In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21

Supreme Court of NSW|2016-12-20|Before: Brereton J

CONSTITUTIONAL LAW - legislative power - compulsory acquisition of property - Constitution s 51(xxxi) - whether PPSA s 267 is disapplied pursuant to PPSA s 252B - whether s 267 effects an acquisition of property within s 51(xxxi) - held, it does not effects an acquisition of property, but if it does it is not one within the meaning of s 51(xxxi), because it is not an acquisition for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor's own purposes, and represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property - whether s 267 would be a valid exercise of power under Constitution s 51(xvii) and s 51(xxxvii) if it effected an acquisition of property within the meaning of s 51(xxxi) other than on just terms - held, although the heads of power that support s 267 sufficiently manifest an intention that at least to that extent they not be constrained by the indirect operation of s 51(xxxi), PPSA s 252B nonetheless would disapply a provision of PPSA if effects an acquisition of property within the meaning of s 51(xxxi) other than on just terms regardless of its constitutional validity - PPSA s 252B is not engaged, and so does not affect the operation of s 267.

CORPORATIONS - securities - personal property securities - registration and perfection of security interests - where security interest not perfected by registration or otherwise before grantor has administrators appointed - where no effective registration within time referred to in s 588FL - application to fix later time under s 588FM - whether relief under Corporations Act s 588FM is available - held, it is not, because the relevant security interest was unperfected at the "critical time" - whether relief under s 588FM if available would reverse vesting under s 267 - held, even if relief could be given under s 588FM, it would not divest an unperfected security interest that has already vested under s 267

SECURITIES - personal property - perfection of security interests - vesting of unperfected security interest in grantor upon insolvency event - where security interest not perfected by registration or otherwise when grantor has administrators appointed - whether extension under PPSA s 293(1)(a) of period for registration referred to in s 62(3)(b) would divest vested unperfected security interest - held, it would not. Legislation Cited: (CTH) A New Tax System (Australian Business Number) Act 1999, s 24, s 41 (CTH) Constitution, s 51(xvii), s 51(xxxi), s 51(xxxvii) (CTH) Corporations Act 2001, s 9, s 118, s 123, s 588FK, s 588FL, s 588FM, s 601BD, s 1344 (CTH) Judiciary Act 1903, s 78B (CTH) Personal Property Securities (Approved Form) Instrument 2013, cl 8 (CTH) Personal Property Securities (Corporations and Other Amendments) Act 2010 (CTH) Personal Property Securities Act 2009, s 13, s 21, s 62, s 153, s 164, s 165, s 170, s 171, s 218, s 252B, s 267, s 293, s 302 (CTH) Personal Property Securities Regulations 2010 cl 5.5, Sch 1 cl 1.3, 1.4, 1.5 (CTH) Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009 (NZ) Personal Property Securities Act 1999 Cases Cited: Accolade Wines Australia Ltd, Re [2016] NSWSC 1023 AirServices Australia v Canadian Airlines International Ltd (1999) 202 CLR 133 Attorney-General (Cth) v Schmidt (1961) 105 CLR 361; (1961) 35 ALJR 54; [1961] ALR 806 Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 Business Development Bank of Canada v ABN Amro Leasing (2003) PEIJ No 22; [2003] PESCAD 5 Commcorp Financial Services Inc v R & R Investments Corp (1995) 31 Alta LR (3d) 393 Director of Public Prosecutions, Re; Ex parte Lawler (1994) 179 CLR 270 Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 Health Insurance Commission v Peverill (1994) 68 ALJR 251; 119 ALR 675 Jenkins v Commonwealth (1947) 74 CLR 400 Maiden Civil, Re (2013) 277 FLR 337 McClintock v Commonwealth (1947) 75 CLR 1 Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155; (1994) 119 ALR 577; (1994) 68 ALJR 216; [1994] HCA 9 Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134; [1994] HCA 27 PJ Magennis Pty Ltd v Commonwealth (1949) 80 CLR 382; [1950] ALR 33; (1949) 23 ALJR 564 Polymers International Ltd v Toon [2013] NZHC 1897 R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207; [1964] ALR 918; (1964) 37 ALJR 503 Rabobank New Zealand Ltd v Stockco Ltd [2011] 13 TCLR 191 Telstra Corp Ltd v Commonwealth (2008) 234 CLR 210; (2008) 243 ALR 1; (2008) 82 ALJR 521; [2008] HCA 7 Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 Valley Vista Golf Course Ltd (Receiver of) v Maxium Financial Services Inc [2003] NSSC 97 White v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214; [2014] WASC 139 WH Blakeley & Co Ltd v Commonwealth (1953) 87 CLR 501; [1953] ALR 293; (1953) 26 ALJ 672 Texts Cited: Dixon R, "Overriding Guarantee of Just Terms or Supplementary Source of Power?: Rethinking s 51(xxxi) of the Constitution" (2005) 27 Syd Law Rev 639 Gault T (ed), Gault on Commercial Law (online loose-leaf ed, Brookers Widdup L, Personal Property Securities Act: A Conceptual Approach (3rd ed, LexisNexis, Wellington, 2013) Category: Principal judgment Parties: Alleasing Pty Limited (Plaintiff) OneSteel Manufacturing Pty Limited (administrators appointed) (First Defendant) Mark Mentha, Cassandra Mathews, Martin Madden and Bryan Webster in their capacities as administrators of OneSteel Manufacturing Pty Limited (Second Defendants) BGC Contracting Pty Ltd (Third Defendant) Striker Australia Pty Limited (Fourth Defendant) Registrar of Personal Property Securities (Intervener) Representation: Counsel: A. Archibald QC w P Kulevski & N Mirzai (Plaintiff) NC Hutley SC w J Hyde Page, B Lim & L McGovern (First and Second Defendants) PA Horobin (Intervener)

Solicitors: Henry Davis York (Plaintiff) Arnold Bloch Liebler (First and Second Defendants) Clifford Chance (Third Defendant)(submitting) Bowen Buchbinder Vilensky (Fourth Defendant)(submitting) Australian Government Solicitor (Intervener) File Number(s): 2016/242112

