.5  Financing statements

(1) Schedule 1 sets out matters prescribed for items of the table in subsection 153(1) of the Act.

...

  1. In PPSR Schedule 1, cl 1.3 provides:

1.3  Body corporate secured party or grantor

(1) For items 1 and 2 of the table in subsection 153(1) of the Act, this clause applies if the secured party or grantor is a body corporate that:

(a)  is a trustee and has an ARSN; or

(b)  is not a trustee of a trust that has an ABN.

(2)  The details mentioned in each item of the table, from the source mentioned for the item, are prescribed for the body corporate mentioned in the item.

(3)  For subclause (2), the prescribed details are the details mentioned in the item of the table that:

(a)  applies to the body corporate; and

(b)  has the lowest item number.

(4)  Item 1 of the table applies only to a registration by the Registrar under subsection 333(2) of the Act.

Item

Body corporate

Details

Source

1

Body corporate for which details have been included on the transitional register, for a migrated security interest

Body corporate number or name of body corporate, as recorded on the transitional register

Transitional register

2

Body corporate that is the responsible entity of a registered scheme, if the scheme has an ARSN

Registered scheme’s ARSN

National Names Index

3

Body corporate that has an ACN

ACN

National Names Index

4

Body corporate that has an ARBN

ARBN

National Names Index

5

Any other body corporate

Name of body corporate, as provided for in body corporate’s constitution or equivalent document

Body corporate’s constitution or equivalent document

  1. Thus item 3 in that table means that (unless items 1 or 2 apply), where the grantor is a body corporate that has an ACN, the prescribed details are the ACN (not the ABN) of the grantor. There is no reference in the table to the ABN: ARBN, referred to in item 4, is short for ‘Australian Registered Body Number’, being the number given by ASIC to a registrable body on registration under Part 5B.2 of Corporations Act 2001 [9] – not the ABN. Provision is made for registration against an ABN only where the grantor is a partner in a partnership, [10] a trustee, [11] or a body politic. [12]

    9. PPSR cl 1.6.

    10. PPSR Sch 1 cl 1.4.

    11. PPSR Sch 1 cl 1.5.

    12. PPSR Sch 1 cl 1.6.

  2. Alleasing submitted that there was no defect in the original registrations, on the basis that:

  1. the requirement of PPSA s 153(1) was that the financing statement consist of specified “data”, relevantly the grantor’s ACN;

  2. the data comprising an ACN was a unique 9-digit sequence;

  3. the original financing statements included, within the 11-digit ABN, OneSteel’s 9-digit ACN;

  4. there was no requirement in or under the PPSA or the PPSR that the ACN be included in any specified field; [13]

  5. thus there was compliance with s 153(1), because the 9-digit sequence could be found within the financing statement.

    13. Citing Business Development Bank of Canada v ABN Amro Leasing (2003) PEIJ No 22; [2003] PESCAD 5 at [55]; Valley Vista Golf Course Ltd (Receiver of) v Maxium Financial Services Inc [2003] NSSC 97 at [24]–[26]; Commcorp Financial Services Inc v R & R Investments Corp (1995) 31 Alta LR (3d) 393 at [44]–[45].

  1. Alleasing’s submissions focus on the word “data” in s 153, arguing that the relevant data – the 9-digit ACN – was included within the 11-digit ABN. However, the fact that the ABN happens to include the ACN does not mean that inclusion of the ABN equates to inclusion of the ACN. They are two different identifiers, issued by different agencies. In the relevant circumstances, the requirement was for the 9-digit ACN. Instead, an 11-digit ABN, the last 9 of which correspond with the ACN, was included. An 11-digit sequence is not the same “data” as a 9-digit sequence which is included within it. Thus an ABN which happens to include the 9-digit ACN is nonetheless not the ACN.

  2. This conclusion is supported by the circumstances that the ABN field, not the ACN field, was completed; and that a search by the ACN alone would not reveal the registrations.

  3. Accordingly, the original financing statements did not include the grantor’s ACN; it included only the ABN.

  4. CORPA s 1344 provides:

1344  Use of ABN

Despite any provision in this Act or any other Act, in any case where:

(a)  the ACN of a company; or  

(b)  the ARBN of a registered body; or

(c)  the ARSN of a registered scheme;

is required or permitted to be used under a law of the Commonwealth administered by ASIC, the ABN of the company, body or scheme may be used instead if the last 9 digits of the ABN are the same, and in the same order, as the last 9 digits of the ACN, ARBN or ARSN.

  1. However, this does not avail Alleasing, because PPSA is not a law administered by ASIC.

  2. Accordingly, the original registrations were defective, in that they did not, as required, include OneSteel’s ACN.

Is the registration ineffective pursuant to s 163(b)?

  1. PPSA s 164 provides:

164 Defects in registration—general rule

(1) A registration with respect to a security interest that describes particular collateral is 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.

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

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

  1. Accordingly, the original registrations will be ineffective because of the omission of OneSteel’s ACN if, and only if that defect:

  1. is “seriously misleading”; or

  2. is of a kind mentioned in section 165.

