Correct Identification of the Grantor

The end of January saw the NSW Supreme Court hand down a stark reminder that failing to correctly identify a Grantor when lodging a registration on the PPSR will have serious (and potentially very expensive) repercussions.

The case concerned the lease of some $23 million or so worth of equipment from Alleasing Pty Ltd to OneSteel Manufacturing Pty Ltd. The leases in question satisfied the PPSA's definition of PPS Leases (s13 of the Act) and were duly registered on the PPSR in order to protect Alleasing's continued interest in the equipment.  Unfortunately for Alleasing, the registrations identified OneSteel as the Grantor by reference to OneSteel's ABN, whereas the PPS Regulations (via some rather convoluted wording) required that the registration identify OneSteel by their ACN.

Although it might be argued (and to some extent it was) that there was no misunderstanding concerning the legal entity that was acting as Grantor - both ABN and ACN clearly identified OneSteel Manufacturing - the issue was more focused upon the extent to which a failure to strictly adhere to the Regulations' identification rules was sufficient to render the registration ineffective.

Because a legally effective search for registrations lodged against OneSteel would need to be conducted on the PPSR against OneSteel's ACN (and thus would not reveal registrations lodged against its ABN) the court found that Alleasing's registrations were ineffective and not sufficient to prevent Alleasing's equipment from vesting in OneSteel and its administrators.

Alleasing claimed that administrators would customarily conduct searches against both ACN and ABN of a Grantor company, and would thus not have been misled by their ABN-based registration; however, this appeared to carry little weight with the court and failed to carry the day.

In this case the letter of the law clearly won out over its, alleged, spirit.

While reports of this action appear to have generated quite a bit of interest judging by blog posts and emailed newsletters, there really isn't anything particularly surprising here.  The PPSA doesn't require a great deal of information to be supplied in a registration but what is supplied must be accurate and in strict accordance with the PPSA's rules.

Although there were a couple of other issues raised in this case, it is perhaps timely for me to provide, at this point, a rough summary of the PPS Regulations' rules for identifying Grantors:

Grantor Type	Grantor Details Required
Sole Trader	Full Name (as per drivers licence) and date of birth
Sole Trader acting as Trustee	Trust ABN (if the Trust does not have an ABN, as per ‘normal’ Sole Trader)
Partnership	ABN
Partnership acting as Trustee	Trust ABN (if the Trust does not have an ABN, as per ‘normal’ Partnership)
Partnership without an ABN	Full name and DOB of each partner (or ACN’s of each if a corporate partnership)
Company with an ACN and no Trust involved	ACN
Company with an ACN acting as Trustee	Trust ABN (if the Trust does not have an ABN, as per ‘normal’ Company)
Corporate entity without an ACN	Full name of the business as per articles of association
Government Entity	ABN
Trust	Trust ABN (if no ABN, use rules as per the trustee)

As I've said and written in other places, 'close enough is good enough' and 'she'll be right' are expressions that should never be uttered in the context of a PPSA registration.