PPS case: Davidson v Registrar of Personal Property Securities

If you want a registration against you removed from the PPS register, and you give an amendment demand but the secured party will not remove it, you can apply to the Registrar (the ‘administrative process’) or a court (the ‘judicial process’) to have it removed.

A recent decision by the AAT comments on the different standards of proof under the two processes. It will be easier for a secured party to resist the application when the administrative process is followed.

Davidson v Registrar of Personal Property Securities [2015] AATA 549

Ms Burge (formerly Ms Davidson) and Mr Davidson were in partnership. The partnership entered into a subcontracting agreement with Davidsons Blinds & Shutters Pty Ltd, under which Blinds & Shutters fulfilled orders the partnership had taken from its customers, and was entitled to hold goods of the partnership as security for the partnership’s payment for the work. Blinds & Shutters made a PPS registration to perfect its security interest.

Mr Davidson alone had signed the agreement for the partnership. Ms Burge gave an amendment demand removal of the registration, then initiated the administrative process under PPSA ss179-181 to have the Registrar remove it. The Registrar declined to remove it on the basis of reasonable grounds of suspicion that the amendment was not authorised, and Ms Burge appealed to the AAT.

The Tribunal found that the agreement with Blinds & Shutters was not within the business of the partnership, not authorised by the partnership agreement, and not binding under the Partnership Act 1958 (Vic) when signed by a single partner. Accordingly the Tribunal did not suspect that the amendment was not authorised, and directed that the amendment be made to end the registration.

In doing so, the Tribunal considered whether s296 placed on Blinds & Shutters the onus of proving that a security interest had attached and was perfected. The Tribunal held that it did not: review by the Tribunal was not a ‘proceeding under the Act’ – rather, it was a proceeding under the Administrative Appeals Tribunal Act 1975 (Cth). The standard was the lesser one of ‘reasonable grounds of suspicion’ under s181. By contrast, if the judicial process (PPSA s182) was followed to have the Registrar implement an amendment demand, s296 and the higher standard of ‘balance of probabilities’ would apply.

The result

In this case Blinds & Shutters had not discharged even the lesser standard: as the agreement was not binding, the AATA did not even suspect that Blinds & Shutters held a security interest.

Digest of PPSA cases

I have added the case to my digest of reported Australian cases – please go to PPS cases for a link to the digest.

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