Section 165(b) – not disclosable on search by reference to grantor’s details?

  1. PPSA s 165 provides:

165  Defects in registration—particular defects

For the purposes of paragraph 164(1)(b), a defect in a registration that describes particular collateral exists at a particular time if any of the following circumstances exist:

(a)  in a case in which the collateral is required by the regulations to be described by serial number in the register—no search of the register by reference to that time, and by reference only to the serial number of the collateral, is capable of disclosing the registration;

(b)  in a case in which the collateral is not required by the regulations to be described by serial number in the register—no search of the register by reference to that time, and by reference only to the grantor’s details (required to be included in the registered financing statement under section 153), is capable of disclosing the registration;

(c)  if the registered financing statement (as amended, if at all) indicates that a security interest in the collateral is a purchase money security interest (to any extent)—the security interest is not a purchase money security interest (to any extent) in the collateral;

(d)  in any case—circumstances in relation to the data related to the registration that are prescribed by the regulations.

  1. The relevant provision in this case is s 165(b). The key point in s 165(b) is that the postulated search of the PPSR must use only one parameter, namely the grantor’s details required to be included in the registered financing statement under s 153. In the relevant circumstances that would, for the reasons explained above, be a search by reference to OneSteel’s ACN. Alleasing submitted that s 165(b) was not engaged, because there were “combined grantor searches” which could be undertaken through B2G interfaces which, if only the ACN were entered, would nonetheless reveal registrations against the same entity’s ABN.

  2. PPSA s 170 limits searches of the PPS register to those authorised by s 171 and s 172:

170  Search—general

(1)  A person may apply to the Registrar for access to the register to search for data in relation to a security interest or personal property (or both).

(2)  The Registrar must:

(a)  give the person access to the register to search for the data, in accordance with the application; and

(b)  if, in the application, the person requests a written search result in relation to the data—ensure that the person is able to obtain a written search result in relation to the data, in the appropriate form under section 174.

(3)  However, the Registrar may give the person access to the register to search for the data only if:

(a) the search is authorised under sections 171 and 172; and

(b)  the application is in the approved form; and

(c)  the person pays the fee determined under section 190; and

(d)  access to the data is not prohibited by the regulations.

  1. PPSA s 171 does not authorise a search by reference to grantor’s details other than those required to be included in a registered financing statement under section 153 (no other criteria having been prescribed by the regulations):

171  Search—criteria

(1)  A person may access the register to search for data by reference to the following criteria:

(a) a grantor’s details (as required to be included, if at all, in a registered financing statement under section 153);

(b) a serial number by which collateral may (or must) be described in the register;

(c) the time of the search;

(d) an earlier nominated time, but only with the consent of the Registrar;

(da) a unique identifier allocated by the Registrar to a registered financing statement;

(e) any other criteria prescribed by the regulations.

(2)  The Registrar must ensure that the way in which the results of a search are worked out in response to an application for the search is determined in accordance with any regulations made for the purposes of this subsection.

  1. That means that a search of the register by reference to grantor’s details other than those required to be included under s 153 is not authorised or contemplated, and thus in respect of a grantor which is a body corporate and is not a trustee of a trust that has an ABN, only a search by reference to the ACN is authorised.

  2. PPSA s 170(3)(b), set out above, has the effect that the application to search the PPS Register must be “in the approved form”. In that respect, PPSA s 302 contemplates that approved forms can include an interactive form provided on the internet, and a digital communication enabling computer to computer interaction:

302  Approved forms

(1)  This section applies if this Act requires or authorises something to be in the approved form.

(2)  To be in the approved form, the thing must:

(a)  be in writing in a form approved by the Registrar; and

(b)  include the information, statements, explanations or other matters required by the form approved for the purposes of paragraph (a); and

(c)  include any other material (including documents) required by that form; and

(d)  be given in accordance with any requirements specified by the Registrar for the purpose.

Note:    Writing may include the display or representation of words or data by any form of communication, if recorded in a certain way (see section 10).

Example:  Examples of forms that could be approved (see paragraph (2)(a)) are as follows:

(a) an interactive form provided on the internet;

(b) a communication exchange provided by an interactive voice recognition telephone system;

(c) a digital communication enabling computer to computer interaction.

(3)  The Registrar may, by written instrument, approve a form for the purposes of paragraph (2)(a).

…            

  1. (CTH) Personal Property Securities (Approved Form) Instrument 2013 approves, for the purposes of PPSA s 302, two methods of searching the PPSR: the first is an online interactive form accessible through the official PPSR website ( [14] while the second is an electronic communication through a computer-to-computer interface, such as from a B2G provider. [15]

    14. (CTH) Personal Property Securities (Approved Form) Instrument 2013 cl 8(1).

    15. (CTH) Personal Property Securities (Approved Form) Instrument 2013 cl 8(2).

