Sham financing statements on the PPSR: problems caused and their resolution
By Nick Anson
The Personal Property Securities Register (PPSR) does not require the person registering a security interest to file the underlying security agreement with the PPSR. That position is in contrast to a ‘documents register’ such as the former ASIC Register of Company Charges, which had an essential requirement of lodgement of the security document for effective registration. As an electronic register that permits registration to occur online, the PPSR is accordingly open to obvious abuse where a person is prepared to lodge a sham financing statement.
The registering party’s motives might be ulterior, such as to harass the would-be grantor, or might arise out of a genuine, but mistaken, belief that the registering party has a security interest in the personal property of the grantor. Either way, the would-be grantor is left having to remove the sham financing statement from the PPSR.
Although administrative and judicial processes exist under the Personal Property Securities Act 2009 (Cth) (PPSA) to remove a sham financing statement, in practice, a contested process can be time consuming and costly. Whether the existing provisions are adequate for the purpose is a real issue…
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