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.

A recent New Zealand High Court case, McCloy v Maruka Institute of Technology [2013] NZHC 936 has provided some guidance in relation to issues not yet judicially decided in Australia. The findings are not surprising. However, they are important, as they suggest which way the Australian courts will go and concern issues relevant to owners corporations engaging contractors to carry out remedial and other works.

The Personal Property Securities Act 2009 (“Act”) fundamentally changed the system for creation and enforcement of security interests in relation to personal property. Although the Act does not apply to interests in real estate, it does apply to interests in equipment and materials on construction sites. As a result, it has important implications for developers and contractors and for owners corporations and other property owners dealing with them. Failure to get this right can have serious consequences, particularly if another party involved in the works goes into liquidation.