  2. A search will only return details of what has been registered. A search by ABN will not return registrations against the ACN, and a search by ACN will not return registrations against the ABN. A search of the PPS register using only the ACN as a parameter – which pursuant to s 171(1)(a) is the only authorised search – would not reveal the original registrations.

  3. The PPSR cannot itself be searched in respect of more than one grantor identifier at a time. The “combined grantor searches” provided by some B2G interfaces, on which Alleasing’s argument relies, in fact do not use only the ACN when searching the PPSR. They have additional functionality, so that when an ACN is entered in the search platform, it first searches other databases to find the corresponding entity name and ABN, and then initiates multiple searches of the PPSR – each using a single parameter – of ACN, name and ABN. The search using the ACN as the parameter would not reveal a registration against the ABN. Insofar as a combined grantor search in which the searcher enters only an ACN reveals a registration against the ABN, it is because a parameter other than the ACN – namely the ABN – is used in searching the PPSR, albeit that it was not initially entered by the searcher, but sourced by the B2G platform from other external databases.

  4. Entering a search parameter on a B2G platform is not itself a search of the PPSR; it generates the functionality of the B2G platform, which then transmits messages to the PPSR. A “combined grantor search”, by the time it reaches and searches the PPSR, is in fact multiple searches, the ABN and name having been obtained from other external sources. Each of those searches – against ACN, ABN and name – generates a separate search result, with a separate unique search identifier. Thus such a “combined grantor search” is not one by reference only to the ACN. Even though the client may enter only the ACN into the third-party search platform, the ensuing search of the PPS register is not a search of the register by reference only to the ACN.

  5. Although it is true that s 165(b) – like s 165(a) – uses the terminology “no search … is capable of revealing”, that means no more than that “a search … would not reveal”. A construction that the condition would not be satisfied so long as there was available one search platform which would reveal the registration – albeit by sourcing and using parameters other than “the grantor’s details required to be included in a financing statement under s 153” – although most would not, would defeat the purpose of the provision.

  6. A search of the PPS register by reference only to OneSteel’s ACN would not reveal the original registrations, including as they did its ABN, not its ACN. Accordingly, the original registrations were ineffective, pursuant to PPSA s 164(1)(b) and s 165(b).

Seriously misleading defect?

  1. Lest my conclusion that s 165(b) is engaged be incorrect, it is appropriate to address the question whether the defect was seriously misleading within s 164(1)(a), such that the registration was ineffective for that reason. Alleasing submitted that the defect was not seriously misleading, because the financing statement refers unequivocally to OneSteel and the relevant collateral, and was in fact discovered by the administrators on search.

  2. As already explained, (CTH) Personal Property Securities (Approved Form) Instrument 2013 approves, for the purposes of PPSA s 302, two methods of searching the PPSR: an online interactive form accessible through the official website; and an electronic communication through a computer-to-computer interface, such as from a B2G provider. Even if a search by reference to the ACN though a B2G platform would reveal the original registrations, a direct search of the PPSR through the official PPSR website using only the ACN as a search parameter would not. A searcher who (legitimately) chose to use that mode of search would not discover the original registrations, and would be led to think, incorrectly, that there was no such registration.

  3. Alleasing relied on the New Zealand case of Rabobank New Zealand Ltd v Stockco Ltd, [16] in which it was held that a financing statement which included the names of a married couple who operated a farm, rather than the name of their farming partnership, was not seriously misleading, as to the outside world the husband was the farmer. However, in Polymers International Ltd v Toon, [17] Asher J observed that Rabobank had been subject to criticism, [18] and in any event distinguished it on facts much closer to the present: Polymers had registered a financing statement under (NZ) Personal Property Securities Act 1999 (“NZPPSA”) against Interworld as debtor which admittedly failed to comply with the requirements of the NZPPSA, including because it did not include the debtor company’s unique incorporation number. Asher J held that the preferable approach to the question whether an omission was seriously misleading, in the context of a registry which (like the Australian registry and unlike some Canadian registries) only provides returns that exactly match what is entered, [19] was to ask whether the error would prevent a registration being disclosed by a properly formatted search in the relevant searchable field; [20] and consequently that the omission of the company’s number was seriously misleading, as it meant that those who searched the register by company number or through the Companies Office would not discover the relevant financing statement. [21]

    16. [2011] 13 TCLR 191.

    17. [2013] NZHC 1897.

    18. [2013] NZHC 1897 at [22], referring to Widdup L, Personal Property Securities Act: A Conceptual Approach (3rd ed, LexisNexis, Wellington, 2013) at 322, and Gault T (ed), Gault on Commercial Law (online loose-leaf ed, Brookers), at 8 A.7.03(2).

    19. [2013] NZHC 1897 at [19].

    20. [2013] NZHC 1897 at [23].

    21. [2013] NZHC 1897 at [20], [24].