Judgment

The plaintiff Alleasing Pty Limited ("Alleasing") is in the business of asset financing and leasing. The first defendant OneSteel Manufacturing Pty Limited ("OneSteel"), which has the ACN 004 651 325 and the ABN 42 004 651 325, operates the Iron Knob mine in the South Middleback Ranges in South Australia. On 16 October 2014, Alleasing and OneSteel entered into a master lease agreement, the effect of which was that upon entry into a "rental schedule" in respect of particular goods, the terms of the master lease would apply subject to the applicable rental schedule. Pursuant to one such rental schedule (number E2N0157602), with effect from 1 May 2015 OneSteel commenced renting from Alleasing a Striker crushing and screening plant, for a term of six years at a quarterly rental of $1,008,321 ("the crusher lease"). The design, supply, installation, assembly, construction and commissioning of the crusher, by the fourth defendant Striker Australia Pty Limited, [1] had been funded by Alleasing at OneSteel's request, at a total cost of $23,329,764. Pursuant to a second rental schedule (number E2N0158455), with effect from 1 July 2015 OneSteel commenced renting from Alleasing spare parts for the crusher, for a term of six years at a quarterly rental of $5,924 ("the parts lease"). The acquisition of the parts from Striker had also been funded by Alleasing at OneSteel's request.
It is uncontroversial that the crusher lease and the parts lease are PPS leases within the meaning of (CTH) Personal Property Securities Act 2009 ("PPSA"), s 13. On 17 October 2014, Alleasing registered a financing statement in respect of the crusher (registration number 201410170012815), [2] and on 7 July 2015 it did so in respect of the parts (registration number 201507070059923) ("the original registrations").
The third defendant BGC Contracting Pty Ltd, [3] a mining services contractor, holds a security interest registered on 11 July 2014 over "all present and after acquired personal property" ("AllPAP") of OneSteel. On 29 October 2014, BGC released the crusher from its AllPAP security.
PPSA s 153 requires a financing statement to include, relevantly, "the grantor's details as prescribed in the regulations" - that is to say, (CTH) Personal Property Securities Regulations 2010 ("PPSR"). PPSR Sch 1 cl 1.3 has the effect that where the grantor is a body corporate that has an ACN, the prescribed details are the ACN of the grantor. [4] As the grantor OneSteel had an ACN, the effect of PPSA s 153 and PPSR Sch 1 cl 1.3 was that the financing statements were required to include its ACN. However, this requirement was not understood by the employee of Alleasing responsible for making the registrations, who, using not the PPS Register portal but a third-party "business-to-government" (B2G) platform linked to the PPS Register, registered them by reference to OneSteel's ABN and not its ACN.
An ABN is an 11 digit number, being the entity's number shown in the Australian Business Register established under (CTH) A New Tax System (Australian Business Number) Act 1999. [5] An ACN is a 9 digit number given to a corporation by the Australian Securities and Investments Commission (ASIC), upon registration under (CTH) Corporations Act 2001 ("CORPA"). [6] Where a corporation with an ACN also has an ABN, the last 9 digits of the ABN may (but need not) correspond with the ACN. [7] At least in OneSteel's case they do: its ABN 42 004 651 325 incorporates as its last nine digits its ACN 004 651 325.
PPSA s 164(1) provides that a registration with respect to a security interest that describes particular collateral is ineffective because of a defect if and only if there is a seriously misleading defect in the registration, or a defect mentioned in s 165. PPSA s 165(b) mentions circumstances, in a case in which the collateral is not required to be described by a serial number, where no search of the register by reference only to the grantor's details required under s 153 is capable of disclosing the registration. Thus where the grantor's details required by s 153 are its ACN, if the financing statement does not include the ACN, a search of the register by reference only to the grantor's ACN would not disclose the registration, and accordingly the registration would be ineffective. [8]
On 7 April 2016, OneSteel appointed administrators; the second defendants are the current administrators, having replaced the original administrators on 12 April 2016. On 10 June 2016, the administrators informed Alleasing that they considered the first registrations to be defective and ineffective, and that as a result of PPSA s 267, Alleasing's security interest - which in the context of a PPS Lease is the lessor's interest in the goods - had vested in OneSteel. On 14 June 2016, Alleasing lodged new financing statements in respect of the crusher (registration no 201606140047841) and the parts (registration no 201606140047839), this time using OneSteel's ACN as the grantor identifier ("the second registrations"). On 17 June 2016, Alleasing amended the original registrations to include the 9-digit ACN of OneSteel.
Pursuant to an originating process filed on 11 August 2016 and amended on 29 August 2016, Alleasing claims (1) declarations to the effect that its security interests in the crusher and the parts are validly perfected and have not vested in OneSteel pursuant to PPSA s 267; (2) alternatively, orders pursuant to (CTH) Corporations Act, s 588FM, fixing as the registration time for its security interests the date on which the second registrations were made, and pursuant to PPSA s 293(1)(a) extending to that date the period for registration referred to in s 62(3)(b); and (3) declarations to the effect that PPSA s 267 is invalid to the extent that it operates to vest Alleasing's security interests in OneSteel, as it effects an acquisition of property other than on just terms. By interlocutory process filed on 5 September 2016, OneSteel and its administrators cross-claim for declarations to the effect that Alleasing's security interests were not validly perfected on or prior to the appointment of administrators to OneSteel on 7 April 2016, and vested in OneSteel immediately prior to that appointment.
Alleasing, for whom Mr Archibald QC, with Mr Kulevski and Mr Mirzai appeared, contend that (1) there was no defect in the original registrations; (2) if there was, it was not such as to render the registrations ineffective; (3) in any event, there has been no vesting because in the circumstances of this case a vesting under s 267 would be an acquisition of property on other than just terms, and PPSA s 252B means that the PPSA does not operate to that effect; and (4) alternatively, time for registration of the second registrations should be extended. OneSteel and its administrators, for whom Mr Hutley SC, with Mr Hyde Page, Mr Lim and Ms McGovern appeared, contend that there has been no effective registration, and that Alleasing's security interest in the crusher and the parts has vested in OneSteel. The PPS Registrar intervened, pursuant to PPSA s 218(1), to make submissions relevant to the manner of operation of the PPS Register, without seeking to address the consequences for the positions of the respective parties. In this respect, the court was assisted by the submissions of Mr Horobin.

Was there a defect in the first registrations?

PPSA s 153(1) provides: 153 Financing statements with respect to security interests (1) A financing statement with respect to a security interest (including such a financing statement as amended by the registration of a financing change statement) consists of data that complies with the following table: …
Item 2 in the table stipulates, as the requisite data about the grantor: Whichever of the following is applicable: (a) if the collateral is consumer property, and is required by the regulations to be described by serial number - no grantor's details; (b) if the collateral is consumer property, and is not required by the regulations to be described by serial number - the grantor's name and date of birth, as evidenced in accordance with the regulations, and no other details; (c) in any other case - the grantor's details as prescribed by the regulations.
Thus a financing statement in respect of collateral being the crusher and the parts - not being "consumer property" - was required to contain "the grantor's details as prescribed in the regulations". In that regard, PPSR reg 5.5 relevantly provides: 5.5 Financing statements (1) Schedule 1 sets out matters prescribed for items of the table in subsection 153(1) of the Act. ...
In PPSR Schedule 1, cl 1.3 provides: 1.3 Body corporate secured party or grantor (1) For items 1 and 2 of the table in subsection 153(1) of the Act, this clause applies if the secured party or grantor is a body corporate that: (a) is a trustee and has an ARSN; or (b) is not a trustee of a trust that has an ABN. (2) The details mentioned in each item of the table, from the source mentioned for the item, are prescribed for the body corporate mentioned in the item. (3) For subclause (2), the prescribed details are the details mentioned in the item of the table that: (a) applies to the body corporate; and (b) has the lowest item number. (4) Item 1 of the table applies only to a registration by the Registrar under subsection 333(2) of the Act. Item Body corporate Details Source 1 Body corporate for which details have been included on the transitional register, for a migrated security interest Body corporate number or name of body corporate, as recorded on the transitional register Transitional register 2 Body corporate that is the responsible entity of a registered scheme, if the scheme has an ARSN Registered scheme's ARSN National Names Index 3 Body corporate that has an ACN ACN National Names Index 4 Body corporate that has an ARBN ARBN National Names Index 5 Any other body corporate Name of body corporate, as provided for in body corporate's constitution or equivalent document Body corporate's constitution or equivalent document

Thus item 3 in that table means that (unless items 1 or 2 apply), where the grantor is a body corporate that has an ACN, the prescribed details are the ACN (not the ABN) of the grantor. There is no reference in the table to the ABN: ARBN, referred to in item 4, is short for 'Australian Registered Body Number', being the number given by ASIC to a registrable body on registration under Part 5B.2 of Corporations Act 2001 [9] - not the ABN. Provision is made for registration against an ABN only where the grantor is a partner in a partnership, [10] a trustee, [11] or a body politic. [12]
Alleasing submitted that there was no defect in the original registrations, on the basis that: 1. the requirement of PPSA s 153(1) was that the financing statement consist of specified "data", relevantly the grantor's ACN; 2. the data comprising an ACN was a unique 9-digit sequence; 3. the original financing statements included, within the 11-digit ABN, OneSteel's 9-digit ACN; 4. there was no requirement in or under the PPSA or the PPSR that the ACN be included in any specified field; [13] 5. thus there was compliance with s 153(1), because the 9-digit sequence could be found within the financing statement.
Alleasing's submissions focus on the word "data" in s 153, arguing that the relevant data - the 9-digit ACN - was included within the 11-digit ABN. However, the fact that the ABN happens to include the ACN does not mean that inclusion of the ABN equates to inclusion of the ACN. They are two different identifiers, issued by different agencies. In the relevant circumstances, the requirement was for the 9-digit ACN. Instead, an 11-digit ABN, the last 9 of which correspond with the ACN, was included. An 11-digit sequence is not the same "data" as a 9-digit sequence which is included within it. Thus an ABN which happens to include the 9-digit ACN is nonetheless not the ACN.
This conclusion is supported by the circumstances that the ABN field, not the ACN field, was completed; and that a search by the ACN alone would not reveal the registrations.
Accordingly, the original financing statements did not include the grantor's ACN; it included only the ABN.
CORPA s 1344 provides: 1344 Use of ABN Despite any provision in this Act or any other Act, in any case where: (a) the ACN of a company; or (b) the ARBN of a registered body; or (c) the ARSN of a registered scheme; is required or permitted to be used under a law of the Commonwealth administered by ASIC, the ABN of the company, body or scheme may be used instead if the last 9 digits of the ABN are the same, and in the same order, as the last 9 digits of the ACN, ARBN or ARSN.
However, this does not avail Alleasing, because PPSA is not a law administered by ASIC.
Accordingly, the original registrations were defective, in that they did not, as required, include OneSteel's ACN.

Is the registration ineffective pursuant to s 163(b)?

PPSA s 164 provides: 164 Defects in registration - general rule (1) A registration with respect to a security interest that describes particular collateral is ineffective because of a defect in the register if, and only if, there exists: (a) a seriously misleading defect in any data relating to the registration, other than a defect of a kind prescribed by the regulations; or (b) a defect mentioned in section 165. (2) In order to establish that a defect is seriously misleading, it is not necessary to prove that any person was actually misled by it. (3) A registration that describes particular collateral is not ineffective only because the registration is ineffective with respect to other collateral described in the registration.
Accordingly, the original registrations will be ineffective because of the omission of OneSteel's ACN if, and only if that defect: 1. is "seriously misleading"; or 2. is of a kind mentioned in section 165.

