Commonwealth Consolidated Acts Commonwealth Consolidated ActsRequirements for collateral to secure obligation etc.
(1) A person must not apply to register a financing statement, or a financing change statement, that describes collateral, unless the person believes on reasonable grounds that the person described in the statement as the secured party is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself).
Civil penalty: 50 penalty units.
Note: See Part 6.3 (Civil penalty proceedings).
Example 1: A person applies to register a financing statement that describes collateral as "all present and after - acquired property" of the grantor described in the statement. It is sufficient to comply with this subsection if the applicant believes on reasonable grounds that the secured party described in the statement will take a security interest in a particular class of items of personal property held (or later acquired) by the grantor (see paragraph (b) of the definition of description in section 10).
Example 2: A person applies to register a financing statement that describes collateral as "fruit". It is sufficient to comply with this subsection if the applicant believes on reasonable grounds that the secured party described in the statement will take a security interest in apples (see paragraph (b) of the definition of description in section 10).
(2) If a financing statement, or a financing change statement, that describes collateral has been registered on the application of a person, the person must, within the period covered by subsection (3), apply to register a financing change statement to amend the registration to end its effect with respect to the collateral, if:
(a) the person described in the statement as the secured party has never, since the statement was registered, been a secured party in relation to the collateral (other than by virtue of the registration itself); and
(b) there are no reasonable grounds (or there are no longer any reasonable grounds) for the belief mentioned in subsection (1).
Civil penalty: 50 penalty units.
Note: See Part 6.3 (Civil penalty proceedings).
(3) The period covered by this subsection is as soon as practicable, or 5 business days, whichever is earlier, after:
(a) if there never have been, since the statement was registered, reasonable grounds for the belief mentioned in subsection (1)--the day of the registration time, or the amendment time, for the financing statement or financing change statement; or
(b) if there are no longer any reasonable grounds for that belief--the day when there stopped being reasonable grounds for the belief.
Note: The period of 5 business days may be extended by a court under section 293.
Damages for contravention of requirements
(5) For the purposes of section 271 (but without limiting that section):
(a) compliance with subsection (1) or (2) is taken to be an obligation imposed on a person who applies, or is required to apply, for the registration of a financing statement or a financing change statement; and
(b) any person with an interest in personal property described in the financing statement or financing change statement is taken to be a person to whom that obligation is owed; and
(c) a contravention of subsection (1) or (2) is taken to be a failure to discharge that obligation.
Note: Section 271 gives a right to recover damages for any loss or damage in relation to such a failure.
Registration unaffected by contravention
(6) However, if a person applies for a registration of a financing statement or a financing change statement in contravention of subsection (1), and the statement is registered accordingly, the contravention does not affect the validity or effectiveness of the registration.
Registrations with respect to security interests only
(7) This section only applies in relation to a registration with respect to a security interest.