All a bit of a mess

When the Personal Property Securities Act was passed in late 2009 it was intended that the  National Register it needed to create would be introduced in May 2011.  It therefore seems strange to suggest that its eventual introduction on 30th January 2012 (after an earlier extension to October 2011) showed all the hallmarks of a rushed affair.


Aside from all the little cosmetic issues with the Register (links not working, Help buttons that popped up with useful guidance such as "insert help text here") the Register simply did not work for much of its first week. 


I remember the fun we had in our office early in February calling out from our cubicles "Is the Register up yet?", "No",  "Hang-on, it's up now!", "Oh no, it's down again". Happy times.


It was only later we realised that it wasn't just us members of the public and business community that were having problems.  The intra-governmental transfer of registered charges from ASIC's database to the PPSR had also hit something of a snag.  It wasn't until mid-March that we discovered that some 38,000 satisfied charges wrongly appeared on the PPSR as current charges with an additional 6,000 charges not appearing at all!  A further 25,878 company charges with multiple secured parties did make it across to the new register but with many of them only showing a single secured party.


Even when details of a company charge have made it across to the new register in one piece we find that some identify the chargee or grantor by ACN, some by ABN and others by company name even though the PPSA rules require grantors with an ACN to be registered solely by that number.  This will virtually necessitate interested parties to conduct at least three searches (by ACN, ABN and Name) for every grantor they are curious about (each search will, of course, attract its own fee from the Register).


While it is easy to get distracted by the practical problems the Register is having in applying their registration rules we shouldn't lose sight of the fact that those rules laid down in the Act itself look pretty flawed in the first place!


If a grantor has an ACN then the security interest registered against it should identify the grantor by that ACN.  That is clear and understood.  


If the charge is against a partnership then that partnership should be identified by their ABN.  That is also clear and makes sense.  


If, however, the charge is against an organisation such as co-operative, a strata plan, sports association, charity, church group or any organisation incorporated under state law (rather than under the Corporations Act) that does not have an ACN but does have an ABN then one would think that the ABN should be used to identify that organisation.  Unfortunately, the answer is 'No'; in such cases the grantor needs to be identified by Name only.


I suppose there could be an argument suggesting that the organisation could use more than one ABN or that the ABN does not sufficiently 'define' the organisation in the same way as an ACN defines a company, but does that same argument not also apply to partnerships?


Last (for this blog entry) but not least,the PPSA also encourages registrations to be made against Trusts which, as most people in business probably know, do not have the legal capacity to enter into contracts nor, indeed, to grant security interests!  


So, to recap briefly, we have a mess of a Register administering rules laid down by a mess of an Act.  


In any other circumstance I'd recommend we all avert our gaze and ignore the whole embarrassing thing; unfortunately, mess or not, the PPSA is not going to go away and will have way too much impact on the manner in which business is conducted in this country for the foreseeable future for us not to pay it a great deal of attention.


In further blog posts I hope to be able to help clarify many of the twists and turns of the PPSA that may trip the unwary and try and make sense of what, in many ways, is all a bit of a mess.


P