Key Takeaways

The combined effect of the lender’s conduct and words to the purchaser of a security resulted in an implied authorisation of the disposal and removal of the lender’s registered security interest.

Brief Facts

In the AAT Pogana Pty Ltd (Applicant) (of which Mr Khamsi was sole director), sought to set aside the decision made by the Respondent Registrar for the removal of the Registration on a concrete pump (Collateral) from the Personal Property Securities Register (PPSR). The Applicant was the secured party under the Registration.

The Applicant entered a deed of loan and deed of variation (Loan Agreement), agreeing to loan Pro Pump Concrete Pumping NSW Pty Ltd (Grantor) $200,000 to purchase the Collateral. Mr Dogmehsaz was the guarantor of the loan and sole director of the Grantor. Under the Loan Agreement, the Applicant was granted a security interest in the Collateral as security for the obligation to repay the loan. The Applicant registered its security interest in the Collateral on the PPSR on 15 June 2018 for seven years (Registration).

On 6 August 2019, the Other Party, the Grantor and Mr Dogmeshsaz entered a written agreement for the Other Party to purchase the Collateral. The agreement did not refer to any pre-existing security interest or PPSR registration. However, it was not disputed the Registration was current and available to be discovered by a standard PPSR search.

Messages were sent between Mr Khamsi and the Other Party regarding the sale and access to the Collateral. In that correspondence Mr Khamsi informed the Other Party that he had released the Registration over the Collateral online with PPSR.

The Other Party issued an amended demand to the Applicant under s178 of the Personal Property Securities Act 2009 (Cth) (the Act) demanding it remove the Registration. When the Applicant did not comply, the Other Party issued an amendment statement to the Respondent pursuant to s180(3) of the Act seeking the removal of the Registration under s181 of the Act.

The Applicant failed to provide evidence to support its claim to be owed money secured by the Registration despite many requests to do so from the Respondent.

In the absence of any evidence from the Applicant from which the Respondent could be satisfied on reasonable grounds that it had been granted a security interest in the Collateral, the Respondent removed the Applicant’s Registrations on 18 January 2021.

On review the AAT did not disturb the Respondent’s decision to remove the Applicant’s Registrations. The AAT:

1. found Mr Khamsi’s evidence unreliable, incomplete and misleading;
2. noted the Applicant acknowledged it authorised the advertising of the sale of the Collateral;
3. released possession of the Collateral to the Other Party after he knew the sale had been completed;
4. found Mr Khamsi was aware of the specific ’disposition’ and while the evidence did not establish that he expressly authorised the disposition, was satisfied that by his conduct he can be taken to have impliedly authorised the disposition which is an exception to the principle that a perfected security interest persists in collateral even though the debtor may no longer own the collateral; and
5. found Mr Khamsi advised the Other Party he released the security ‘online’ with PPSR even though he had not.

Implications

By its conduct and words the Applicant impliedly authorised the disposal of an asset over which it held a registered security. The implied authorisation had the effect of extinguishing the registered security interest.