Australia: How the Personal Property Securities Act 2009 affects

Last Updated: 27 March 2011
Article by Daniel Pinti

The Personal Property Securities Act 2009 (PPSA) will have a significant impact on the core business operations of many industries. Businesses need to review their operations now and make arrangements to ensure their interests are protected when the PPSA commences.

Importantly, under the PPSA, suppliers and other beneficiaries of a retention of title clause will need to register their interest to ensure that the clause is enforceable and has its intended effect.

Here, partner Paul Cullen and senior associate Daniel Pinti discuss how the registration and enforceability of retention of title arrangements will change under the PPSA, and what businesses should be doing now to ensure their interests are protected.

Key points 

  • The PPSA is currently scheduled to commence in October 2011. If you use retention of title arrangements in your business operations, or if you have ever used a retention of title clause and that arrangement will still be in place at the time the PPSA commences, you should seek advice now. Procedures for new transactions will need to be updated, and many existing arrangements - including arrangements which are not currently considered to be security interests - will need to be registered.
  • For suppliers or manufacturers who use retention of title arrangements, the period leading up to the commencement of the PPSA is an important time to review existing terms of trade and put into place processes to register any security interests in goods before they are sold.
  • It may also be appropriate for suppliers to register a purchase money security interest to ensure that they will have priority over their customer's other creditors for future ongoing supplies. Suppliers will also need to keep appropriate records and put in place systems to address enquiries about the security interests permitted under the PPSA.

Who will the PPSA affect?

It's not only businesses and other commercial entities that will be affected by the PPSA. Any person who has been granted, or who may in the future be granted, an interest that constitutes a "security interest" for the purposes of the PPSA must carefully consider their position and seek advice as necessary. The definition of "security interest" in the PPSA is wide and includes the following examples:

  •  Charges
  • Mortgages (excluding a mortgage over land or water rights)
  • Conditional sale agreements, including retention of title arrangements
  • Hire purchase agreements
  • Pledges
  • Trust receipts
  • Leases of goods
  • Consignments
  • Assignments
  • Transfers of title
  • Flawed asset arrangements (eg controlled/restricted bank deposits)

This list is not exhaustive, as the PPSA will regulate any interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation. In addition, the legislation also classes certain prescribed interests as security interests even though they may not secure payment or performance of an obligation. Examples of this include the interest of a consignor under a commercial consignment or the interest of a lessor or bailor of goods under a "PPS lease" (certain leases or bailment of goods arrangements specified in the PPSA to be a "PPS lease").

It is essential that those who have entered into a transaction of this nature, and who may be the beneficiary of a security interest under the PPSA, review their arrangements and seek advice as to the steps that need to be taken to protect their interests before the Act commences.

Retention of title arrangements

Anyone who is a supplier of goods should pay close attention to the PPSA requirements to make sure their retention of title clauses remain enforceable. A retention of title clause (sometimes also referred to as a "reservation of title" or "Romalpa" clause) is often used by suppliers to retain ownership of or title to goods until the buyer makes the final payment.

Retention of title clauses are currently recognised at law and do not require registration to be effective. However, that position will change under the PPSA. Suppliers or other beneficiaries of a retention of title clause will need to register their interest (their "security interest") to ensure that the clause is enforceable and has its intended effect.

The legislation also offers some new protections, of which a beneficiary of a retention of title arrangement can take advantage. Examples include the ability to extend the security interest to cover the book debts referrable to the relevant goods, and mechanisms to protect commingled and attached goods (which, in both cases, are problematic under the current law).

Purchase money security interests

The security interest arising from a retention of title arrangement is an example of what the PPSA refers to as a "purchase money security interest". In simple terms, this is a security interest over goods that is given to a party who has provided credit to assist with the purchase of those goods. Examples of purchase money security interests include equipment leases and hire purchase agreements.

The significance of this type of interest is that it has a "super priority" in certain circumstances, meaning that a supplier who has a registered purchase money security interest can potentially have priority over a previously registered security interest, such as a company charge. For example, consider a situation where a customer has granted a security interest to a bank over all of its present and future property. A supplier to that customer who uses a retention of title arrangement can potentially have priority over the bank's security, even if the bank's security was registered first.

The registration of the retention of title arrangement must indicate that it is a purchase money security interest to obtain the super priority. It must also be made within a prescribed timeframe.

Insolvency: Legal title is not enough

The concept of "ownership" or "title" is, for all practical purposes, redundant under the PPSA. In general terms, the PPSA assumes that assets subject to a security interest should be available for realisation and distribution to secured creditors, regardless of who has title to it. Emphasis is placed on the status and priority of the "security interest". For example, where goods are leased, ownership and title to the item remains with the lessor. The lessee has rights over the item, but does not have title to it. This presents a difficulty in the event of the insolvency of the lessee under the current regime, as it is not always clear which assets the lessee "owns" that can be realised to repay secured creditors. Assets owned by the lessor would not be available to the lessee's creditors.

This distinction does not exist under the PPSA and, using the same example, the lessor would be required to record its interest on the Personal Property Securities Register as a "security interest" (even though the lessor has title to the goods). In this example, the lessor must register its interest in order to "perfect" its interest. The concept of perfection under the PPSA is important and of particular relevance in the context of enforceability and priority. For example, while there are exceptions, a perfected security interest will generally have priority over an unperfected security interest.

An unperfected security interest will generally mean that the underlying property becomes available to the creditors of the security provider on its insolvency. The effect of this is that the security interest is essentially void. While this is consistent with the current position for charge and mortgage securities, it differs significantly for retention of titles and other interests, which were previously not considered to be "security interests".

For example, a supplier who has used a retention of title clause would, under the current regime, retain ownership of the goods in circumstances where the buyer is insolvent. Under the PPSA, the supplier may lose its priority and its interest in the goods if it does not register its security interest. This will apply even if the supplier has title to the goods. A secured party whose interest is void due to insolvency will only have the same rights as other unsecured creditors, even though it holds legal title to the goods. This is a dramatic change to the position under the current law and emphasises the importance of registration/perfection under the PPSA.

© HopgoodGanim Lawyers

Gold Employer of Choice - ALB magazine, April 2010
Finalist, Brisbane Law Firm of the Year, ALB Australasian Law Awards 2010

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.