How to dispute a claimed migrated SPG
If you consider that a migrated secured party group (SPG) has been claimed by another user in error, the following steps may be taken:
Step 1: Check that the first claimant is in error
One way to check that the “first Claimant” is in error would be to obtain registration numbers associated with the migrated SPG and search on the details of a sample registration to determine if the migrated SPG does in fact belong to the “second Claimant”.
Step 2: Second claimant should send a notice of dispute to first claimant directly
The second Claimant should make direct contact with the first Claimant to advise that there is a disputed claim. The communication to the first Claimant should be in writing and include:
- contact details of the second Claimant;
- a brief explanation of why the second Claimant believes that the relevant migrated SPG belongs to them; and
- details of the target SPG to which they seek to have the associated migrated registrations assigned.
Step 3: First claimant to review claim file and respond to the notice of dispute
When the first Claimant receives the notice of disputed claim from the second Claimant, they should review their own claim of the disputed migrated SPG. The review might include checking whether the associated migrated registrations do belong to the first Claimant. Within 5 business days of receipt of the notice of dispute, the first Claimant should advise the second Claimant in writing of its response to the notice of disputed claim. The response may be either that the first Claimant:
- agrees that the migrated SPG was claimed in error, in which case the participants should go to Step 6 below; or
- denies that the migrated SPG was claimed in error, in which case the participants should go to Step 4 below.
Where the first Claimant denies there was an error, the response should include a brief explanation of why the relevant migrated SPG belongs to them. This may also include any information in response to information set out in the notice of dispute from the second Claimant.
If the second Claimant receives a response to a notice of disputed claim which denies the migrated SPG was claimed by the first Claimant in error, they should review the response.
At this stage, participants are encouraged to engage in cooperative dialogue to resolve the dispute. This could include, for example, exchanging information with each other about the organisational structures of which the migrated SPG forms a part, sharing copies or extracts of security agreements that the migrated SPG is a party to, and any other information that may assist in determining whether the associated registrations should remain assigned to the first Claimant or be transferred to the second Claimant. Such exchange of information would be subject to any applicable confidentiality/privacy considerations. Participants may wish to refer issues to officers or advisers or use such other means to assist reaching a resolution. Participants should keep notes of communications and copies of information shared for future reference.
If a resolution is reached, the participant that has agreed to withdraw their claim over the migrating SPG should provide to the other participant a written notice of resolution to that effect. If the first Claimant withdraws their claim, the participants should go to Step 6.
If neither participant withdraws their claim and provides the other participant with a notice of resolution within a period of 10 business days after receipt of a response which denies the migrated SPG was claimed in error, then either Claimant may seek assistance from the National Service Centre (NSC) in accordance with Step 5. The NSC provides support to the operation of the PPSR.
If the participants, despite efforts in Step 4, cannot reach agreement about which of their target SPGs is the appropriate destination for registrations of the migrated SPG, either may seek assistance from the National Service Centre (NSC) which may be able to provide information to assist a resolution.
The NSC may be contacted through firstname.lastname@example.org or reached on 1300 007 777 (1300 00 PPSR).
The NSC may, following the receipt of request for assistance, offer the participants such additional information or suggestions that might assist in resolving the dispute. That might include:
- suggesting other information sources that could be relevant to determining the appropriate claimant (for example, company information held by the Australian Securities and Investments Commission); or
- providing information about next steps in the event the dispute cannot be resolved, as referred to in Step 7.
There is no statutory framework for this service in the Personal Property Securities Act 2009 (PPS Act), so it will be informal and participation is voluntary. Seeking information or guidance through the NSC will not necessarily lead to a resolution. Notwithstanding those limitations, participants may find it worthwhile to seek further information to facilitate a resolution between the participants because, in the event that resolution cannot be reached, the alternative mechanisms described in Step 7 are likely to involve greater delay and cost, because the amendment demand process must be conducted at the level of each registration. If a resolution can be reached at the level of the claim over the migrated SPG, it would encompass all associated registrations.
If at any time throughout the process either participant agrees to withdraw their claim over the migrating SPG, that participant should provide to the other participant a written notice to that effect.
In circumstances where the first Claimant accepts that their claim over the migrated SPG has been made in error, the following processes may be used to transfer the relevant registrations to the second Claimant.
The transfer of registrations associated with a migrated SPG using standard PPSR functionality.
Scenario One: Registrations of the migrated SPG have been allocated to a target SPG with no other registrations.
In a simple case, the registrations of a migrated SPG will have been allocated by the first Claimant to a target SPG that has no other registrations. In such a case, it would be possible to transfer all registrations to the second Claimant’s nominated target SPG by using the standard PPSR functionality of “transfer all”.
If the first Claimant does not already have the SPG number of the target SPG of the second Claimant, they will need to obtain it (in writing to minimise errors) from the second Claimant before proceeding with the transfer.
A verification statement will be produced and sent to the address for service for both of the ‘transfer from’ and ‘transfer to’ secured party groups. New tokens are sent to the ‘transfer to’ secured party group (i.e., the second Claimant’s target SPG).
First Claimants should attend to such transfers the same day they provide written notice to the effect that they have withdrawn their claim over the migrated SPG. Alternatively, if the at the time of providing the written notice the first Claimant has not received the second Claimant’s SPG number, the first Claimant should attend to the transfers the day they receive that information. If a second Claimant does not receive the relevant verification statements and token notifications, they should contact the first Claimant and remind them to effect the transfer. If the first Claimant does not respond, it is open to the second Claimant to utilise Step 7.
Scenario Two: Registrations of the migrated SPG have been allocated to a target SPG that has other registrations.
It is possible that the first Claimant nominated a target SPG for more than one migrated SPG, not all of which are disputed. In such a case, the ‘transfer all’ function would not produce the desired outcome because only some of the registrations of the first Claimant’s target SPG (that is, those that were associated with the disputed migrated SPG) should be transferred to the second Claimant’s SPG.
In such a case, it would be necessary to transfer each registration separately, using the ‘single transfer’ function.
As noted above, participants are encouraged to resolve any disputes about claims over migrated SPGs themselves at the first instance. If that is not possible, the process of seeking assistance from the NSC (see Step 5 above) can be utilised.
If there is still no resolution, the second Claimant could lodge their own financing statements, based on their understanding of their interests in the collateral derived from security agreements etc. However, they should seek independent legal advice on whether this is appropriate in the circumstances.
It is open to the second Claimant to attempt to utilise the formal amendment demand process in Part 5.6 of the PPS Act to require the first Claimant to discharge the migrated registrations.
In order to utilise the amendment demand process, it will be necessary for the second Claimant to obtain details of the associated migrated registrations. Likely sources for that information are:
- The second Claimant’s own records (such as copies of security agreements).
- Through consulting the post-RCT database to ascertain the PPSR registration number of each registration associated with the migrated SPG.
The above sources are likely to include details of grantors, or registration numbers that would enable searches to be conducted to obtain the necessary details regarding the relevant registrations.
The amendment demand process would be conducted in accordance with Part 5.6 of the PPS Act. It is beyond the scope of this document to describe the details of that process, except to note that it may lead to the Registrar registering a financing statement to end the effective registration held by the first Claimant. It may also ultimately lead to a judicial process. As there is no facility in the amendment demand procedure to require a secured party to transfer a registration to another secured party group, it will be in the hands of the second Claimant to register new financing statements as appropriate (which may occur prior to the commencement of the amendment demand proceedings).
Note: The above processes have been developed on the assumption that the claims of both the first Claimant and second Claimant are based on a genuine belief held by both participants that the migrated SPG is theirs.