Register your interest under the Personal Property Securities Act 2009
Posted 26 August 2014
Category: Construction, Personal Property Securities
In a Nutshell
Parties who loan or lease plant or equipment need to be aware of when to register a security interest under the Personal Property Securities Act 2009 (“PPSA”) to avoid unhappy scenarios such as that discussed below, where the owner of plant and equipment was ordered to hand vehicles over to a finance company that had loaned money to the tenant.
Personal Property
The PPSA applies to personal property which includes tangible things like:
- Plant and equipment, such as tools or vehicles, leased or bailed in the course of business; and
- Temporary works such as scaffolding,
and intangible things like:
- Retention monies; and
- Contractual rights, such as ‘take out’ rights, or ‘step in’ rights.
How Do I Protect My Interests
The PPSA provides a system whereby security interests can be registered on the Personal Property Security Register (“PPSR”).
While registering on the PPSR is relatively inexpensive, and can be done online, the PPSR could not be described as a user-friendly interface. Care needs to be taken to ensure that registrations are performed correctly to avoid an invalid registration.
A sample Registration Search Certificate is reproduced below.
Maiden Civil Case
The PPSA regime has introduced a conceptual shift where ownership of title has been replaced with the PPSA regime for matters involving security interests as demonstrated in the Maiden Civil case.
In the Maiden CiviI case, Queensland Excavation Services (“QES”) lost Caterpillar plant (two excavators and a wheel loader) by failing to take adequate protection under the PPSA.
Briefly, the key facts were that QES leased the Caterpillar plant to Maiden Civil, and Maiden Civil, in turn, obtained finance from Fast Financial Solutions (“Fast”) using that Caterpillar plant as security.
The lease of the Caterpillar plant was classified as a ‘PPS Lease’ under the PPSA which meant that Maiden Civil was permitted by the PPSA to use the Caterpillar plant as security for the loan from Fast.
When Maiden Civil defaulted on the loan Fast appointed receivers and was able to obtain orders from the Court that the Caterpillar plant be returned to the receivers.
QES failed to adequately protect its interest in the Caterpillar plant by registering its interest on the Person Property Security Register. Fast had registered its interest on the register and so even though the Court recognised that QES owned the Caterpillar plant and was not involved in the loan of moneys from Fast, QES lost that Caterpillar plant to the finance company that had registered its interest.
Next Steps?
Parties should review their business operations to ensure that their interests are properly protected under the PPSA. Given the complexities with this regime legal and professional advice may need to be sought. In particular care needs to be taken when registering security interests to ensure that the registration is valid.
***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.
