Mr Cirillo and Registrar of Personal Property Securities

[2013] AATA 733

[2013] AATA 733

Division	GENERAL ADMINISTRATIVE DIVISION
File Number	2012/3697
Re	Mr Cirillo
APPLICANT
And	Registrar of Personal Property Securities
RESPONDENT

DECISION

Tribunal	Deputy President K Bean
Date	11 October 2013
Place	Adelaide

The decision under review is affirmed.

.............[Sgd].....................

Deputy President K Bean

CATCHWORDS

CORPORATIONS - Securities - Personal Property Securities Act 2009 - Amendment demand given seeking removal of registration from Personal Property Securities Register - Registrar refused to register a financing change statement amending registration - Whether reasonable grounds to suspect amendment sought not authorised - Collateral continues to secure debt owed by the applicant - Amendment sought not authorised - Decision under review affirmed.

LEGISLATION

Personal Property Securities Act 2009 (Cth), ss 178, 180, 181 and 191

SECONDARY MATERIALS

Personal Property Securities Bill 2009 (Cth) Replacement Explanatory Memorandum

REASONS FOR DECISION

Deputy President K Bean

11 October 2013

INTRODUCTION

1. In October 2007 the applicant, Mr Cirillo, purchased a Holden Commodore motor vehicle (the vehicle) with the assistance of finance provided by GE Personal Finance Pty Ltd (GE).  In 2010, he borrowed additional funds from GE and consolidated that additional loan with the original loan on the basis that the new loan, like the original loan, was secured against the vehicle.

2. GE’s interest in the vehicle as collateral for the finance it had provided to Mr Cirillo was registered on the New South Wales Register of Encumbered Vehicles (REVS) in October 2007, and again in 2010.  Following establishment of the national Personal Property Securities Register (PPSR) in early 2012, the data from REVS, including the details registered by GE in respect of Mr Cirillo’s debt to them secured by the vehicle, was migrated to the PPSR.

3. Later that year, in July 2012, Mr Cirillo initiated a process intended to remove the relevant registration from the PPSR.  That process culminated in a decision made by the Registrar of Personal Property Securities (the Registrar) in August 2012 not to make the amendment to the PPSR sought by Mr Cirillo, which would have resulted in removal of the registration from the PPSR.

4. Mr Cirillo has now sought review of that decision by this Tribunal, giving rise to these proceedings.

5. Before addressing the issues which arise from Mr Cirillo’s application more directly, I will first set out the applicable statutory framework, and then outline in more detail the factual background to the application.

   THE STATUTORY FRAMEWORK

6. The Personal Property Securities Act 2009 (the Act) commenced operation on 15 December 2009.  The Act established a single national law governing security interests in personal property and was aimed to address the complexity of the regime it replaced, comprising over 70 Commonwealth, State and Territory laws, common law rules and rules of equity governing personal property securities.  It was intended to provide a “modern and efficient personal property securities regulatory system which is essential for any modern financial system”.[1]  The Act also established the PPSR, which is maintained by the Registrar.  As alluded to above, the PPSR ultimately commenced on 30 January 2012, when data from pre-existing registers (including REVS) was migrated to the newly created PPSR. 

   [1] Personal Property Securities Bill 2009 (Cth) Replacement Explanatory Memorandum, p 11.

7. Part 5.6 of the Act sets out an administrative process by which a person with an interest in collateral which is the subject of a PPSR registration can make an amendment demand of a secured party seeking an amendment to end a registration on the PPSR, including an amendment to remove the registration.  If the secured party does not comply with the amendment demand within five business days, the person may give an amendment statement to the Registrar stating the amendment demanded.  The Registrar is required to then issue an amendment notice to the secured party stating the amendment demanded and inviting a response within a certain timeframe.[2]

   [2] Section 180.

8. Section 178 of the Act relevantly provides as follows:

   178  How amendment demands are given

   (1)A person with an interest (including a security interest) in collateral described in a registration with respect to a security interest may give a demand (an amendment demand), in writing, to the secured party for a financing change statement to be registered to amend the registration as authorised by the following table:

   Note:If the secured party does not comply with the amendment demand, the demand may be enforced under Subdivision A (administrative process) or Subdivision B (judicial process) of Division 2.

Authorised amendments
Item	When amendment is authorised	What amendment is authorised
1	No collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party.	Amendment to end effective registration (including an amendment to remove the registration).
2	The particular collateral in which the person has an interest does not secure any obligation (including a payment) owed by a debtor to the secured party.	Amendment to omit the collateral.

(2)Data removed from the register because of an amendment in compliance with the amendment demand must not be made available for search in the register by reference to any time before (or after) the time of removal, if the Registrar so decides for the purposes of this subsection.

