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12 September 2013 Possession really is 9/10s of the law. Are you ready for the end to PPSA transition arrangements?

By Tim Hemingway, Partner


In Brief

On 31 January 2014, the PPSA's two year grace period for security interests that didn't migrate to the PPSR automatically as well as various lease, retention of title and other arrangements comes to an end. Now is the time to work out what steps you need to take to protect your interests in personal property and how you can otherwise deal with the risks that those security arrangements are designed to manage. 


With the implementation of the Personal Property Securities Act (PPSA) regime on 30 January 2012, the question is no longer who owns or has title to goods, but rather whose interest in goods has priority under the PPSA regime.

As the recent Maiden Civil case made clear, the fact that someone clearly owns, is the undisputed lessor of, or provides apparently secured finance for goods is no longer in itself enough to trump what used to be inferior interests if things go belly-up. 

If you haven't 'perfected' your interest for PPSA purposes, what you think of as your 'security interest' may not help you much.

Perfection is achieved by due and timely registration of a security interest on the Personal Property Securities Register (PPSR) or where the secured party (lender, lessor, owner, consignor etc) has possession or control of the goods.

The PPSA included a two year grace period for holders of certain types of security interest which:

  • were registered pre-PPSA but where those registrations were not automatically transferred to the PPSR (as charges on ASIC's records were, for example); and/or
  • were previously not registered or not registrable.

This was to give these security interest holders time to register their interests or otherwise put in place PPSA-compliant, or at least PPSA-consistent, arrangements.

The PPSA provided deemed 'temporary perfection' during the grace period for secured parties under things like certain leases of goods, hire purchase arrangements, retention of title arrangements, consignments and bailments that were already on foot.

The grace period will come to an end on 31 January 2014.

This means that if, under an arrangement that was on foot as at 30 January 2012, your goods are in someone else's possession, say under a financed lease or retention or title or consignment arrangement, your interest as owner, lessor, consignor or financier will soon cease to be 'perfected' under the PPSA's transitional arrangements.

Now is the time to work out what steps you need to take to protect those interests and otherwise how you might deal with the risk that those arrangements are designed to manage. 

It was readily apparent in the Maiden Civil case, and it is apparent from our own experience and anecdotal evidence, that there is a lot of confusion out there about the level of protection of interests that people think they have under the new PPSA regime, both generally and under the PPSA transition arrangements in particular.

The obvious step is to register the relevant interest on the PPSR now before it is too late, or to put in place fresh, PPSA-compliant arrangements and register your interests under those new arrangements on the PPSR.

Bear in mind, of course, that perfection of an interest by registration on the PPSR is only one of the ways of managing the risks which, after all, security arrangements are designed to address. 

For example, suppliers who routinely supply goods on a retention of title basis will need to weigh up the costs and administrative burdens of registration of each and every RoT arrangement on the PPSR against other means of making sure goods are paid for in a timely manner and the likelihood and magnitude of the risk of non-payment.

We are here to help so let us know if you have any questions or need any assistance getting things in order before January 2014.

Angela Harvey, Partner  |  Phone: +61 2 9233 5544  |  Email: axh@swaab.com.au

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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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