You are right that a lapsed (cancelled) registration is treated as a new registration, but I wonder if there will be additional hassles as the previous registration details have someone else's name on them.
In this case the car was registered, but it is not clear if registration has been cancelled.
Agreed you are supposed to transfer within 14 days, but it does not say what happens if you don't transfer and then let the registration lapse and get cancelled, and a different person tries to take on the registration.
See:
How to transfer registration < Transfer your rego < Registration < www.rta.nsw.gov.au
Proof of registration entitlement < Get a new rego < Registration < www.rta.nsw.gov.au



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