Section 165(b) - not disclosable on search by reference to grantor's details?

PPSA s 165 provides: 165 Defects in registration - particular defects For the purposes of paragraph 164(1)(b), a defect in a registration that describes particular collateral exists at a particular time if any of the following circumstances exist: (a) in a case in which the collateral is required by the regulations to be described by serial number in the register - no search of the register by reference to that time, and by reference only to the serial number of the collateral, is capable of disclosing the registration; (b) in a case in which the collateral is not required by the regulations to be described by serial number in the register - no search of the register by reference to that time, and by reference only to the grantor's details (required to be included in the registered financing statement under section 153), is capable of disclosing the registration; (c) if the registered financing statement (as amended, if at all) indicates that a security interest in the collateral is a purchase money security interest (to any extent) - the security interest is not a purchase money security interest (to any extent) in the collateral; (d) in any case - circumstances in relation to the data related to the registration that are prescribed by the regulations.
The relevant provision in this case is s 165(b). The key point in s 165(b) is that the postulated search of the PPSR must use only one parameter, namely the grantor's details required to be included in the registered financing statement under s 153. In the relevant circumstances that would, for the reasons explained above, be a search by reference to OneSteel's ACN. Alleasing submitted that s 165(b) was not engaged, because there were "combined grantor searches" which could be undertaken through B2G interfaces which, if only the ACN were entered, would nonetheless reveal registrations against the same entity's ABN.
PPSA s 170 limits searches of the PPS register to those authorised by s 171 and s 172: 170 Search - general (1) A person may apply to the Registrar for access to the register to search for data in relation to a security interest or personal property (or both). (2) The Registrar must: (a) give the person access to the register to search for the data, in accordance with the application; and (b) if, in the application, the person requests a written search result in relation to the data - ensure that the person is able to obtain a written search result in relation to the data, in the appropriate form under section 174. (3) However, the Registrar may give the person access to the register to search for the data only if: (a) the search is authorised under sections 171 and 172; and (b) the application is in the approved form; and (c) the person pays the fee determined under section 190; and (d) access to the data is not prohibited by the regulations.
PPSA s 171 does not authorise a search by reference to grantor's details other than those required to be included in a registered financing statement under section 153 (no other criteria having been prescribed by the regulations): 171 Search - criteria (1) A person may access the register to search for data by reference to the following criteria: (a) a grantor's details (as required to be included, if at all, in a registered financing statement under section 153); (b) a serial number by which collateral may (or must) be described in the register; (c) the time of the search; (d) an earlier nominated time, but only with the consent of the Registrar; (da) a unique identifier allocated by the Registrar to a registered financing statement; (e) any other criteria prescribed by the regulations. (2) The Registrar must ensure that the way in which the results of a search are worked out in response to an application for the search is determined in accordance with any regulations made for the purposes of this subsection.
That means that a search of the register by reference to grantor's details other than those required to be included under s 153 is not authorised or contemplated, and thus in respect of a grantor which is a body corporate and is not a trustee of a trust that has an ABN, only a search by reference to the ACN is authorised.
PPSA s 170(3)(b), set out above, has the effect that the application to search the PPS Register must be "in the approved form". In that respect, PPSA s 302 contemplates that approved forms can include an interactive form provided on the internet, and a digital communication enabling computer to computer interaction: 302 Approved forms (1) This section applies if this Act requires or authorises something to be in the approved form. (2) To be in the approved form, the thing must: (a) be in writing in a form approved by the Registrar; and (b) include the information, statements, explanations or other matters required by the form approved for the purposes of paragraph (a); and (c) include any other material (including documents) required by that form; and (d) be given in accordance with any requirements specified by the Registrar for the purpose. Note: Writing may include the display or representation of words or data by any form of communication, if recorded in a certain way (see section 10). Example: Examples of forms that could be approved (see paragraph (2)(a)) are as follows: (a) an interactive form provided on the internet; (b) a communication exchange provided by an interactive voice recognition telephone system; (c) a digital communication enabling computer to computer interaction. (3) The Registrar may, by written instrument, approve a form for the purposes of paragraph (2)(a). …
(CTH) Personal Property Securities (Approved Form) Instrument 2013 approves, for the purposes of PPSA s 302, two methods of searching the PPSR: the first is an online interactive form accessible through the official PPSR website (http://transact.ppsr.gov.au/); [14] while the second is an electronic communication through a computer-to-computer interface, such as from a B2G provider. [15]
A search will only return details of what has been registered. A search by ABN will not return registrations against the ACN, and a search by ACN will not return registrations against the ABN. A search of the PPS register using only the ACN as a parameter - which pursuant to s 171(1)(a) is the only authorised search - would not reveal the original registrations.
The PPSR cannot itself be searched in respect of more than one grantor identifier at a time. The "combined grantor searches" provided by some B2G interfaces, on which Alleasing's argument relies, in fact do not use only the ACN when searching the PPSR. They have additional functionality, so that when an ACN is entered in the search platform, it first searches other databases to find the corresponding entity name and ABN, and then initiates multiple searches of the PPSR - each using a single parameter - of ACN, name and ABN. The search using the ACN as the parameter would not reveal a registration against the ABN. Insofar as a combined grantor search in which the searcher enters only an ACN reveals a registration against the ABN, it is because a parameter other than the ACN - namely the ABN - is used in searching the PPSR, albeit that it was not initially entered by the searcher, but sourced by the B2G platform from other external databases.
Entering a search parameter on a B2G platform is not itself a search of the PPSR; it generates the functionality of the B2G platform, which then transmits messages to the PPSR. A "combined grantor search", by the time it reaches and searches the PPSR, is in fact multiple searches, the ABN and name having been obtained from other external sources. Each of those searches - against ACN, ABN and name - generates a separate search result, with a separate unique search identifier. Thus such a "combined grantor search" is not one by reference only to the ACN. Even though the client may enter only the ACN into the third-party search platform, the ensuing search of the PPS register is not a search of the register by reference only to the ACN.
Although it is true that s 165(b) - like s 165(a) - uses the terminology "no search … is capable of revealing", that means no more than that "a search … would not reveal". A construction that the condition would not be satisfied so long as there was available one search platform which would reveal the registration - albeit by sourcing and using parameters other than "the grantor's details required to be included in a financing statement under s 153" - although most would not, would defeat the purpose of the provision.
A search of the PPS register by reference only to OneSteel's ACN would not reveal the original registrations, including as they did its ABN, not its ACN. Accordingly, the original registrations were ineffective, pursuant to PPSA s 164(1)(b) and s 165(b).

Seriously misleading defect?

Lest my conclusion that s 165(b) is engaged be incorrect, it is appropriate to address the question whether the defect was seriously misleading within s 164(1)(a), such that the registration was ineffective for that reason. Alleasing submitted that the defect was not seriously misleading, because the financing statement refers unequivocally to OneSteel and the relevant collateral, and was in fact discovered by the administrators on search.
As already explained, (CTH) Personal Property Securities (Approved Form) Instrument 2013 approves, for the purposes of PPSA s 302, two methods of searching the PPSR: an online interactive form accessible through the official http://transact.ppsr.gov.au/ website; and an electronic communication through a computer-to-computer interface, such as from a B2G provider. Even if a search by reference to the ACN though a B2G platform would reveal the original registrations, a direct search of the PPSR through the official PPSR website using only the ACN as a search parameter would not. A searcher who (legitimately) chose to use that mode of search would not discover the original registrations, and would be led to think, incorrectly, that there was no such registration.
Alleasing relied on the New Zealand case of Rabobank New Zealand Ltd v Stockco Ltd, [16] in which it was held that a financing statement which included the names of a married couple who operated a farm, rather than the name of their farming partnership, was not seriously misleading, as to the outside world the husband was the farmer. However, in Polymers International Ltd v Toon, [17] Asher J observed that Rabobank had been subject to criticism, [18] and in any event distinguished it on facts much closer to the present: Polymers had registered a financing statement under (NZ) Personal Property Securities Act 1999 ("NZPPSA") against Interworld as debtor which admittedly failed to comply with the requirements of the NZPPSA, including because it did not include the debtor company's unique incorporation number. Asher J held that the preferable approach to the question whether an omission was seriously misleading, in the context of a registry which (like the Australian registry and unlike some Canadian registries) only provides returns that exactly match what is entered, [19] was to ask whether the error would prevent a registration being disclosed by a properly formatted search in the relevant searchable field; [20] and consequently that the omission of the company's number was seriously misleading, as it meant that those who searched the register by company number or through the Companies Office would not discover the relevant financing statement. [21]
I respectfully agree with Asher J. Such a construction furthers the purpose of the PPSA in ensuring the integrity and reliability of the PPS register, [22] and visiting upon secured parties the obligation to ensure - if they are to enjoy the benefits of registration - that their registration be discoverable on search against the grantor's details required to be included in a financing statement under s 153. The facilitation of ascertaining whether there are prior registrations is a fundamental purpose of the PPSA.
It does not avail Alleasing that the administrators, apparently using a B2G interface, discovered the original registrations; it is unnecessary, for a defect to be misleading, to establish that anyone was in fact actually misled. [23] It is the capacity or potential to mislead that is crucial. Here, the defect was such that searchers using one of the two authorised modes of search would not discover the registration. The circumstance that a searcher using one of the authorised means of search would not discover the registration renders the defect misleading, and seriously so - even if, as is suggested, most searchers (the evidence indicates 80%) use B2G platforms which, in the way that has been described, would reveal it.
Thus the defect was seriously misleading, because the omission of the ACN meant that searchers using one of the authorised modes of search would not discover the registration. Accordingly, the original registrations were ineffective pursuant to s 164(1)(a).

