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Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:


CALL: (03) 8561 3318

For a general introduction to the Personal Property Securities Register, read our previous article.

Searching and completing registrations on the Personal Property Securities Register can often be confusing and counterintuitive. In this article, we provide some tips to avoid making common mistakes when searching or completing registrations on the PPSR.

Make sure that you have a party’s identity right when completing registrations

It is critical to correctly identify the parties. Registrations that are incorrectly registered will be ineffective, with potentially devastating financial results.

The Personal Property Securities Regulations 2009 (Cth) provide detailed requirements on how to correctly identify an entity, and the courts require strict compliance with these regulations.

Companies and trusts

The most common registrations involve companies and trusts. We set out below the basic rules for registering against ordinary companies or trusts (though please note that this is not intended as a comprehensive statement of the regulations, and you should seek professional advice if you are unsure of how to correctly identify a party):

  1. A company acting in its own capacity must be identified using its Australian Company Number (ACN), not by its ABN.
  2. A trust that has an Australian Business Number (ABN) must be identified by its ABN, not by the ACN of its trustee company.
  3. A trust that does not have an ABN but has a corporate trustee must be identified using the ACN of the corporate trustee.

An example of what can go wrong if you get the registration incorrect is provided by the case In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21, where a lessor reportedly lost $23 million worth of assets because it registered a security interest to protect its assets against the borrower company using its ABN rather than its ACN. The Court held that the registration was ineffective. Given that the borrower had gone into administration, the lessor’s interest was defeated by the administration, and they became an unsecured creditor, effectively losing the $23 million worth of assets. It was a very simple yet very costly mistake.

Furthermore, if a grantor’s situation changes (e.g. a trust obtains an ABN), a secured party must update their registration within 5 business days of becoming aware of the change, or their registration will become ineffective.

An example where a secured party failed to update their registration can be seen in the case In the matter of Psyche Holdings Pty Limited [2018] NSWSC 1254. In this case, a secured party had correctly registered a security interest against a trust that had a corporate trustee and no ABN, using the ACN of the corporate trustee. The trust subsequently obtained an ABN. The secured party’s director learned of this but failed to update the PPSR registration. Five years later, the grantor applied to the New South Wales Supreme Court under section 588FM Corporations Act 2001 requesting an extension of time to amend the registration. In this case, the Court granted the extension because the failure to update the registration was inadvertent and did not prejudice third parties. However, had there been competing secured parties or had the company been in liquidation, the outcome would most likely be different.

Individuals

If you are registering against an individual grantor, you should register using the person’s name and date of birth as given on an Australian driver’s licence. If they do not have a driver’s licence, the Regulations provide a list of other documents that you can use to identify a party.

Searching the PPSR

It is also important that you correctly identify the party when you are searching the Register. If you fail to correctly identify the party, you may purchase assets (for example) thinking that the asset is free of encumbrances when that is not in fact the case. This may result in you losing the asset to that secured party.

Whilst the PPSR is designed so that you only need to search the correct identifier, it is often advisable to search by multiple possible identifiers (e.g. both by ACN and ABN) to identify possible issues with prior registered security interests. For example:

  1. Sometimes it may not be clear whether an asset belongs to a company or a trust of which the company is a trustee, and searching multiple identifiers could help identify potential issues,
  2. If a grantor’s details change (e.g. a trust that did not originally have an ABN obtains an ABN), it is possible that a secured party’s existing security interest registered using the grantor’s former details remains effective if that secured party has not become aware of the change in the grantor’s details, and
  3. Some transitional registrations (i.e. registrations under old security regimes prior to the introduction of the PPSR) may use incorrect identifiers. Whilst these transitional registrations would now be ineffective since the transitional period has passed for secured parties to amend their transitional registrations, you may still want to be aware of potential issues.

If you can avoid a dispute by carrying out proper searches, this is often more beneficial than later on establishing the correctness of your position against a third party who is likely to be disadvantaged if their security interest is defective.

How can Sharrock Pitman Legal assist?

If you require any assistance with searching or registering on the PPSR, please do not hesitate to contact us on 1300 205 506. We can conduct both searches and registrations for your business, and we also offer training to assist businesses who deal with the PPSR regularly to have proper guidelines in place.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Written by one of our lawyers

,

.

