Court Case type 1 “Woops – I made an error Your Honour!’’
Court applications to correct errors have been the bulk of the legal cases. In fact, there continues to be a seemingly endless stream of them. Typically, an entity will have performed many registrations only to subsequently discover that they are wrong. Proceeding to Court to rectify them is an option. Typical reasons include:
· Not selecting the PMSI (super priority);
· Registering the grantor (customer) incorrectly, e.g., registering a company incorrectly by its ABN instead of by its ACN;
· Not registering the Trust, just the trustee;
· Registering out of time; and
· Forgetting to register at all.
In a very public forum, businesses are regularly spending hundreds of thousands of dollars in legal fees going to Court and requesting that past errors be rectified. It’s an expensive and embarrassing process that could be avoided by performing a correct registration for $6 in the first place. The errors committed could have been avoided with even the most basic of PPSR knowledge. Further, a creditor can still oppose an application, thereby jeopardising the outcome.
One of the first PPSR Court cases was Forge Group Power v General Electric, which dealt with the matter of simply forgetting to register. Failing to make a $6 registration saw the owner lose equipment worth around $50 million to the Insolvency Practitioner.
Moral of the story: Be aware of when you need to register. Seek expert advice upfront.