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ARTICLE · 29 FEBRUARY 2024

Registering on the PPSR without reasonable grounds? You could be penalised

Coleman Greig Lawyers
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A person may only register if they believe on reasonable grounds that they will hold a security interest for their benefit.

AustraliaCorporate/Commercial Law
John Bennett
John Bennett
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Failures to register have notoriously cost businesses millions of dollars in assets under the Personal Property Securities Act 2009 (PPSA). Similarly infamous are the costs and delays in commercial transactions caused by baseless registrations.

In a notable development addressing the latter challenge, it appears for the first time that in Registrar of Personal Property Securities v Brookfield [2024] FCA 29, a person has been fined for registering when they were never a secured party and didn't believe on reasonable grounds that they would ever become one.

Belief required before registering

Section 151(1) of the PPSA requires that a person must believe on reasonable grounds that they are a secured party or will become one before they register. That is, a person may only register if they believe on reasonable grounds that they will hold a security interest for their benefit.

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