The Personal Property Securities Act contains penalties for misuse of the register. The Government regulator, AFSA, are now taking action to maintain the register’s integrity.
The Personal Property Securities Register (“PPSR”) is a publicly-accessible online register, containing records of prescribed personal property and claimed security interests in personal property. However, allowing such a large pool of entities to register on the PPSR opens up a greater possibility for misuse.
The Personal Property Securities Act 2009 (Cth) (the “PPS Act”) contains civil penalty provisions to deal with such situations. The provisions are as follows:
- s. 151(1): prescribes a civil penalty for applying to make a registration without believing on reasonable grounds that the person described as the secured party is, or will become, a secured party in relation to the collateral;
- s. 151(2): prescribes a civil penalty for failing to apply to remove a registration from the PPSR within the prescribed time if:
- the person described as the secured party has never been a secured party in relation to the collateral; and
- there are not, or are no longer, any reasonable grounds for believing the person is, or will be, a secured party in relation to the collateral;
- s. 172(3): prescribes a civil penalty for searching the PPSR without an authorised purpose, or using data obtained from an unauthorised search; and
- s. 195A(4): prescribes a civil penalty for failing to comply with a Registrar’s investigation notice issued pursuant to section 195A(2) of the PPS Act.
The contravention of each of these sections of the PPS Act carries a maximum civil penalty per contravention of 50 penalty units for individuals, and 250 penalty units for corporate bodies.
The integrity of the PPSR has recently come under threat from the actions of a Queenslander, Mr Mead, who allegedly misused the PPSR by falsifying a security agreement relating to a vehicle, following the sale of the vehicle in February 2019.
The Australian Financial Security Authority (“AFSA”) are pursuing charges against Mr Mead.
It has been alleged that the vehicle had no security interests recorded on the PPSR, however, had a registration made against it in November 2019, claiming an interest by Mr Mead’s company “Iceman Enterprises”.
AFSA’s Deputy Chief Executive, Mr Gavin McCosker, has stated that there is evidence to suggest that the information provided was falsified. Namely, as the security agreement relating to the vehicle was alleged to have been signed and completed in 2013, however the vehicle was not built until 2016.
This is not the first instance in recent times, where there has been alleged misuse of the PPSR. Namely, in 2018 there was the case of Rubis & Ors v Garrett as Trustee of the Andrew Garrett Family Trust Trading as Dynamic Commercial Workforce Solutions (No 2)  FCA 2011, whereby Mr Garrett had made PPSR registrations over a number of individuals and companies that he sought to sue. Included in his list of potential litigants, was the Queen of England, the High Court of Australia, all of the members and senators of the Commonwealth Government, along with a number of regulatory bodies.
Leave to proceed against all of the registered parties was refused, however 24 of the 46 individuals and companies that had registrations placed against them brought proceedings to remove the registrations under s. 182 of the PPS Act.
The Court made orders to remove the registrations, stating that Mr Garrett did not have sufficient interest to maintain the registrations. It was further determined that the Registrar should have acted to remove the registrations before the matter had reached the litigation stage on the basis that the registrations were vexatious. His Honour Rares J stated that the Registrar should have taken his public function into greater account, namely, to protect both the Register and the public from vexatious registrations.
Though the above 2 cases set out a clear difference in circumstances surrounding the alleged contravention, it is clear that, with over 10 million registrations on the PPSR, the system may be open to abuse as it allows the registration of a security interest by mere assertion.
However, the case of Mr Mead shows a more proactive stance by AFSA as opposed to the case of Mr Garrett, so as to hopefully deter misuse in future.