The constitutional issue:

PPSA s 267 provides for the vesting of unperfected security interests in the grantor immediately before the grantor's winding up, administration or bankruptcy: 267 Vesting of unperfected security interests in the grantor upon the grantor's winding up or bankruptcy etc. Scope (1) This section applies if: (a) any of the following events occurs: (i) an order is made, or a resolution is passed, for the winding up of a company or a body corporate; (ii) an administrator of a company or a body corporate is appointed (whether under section 436A, 436B or 436C of the Corporations Act 2001, under that section as it is applied by force of a law of a State or Territory, or otherwise); (iii) a company or a body corporate executes a deed of company arrangement (whether under Division 10 of Part 5.3A of the Corporations Act 2001, under that Division as it is applied by force of a law of a State or Territory, or otherwise); (iv) a sequestration order is made against a person (the bankrupt) under the Bankruptcy Act 1966; (v) a person (the bankrupt) becomes a bankrupt by force of section 55, 56E or 57 of the Bankruptcy Act 1966; and (b) a security interest granted by the body corporate, company or bankrupt is unperfected at whichever of the following times applies: (i) in the case of a company or body corporate that is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day (whether under section 513A or 513B of the Corporations Act 2001, under either section as applied by force of a law of a State or Territory, or otherwise); (ii) in the case of any other company or body corporate - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company or body, within the meaning of the Corporations Act 2001 (including that Act as it is applied by force of a law of a State or Territory, or otherwise); (iii) in the case of a bankrupt - when a sequestration order is made against the bankrupt under the Bankruptcy Act 1966, or when he or she becomes a bankrupt by force of section 55, 56E or 57 of that Act. Note 1: For the meaning of company, see section 10. Note 2: See also Division 2A of Part 5.7B of the Corporations Act 2001. Security interest vested in grantor (2) The security interest held by the secured party vests in the grantor immediately before the event mentioned in paragraph (1)(a) occurs. Note: This subsection does not apply to certain security interests (see section 268). …
PPSA s 252B disapplies any provision of the Act if its operation would result in an acquisition of property other than on just terms (within the meaning of paragraph 51(xxxi) of the Constitution): 252B No unjust acquisition of property (1) A provision of this Act does not apply to the extent that the operation of the provision would result in an acquisition of property from a person otherwise than on just terms. (2) In subsection (1): acquisition of property has the same meaning as in paragraph 51(xxxi) of the Constitution. just terms has the same meaning as in paragraph 51(xxxi) of the Constitution.
Alleasing submitted that in the circumstances of this case, s 252B prevented the operation of the vesting provisions in s 267, as if they operated they would effect an acquisition of property other than on just terms - because if s 267 operated, upon an insolvency event of the kind described in s 267(1)(a), to vest the lessor's interest in the goods the subject of a PPS lease in the lessee, though the lessor was until then the true owner of the subject matter of the lease, then the lessor's valuable property would be acquired by the lessee, in return only for the right to prove in the insolvency as an unsecured creditor for damages for the value of the goods under PPSA s 269, which was not just. [24]
The first answer to this submission is that s 267 does not effect an "acquisition" at all. The section does not effect a taking of property which the PPS lessor held prior to its becoming subject to the PPSA; rather, it prescribes a consequence, in certain circumstances, of a lease entered into subject to the PPSA. It is an incident of any PPS lease entered into after the commencement of the PPSA that the lessor's interest is liable to vest in the lessee in certain events, if it has not been perfected. The master lease was entered into against the legal background provided by the PPSA, to which it referred. Thus, when Alleasing granted a lease of the crusher to OneSteel, to which the PPSA applied, that involved the consequence that its interest was liable to vest in OneSteel in certain events - in particular, those referred to in s 267(1)(a) - if it did not perfect its security interest.
As in Telstra Corp Ltd v Commonwealth, [25] Alleasing's argument is "synthetic and unreal", because it proceeds from an unstated premise that Alleasing has larger and more ample rights in respect of the crusher than in fact and law it had: Alleasing's "bundle of rights" in respect of the crusher was, from the moment it granted a lease to OneSteel, not of the amplitude which its present argument assumes, but involved the potential vesting of its interest in the lessee upon an insolvency event if its security interest were not perfected.
The second answer is that it is not an acquisition within the meaning of paragraph 51(xxxi) of the Constitution. Section s 51(xxxi) operates indirectly to reduce the content of other grants of legislative power, through the medium of the rule of construction that the conferral of an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, is inconsistent with any construction of other powers which would mean that they included the same subject or produced the same effect and so authorised the same kind of legislation but without the safeguard, restriction or qualification. [26] However, this is subject to at least two qualifications, as explained by Dixon CJ in Attorney-General (Cth) v Schmidt (No 1) (Re Doehnert Mueller Schmidt) [27] in the following passage: It is hardly necessary to say that when you have, as you do in para (xxxi), an express power, subject to a safeguard, restriction or qualification, to legislate on a particular subject or to a particular effect, it is in accordance with the soundest principles of interpretation to treat that as inconsistent with any construction of other powers conferred in the context which would mean that they included the same subject or produced the same effect and so authorized the same kind of legislation but without the safeguard, restriction or qualification. But two observations must be made. First, it is necessary to take care against an application of this doctrine to the various powers contained in s 51 in a too sweeping and undiscriminating way. For it cannot have much to do with some of the subject matters of power upon the very terms in which they are conferred. The other observation is that the principle does not apply except with respect to the ground actually covered by para (xxxi) of s 51. For example, no one would doubt that, under the power to make laws with respect to bankruptcy, property of the bankruptcy may be sequestrated and property of others which has been left in his order and disposition may be vested in the Official Receiver and that s 51(xxxi) has no bearing on the matter. At the same time, if a law was made under which a piece of land was acquired for a Bankruptcy Office, s 51(xxxi) would govern the legislation and not s 51(xvii). It must be borne in mind that s 51(xxxi) confers a legislative power and it is that power only which is subject to the condition that the acquisitions provided for must be on just terms.
The first of those qualifications is that the scope of s 51(xxxi), in its indirect as well as direct application, is confined to acquisitions "for any purpose in respect of which the Parliament has power to make laws'', so that an acquisition of property for a purpose other than one in respect of which the parliament has power to make laws is not affected by s 51(xxxi). Thus in Mutual Pools & Staff Pty Ltd v The Commonwealth, [28] Mason CJ said: The words ``for any purpose in respect of which the Parliament has power to make laws'' are, in the context of a grant of legislative power, words of limitation. They confine the exercise of the power to an implementation of a purpose within the field of Commonwealth legislative power. They are not to be read as an exclusive and exhaustive statement of the parliament's powers to deal with or provide for the involuntary disposition of or transfer of title to an interest in property. … Likewise, a law made in the exercise of the power with respect to bankruptcy and insolvency, which provides for the sequestration of the property of a bankrupt and its vesting in the Official Receiver, is not a law with respect to the acquisition of property within s 51(xxxi) [Schmidt (1961) 105 CLR at 372]. It is no more and no less than a law which regulates the incidents and effects of bankruptcy, the provision for the vesting of title to the bankrupt's property in the Official Receiver being subordinate to sequestration. That element in the law would not enable one to describe it with any semblance of accuracy as a law for the acquisition of property.