  4. I respectfully agree with Asher J. Such a construction furthers the purpose of the PPSA in ensuring the integrity and reliability of the PPS register, [22] and visiting upon secured parties the obligation to ensure – if they are to enjoy the benefits of registration – that their registration be discoverable on search against the grantor’s details required to be included in a financing statement under s 153. The facilitation of ascertaining whether there are prior registrations is a fundamental purpose of the PPSA.

    22. Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009, [5.71].

  5. It does not avail Alleasing that the administrators, apparently using a B2G interface, discovered the original registrations; it is unnecessary, for a defect to be misleading, to establish that anyone was in fact actually misled. [23] It is the capacity or potential to mislead that is crucial. Here, the defect was such that searchers using one of the two authorised modes of search would not discover the registration. The circumstance that a searcher using one of the authorised means of search would not discover the registration renders the defect misleading, and seriously so – even if, as is suggested, most searchers (the evidence indicates 80%) use B2G platforms which, in the way that has been described, would reveal it.

    23. PPSA s 164(2).

  6. Thus the defect was seriously misleading, because the omission of the ACN meant that searchers using one of the authorised modes of search would not discover the registration. Accordingly, the original registrations were ineffective pursuant to s 164(1)(a).

The constitutional issue:

  1. PPSA s 267 provides for the vesting of unperfected security interests in the grantor immediately before the grantor’s winding up, administration or bankruptcy:

267  Vesting of unperfected security interests in the grantor upon the grantor’s winding up or bankruptcy etc.

Scope

(1)  This section applies if:

(a)  any of the following events occurs:

(i)  an order is made, or a resolution is passed, for the winding up of a company or a body corporate;

(ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise);

(iii) a company or a body corporate executes a deed of company arrangement (whether under Division 10 of Part 5.3A of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise);

(iv) a sequestration order is made against a person (the bankrupt) under the Bankruptcy Act 1966;

(v) a person (the bankrupt) becomes a bankrupt by force of section 55, 56E or 57 of the Bankruptcy Act 1966; and

(b)  a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies:

(i) in the case of a company or body corporate that is being wound up—when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day (whether under section 513A or 513B of the Corporations Act 2001, under either section as applied by force of a law of a State or Territory, or otherwise);

(ii) in the case of any other company or body corporate—when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise);

(iii) in the case of a bankrupt—when a sequestration order is made against the bankrupt under the Bankruptcy Act 1966, or when he or she becomes a bankrupt by force of section 55, 56E or 57 of that Act.

Note 1:  For the meaning of company, see section 10.

Note 2: See also Division 2A of Part 5.7B of the Corporations Act 2001.

Security interest vested in grantor

(2)  The security interest held by the secured party vests in the grantor immediately before the event mentioned in paragraph (1)(a) occurs.

Note:  This subsection does not apply to certain security interests (see section 268).

…

  1. PPSA s 252B disapplies any provision of the Act if its operation would result in an acquisition of property other than on just terms (within the meaning of paragraph 51(xxxi) of the Constitution):

252B  No unjust acquisition of property

(1)  A provision of this Act does not apply to the extent that the operation of the provision would result in an acquisition of property from a person otherwise than on just terms.

(2)  In subsection (1):

acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution.

just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.

  1. Alleasing submitted that in the circumstances of this case, s 252B prevented the operation of the vesting provisions in s 267, as if they operated they would effect an acquisition of property other than on just terms – because if s 267 operated, upon an insolvency event of the kind described in s 267(1)(a), to vest the lessor’s interest in the goods the subject of a PPS lease in the lessee, though the lessor was until then the true owner of the subject matter of the lease, then the lessor’s valuable property would be acquired by the lessee, in return only for the right to prove in the insolvency as an unsecured creditor for damages for the value of the goods under PPSA s 269, which was not just. [24]

    24. Notices under (CTH) Judiciary Act 1903, s 78B, were served on the Attorneys’ General of the Commonwealth and the States; none of them intervened in the proceedings.

  1. The first answer to this submission is that s 267 does not effect an “acquisition” at all. The section does not effect a taking of property which the PPS lessor held prior to its becoming subject to the PPSA; rather, it prescribes a consequence, in certain circumstances, of a lease entered into subject to the PPSA. It is an incident of any PPS lease entered into after the commencement of the PPSA that the lessor’s interest is liable to vest in the lessee in certain events, if it has not been perfected. The master lease was entered into against the legal background provided by the PPSA, to which it referred. Thus, when Alleasing granted a lease of the crusher to OneSteel, to which the PPSA applied, that involved the consequence that its interest was liable to vest in OneSteel in certain events – in particular, those referred to in s 267(1)(a) – if it did not perfect its security interest.

  2. As in Telstra Corp Ltd v Commonwealth, [25] Alleasing’s argument is “synthetic and unreal”, because it proceeds from an unstated premise that Alleasing has larger and more ample rights in respect of the crusher than in fact and law it had: Alleasing’s “bundle of rights” in respect of the crusher was, from the moment it granted a lease to OneSteel, not of the amplitude which its present argument assumes, but involved the potential vesting of its interest in the lessee upon an insolvency event if its security interest were not perfected.