Note 1:Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision that the removed data is not to be made available for search in the register (see section 191).

Note 2:Incorrectly removed data may be restored under section 186.

(3)A secured party must not require payment for compliance with an amendment demand in relation to collateral that:

(a)   at the time the security interest attached to the collateral, the grantor intended to use predominantly for personal, domestic or household purposes; or

(b)   the grantor is using predominantly for personal, domestic or household purposes.

1. Section 181 of the Act relevantly provides as follows:

   181  Administrative process—registration amendments

   (1)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.

   (2)However, the Registrar may register such a financing change statement before the end of the period covered by subsection (3) if:

   (a)   the secured party has responded to the invitation in the amendment notice; and

   (b)   the Registrar has no reason to believe that the secured party intends to give a further response.

   (3)   The period covered by this subsection is:

   (a)   5 business days after the day the amendment notice is given to the secured party; or

   (b)   a longer period approved by the Registrar (in relation to the particular amendment demand, or to a class of amendment demands) after the amendment notice is given to the secured party.

2. Section 191 of the Act also provides that application may be made to this Tribunal for the review of a variety of decisions made by the Registrar, including a decision to refuse to register a financing change statement in accordance with an amendment demand, under s 181(1).[3]

   [3] Section 191(h).

3. Accordingly, the main issue for my determination is whether there are reasonable grounds to suspect that the amendment sought by Mr Cirillo is not authorised under s 178, pursuant to s 181(1).  Such reasonable grounds would clearly include satisfaction on my part that the collateral described in the registration continues to secure an obligation owed by Mr Cirillo to the secured party.  Therefore consideration of this issue involves the question of whether the vehicle does continue to secure an obligation owed by Mr Cirillo to the secured party.

4. However before addressing that issue more directly, I will first set out in more detail the relevant factual background to the application.

   THE BACKGROUND FACTS

5. As outlined above, on 3 August 2010, GE registered an encumbrance on REVS regarding the vehicle.  The encumbrance secured a finance facility to Mr Cirillo in relation to the vehicle, being the second finance facility provided by GE to Mr Cirillo secured by the vehicle.  On 30 January 2012, at the commencement of the PPSR, that registration was migrated to the PPSR.  The registration listed GE as the secured party and the collateral as the vehicle, which has the serial number 6G1EK52B77L904606.[4]

   [4] Respondent’s Statement of Facts, Issues & Contentions, [4].

6. In the meantime, on 24 December 2011, GE had entered into a sale of debt agreement with Lion Finance Pty Ltd (Lion Finance) whereby GE assigned to Lion Finance a number of debts, including Mr Cirillo’s debt secured by the vehicle.  The sale of debt agreement included terms by which GE agreed to register financing statements on the PPSR to record the transfer of security interests relating to the debts/contract rights assigned to Lion Finance.  The registrations were required to be transferred on the PPSR to the secured party group nominated by Lion Finance.[5]

   [5] T10/92.

7. On 28 March 2012, GE accordingly registered a financing change statement in the approved form under s 150(2) of the Act to change the secured party details from GE to Collection House Limited[6] (Collection House) and Lion Finance.[7]

   [6] According to the documentation before me, Lion Finance is a wholly owned subsidiary of Collection House - see T10/92 and also T5/21.

   [7] Respondent’s Statement of Facts, Issues & Contentions, [5].

8. As also alluded to above, on 23 July 2012, Mr Cirillo issued an amendment demand to the new secured parties, Lion Finance and Collection House.[8]  Mr Cirillo demanded:

   a.    An amendment to end effective registration (including an amendment to remove the registration), because no collateral described in the registration secures any obligation (including payment) owed by the debtor to the secured party; or

   b.    An amendment to omit the following collateral serial number 6G1EK52B77L904606, because the person has an interest in that collateral and it does not secure any obligation (including a payment) owed by a debtor to the secured party.[9]

   [8] T3/9.

   [9] T3/9, [vi].

9. On 31 July 2012, the Registrar received an amendment statement from Mr Cirillo dated 1 August 2012.[10]  The amendment statement sought that the Registrar register a financing change statement to end effective registration (including by removing the registration) and enclosed a copy of the amendment demand issued to Lion Finance and Collection House by Mr Cirillo dated 23 July 2012.

   [10] T3/6.

10. On 7 August 2012, the Registrar sent an amendment notice to Lion Finance and Collection House informing them of the amendment statement received from Mr Cirillo.[11]  The amendment notice advised Lion Finance and Collection House that it was open to them to comply with the demand or alternatively, if they asserted the amendment was not authorised, to submit a response by 15 August 2012.

    [11] T4.

