I was recently reminded of a saying an employer once told me and that is that “it takes just as long to do it right as it does to do it wrong”! This sentence became my mantra as it proved correct over and over again.
The PPSA in Australia has been modelled on the New Zealand and Canadian model and because of this we can recognise the precedent set in Canada in the case of Fairbanx. This case involved a company called “Friction Tecnology Consultants”. Notice the fact that the legally registered name did not include a “h” in the word technology. This business carried on trading with the orthographically correct spelling of the word in their letter head and invoices. They even signed a factoring agreement with a company called Fairbanx using the incorrect spelling.
Fairbanx registered its security interest in Friction Technology Consultants on the PPSR and used the incorrect spelling of the name but did not check the actual registration of the organisation. Later the debtor applied for a loan from Royal Bank based on its current and future owned assets. The bank did a search using the legally incorrect name and found the registration by Fairbanx. The bank agreed to the loan some months later and did a second search using the correct name and found no registrations and placed their own interest. As a condition of the loan the bank had instructed the debtor to cease factoring its accounts with Fairbanx but they ignored this directive.
The bank and Fairbanx ended up in dispute over some invoices that had been factored to Fairbanx. Since both actions were covered by the PPS there is the fact that Fairbanx had registered some two years before the bank. When the case was heard it was found that their registration was unperfected as it was against the incorrectly spelt company name.
There are two very interesting points, even lessons here. You must always be extremely sure as to the actual registered name of the company you are dealing with. The second is to never give up your position even if you think you were last to register as the “Bradbury Rule” exists and the last one standing is likely to be the one paid.