    25. Telstra Corp Ltd v Commonwealth (2008) 234 CLR 210; (2008) 243 ALR 1; (2008) 82 ALJR 521; [2008] HCA 7 at [52].

  3. The second answer is that it is not an acquisition within the meaning of paragraph 51(xxxi) of the Constitution. Section s 51(xxxi) operates indirectly to reduce the content of other grants of legislative power, through the medium of the rule of construction that the conferral of an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, is inconsistent with any construction of other powers which would mean that they included the same subject or produced the same effect and so authorised the same kind of legislation but without the safeguard, restriction or qualification. [26] However, this is subject to at least two qualifications, as explained by Dixon CJ in Attorney-General (Cth) v Schmidt (No 1) (Re Doehnert Mueller Schmidt) [27] in the following passage:

It is hardly necessary to say that when you have, as you do in para (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification. But two observations must be made. First, it is necessary to take care against an application of this doctrine to the various powers contained in s 51 in a too sweeping and undiscriminating way. For it cannot have much to do with some of the subject matters of power upon the very terms in which they are conferred. The other observation is that the principle does not apply except with respect to the ground actually covered by para (xxxi) of s 51. For example, no one would doubt that, under the power to make laws with respect to bankruptcy, property of the bankruptcy may be sequestrated and property of others which has been left in his order and disposition may be vested in the Official Receiver and that s 51(xxxi) has no bearing on the matter. At the same time, if a law was made under which a piece of land was acquired for a Bankruptcy Office, s 51(xxxi) would govern the legislation and not s 51(xvii). It must be borne in mind that s 51(xxxi) confers a legislative power and it is that power only which is subject to the condition that the acquisitions provided for must be on just terms.

26. Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 160 (Mason CJ, Brennan, Deane Toohey, Gaudron and McHugh JJ); [1994] HCA 27, citing Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 371–2 per Dixon CJ.

27. (1961) 105 CLR 361 at 371–2 (Dixon CJ); [1961] ALR 806; (1961) 35 ALJR 54.

  1. The first of those qualifications is that the scope of s 51(xxxi), in its indirect as well as direct application, is confined to acquisitions “for any purpose in respect of which the Parliament has power to make laws'’, so that an acquisition of property for a purpose other than one in respect of which the parliament has power to make laws is not affected by s 51(xxxi). Thus in Mutual Pools & Staff Pty Ltd v The Commonwealth, [28] Mason CJ said:

The words ``for any purpose in respect of which the Parliament has power to make laws'’ are, in the context of a grant of legislative power, words of limitation. They confine the exercise of the power to an implementation of a purpose within the field of Commonwealth legislative power. They are not to be read as an exclusive and exhaustive statement of the parliament's powers to deal with or provide for the involuntary disposition of or transfer of title to an interest in property.

…

Likewise, a law made in the exercise of the power with respect to bankruptcy and insolvency, which provides for the sequestration of the property of a bankrupt and its vesting in the Official Receiver, is not a law with respect to the acquisition of property within s 51(xxxi) [Schmidt (1961) 105 CLR at 372]. It is no more and no less than a law which regulates the incidents and effects of bankruptcy, the provision for the vesting of title to the bankrupt's property in the Official Receiver being subordinate to sequestration. That element in the law would not enable one to describe it with any semblance of accuracy as a law for the acquisition of property.

28. (1994) 179 CLR 155 at 169; (1994) 119 ALR 577 at 585; (1994) 68 ALJR 216; [1994] HCA 9.

  1. Dawson and Toohey JJ said: [29]

In arriving at the meaning of the phrase ``acquisition of property'’ in s 51(xxxi), it is necessary to have regard to the composite expression of which it forms part, namely, ``acquisition of property … for any purpose in respect of which the Parliament has power to make laws'’. As Dixon CJ pointed out in Attorney-General (Cth) v Schmidt [(1961) 105 CLR at 372] ``it refers to the use or application of the property in or towards carrying out or furthering a purpose comprised in some other legislative power'’. Whilst the precise limits of that expression have proved elusive [Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR at 408 per Gibbs J], it does appear primarily to refer to the acquisition of real or personal property which itself is intended to be used by the government in administering laws made by the parliament in the exercise of its legislative power [Attorney-General (Cth) v Schmidt (1961) 105 CLR at 372 per Dixon CJ; Re Tooth & Co Ltd (No 2) (1978) 34 FLR 112 at 146–7].

29. (1994) 179 CLR 155 at 198; (1994) 119 ALR 577 at 608; (1994) 68 ALJR 216; [1994] HCA 9.

  1. As Dawson and Toohey  JJ acknowledged, s 51(xxxi) extends to the acquisition of property by persons other than the Commonwealth or its agencies, [30] but only where the property is acquired for a relevant Commonwealth purpose: [31]

However, compulsory acquisition by a third person is not within the terms of s 51(xxxi) unless it is for a purpose in respect of which the parliament has power to make laws.

30. Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 199; (1994) 119 ALR 577 at 608; (1994) 68 ALJR 216; [1994] HCA 9; citing Jenkins v Commonwealth (1947) 74 CLR 400 at 406; McClintock v Commonwealth (1947) 75 CLR 1 at 23, 36; PJ Magennis Pty Ltd v Commonwealth (1949) 80 CLR 382 at 401–2, 411, 423; Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 427, 451–2; Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 510–11, 526.

31. (1994) 179 CLR 155 at 169; (1994) 119 ALR 577 at 585–6; (1994) 68 ALJR 216; [1994] HCA 9.

  1. In this context, “purpose” refers to the use or application of the property acquired. [32] As Dawson J elaborated in Nintendo Co Ltd v Centronics Systems Pty Ltd, where a law provides for the acquisition of property, not by the Commonwealth or one of its emanations, but by an independent third party, that acquisition is unlikely to be for the purposes of one of the Commonwealth powers, but rather for the private purposes of the third party, in which s 51(xxxi) is not engaged, and the validity of the law depends on another head of power: [33]

It will be apparent that where legislation provides for the acquisition of property by a third party, the property itself will frequently not be acquired for any purpose in respect of which the parliament has power to make laws but for the purposes of the third party [Health Insurance Commission v Peverill (1994) 68 ALJR 251 at 261–2; 119 ALR 675 at 690–1]. However, that need not always be the case. An example of property acquired by a third party for the purposes of the Commonwealth is to be found in McClintock v Commonwealth [(1947) 75 CLR 1]. In that case, at least on one view of the legislation, pineapples were compulsorily acquired from the growers by certain canneries and were processed to provide pineapple products required to supply the needs of the armed forces. The property acquired was acquired for a purpose in respect of which the parliament had power to make laws, namely, to feed members of the armed forces, a purpose within the power to make laws with respect to defence.

Where property is acquired by a third party pursuant to Commonwealth legislation, it is more likely that the use or application of the property envisaged by the legislation will not fall within any head of Commonwealth legislative power. The acquisition of the property will then not be for any purpose in respect of which the parliament has power to make laws within the meaning of s 51(xxxi), and legislative power to support the acquisition must be sought elsewhere. This is the situation with many Commonwealth laws which regulate the relationship between private persons. For example, it is the situation with the compulsory acquisition of property under bankruptcy law. The power to support the acquisition is not found in s 51(xxxi) but in s 51(xvii) (bankruptcy and insolvency) [See Attorney-General (Cth) v Schmidt (1961) 105 CLR at 372]. It is the situation with the readjustment of property rights between the parties to a marriage where the legislative power is to be found in s 51(xxi) (marriage) or s 51(xxii) (divorce and matrimonial causes).

Section 51(xxxi) has been treated as abstracting from all other heads of power (including the incidental power but not s 122) the power to legislate for the compulsory acquisition of property which is conferred by that paragraph. But that power is limited to the acquisition of property for any purpose in respect of which the parliament has power to make laws, and that is all that is abstracted from the other heads of power. Thus the power to legislate for the acquisition of property which is not intended to be used or applied for such a purpose may be found in other heads of power [ibid]. A succinct explanation was given by Brennan J in the Federal Court in Re Tooth & Co Ltd (No 2) [(1978) 34 FLR 112 at 148]:

Where a federal legislative power extends to the regulation of a relationship between private persons, pl (xxxi) does not necessarily cut down that power so as to exclude the acquisition of property as a mode of regulation. If the acquisition is intended by the regulating law to be for a purpose referred to in pl (xxxi) then pl (xxxi) applies and the validity of the law depends upon its compliance with the requirement of just terms. But if the acquisition is not intended to be for such a purpose, pl (xxxi) does not bear upon the law's validity. The validity of such a law is ascertained by inquiring whether it bears the character of a law with respect to some other head of federal legislative power.

32. WH Blakeley & Co Ltd v Commonwealth (1953) 87 CLR 501 at 518-19; [1953] ALR 293; (1953) 26 ALJR 672; see also Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 372–3; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 68 ALJR 216 at 236–7; 119 ALR 577 at 608–9; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 165, 167; (1994) 121 ALR 577 at 598, 600; (1994) 68 ALJR 537; [1994] HCA 27 (Dawson J).

33. Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 166; (1994) 121 ALR 577 at 599; (1994) 68 ALJR 537; [1994] HCA 27 (Dawson J).

  1. If property can be said to be “acquired” pursuant to PPSA s 267, it is not acquired to be applied for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor’s own purposes: to enlarge the grantor’s assets and the property that will be divisible among its creditors. As such an acquisition is not for a relevant Commonwealth purpose, s 267 does not depend for its constitutional authority on s 51(xxxi), and s 51(xxxi) does not operate indirectly to confine those legislative powers – such as s 51(xvii) (the power to make laws with respect to bankruptcy and insolvency), and s 51(xxxvii) (the power to make laws with respect to matters referred by the states) – which provide the authority for s 267.