Dawson and Toohey JJ said: [29] In arriving at the meaning of the phrase acquisition of property'' in s 51(xxxi), it is necessary to have regard to the composite expression of which it forms part, namely, acquisition of property … for any purpose in respect of which the Parliament has power to make laws''. As Dixon CJ pointed out in Attorney-General (Cth) v Schmidt [(1961) 105 CLR at 372] ``it refers to the use or application of the property in or towards carrying out or furthering a purpose comprised in some other legislative power''. Whilst the precise limits of that expression have proved elusive [Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR at 408 per Gibbs J], it does appear primarily to refer to the acquisition of real or personal property which itself is intended to be used by the government in administering laws made by the parliament in the exercise of its legislative power [Attorney-General (Cth) v Schmidt (1961) 105 CLR at 372 per Dixon CJ; Re Tooth & Co Ltd (No 2) (1978) 34 FLR 112 at 146-7].
As Dawson and Toohey JJ acknowledged, s 51(xxxi) extends to the acquisition of property by persons other than the Commonwealth or its agencies, [30] but only where the property is acquired for a relevant Commonwealth purpose: [31] However, compulsory acquisition by a third person is not within the terms of s 51(xxxi) unless it is for a purpose in respect of which the parliament has power to make laws.
In this context, "purpose" refers to the use or application of the property acquired. [32] As Dawson J elaborated in Nintendo Co Ltd v Centronics Systems Pty Ltd, where a law provides for the acquisition of property, not by the Commonwealth or one of its emanations, but by an independent third party, that acquisition is unlikely to be for the purposes of one of the Commonwealth powers, but rather for the private purposes of the third party, in which s 51(xxxi) is not engaged, and the validity of the law depends on another head of power: [33] It will be apparent that where legislation provides for the acquisition of property by a third party, the property itself will frequently not be acquired for any purpose in respect of which the parliament has power to make laws but for the purposes of the third party [Health Insurance Commission v Peverill (1994) 68 ALJR 251 at 261-2; 119 ALR 675 at 690-1]. However, that need not always be the case. An example of property acquired by a third party for the purposes of the Commonwealth is to be found in McClintock v Commonwealth [(1947) 75 CLR 1]. In that case, at least on one view of the legislation, pineapples were compulsorily acquired from the growers by certain canneries and were processed to provide pineapple products required to supply the needs of the armed forces. The property acquired was acquired for a purpose in respect of which the parliament had power to make laws, namely, to feed members of the armed forces, a purpose within the power to make laws with respect to defence. Where property is acquired by a third party pursuant to Commonwealth legislation, it is more likely that the use or application of the property envisaged by the legislation will not fall within any head of Commonwealth legislative power. The acquisition of the property will then not be for any purpose in respect of which the parliament has power to make laws within the meaning of s 51(xxxi), and legislative power to support the acquisition must be sought elsewhere. This is the situation with many Commonwealth laws which regulate the relationship between private persons. For example, it is the situation with the compulsory acquisition of property under bankruptcy law. The power to support the acquisition is not found in s 51(xxxi) but in s 51(xvii) (bankruptcy and insolvency) [See Attorney-General (Cth) v Schmidt (1961) 105 CLR at 372]. It is the situation with the readjustment of property rights between the parties to a marriage where the legislative power is to be found in s 51(xxi) (marriage) or s 51(xxii) (divorce and matrimonial causes). Section 51(xxxi) has been treated as abstracting from all other heads of power (including the incidental power but not s 122) the power to legislate for the compulsory acquisition of property which is conferred by that paragraph. But that power is limited to the acquisition of property for any purpose in respect of which the parliament has power to make laws, and that is all that is abstracted from the other heads of power. Thus the power to legislate for the acquisition of property which is not intended to be used or applied for such a purpose may be found in other heads of power [ibid]. A succinct explanation was given by Brennan J in the Federal Court in Re Tooth & Co Ltd (No 2) [(1978) 34 FLR 112 at 148]: Where a federal legislative power extends to the regulation of a relationship between private persons, pl (xxxi) does not necessarily cut down that power so as to exclude the acquisition of property as a mode of regulation. If the acquisition is intended by the regulating law to be for a purpose referred to in pl (xxxi) then pl (xxxi) applies and the validity of the law depends upon its compliance with the requirement of just terms. But if the acquisition is not intended to be for such a purpose, pl (xxxi) does not bear upon the law's validity. The validity of such a law is ascertained by inquiring whether it bears the character of a law with respect to some other head of federal legislative power.
If property can be said to be "acquired" pursuant to PPSA s 267, it is not acquired to be applied for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor's own purposes: to enlarge the grantor's assets and the property that will be divisible among its creditors. As such an acquisition is not for a relevant Commonwealth purpose, s 267 does not depend for its constitutional authority on s 51(xxxi), and s 51(xxxi) does not operate indirectly to confine those legislative powers - such as s 51(xvii) (the power to make laws with respect to bankruptcy and insolvency), and s 51(xxxvii) (the power to make laws with respect to matters referred by the states) - which provide the authority for s 267.
Further, a law which is not directed towards the acquisition of property as such but which is concerned with the adjustment of the competing rights, claims or obligations of persons in a particular relationship or area of activity is unlikely to be susceptible of legitimate characterisation as a law with respect to the acquisition of property such as to fall within s 51(xxxi). [34] The PPSA is directed to regulating and adjusting the relationship between true owners, the holders of security interests, and apparent owners. In these respects it modifies the rights those parties might have had in respect of personal property at common law. Section 267 works a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property, and is not a law with respect to the acquisition of property for the purposes of s 51(xxxi).
That was the approach taken by Le Miere J in White v Spiers Earthworks Pty Ltd: [35] [39] … Section 267(1) provides the circumstances in which the security interest held by a secured party vests in the grantor. The circumstances are where the grantor is insolvent and hence the vesting of the security interest in the grantor adjusts the competing rights of the secured party on the one hand and the unsecured creditors of the grantor on the other hand in relation to the personal property in relation to which the secured party has a security interest. [40] Section 267(2) of the PPSA does not effect an acquisition of property within the meaning of "acquisition of property" in s 51(xxxi) of the Constitution. The operation of s 267 to vest the defendants' interest in the hire assets does not result in an acquisition of property within the meaning of "acquisition of property" in s 51(xxxi) of the Constitution, and hence s 252B of the PPSA does not apply to the circumstances of this case.
While Alleasing submitted that I should decline to follow White v Spiers on the basis that it was plainly wrong, in my judgment it is plainly correct.
Accordingly, any "acquisition" effected by s 267 is not an acquisition within the meaning of s 51(xxxi): it is not an acquisition of property to be applied for any purpose in respect of which the Commonwealth has power to make laws, but one for the grantor's own purposes, and it represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property. PPSA s 252B is not engaged.