11. On 13 August 2012, Collection House on behalf of its wholly owned subsidiary, Lion Finance, advised that it was authorised and instructed to write for and on behalf of Lion Finance, and submitted a written response to the amendment statement asserting that the registration should not be removed.[12]  Collection House also provided copies of a number of documents in support of its assertion that the registration should not be removed.

    [12] T5.

12. On 19 August 2012, following consideration of this material, the Registrar made a decision under s 181(1) of the Act to not register a financing change statement to remove the registration in accordance with the amendment demand, as the Registrar suspected that the amendment demanded was not authorised under s 178 of the Act.[13]

    [13] T7, T8.

13. Having set out that additional background to the application, I will now proceed to address the main issue on which the application turns, namely whether the vehicle continues to secure an obligation owed by Mr Cirillo to Lion Finance.

    DOES THE VEHICLE CONTINUE TO SECURE AN OBLIGATION OWED BY MR CIRILLO TO LION FINANCE?

14. Mr Cirillo contends that the vehicle does not secure a debt owed by him to Lion Finance or Collection House for a variety of reasons.  Some of the arguments he has put forward in support of this contention include:

    (a)that one of the contracts he is alleged to have entered into with GE was not signed;

    (b)that he was not appropriately informed about the applicable rate of interest;

    (c)that a person who signed a contract on behalf of GE was not authorised to do so;

    (d)that one of the relevant documents is an application form, not a binding contract;

    (e)that he did not understand the nature of the arrangements he was entering into with GE and was taken advantage of;

    (f)that the relevant registration is not legitimate;

    (g)that the contract pursuant to which GE sold his debt to Lion Finance was invalid;

    (h)that GE unlawfully assigned its rights to Lion Finance;

    (i)that the figures provided by Lion Finance and Collection House are inaccurate and he does not owe as much as they say he owes; and

    (j)that GE had no right to amend the relevant registration so as to record Lion Finance and Collection House as the secured parties.[14]

    [14] “Applicant’s Particulars of Claim”, dated 6 April 2013.

15. However, insofar as they bear upon the issues before me, Mr Cirillo’s assertions and contentions are not borne out by the documentary material which has been tendered into evidence.

16. Those documents show that on 19 October 2007, Mr Cirillo signed a contract for the purchase of the vehicle, being a Holden Commodore with the serial number referred to above.[15]  The purchase price was $28,890 with the total amount of the transaction being $30,000.  A deposit of $3,000 was paid, with the balance of $27,000 to be settled by means of finance to be approved.[16]  Documents produced by GE also indicate that on 22 October 2007, an amount of $35,605.44 was recorded as being owed to GE by Mr Cirillo.[17]  Those documents also include a lease/asset purchase agreement signed by Mr Cirillo on 20 October 2007[18] for a total amount of $35,605.44, comprising the net price of the vehicle, being $27,000, together with some additional costs and an “upfront” interest charge of $7,696.79.[19]

    [15] Exhibit 2, A1 and A2.

    [16] Exhibit 2, A2.

    [17] Exhibit 2, A3.

    [18] Exhibit 3, GE3.

    [19] Exhibit 3, GE3/6 and GE3/10.

17. The terms and conditions of the agreement entered into between Mr Cirillo and GE also make clear that the agreement was a hire purchase arrangement,[20] and the documentation includes a statement signed by Mr Cirillo on 20 October 2007, indicating that before he signed the relevant agreement he received a copy of the booklet entitled “Lease Agreement and Asset Purchase Agreement and Guarantee Terms & Conditions”.[21]  The documentation also includes a certificate indicating that GE registered its interest in the vehicle on REVS on 23 October 2007.[22]

    [20] Exhibit 3, GE4/26 and GE3/6.

    [21] Exhibit 3, GE3/18.

    [22] Exhibit 3, GE7/79.

18. The material produced by GE also includes documentation in relation to the second transaction entered into by Mr Cirillo with GE.  This further contract was entered into in August 2010 and related to a fixed rate personal loan for the amount of $22,884.90, of which $18,543.85 was paid to GE Auto, with the balance, less fees and charges of $284.90, being paid to Mr Cirillo.  In effect, it appears that this second loan amount was comprised of an amount to pay the outstanding balance owed on Mr Cirillo’s previous hire purchase contract, together with an additional “top up” loan direct to Mr Cirillo.  The documents indicate that an offer by GE to lend Mr Cirillo that amount of money on the basis indicated was accepted by Mr Cirillo, as indicated by his signature on the relevant document, on 3 August 2010.[23]

    [23] Exhibit 3, GE5/45.

19. The documentation also indicates that GE registered its interest in the vehicle arising from this fresh contract on 3 August 2010,[24] and apparently advised the insurer of the vehicle of its interest by letter dated 2 August 2010.[25]  That letter also included an annotation signed by Mr Cirillo and indicating that he transferred his rights in the vehicle to GE.