  2. Further, a law which is not directed towards the acquisition of property as such but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity is unlikely to be susceptible of legitimate characterisation as a law with respect to the acquisition of property such as to fall within s 51(xxxi). [34] The PPSA is directed to regulating and adjusting the relationship between true owners, the holders of security interests, and apparent owners. In these respects it modifies the rights those parties might have had in respect of personal property at common law. Section 267 works a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property, and is not a law with respect to the acquisition of property for the purposes of s 51(xxxi).

    34. Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 161 (Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ); [1994] HCA 27, referring to Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 510; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 171–173, 177–178, 188–189; Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 285–286; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 236–238; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305–8; Dixon R, “Overriding Guarantee of Just Terms or Supplementary Source of Power?: Rethinking s 51(xxxi) of the Constitution” (2005) 27 Syd Law Rev 639 at 649–50; White v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214; [2014] WASC 139 at [38].

  3. That was the approach taken by Le Miere J in White v Spiers Earthworks Pty Ltd: [35]

[39] … Section 267(1) provides the circumstances in which the security interest held by a secured party vests in the grantor. The circumstances are where the grantor is insolvent and hence the vesting of the security interest in the grantor adjusts the competing rights of the secured party on the one hand and the unsecured creditors of the grantor on the other hand in relation to the personal property in relation to which the secured party has a security interest.

[40] Section 267(2) of the PPSA does not effect an acquisition of property within the meaning of “acquisition of property” in s 51(xxxi) of the Constitution. The operation of s 267 to vest the defendants’ interest in the hire assets does not result in an acquisition of property within the meaning of “acquisition of property” in s 51(xxxi) of the Constitution, and hence s 252B of the PPSA does not apply to the circumstances of this case.

35. (2014) 99 ACSR 214 at 222–3; [2014] WASC 139 at [39]–[40].

  1. While Alleasing submitted that I should decline to follow White v Spiers on the basis that it was plainly wrong, in my judgment it is plainly correct.

  2. Accordingly, any “acquisition” effected by s 267 is not an acquisition within the meaning of s 51(xxxi): it is not an acquisition of property to be applied for any purpose in respect of which the Commonwealth has power to make laws, but one for the grantor’s own purposes, and it represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property. PPSA s 252B is not engaged.

  3. The second qualification to the indirect operation of s 51(xxxi) is that it is subject to a contrary intention either expressed or made manifest in the other heads of power, some of which clearly encompass the making of laws providing for the acquisition of property other than on just terms, and “[w]here that is so, the other grant of legislative power manifests a contrary intention which precludes the abstraction from it of the legislative power to make such a law”. [36] This was the other point made by Dixon CJ in Schmidt in the passage set out above, and was expounded by Mason CJ in Mutual Pools: [37]

The conferral of the legislative power of compulsory acquisition subject to the requirement of just terms means that, apart from s 122 which stands in a separate position [See Teori Tau v Commonwealth (1969) 119 CLR 564 at 570], in the absence of any indication of contrary intention, the other legislative powers reposed in the parliament must be construed so that they do not authorise the making of a law which can properly be characterised as a law with respect to the acquisition of property for any relevant purpose otherwise than on just terms. For it is a well-accepted principle of interpretation that, when a power is conferred and some qualification or restriction is attached to its exercise, other powers should be construed, absent any indication of contrary intention, so as not to authorise an exercise of the power free from the qualification or restriction [See Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 370–2 per Dixon CJ]. Hence, the effect of s 51(xxxi) when read in conjunction with the other legislative powers of the parliament is that, subject to any contrary intention, it forbids the making of laws with respect to the acquisition of property from any State or person for a relevant purpose on terms that are not just [See Australian Apple and Pear Marketing Board v Tonking (1942) 66 CLR 77 ; Johnston Fear & Kingham & Offset Printing Co Pty Ltd v Commonwealth (1943) 67 CLR 314 ; Bank of NSW v Commonwealth(the Bank Nationalisation case) (1948) 76 CLR 1 at 349–50 per Dixon J]. Consequently, a law with respect to the acquisition of property must comply prima facie with the requirement of just terms.

An indication of contrary intention may be provided by the express terms in which a specific power is conferred or by the very nature of the subject matter of a specific power or what is included within it. Thus, the very terms of s 51(xxxiii), which confers power to make laws with respect to the acquisition of State railways ``on terms arranged between the Commonwealth and the State'’, indicate that an acquisition of State railways stands outside s 51(xxxi). And, so does s 85 which makes special provision with respect to compensation payable by the Commonwealth for property passing from a State under that section.

36. Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 160 (Mason CJ, Brennan, Deane Toohey, Gaudron and McHugh JJ); [1994] HCA 27, referring to Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 169–171, 177–78, 186–88, 219–223; Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 274–9, 283–4, 294–6; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 258–60; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305–7.

