Commonwealth Numbered Acts Commonwealth Numbered 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 collateral secures, or will secure, an obligation (including a payment) owed by a debtor to the person described in the statement as the secured party.
(a) for an individual--50 penalty units;
(b) for a body corporate--250 penalty units.
Note: See Part 6.3 (Civil penalty proceedings).
(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 collateral has never, since the statement was registered, secured an obligation (including a payment) owed by a debtor to the person stated in the registration to be the secured party; and
(b) there are no reasonable grounds (or there are no longer any reasonable grounds) for believing that the collateral secures, or will secure, such an obligation.
(a) for an individual--50 penalty units;
(b) for a body corporate--250 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 believing that the collateral secures, or will secure, an obligation mentioned in paragraph (2)(a)--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.
(4) A person who wishes to establish that there were reasonable grounds for the belief mentioned in subsection (1) or paragraph (2)(b) (at any particular time) bears an evidential burden in relation to the matter.
Note: For evidential burden , see section 10.
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.