    [24] Exhibit 3, GE7/79.

    [25] Exhibit 3, GE8/83.

20. The material produced by GE also indicates that, in respect of the second transaction entered into by Mr Cirillo with GE, the opening balance on 3 August 2010 was $18,543.85, with the closing balance as at January 2012 being $23,007.40, following the accrual of interest charges and fees.  This material also shows that Mr Cirillo was not making regular payments against this loan after approximately July 2011.  This appears to be at least partially explained by the fact that, in June 2011, Mr Cirillo was unfortunately made redundant from the position he then held.[26]

    [26] Exhibit 4, L20.

21. In relation to Mr Cirillo’s assertions that GE was not entitled to sell his debt to Lion Finance, the material produced by GE also includes a copy of the contract signed by him in 2010, which includes a clause specifically allowing GE to assign its rights under the contract.[27]  The T-Documents also include a copy of the sale of debt agreement between GE and Lion Finance[28] and documents produced by Lion Finance clearly indicate that Mr Cirillo’s debt was one of those included in this sale of debt agreement.[29] The documentation also indicates that Mr Cirillo was advised of the sale of his debt by letter dated 26 March 2012,[30] and that the registration of the debt on the PPSR was appropriately transferred from GE to Lion Finance and Collection House on 28 March 2012.[31]  The documentation also makes clear that the debt, now owed by Mr Cirillo to Lion Finance, continues to be secured by the vehicle which he originally purchased in 2007.[32]

    [27] Exhibit 3, GE6/65, [8.10].

    [28] T5/31.

    [29] Exhibit 4, p68.

    [30] Exhibit 4, p71.

    [31] Exhibit 4, p120.

    [32] cf Exhibit 2, A2 and Exhibit 4, p 120.

22. Having regard to this material, and notwithstanding Mr Cirillo’s submissions to the contrary, I have concluded that Mr Cirillo continues to owe a debt, secured by the vehicle, that that debt has been lawfully sold by GE to Lion Finance and that the PPSR has been appropriately amended to reflect the fact that Lion Finance and Collection House are now the secured creditors with respect to the debt owed by Mr Cirillo.  As I have indicated above, amongst the arguments advanced by Mr Cirillo were arguments that he had repaid the debt, that GE and/or Lion Finance and Collection House were not entitled to secure the debt against the vehicle, that the relevant loan documentation was not properly signed, and that he had not entered into any relevant binding contract or that the contract(s) were unenforceable.  However, following careful consideration of the material I have referred to above, I am not persuaded that Mr Cirillo’s contentions are borne out by the documentary material.  Rather, I am satisfied that the evidence before me, in particular the documentary material I have referred to, clearly establishes that Mr Cirillo continues to owe a debt, which has been properly assigned by GE to Lion Finance, and further that that debt continues to be secured by the vehicle Mr Cirillo purchased in 2007, with the assistance of finance supplied by GE.

1. The only remaining issue therefore is whether, in light of that conclusion, there are reasonable grounds to suspect that the amendment sought by Mr Cirillo is not authorised under s 178 of the Act.

   ARE THERE REASONABLE GROUNDS TO SUSPECT THAT THE AMENDMENT SOUGHT BY MR CIRILLO IS NOT AUTHORISED?

2. In my view, it follows from the conclusion I have reached above that there were and are reasonable grounds to suspect, under s 181(1) of the Act, that the collateral described in the relevant registration secures an obligation owed by Mr Cirillo to Lion Finance and therefore that the amendment demanded by Mr Cirillo, to remove the registration, is not authorised under s 178 of the Act.

3. I have further concluded, based on those grounds, that I also suspect that the amendment sought by Mr Cirillo is not authorised under s 178.  Accordingly, I am satisfied that the decision made by the Registrar, to not register a financing change statement to remove the registration under s 181 on the basis that he suspected that the amendment demand was not authorised, was correct, and I have decided to affirm that decision.

4. Before leaving the matter, I should also record the fact that on 6 November 2012, the Tribunal wrote to Collection House advising them of the proceedings and inviting them to apply to become a party if they wished to.  However as no response was received, the matter proceeded to finality with the Registrar as sole contradictor.

   DECISION

5. The decision under review is affirmed.

I certify that the preceding 35 (thirty -five) paragraphs are a true copy of the reasons for the decision herein of Deputy President K Bean

.....[Sgd].....

Associate

Dated 11 October 2013

Date of hearing	16 July 2013
Applicant	In person
Advocate for the Respondent	Mr A Sellars Principal Legal Officer Registrar of Personal Property Securities