  1. Alleasing also invoked PPSA s 293(1)(a), to seek an extension of the period for registration of its security interest in order that it retain priority as a PMSI:

293  Timing—applications for extension of time

(1)  On application, a court may make an order extending the number of business days in a period specified in the following provisions if the court is satisfied that it is just and equitable to do so:

(a)  paragraphs 62(3)(b) (perfection of purchase money security interests);

…

(2)  The court may make the order even if the period has ended.

(3)  In making an order to extend a period under subsection (1), the court must take into account the following:

(a)  whether the need to extend the period arises as a result of an accident, inadvertence or some other sufficient cause;

(b)  whether extending the period would prejudice the position of any other secured parties or other creditors;

(c)  whether any person has acted, or not acted, in reliance on the period having ended.

  1. However, s 293(1)(a) is concerned only with extension of the period referred to in s 62(3)(b). Section 62 is concerned with when a perfected purchase money security interest (“PMSI”) has priority over a perfected security interest that is not a PMSI, and in respect of personal property other than inventory relevantly provides:

(3)  The purchase money security interest has priority if:

(a)  the interest is in personal property, or its proceeds, other than inventory; and

(b)  the purchase money security interest is perfected by registration before the end of 15 business days after whichever of the following days applies:

(i)  for goods—the day the grantor, or another person at the request of the grantor, obtains possession of the property;

(ii)  for any other property—the day the interest attaches to the property; and

(c) the registration that perfects the purchase money security interest states, in accordance with item 7 of the table in section 153, that the interest is a purchase money security interest.

Note:  The period mentioned in paragraph (b) may be extended by a court under section 293.

  1. Thus s 62(3) is concerned with the priority of security interests, not their perfection. An extension of the period referred to in s 62(3)(b) would not affect the vesting that has taken place under s 267, because it would not alter the fact that, for the purpose of s 267(1)(b)(ii), on “the s 513C day”, Alleasing’s security interest was unperfected.

Conclusion

  1. My conclusions may be summarised as follows:

  2. The original registrations were defective, in that they did not, as required, include OneSteel’s ACN. A search of the PPS register by reference only to OneSteel’s ACN would not reveal the original registrations, being as they were against the ABN. Accordingly, the original registrations were ineffective, pursuant to PPSA s 164(1)(b) and s 165(b). Moreover, the defect was such that searchers using one of the authorised modes of search would not discover the registration. This renders the defect seriously misleading, and so the first registrations were ineffective pursuant to s 164(1)(a) also.

  3. Although but for PPSA s 252B, s 267 would be a valid exercise of power under Constitution s 51(xvii) and s 51(xxxvii) even if it effected an acquisition of property within the meaning of s 51(xxxi) other than on just terms, because those heads of power sufficiently manifest an intention that, at least to that extent, they not be constrained by the indirect operation of s 51(xxxi), PPSA s 252B disapplies a provision of PPSA if it effects an acquisition of property within the meaning of s 51(xxxi) other than on just terms, regardless of its constitutional validity. However, s 267 does not effect an acquisition of property at all. Alternatively, if it does effect an acquisition of property, it is not one within the meaning of s 51(xxxi), because it is not for application for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor’s own purposes, and represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property. Accordingly, PPSA s 252B is not engaged and does not disapply s 267.

  4. Relief under Corporations Act s 588FM is not available, because the relevant security interest was unperfected at the “critical time”. Even if relief could be given under s 588FM, it would not operate to divest an unperfected security interest that has already vested under s 267, because an extension of time for the purposes of s 588FL would not affect the vesting that has taken place under s 267, as it would not alter the fact that, for the purpose of s 267(1)(b)(ii), on the s 513C day for the grantor company OneSteel when administrators were first appointed to it on 7 April 2016, Alleasing’s security interest was unperfected.

  5. Similarly, an extension under PPSA s 293(1)(a) of the period referred to in s 62(3)(b) would not affect the vesting that has taken place under s 267, because it would not alter the fact that on, on the s 513C day, Alleasing’s security interest was unperfected.

  6. It follows that Alleasing’s security interests in the crusher and the parts, being unperfected on 7 April 2016 when OneSteel went into administration, have vested in OneSteel pursuant to PPSA s 267. The originating process should be dismissed, and on the cross-claim there should be a declaration that Alleasing’s security interests in the crusher and the parts have vested in OneSteel.

  7. The court therefore:

  1. orders that the originating process be dismissed.

  2. declares that the interest of the plaintiff as lessor of the Striker crushing and screening plant referred to in Rental Schedule E2N0157602 and in the spare parts referred to in Rental Schedule E2N0158455 under the rental agreement dated 16 October 2014 between the plaintiff and the first defendant has vested in the first defendant.

  3. orders that the plaintiff pay the first and second defendants’ costs of the proceedings (including the cross-claim).

**********

Endnotes


Decision last updated: 01 February 2017

Most Recent Citation
Cases Cited

24

Statutory Material Cited

10

Re Accolade Wines Australia Ltd [2016] NSWSC 1023
Polymers International Limited v Toon [2013] NZHC 1897
Telstra Corporation Ltd v The Commonwealth [2008] HCA 7