Some important PPSA lessons from the ‘Hastie Case’
Some important PPSA lessons from the ‘Hastie Case’:
The Personal Property Securities Act 2009 (Cth) (PPSA) commenced on 30 January 2012. Since then, we have been busy assisting our clients with navigating the legislation, amending their terms and conditions of trade and attending to registration of security interests on the Personal Property Securities Register (PPSR).
As with any new legislation, it takes considerable time for Courts to build precedents in case law guiding us in respect of interpretation and implementation of that legislation. The PPSA is no different. While we have been fortunate to be able to rely upon precedents set by other common law jurisdictions in which a similar regime has already been enacted – most notably, New Zealand and Canada – until now we have not had local case law to consult.
Hastie Group (No3)  FCA 719, is a recent case in the Federal Court of Australia which has highlighted the need for registration of security interests and providing adequate responses to urgent notices issued by an administrator. A failure to respond to an administrator could result in a security interest losing its priority.
The facts of the case
In May 2012 administrators were appointed to the Hastie Group. At the time, the PPSR contained 995 registrations of security interests against the group as grantor. Many of the security interests had general wording and as such it was difficult for administrators to determine which items of plant and equipment each security interest related. Further, due to the relative newness of the PPSA, there were also a number of transitional interests that had not yet been registered.
To overcome these problems, the administrator sent notices to each of the secured parties requesting particulars of what items of plant and equipment were protected by their registered or transitional interests.
A large amount of the creditors simply did not respond to these requests and the ones that did respond, failed to provide adequate information. As such, the administrators applied to the Federal Court for directions to allow them to dispose of the plant and equipment. The Court allowed the administrators to proceed to auction (with certain stipulations) treating the unclaimed plant and equipment as property of the Hastie Group.
What can we all learn from the decision in the Hastie case?
- If you are taking security over specific items, then you should take care with the registration and clearly identify and describe the property that you are securing. If the registration relates to, say, retention of title, then you should aim to be more general in your description, but not so general as to make it impossible to give a third party an idea as to what your security might relate to.
- You must respond promptly and adequately to any notice relating to any of your security interests recorded on the PPSR (or transitional security interests that have not yet been registered).
- Your details on the PPSR (as a Secured Party Group) should be kept up to date at all times so that notices will reach you.
- The transitional period (to register security interests created prior to the commencement of the PPSA) ends in less than 12 months. You should register any transitional interests now. Do not wait until the end of the transitional period.
If you would like to discuss the possible implications of this case on your registered security interests or you need assistance with registering a transitional or new security interest, please do not hesitate to contact us.