Reading a PPSR Registration

The manner in which the PPSR has been designed does not require suppliers to provide any description of the collateral representing their security interest beyond identifying the Collateral Class (eg, 'Other Goods').  

There is an opportunity for registrants to provide a description of their goods but this is not a mandatory field and, as with most Government forms, if you are given an opportunity not to have to enter something then it is not unnatural to give a quick murmured thanks to your deity of choice and move on, leaving the optional field pristine and untouched.

However, there are clearly a large number of organisations out there (most of which should definitely know better) who seem to view the absence of a collateral description as some sort of indication that the registration could therefore apply to anything.  As a result we have clients who supply paper products, for example, being asked to sign Deeds of Release or amend their registrations for anything from cars and trucks to hose-pipes and buildings.

The big problem, however, is not that the supplier has failed to enter a collateral description but that the third party (usually a bank or financier) has failed to understand the information that is contained in the basis registration.

At the moment one of our client's ‘typical’ registrations without a collateral description tells the following story (I'll simply refer to our client as ABC):

Commercial Property

ABC have a security interest over certain property owned by the Grantor.  This does not include any interest over property owned by the Grantor in any capacity they may hold as a private consumer.

Other Goods

That security interest is not over land, buildings or serial numbered collateral such as motor vehicles, watercraft, aircraft etc.

ABC's security interest is over tangible goods and is not a general security interest over all the Grantor’s property.

PMSI

The security interest only applies in relation to goods that ABC have supplied to the Grantor.

Inventory

The security interest applies to goods ABC have supplied that form part of the inventory of the Grantor and therefore does not apply to any of their other assets and equipment.

Proceeds

ABC's security interest extends to any return the Grantor may have received from on-selling or otherwise disposing of the goods ABC supplied.

ABC's security interests only apply while there is an outstanding account between the Grantor and ABC.

The above is all evident from a quick glance at one of ABC's Verification Statements or from the results of a search that any third party might conduct on the PPSR.

While adding a collateral description of, say, “Materials and raw materials” will certainly do no harm, I am sure you will agree that it adds little if anything to the basic story being told by ABC's registration without that description.

I appreciate that it must be getting more than a little frustrating to be pestered by third parties who, for whatever reason, have failed to take the trouble to understand a supplier's registrations to that end the following ‘standard’ response we drafted recently for another of our clients in a similar predicament may be of interest:

Our registration relates to a security interest held, by virtue of a Retention of Title clause, over goods supplied by us as well as over the proceeds of any sale of those goods. 

Reference in our registration to “All present and after acquired property” relates solely to any proceeds that might arise from the use, disposal or sale of collateral supplied by us and does not represent a security interest over any other assets of the Grantor. 

In light of this it would appear neither necessary nor appropriate for us to complete the Deed of Release you have provided.