The second qualification to the indirect operation of s 51(xxxi) is that it is subject to a contrary intention either expressed or made manifest in the other heads of power, some of which clearly encompass the making of laws providing for the acquisition of property other than on just terms, and "[w]here that is so, the other grant of legislative power manifests a contrary intention which precludes the abstraction from it of the legislative power to make such a law". [36] This was the other point made by Dixon CJ in Schmidt in the passage set out above, and was expounded by Mason CJ in Mutual Pools: [37] The conferral of the legislative power of compulsory acquisition subject to the requirement of just terms means that, apart from s 122 which stands in a separate position [See Teori Tau v Commonwealth (1969) 119 CLR 564 at 570], in the absence of any indication of contrary intention, the other legislative powers reposed in the parliament must be construed so that they do not authorise the making of a law which can properly be characterised as a law with respect to the acquisition of property for any relevant purpose otherwise than on just terms. For it is a well-accepted principle of interpretation that, when a power is conferred and some qualification or restriction is attached to its exercise, other powers should be construed, absent any indication of contrary intention, so as not to authorise an exercise of the power free from the qualification or restriction [See Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 370-2 per Dixon CJ]. Hence, the effect of s 51(xxxi) when read in conjunction with the other legislative powers of the parliament is that, subject to any contrary intention, it forbids the making of laws with respect to the acquisition of property from any State or person for a relevant purpose on terms that are not just [See Australian Apple and Pear Marketing Board v Tonking (1942) 66 CLR 77 ; Johnston Fear & Kingham & Offset Printing Co Pty Ltd v Commonwealth (1943) 67 CLR 314 ; Bank of NSW v Commonwealth(the Bank Nationalisation case) (1948) 76 CLR 1 at 349-50 per Dixon J]. Consequently, a law with respect to the acquisition of property must comply prima facie with the requirement of just terms. An indication of contrary intention may be provided by the express terms in which a specific power is conferred or by the very nature of the subject matter of a specific power or what is included within it. Thus, the very terms of s 51(xxxiii), which confers power to make laws with respect to the acquisition of State railways ``on terms arranged between the Commonwealth and the State'', indicate that an acquisition of State railways stands outside s 51(xxxi). And, so does s 85 which makes special provision with respect to compensation payable by the Commonwealth for property passing from a State under that section.
As the defendants submitted, the other heads of power (including, relevantly, the power in s 51(xvii) to legislate with respect to bankruptcy and insolvency) "comprehend a power to enact provisions appropriate and adapted to the fulfilment of any objective falling within power, … and s 51(xxxi) does not abstract the power to prescribe the means appropriate and adapted to the achievement of an objective falling within another head of power where the acquisition of property without just terms is a necessary or characteristic feature of the means prescribed", and in this context, "necessary does not mean indispensable". [38] The power to legislate with respect to bankruptcy and insolvency includes the power to make laws vesting the bankrupt's property (and property in his or her possession), which are properly characterised not as a laws with respect to the acquisition of property, but as laws with respect to bankruptcy. [39]
PPSA s 267 is a law with respect to insolvency. In Schmidt, Dixon CJ mentioned - as being within the subject matters of laws with respect to insolvency, upon which s 51(xxxi) would have no bearing - a law dealing with and vesting property of others left in the possession and control of the insolvent. Alleasing argued that Dixon CJ was referring to the doctrine of reputed ownership and trading goods that allowed an insolvent to obtain credit to the detriment of his creditors, and that it was neither "necessary" nor "characteristic" of bankruptcy and insolvency that the property of the bailor (lessor) be transferred to the insolvent bailee (lessee). However, a PPS lease creates the same appearance of ownership which justifies the traditional regulation of chattel mortgages and charges, [40] and to treat such a lease as in substance a financing transaction under which the lessor's substantive right is to receive rent for the term of the lease, to require registration of the lessor's interest in order to protect the interests of others dealing with the lessee, and to convert the lessor's unperfected interest upon insolvency of the lessee into a right to prove in the insolvency, is a scheme appropriate and adapted to the achievement of objectives of the law of bankruptcy and insolvency. Section 267 is part of that scheme.
Further, PPSA s 267 is a law with respect to a matter referred by the states, authorised by s 51(xxxvii). Each State has referred relevant matters to the Commonwealth Parliament, and the referred matters included the "initial referred provisions", which meant the text of the proposed Commonwealth PPSA Bill tabled in the Legislative Assembly of New South Wales on 16 June 2009. That tabled text included s 267 in its current form, and it did not include s 252B.
The content and scope of a power conferred under s 51(xxxvii) is necessarily informed by the terms of the referral, which may be expressed in broad and general terms, and need not be limited to authorising the Commonwealth to enact a described and defined statute. [41] The effect of a referral is as if to add the referred matter to the list of heads of power in s 51. At least in theory, s 51(xxxi) could operate indirectly in respect of such a referred matter, and the potential for that would be at its highest where the referral was in general terms, analogous to the manner in which the various heads of power in s 51 are described. However, where the reference includes a "described and defined statute" which expressly includes a provision that authorises the acquisition of property other than on just terms, the indirect operation of s 51(xxxi) to constrain the express referred power would necessarily be excluded by the terms of the referral, a contrary intention being manifest. Here, where the referred matter was a "described and defined statute" which included s 267, the terms of the referral manifest an intention that it not be subject to the restriction referred to in s 51(xxxi).
The force of that argument would have been dissipated had the "tabled text" also included s 252B, because the referred matter viewed as a whole would then not have been inconsistent with, but to the contrary would have accommodated and intended, the continued operation of s 51(xxxi). However, s 252B was not in the tabled text; it was inserted into the Commonwealth Act by amendment, after the referral, by (CTH) Personal Property Securities (Corporations and Other Amendments) Act 2010, no 96 of 2010, the explanatory memorandum to which stated that it was inserted to remove any doubt about the constitutionality of the PPSA, and establishes that a provision of the PPSA would not apply where it would have the effect of providing for an acquisition of property otherwise than on just terms. That the Commonwealth Parliament chose to include s 252B does not confine the scope of the referred matter and the constitutional power derived from it.
For those reasons, the constitutional power to legislate (under s 51(xvii)) with respect to bankruptcy and insolvency, and (under s 51(xxxvii)) with respect to the specifically referred described and defined statute in the "tabled text", supported PPSA s 267 and was not in that respect indirectly affected by par 51(xxxi). However, although for that reason s 267 would have been constitutionally valid even if it effected an acquisition of property within the meaning of s 51(xxxi) on other than just terms - because a "contrary intention" emerges from s 51(xvii) and from the terms of the referral under s 51(xxxvii) - this does not assist in circumstances where by inserting s 252B into the Act, Parliament evinced an intention that no provision of PPSA should authorise an acquisition of property within the meaning of s 51(xxxi) on other than just terms. Section 252B has the effect that regardless of any other available head of power which might manifest an intention that it not be constrained by the indirect operation of s 51(xxxi), PPSA does not authorise an acquisition of property within the meaning of s 51(xxxi) on other than just terms.
Thus although but for s 252B, s 267 would be a valid exercise of power under Constitution s 51(xvii) and s 51(xxxvii) even if it effected an acquisition of property within the meaning of s 51(xxxi) other than on just terms, s 252B disapplies a provision of PPSA if effects an acquisition of property within the meaning of s 51(xxxi) other than on just terms, regardless of its constitutional validity. However, because s 267 does not effect an acquisition of property at all - and alternatively because if it does effect an acquisition of property, it is not one within the meaning of s 51(xxxi), as it is not acquired for application for any purpose in respect of which the Commonwealth has power to make laws but for the grantor's own purposes, and represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property - PPSA s 252B is not engaged and does not disapply s 267.

