The Personal Property Securities Act came into force in early 2012, and radically changed the law relating to personal property in Australia.
Personal property is in general terms everything other than land and certain specific licences, such as gas and mineral licences, so it includes motor vehicles, crops while they are growing and their proceeds, furniture, debts (either that you owe, or that are owed to you), copyright, trademarks and rights under contracts.
Of the many fundamental changes to the law brought about by the Act, one was to class certain arrangements as ‘security interests’ where they hadn’t previously been. These arrangements include ‘retention of title’ supplies, commercial consignments of goods and certain leases and hiring arrangements.
The idea behind this is to enable people to check (by searching a register) whether goods that appear to be owned by a person are in fact only consigned or leased to them and not actually owned by them (in the same way you are able to check if goods are financed).
The effect of this change is that people supplying goods on retention of title terms, on consignment or under certain leases (called ‘PPS Leases’) must register their ownership of the goods on the Personal Property Securities Register or risk losing ownership of the goods if the person who holds the goods under lease or on consignment becomes insolvent. Before the PPSA, you could in those circumstances recover your goods as owner, but this is no longer the case.
Because this was such a fundamental change to the law, the PPSA included a 24 month ‘grace period’ for arrangements that commenced prior to 30 January 2012, to give people the chance to protect their assets by registering on the PPSR.
If you register such a ‘transitional security interest’ within the grace period there is no registration fee, and you are treated as having registered at 30 January 2012 – which is important in ensuring your interest ranks ahead of other security interests granted by the person holding the goods (for example, to a bank).
The grace period – and free registration – comes to an end on 30 January 2014. You can still register these arrangements (called ‘transitional security agreements’) after 30 January, but fees will apply, and the registration won’t be ‘backdated’ to 30 January 2012, so other security interests registered prior to your registration may rank ahead of your security interest in the goods.
It is therefore important if you supply on retention of title terms, consignment terms or under certain leasing and bailment terms that (if you haven’t already done so) you take steps to ensure that any ‘transitional security interests’ are registered on the PPSR prior to 30 January 2014, or at least weigh up the risks in your circumstances of not registering.
If you are supplying goods on retention of title or consignment terms (or leasing property to others), and you would like further information on protecting your interest in your property under the Personal Property Securities Act, please contact Murdoch Lawyers on 07 4616 9898.
