Recent case confirms the paramount importance of the PPSA registration to protect personal property.
The Personal Property Securities Act 2009 (“the PPSA”) came into effect on 30 January 2012. As its name suggests, the PPSA governs the way in which securities over personal property are construed in the eyes of the law. The key change introduced by the PPSA is that it essentially removes the concept of ownership in private property and instead makes the registration on the PPS Register the main factor in deciding who is entitled to personal property in the event of competing interests.
The first major Australian case on the application of the PPSA was handed down in June 2013 in a Supreme Court decision of Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd (QES). QES had leased Caterpillar equipment to Maiden without a written lease. Maiden was in possession of the equipment over a year but QES did not register its interest (ie ownership) in the leased equipment on the PPS Register. Maiden has separately granted security over all of its assets to Fast Financial Solutions Pty Ltd under a general security agreement (GSA) and Fast perfected its security interest under the GSA by registering it on the PPS Register. Maiden then fell into financial difficulty and Fast appointed receivers as it was entitled to do under the GSA. QES terminated the lease and claimed ownership of the Caterpillar equipment. However, Fast’s receivers asserted primary rights to the equipment as the sole perfected security interest holder (as Fast’s security was registered on the PPS Register). The Supreme Court found that QES and Fast both had security interests but Fast’s perfected security interest took priority under the PPSA.
The result may seem surprising since the apparent owner of the equipment lost its right to recover possession because it has failed to register its leases. However, it reflects the fundamental object of the PPSA, namely to make the registration of the security interests on the PPS Register paramount.
The warning is clear. No matter how obvious your legal rights to personal property may appear, be sure to protect your interest by registering with the PPS Register as early as possible.
Source Legal assists businesses with registrations on the PPS Register and advice on the PPSA.
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