PPSR Registrations Against Sole Traders

While the PPSR allows you to describe your registration as being in respect of a security interest arising from either a Commercial or Consumer transaction, when it comes to registering that interest against an individual this differentiation appears to have no real effect.

Registrations against a sole trader entering into a security agreement on behalf of their business still have to be lodged against the individual as opposed to the business.

Any registrations against an individual must identify the individual by their full name (such as would appear on their drivers licence) and date of birth.  

The fact that the sole trader has a valid ABN (Australian Business Number) which featured prominently on their application for credit is neither here nor there and the PPSR provides no facility for entering this number as part of the registration.  

But what if the sole trader is acting as the trustee of a Trust?  The PPSA allows for the registration of security interests against Trusts using the Trust ABN - doesn't this allow a creditor to avoid having to use the sole trader's name and date of birth?

Unfortunately, the answer is far from clear.  

The Personal Property Securities Regulations 2010 provides the following definition for an individual:

individual:

                (a)    includes a sole trader who has an ABN for the enterprise for which the security interest is granted or held; and

               (b)    does not include an individual who is a partner in a partnership or a trustee of a trust if the partnership or trust has an ABN for the enterprise for which the security interest is granted or held.

Well, what's unclear about that? (b) seems to be saying quite clearly that if the sole trader is using a Trust ABN then they don't have to be treated as an individual for the purposes of registration.  

Agreed, but if we look further at the Regulations they go on to state that the prescribed details for lodging a registration against a trustee are:

               (a)    for a trustee that is an individual — the details mentioned in the item of the table in clause 1.2                        that:

                          (i)    applies to the trustee; and

                         (ii)    has the lowest item number;

The table in clause 1.2 referred to here takes us back to the instructions stating that the details needing to be provided are the full name and date of birth of the individual as found on their drivers licence!

Now, while I would suggest that the intention of the Act is probably to allow for sole traders who are acting as trustees for Trusts that have ABNs to have registrations lodged against the Trust (as an organisation) and be identified by that Trust's ABN, the relevant wording is so convoluted and unclear that, in the absence of legal precedent, a case could be made either way.