CORPA s 588FM and PPSA s 293

CORPA s 588FL relevantly provides that a perfected PPSA security interest granted by a company vests in the company if it is subject to an insolvency event, [42] with effect from immediately before the insolvency event, if it was perfected by registration after the later of (1) six months before the deemed commencement of the winding up or administration (under s 513A, 513B or 513C as the case may be), or (2) the earlier of 20 business days after the security agreement that gave rise to the security interest came into force, or the deemed commencement of the winding up or administration, or (3) a later time ordered by the Court under section 588FM: 588FL Vesting of PPSA security interests if collateral not registered within time Scope (1) This section applies if: (a) any of the following events occurs: (i) an order is made, or a resolution is passed, for the winding up of a company; (ii) an administrator of a company is appointed under section 436A, 436B or 436C; (iii) a company executes a deed of company arrangement under Part 5.3A; and (b) a PPSA security interest granted by the company in collateral is covered by subsection (2). Note: A security interest granted by a company in relation to which paragraph (a) applies that is unperfected at the critical time may vest in the company under section 267 or 267A of the Personal Property Securities Act 2009. (2) This subsection covers a PPSA security interest if: (a) at the critical time, or, if the security interest arises after the critical time, when the security interest arises: (i) the security interest is enforceable against third parties under the law of Australia; and (ii) the security interest is perfected by registration, and by no other means; and (b) the registration time for the collateral is after the latest of the following times: (i) 6 months before the critical time; (ii) the time that is the end of 20 business days after the security agreement that gave rise to the security interest came into force, or the time that is the critical time, whichever time is earlier; (iii) if the security agreement giving rise to the security interest came into force under the law of a foreign jurisdiction, but the security interest first became enforceable against third parties under the law of Australia after the time that is 6 months before the critical time - the time that is the end of 56 days after the security interest became so enforceable, or the time that is the critical time, whichever time is earlier; (iv) a later time ordered by the Court under section 588FM. Note 1: For the meaning of critical time, see subsection (7). Note 2: For when a security interest is enforceable against third parties under the law of Australia, see section 20 of the Personal Property Securities Act 2009. Note 3: A security interest may become perfected at a particular time by a registration that is made earlier than that time, if the security interest attaches to the collateral at the later time (after registration). See section 21 of the Personal Property Securities Act 2009. Note 4: The Personal Property Securities Act 2009 provides for perfection by registration, possession or control, or by force of that Act (see section 21 of that Act). … Vesting of security interest in company (4) The PPSA security interest vests in the company at the following time, unless the security interest is unaffected by this section because of section 588FN: (a) if the security interest first becomes enforceable against third parties at or before the critical time - immediately before the event mentioned in paragraph (1)(a); (b) if the security interest first becomes enforceable against third parties after the critical time - at the time it first becomes so enforceable. Note: For the meaning of critical time, see subsection (7). … (7) In this section: critical time, in relation to a company, means: (a) if the company is being wound up - when, on a day, the event occurs by virtue of which the winding up is taken to have begun or commenced on that day under section 513A or 513B; or (b) in any other case - when, on a day, the event occurs by virtue of which the day is the section 513C day for the company.
CORPA s 588FM provides for the Court to make an order (for the purposes of subparagraph 588FL(2)(b)(iv)) fixing a later time, on such terms and conditions as seem just and expedient, if the failure to register the collateral earlier was due to accident, inadvertence or some other sufficient cause, or not of such a nature as to prejudice the position of creditors or shareholders, on other grounds it is just and equitable to do so: 588FM Extension of time for registration (1) A company, or any person interested, may apply to the Court (within the meaning of section 58AA) for an order fixing a later time for the purposes of subparagraph 588FL(2)(b)(iv). Note: If an insolvency‑related event occurs in relation to a company, paragraph 588FL(2)(b) fixes a time by which a PPSA security interest granted by the company must be registered under the Personal Property Securities Act 2009, failing which the security interest may vest in the company. (2) On an application under this section, the Court may make the order sought if it is satisfied that: (a) the failure to register the collateral earlier: (i) was accidental or due to inadvertence or some other sufficient cause; or (ii) is not of such a nature as to prejudice the position of creditors or shareholders; or (b) on other grounds, it is just and equitable to grant relief. (3) The Court may make the order sought on any terms and conditions that seem just and expedient to the Court.
Alleasing submitted that, if it were not accepted that the original registrations were effective, time should be extended under s 588FM for registration, so that the second registrations - though they occurred after each of (1) 6 months before the critical time (being relevantly the time when administrators were appointed) and (2) the earlier of the end of 20 business days after the security agreement that gave rise to the security interest came into force and the critical time, would be within time.
Alleasing submitted - and it was not disputed - that for the purposes of s 588FM(2)(a), the failure to register the collateral earlier was accidental or due to inadvertence or some other sufficient cause; and/or was not of such a nature as to prejudice the position of creditors or shareholders. However, OneSteel submitted that the power to extend time under s 588FM was not enlivened, because for the purposes of s 588FL(2)(a), at the critical time (being the appointment of administrators) the security interest was not perfected by registration.
An order under s 588FM provides relief from the consequences of failure to register a security interest within time, with the consequences that a security interest is no longer in jeopardy of being vested in the grantor, in case of an insolvency event, on account of its belated registration. The effect of such relief is that should an insolvency event occur within six months of actual registration, although the security interest would otherwise vest in the grantor under s 588FL(4) because of its belated registration, it will not vest under that provision. However, an order under s 588FM fixes a later time only "for the purposes of subparagraph 588FL(2)(b)(iv)". An order under s 588FM does not resurrect a security interest which has vested in the grantor for a reason other than late registration. In other words, it serves to immunise the relevant security interest only against the consequences of what would otherwise be late registration.
In this respect, it is notable that such relief is available only in respect of a security interest that has been perfected as at the "critical time". Together, s 588FL(1) and (2) mean that s 588FL applies only to a security interest that "at the critical time" is enforceable against third parties and "is perfected by registration, and by no other means". Alleasing's submission that the phrase is perfected by registration means "is capable of being perfected" must be rejected. The opening words of s 588FL(2)(a) - "at the critical time, or, if the security interest arises after the critical time, when the security interest arises" - indicate that the security interest must have the status of being perfected at that time. Moreover, pursuant to CORPA s 588FK, the term "is perfected" has the same meaning in CORPA as in the PPSA, where s 21 uses the present tense in the same way: 21 Perfection - main rule (1) A security interest in particular collateral is perfected if: (a) the security interest is temporarily perfected, or otherwise perfected, by force of this Act; or (b) all of the following apply: (i) the security interest is attached to the collateral; (ii) the security interest is enforceable against a third party; (iii) subsection (2) applies. (2) This subsection applies if: (a) for any collateral, a registration is effective with respect to the collateral; or (b) for any collateral, the secured party has possession of the collateral (other than possession as a result of seizure or repossession); or (c) for the following kinds of collateral, the secured party has control of the collateral: (i) an ADI account; (ii) an intermediated security; (iii) an investment instrument; (iv) a negotiable instrument that is not evidenced by a certificate; (v) a right evidenced by a letter of credit that states that the letter of credit must be presented on claiming payment or requiring the performance of an obligation; (vi) satellites and other space objects. Note: For what constitutes possession and control of collateral, see Part 2.3. …
Notably, s 21(2) provides at least two modes of perfection for any collateral (s 21(2)(a) and (b)), and three for some (s 21(2)(c)). There is no collateral which can be said to be capable of perfection only by registration. Thus, if the phrase is perfected by registration, and by no other means meant "is capable of being perfected by registration, and by no other means", there would be no form of collateral to which it could ever apply.
That s 588FM is concerned only to provide relief from the consequences of belated registration of perfected interests, and is not concerned with unperfected interests, is reinforced by the note to s 588FL(1), which is to the effect that a security interest granted by a company which has an insolvency event, that is unperfected at the critical time, may vest in the company under PPSA s 267 or s 267A.
Section 588FM provides a means for obtaining relief from the consequences of belated registration of security interests granted by companies. Notably, it applies only to interests granted by companies. However, s 267, which vests unperfected security interests, applies to interests granted by individuals as well as those granted by companies. It would be discordant if a vesting under s 267 were amenable to cure by relief under s 588FM where the grantor was a company, but not otherwise.
Accordingly, an order under s 588FM does not immunise an unperfected security interest from vesting under s 267(2), but only a perfected security interest from vesting under s 588FL(4). It follows that, the relevant security interest being unperfected at the "critical time", relief under s 588FM is not available.
Moreover, even if relief could be given under s 588FM, it would not operate to divest an unperfected security interest that has already vested under s 267. While an order under s 588FM would have the consequence that the security interests would not vest under s 588FL(4) by reason of not having been registered earlier than the second registrations, it would not affect their vesting under s 267(2) on the basis that they were not, at the critical time, perfected. Vesting of unperfected security interests under s 267(2) occurs with effect from immediately before the relevant insolvency event. Here, vesting under s 267 occurred when administrators were first appointed to OneSteel, on 7 April 2016. An extension of time for the purposes of s 588FL would not affect the vesting that has taken place under s 267, because it would not alter the fact that, for the purpose of s 267(1)(b)(ii), on "the s 513C day", Alleasing's security interest was unperfected.
Alleasing also invoked PPSA s 293(1)(a), to seek an extension of the period for registration of its security interest in order that it retain priority as a PMSI: 293 Timing - applications for extension of time (1) On application, a court may make an order extending the number of business days in a period specified in the following provisions if the court is satisfied that it is just and equitable to do so: (a) paragraphs 62(3)(b) (perfection of purchase money security interests); … (2) The court may make the order even if the period has ended. (3) In making an order to extend a period under subsection (1), the court must take into account the following: (a) whether the need to extend the period arises as a result of an accident, inadvertence or some other sufficient cause; (b) whether extending the period would prejudice the position of any other secured parties or other creditors; (c) whether any person has acted, or not acted, in reliance on the period having ended.
However, s 293(1)(a) is concerned only with extension of the period referred to in s 62(3)(b). Section 62 is concerned with when a perfected purchase money security interest ("PMSI") has priority over a perfected security interest that is not a PMSI, and in respect of personal property other than inventory relevantly provides: (3) The purchase money security interest has priority if: (a) the interest is in personal property, or its proceeds, other than inventory; and (b) the purchase money security interest is perfected by registration before the end of 15 business days after whichever of the following days applies: (i) for goods - the day the grantor, or another person at the request of the grantor, obtains possession of the property; (ii) for any other property - the day the interest attaches to the property; and (c) the registration that perfects the purchase money security interest states, in accordance with item 7 of the table in section 153, that the interest is a purchase money security interest. Note: The period mentioned in paragraph (b) may be extended by a court under section 293.
Thus s 62(3) is concerned with the priority of security interests, not their perfection. An extension of the period referred to in s 62(3)(b) would not affect the vesting that has taken place under s 267, because it would not alter the fact that, for the purpose of s 267(1)(b)(ii), on "the s 513C day", Alleasing's security interest was unperfected.

