Federal Court rules that an error in secured party's details on a PPS registration was not "seriously misleading"

A registration on the Personal Property Securities Register (PPSR) that incorrectly identifies the secured party is not necessarily ineffective pursuant to section 164(1) of the Personal Property Securities Act 2009 (Cth) (PPSA), according to the recent Federal Court decision of AMAL Security Services Pty Ltd (Trustee) v 452HM Pty Ltd, in the matter of 452HM Pty Ltd [2025] FCA 603.

This decision clarifies the interpretation of section 165(d) of the PPSA and departs from the approach in Re AMAL Trustees Pty Ltd as trustee for the Longreach Direct Lending Fund [2023] FCA 1519. It aligns with earlier authority (Future Revelation Ltd v Medica Radiology & Nuclear Medicine Pty Ltd [2013] NSWSC 1741) that a defect in the secured party's details does not automatically invalidate a registration.

Background to the dispute in AMAL

AMAL Security Services Pty Ltd applied to the Court to address an error in the registration of a security interest on the PPSR against 452HM Pty Ltd (Grantor). The error arose because AMAL Services was incorrectly recorded as holding the security interest in the wrong capacity.

Structure of the lending and security arrangements

The case concerned the following circumstances:

• AMAL Services was appointed as security trustee under a Security Trust Deed for the Parc Trust, which did not have an ABN.

• On the same day, AMAL Trustees Pty Ltd, as trustee of the Causeway Trust (which did have an ABN), became a participant under the trust structure and entered into a Loan Facility Agreement involving Australian Hotel Management (as borrower) and AMAL Services (as trustee of the Parc Trust).

• AMAL Services later replaced AMAL Trustees as trustee of the Causeway Trust and the rights under the Loan Facility Agreement were assigned to AMAL Services in that capacity.

• AMAL Services (in both trust capacities) subsequently entered into a Deed of Forbearance with Australian Hotel Management and others, including the Grantor. As part of that arrangement, the Grantor executed a Deed of Guarantee in favour of AMAL Services in its capacity as trustee of the Causeway Trust and a General Security Deed in favour of AMAL Services in its capacity as trustee of the Parc Trust.

Registration error and court application

Although AMAL Services' solicitors registered the security on the PPSR, the registration mistakenly recorded it as acting for the Causeway Trust rather than the Parc Trust.

To protect its position, particularly as a winding-up application for the Grantor was pending, AMAL Services applied to the Court for a declaration that the registration was not ineffective despite the error. In the alternative, it sought an order under section 588FM of the Corporations Act to extend the time to correct the registration.

Court’s findings on defect and statutory interpretation

Section 164 of the PPSA deals with the effect of defects in a registration. Under section 164(1), a registration is ineffective because of a defect only if:

• there is a seriously misleading defect in any data relating to the registration (other than a defect of a kind prescribed by the regulations); or

• there is a defect of the kind mentioned in section 165.

Section 165 sets out specific categories of defects that may render a registration ineffective. The Court noted that paragraphs (a), (b), and (c) of section 165 did not apply to the facts of the case, leaving section 165(d) as the only potentially relevant provision.

The Court held that the defect in the registration – namely, misidentification of the secured party's capacity – was not "seriously misleading" under section 164(1) of the PPSA. In reaching this conclusion, the Court applied the test from earlier case law, which asks whether the defect would prevent the registration from being disclosed in a search.

The Court’s reasoning as to why the registration was not seriously misleading included:

• the Grantor's correct ACN was identified and searchable;

• the type of security interest was correctly identified;

• AMAL Services was in fact the trustee of the identified Causeway Trust (including by reference to its ABN);

• AMAL Services’ contact details were correctly recorded, allowing any interested party to obtain further information.

The Court also rejected the interpretation of section 165(d) in Re AMAL Trustees Pty Ltd as trustee for the Longreach Direct Lending Fund [2023] FCA 1519 which suggested that a defect exists if the registration data does not match the requirements prescribed by the regulations. Instead, the Court found that section 165(d) refers only to "prescribed circumstances" specified in the regulations – not merely any failure to comply with data requirements. As no such circumstances were prescribed, section 165(d) did not apply.

Extension of time granted under Corporations Act

As the application was made ex parte, the Court declined to make a declaration that the registration was effective. Instead, the Court granted an order under section 588FM of the Corporations Act extending the time for AMAL Services to correct the registration. The order included a provision allowing any administrator, deed administrator, liquidator, or unsecured creditor of the Grantor to apply to vary or set aside the order if the Grantor entered insolvency within six months.