Learn how to navigate the new laws from the alarming tale of a construction company that lost all rights in its own equipment.
A new era
The Personal Property Securities Act 2009 (PPSA) and the related Personal Property Securities Register (PPSR) introduced a complete overhaul of personal property rights. If you own property that is subject to a security agreement, lease, hire/purchase agreement, or retention of title provision, your interests must be placed on the PPSR to secure priority of your interest.
Gone are the days of simply asserting legal ownership.
Physical possession of property entitles the possessor to rights in the property despite their lack of ownership. Among other rights, possessors of property have the ability to grant security over their interest in the goods to a third party without the knowledge of the original owner.
Legal title – if not perfected on the PPSR – is no longer a suitable safeguard to ensure what’s yours remains yours. Registered interests will cut through your own legal title like an icebreaker if you don’t perfect yours first.
A tale of warning
Queensland Excavation Services (QES) leased 3 Caterpillar vehicles to Maiden Civil (Maiden), but never registered its interest in them.
During the lease Maiden used the vehicles as part of its security for a loan from Fast Financial Solutions (Fast). Fast immediately registered its security over the Maiden personal property (including Maiden’s interests in the Caterpillars) on the PPSR.
Soon after, Maiden went into receivership and both QES and Fast sought possession of the vehicles. The Court ruled that Fast’s registered interest on the PPSR took priority over QES’ original legal title and QES went home with nothing.
Don’t be fooled!
The PPSA provides a grace period (that ends on 30 January 2014) to place an interest on the PPSR if your interest is derived from an agreement that predates 30 January 2012.
But be warned! Your interest will only be protected if you have registered your interest on any relevant corresponding register under the old system (such as the now defunct New South Wales Security Interests in Goods Register).
Even then, don’t rely on the grace period; REGISTER YOUR INTEREST.
The Maiden case is a confirmation of the effectiveness and power of the PPSA and a timely warning to act now. Don’t let your property be lost in the sea of competing interests.
Contact the Kells Commercial team about establishing a PPS policy, perfecting your interests by registration and protecting your ownership.