Samuel Ellemor

For further information contact

Samuel Ellemor

Samuel is a Legal Practitioner at Sharrock Pitman Legal.

He deals with areas of Commercial Law, Employment Law and Charities & Not for Profit Law. For further information, contact Samuel on his direct line (03) 8561 3316.

More on

Commercial Law

However, in this article we will set out the factors that influence how long it will take to obtain a Grant of Probate and to administer an estate in Victoria.

The basics

First things first: what is a Grant of Probate? A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will. Without Probate, the asset holders (say a bank or share registry) cannot be satisfied as who has the correct authority to receive the deceased's assets and may refuse to pay out.

Sometimes, for smaller estates or if assets are mostly jointly owned with a surviving spouse, asset holders might agree to release payment without requiring a Grant of Probate. This is usually on the basis that the person who receives payment promises to repay (or Indemnify) the asset holder if it turns out they paid to the wrong person.

If there is no Will, then you cannot obtain a Grant of Probate. Instead you obtain Letters of Administration. This is effectively the same, in terms of authorising someone to administer the estate, and would usually be obtained by the person who is the closest next-of-kin to the deceased.

“A Grant of Probate is effectively a document issued by the Supreme Court of Victoria which formally authorises an executor to manage the estate of a deceased person in accordance with their Will.”

Timeframes for Probate in Victoria

In order to obtain a Grant of Probate, the Court needs to be given information about the assets and liabilities of the estate, the deceased person, the witnesses to the Will, the executors and the Will itself. An advertisement of your intention to apply for Probate must also be placed on the Supreme Court website for at least 14 days prior to any application.

Often, making enquires to obtain all the necessary information can take a number of weeks. Also, you will need the Death Certificate for the application for Grant of Probate and possibly for making proper enquires regarding the assets and liabilities. Waiting for the Death Certificate to issue can therefore add a few more weeks to the process. Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.

The Court itself does not take long to process the application (maybe another 1 to 2 weeks) and this is done 'on the papers' using the electronic Court filing system. This means you do not have to go to a court hearing. There is also a general discretion for the Court to issue a 'Requisition' asking that you provide more information before they process the application and this can delay matters.

“Overall, if you have your application for Grant of Probate lodged within 1 to 2 months from the date of death, you are making timely progress.”

So, here we are a few months after death and you finally have a Grant of Probate. It is important to remember that this is the start of the estate administration and not the end. For a very simple estate, you might only need a further month or so to cash the assets and pay them to the correct beneficiaries. However, it can often be more complex than that. Factors that determine the timeframe to administer the estate include:-

  • Some assets will take time to cash or transfer. For example, if selling a property, final settlement might be 60/90/120 days from the day of sale.
  • There is a 6 month period for challenges to be brought against the estate and executors must wait until this period expires before distributing the estate, if there is any risk that a disgruntled family member might come forward.
  • There might need to be final tax returns for the deceased or for the estate. Failing to wait for the ATO to process these could leave the executor personally liable for a tax bill.
  • You might need to advertise for creditors to come forward and wait for a period of months while this advertising timeframe expires. This protects the executor if they are unsure of all of the deceased's financial dealings and creditors.
  • It might not always be a good time to immediately cash estate assets. For example, the shares just took a nose-dive, do you still sell regardless of available price?

There is a general rule that executors have an 'executor's year' to complete the estate administration. This means that you should be aiming to have the estate finalised and distributed within 12 months from the date of death.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

Liability limited by a scheme approved under Professional Standards Legislation.

Need help with Probate?

Our expert legal team is ready to take your call!

Mitchell is the Managing Principal of Sharrock Pitman Legal. He is an Accredited Specialist in Commercial Law (accredited by the Law Institute of Victoria). He also deals with areas of Employment Law, Wills & Estate Planning and Probate and can answer all your questions related to probate.

For further information, contact Mitchell on his direct line:

DIRECT LINE: 
(03) 8561 3318

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For fifty years Sharrock Pitman Legal has made a significant and long term contribution to meeting the legal needs of business owners and residents in the City of Monash and greater Melbourne area.