Does it Matter? Identifying Parties Using ACNs and ABNs

Australian Business Numbers (ABN) and Australian Company Numbers (ACN) are often used interchangeably in legal proceedings. I attribute this to the fact that most lawyers on the local circuit are innumerate (author included) and their eyes glaze over as soon as they are presented with anything that an accountant may have ever touched.

dr brule

ABNs and ACNs

An ABN is an identifier issued by the Australian Taxation Office and is issued to every entity hoping to engage in business all the way from sole trader to partnership to corporations. An ABN is issued under the A New Tax System (Australian Business Number) Act 1999 (Cth).

An ACN is an identifier issued by the Australian Securities and Investments Commission (ASIC) and unlike an ABN is issued only to companies.

Well that was easy

Yep, simple right? You know I wouldn’t set you up just to rip the rug out from under you right? Well, wrong on both counts.

As far as process documents go, ACNs should be used when they exist unless the company is being sued as a trustee. In any event, the Corporations Act 2001 (Cth) does allow for leeway. Section 1344 of the Corporations Act allows for companies to be identified by either their ACN or ABN when required. As businesses don’t necessarily have ACNs this essentially means that an accurate description with either ABN or ACN will be sufficient for court documents.

Pro tip: An often ignored aspect of suing under an ACN is that the process is supposed to be accompanied by an affidavit attaching a search of the ASIC records. This is required by rule 2.4(2) of the Corporations Rules incorporated in Schedule 6 of the Court Procedures Rules 2006 (ACT).

Wait, that’s still pretty easy

Yep, that is unless you’ve met my friend the Personal Property Securities Register (PPSR).

In January 2017, a leasing finance company lost a $23m ore crusher all because they identified a company with its ABN instead of its ACN.

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In 2009, the Australian Personal Property Securities Act 2009 (Cth) was passed. The act set up a register of security interests that was designed to simplify the registration and identification of security interests.

The act has not simplified things. Instead, we are now almost a decade into a post-apocalyptic hellscape ruled over by technocrats and bad bond villains (As far as registering security interests goes that is). Errors are common and the scheme is still poorly understood even by those who have studied it extensively.

Catch me if you can

In the matter of OneSteel Manufacturing Pty Limited (administrators appointed) [2017] NSWSC 21 concerned Alleasing, a leasing finance company, seeking to recover their $23m asset and prevent it from being applied by the administrators for the benefit of all of Onesteel’s creditors.

Alleasing had registered their interest under Onesteel’s ABN and later corrected it to the company’s ACN but only after the administrators had been appointed.

The Court was required to consider whether using the ABN created a “seriously misleading” defect as set out in section 164 of the PPSA.

Alleasing attempted to rely on section 1344, set out above, to allow them to use either identifier, but this was swatted away as that provision only applies to laws administered by ASIC, which the PPSA is not.

The Court found that using the wrong identifier was a serious defect as anyone searching the register using the ACN would not be able to identify the relevant security interest. In the case of Onesteel, the defect didn’t cause prejudice to any creditors or the company, but the defect remained nonetheless.

Alleasing also sought to rely on the Corporations Act (s588FL) to extend their time to amend the registration, but the property had already vested with the administrators so it would not be possible. The crusher was available for distribution to all of the creditors of Onesteel and Alleasing would simply have to wait in line with everyone else.

As with all things PPSR, this, of course, is not a consistent or clear position, even when the same judge is involved. In 2013, in Future Revelation Ltd v Medica Radiology & Nuclear Medicine Pty Ltd [2013] NSWSC 1741 the same defect was found to not be serious and the property was returned to the claiming party. The common thread though is how easily the interest can be identified despite the defect.

 

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