Conclusion

My conclusions may be summarised as follows:
The original registrations were defective, in that they did not, as required, include OneSteel's ACN. A search of the PPS register by reference only to OneSteel's ACN would not reveal the original registrations, being as they were against the ABN. Accordingly, the original registrations were ineffective, pursuant to PPSA s 164(1)(b) and s 165(b). Moreover, the defect was such that searchers using one of the authorised modes of search would not discover the registration. This renders the defect seriously misleading, and so the first registrations were ineffective pursuant to s 164(1)(a) also.
Although but for PPSA s 252B, s 267 would be a valid exercise of power under Constitution s 51(xvii) and s 51(xxxvii) even if it effected an acquisition of property within the meaning of s 51(xxxi) other than on just terms, because those heads of power sufficiently manifest an intention that, at least to that extent, they not be constrained by the indirect operation of s 51(xxxi), PPSA s 252B disapplies a provision of PPSA if it effects an acquisition of property within the meaning of s 51(xxxi) other than on just terms, regardless of its constitutional validity. However, s 267 does not effect an acquisition of property at all. Alternatively, if it does effect an acquisition of property, it is not one within the meaning of s 51(xxxi), because it is not for application for any purpose in respect of which the Commonwealth has power to make laws, but for the grantor's own purposes, and represents a genuine adjustment of the competing rights, claims and obligations between owners of interests in personal property. Accordingly, PPSA s 252B is not engaged and does not disapply s 267.
Relief under Corporations Act s 588FM is not available, because the relevant security interest was unperfected at the "critical time". Even if relief could be given under s 588FM, it would not operate to divest an unperfected security interest that has already vested under s 267, because an extension of time for the purposes of s 588FL would not affect the vesting that has taken place under s 267, as it would not alter the fact that, for the purpose of s 267(1)(b)(ii), on the s 513C day for the grantor company OneSteel when administrators were first appointed to it on 7 April 2016, Alleasing's security interest was unperfected.
Similarly, an extension under PPSA s 293(1)(a) of the period referred to in s 62(3)(b) would not affect the vesting that has taken place under s 267, because it would not alter the fact that on, on the s 513C day, Alleasing's security interest was unperfected.
It follows that Alleasing's security interests in the crusher and the parts, being unperfected on 7 April 2016 when OneSteel went into administration, have vested in OneSteel pursuant to PPSA s 267. The originating process should be dismissed, and on the cross-claim there should be a declaration that Alleasing's security interests in the crusher and the parts have vested in OneSteel.
The court therefore: 1. orders that the originating process be dismissed. 2. declares that the interest of the plaintiff as lessor of the Striker crushing and screening plant referred to in Rental Schedule E2N0157602 and in the spare parts referred to in Rental Schedule E2N0158455 under the rental agreement dated 16 October 2014 between the plaintiff and the first defendant has vested in the first defendant. 3. orders that the plaintiff pay the first and second defendants' costs of the proceedings (including the cross-claim).

Endnotes

Striker filed an appearance but did not take an active part in the proceedings.
On 1 May 2015, Alleasing amended the registration in respect of the crusher, more precisely to describe the subject property; it is not suggested that this has any present significance - the registration remained one against OneSteel's ABN.
BGC has filed a submitting appearance.
PPS Reg Sch 1 Pt 1 cl 1.3 Table item 3, which under cl 1.3(3)(b) takes priority over item 4.
(CTH) A New Tax System (Australian Business Number) Act 1999 s 24, s 41.
(CTH) Corporations Act 2001 s 9, s 118, s 601BD.
See, for example, (CTH) Corporations Act 2001, s 123 and s 1344.
See Re Accolade Wines Australia Ltd [2016] NSWSC 1023 at [3].
PPSR cl 1.6.
PPSR Sch 1 cl 1.4.
PPSR Sch 1 cl 1.5.
PPSR Sch 1 cl 1.6.
Citing Business Development Bank of Canada v ABN Amro Leasing (2003) PEIJ No 22; [2003] PESCAD 5 at [55]; Valley Vista Golf Course Ltd (Receiver of) v Maxium Financial Services Inc [2003] NSSC 97 at [24]-[26]; Commcorp Financial Services Inc v R & R Investments Corp (1995) 31 Alta LR (3d) 393 at [44]-[45].
(CTH) Personal Property Securities (Approved Form) Instrument 2013 cl 8(1).
(CTH) Personal Property Securities (Approved Form) Instrument 2013 cl 8(2).
[2011] 13 TCLR 191.
[2013] NZHC 1897.
[2013] NZHC 1897 at [22], referring to Widdup L, Personal Property Securities Act: A Conceptual Approach (3rd ed, LexisNexis, Wellington, 2013) at 322, and Gault T (ed), Gault on Commercial Law (online loose-leaf ed, Brookers), at 8 A.7.03(2).
[2013] NZHC 1897 at [19].
[2013] NZHC 1897 at [23].
[2013] NZHC 1897 at [20], [24].
Replacement Explanatory Memorandum to the Personal Properties Securities Bill 2009, [5.71].
PPSA s 164(2).
Notices under (CTH) Judiciary Act 1903, s 78B, were served on the Attorneys' General of the Commonwealth and the States; none of them intervened in the proceedings.
Telstra Corp Ltd v Commonwealth (2008) 234 CLR 210; (2008) 243 ALR 1; (2008) 82 ALJR 521; [2008] HCA 7 at [52].
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 160 (Mason CJ, Brennan, Deane Toohey, Gaudron and McHugh JJ); [1994] HCA 27, citing Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 371-2 per Dixon CJ.
(1961) 105 CLR 361 at 371-2 (Dixon CJ); [1961] ALR 806; (1961) 35 ALJR 54.
(1994) 179 CLR 155 at 169; (1994) 119 ALR 577 at 585; (1994) 68 ALJR 216; [1994] HCA 9.
(1994) 179 CLR 155 at 198; (1994) 119 ALR 577 at 608; (1994) 68 ALJR 216; [1994] HCA 9.
Mutual Pools & Staff Pty Ltd v The Commonwealth (1994) 179 CLR 155 at 199; (1994) 119 ALR 577 at 608; (1994) 68 ALJR 216; [1994] HCA 9; citing Jenkins v Commonwealth (1947) 74 CLR 400 at 406; McClintock v Commonwealth (1947) 75 CLR 1 at 23, 36; PJ Magennis Pty Ltd v Commonwealth (1949) 80 CLR 382 at 401-2, 411, 423; Trade Practices Commission v Tooth & Co Ltd (1979) 142 CLR 397 at 427, 451-2; Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 510-11, 526.
(1994) 179 CLR 155 at 169; (1994) 119 ALR 577 at 585-6; (1994) 68 ALJR 216; [1994] HCA 9.
WH Blakeley & Co Ltd v Commonwealth (1953) 87 CLR 501 at 518-19; [1953] ALR 293; (1953) 26 ALJR 672; see also Attorney-General (Cth) v Schmidt (1961) 105 CLR 361 at 372-3; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 68 ALJR 216 at 236-7; 119 ALR 577 at 608-9; Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 165, 167; (1994) 121 ALR 577 at 598, 600; (1994) 68 ALJR 537; [1994] HCA 27 (Dawson J).
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 166; (1994) 121 ALR 577 at 599; (1994) 68 ALJR 537; [1994] HCA 27 (Dawson J).
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 161 (Mason CJ, Brennan, Deane, Toohey, Gaudron and McHugh JJ); [1994] HCA 27, referring to Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480 at 510; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 171-173, 177-178, 188-189; Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 285-286; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 236-238; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305-8; Dixon R, "Overriding Guarantee of Just Terms or Supplementary Source of Power?: Rethinking s 51(xxxi) of the Constitution" (2005) 27 Syd Law Rev 639 at 649-50; White v Spiers Earthworks Pty Ltd (2014) 99 ACSR 214; [2014] WASC 139 at [38].
(2014) 99 ACSR 214 at 222-3; [2014] WASC 139 at [39]-[40].
Nintendo Co Ltd v Centronics Systems Pty Ltd (1994) 181 CLR 134 at 160 (Mason CJ, Brennan, Deane Toohey, Gaudron and McHugh JJ); [1994] HCA 27, referring to Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 169-171, 177-78, 186-88, 219-223; Re Director of Public Prosecutions; Ex parte Lawler (1994) 179 CLR 270 at 274-9, 283-4, 294-6; Health Insurance Commission v Peverill (1994) 179 CLR 226 at 258-60; Georgiadis v Australian and Overseas Telecommunications Corporation (1994) 179 CLR 297 at 305-7.
(1994) 179 CLR 155 at 169; (1994) 119 ALR 577 at 585-6; (1994) 68 ALJR 216; [1994] HCA 9.
Cf AirServices Australia v Canadian Airlines International Ltd (1999) 202 CLR 133 at 180 [98].
Attorney-General (Cth) v Schmidt (No 1) (Doehnert Mueller Schmidt) (1961) 105 CLR 361 at 371 (Dixon CJ); [1961] ALR 806; (1961) 35 ALJR 54; Mutual Pools & Staff Pty Ltd v Commonwealth (1994) 179 CLR 155 at 177-8 (Brennan J); AirServices Australia v Canadian Airlines International Ltd (1999) 202 CLR 133 at 180 [98].
Re Maiden Civil (2013) 277 FLR 337 at [31]-[32].
R v Public Vehicles Licensing Appeal Tribunal (Tas); Ex parte Australian National Airways Pty Ltd (1964) 113 CLR 207; [1964] ALR 918; (1964) 37 ALJR 503.
Which term I use to encompass the making of an order or passing of a resolution for the winding up of the company, the appointment of an administrator under CORPA s 436A, 436B or 436C, or the execution of a deed of company arrangement under Part 5.3A: see s 588FL(1)(a). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 February 2017

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