Australia: Attention Small to Medium Business: the Personal Property Securities Act - does it affect you?

Last Updated: 29 February 2012
Article by Alexia Horton

Does your business supply goods? Do you lease or hire out equipment, goods or other property? Do you take security deposits or bond payments in your line of business? Are you thinking of buying a business?

If you answered yes to any of these questions then it is likely that the new Personal Property Securities Act 2009 affects your business and you could run the risk of losing out if you do not adequately protect your interests under the new laws.

The new laws

On 30 January 2012 the new Personal Property Securities Act 2009 (the new PPS laws) came into force, reforming the laws and registers dealing with securities over personal property. Each state and territory previously had its own laws which have now been brought together under one national system and online register called the Personal Property Securities Register (PPS Register). This register will also include company charges which were previously registered at ASIC.

Personal property is any form of property other than land, buildings or fixtures. It can include tangibles such as cars, art, machinery and livestock as well as intangibles such as intellectual property and contract rights. Security interests in any personal property may now be noted on the online PPS Register.

Supply of goods – retention of title and commercial consignments

The new PPS laws offer protection of 'security interests' in personal property and it appears that these security interests will include:

  • Retention of title arrangements: that is, the supply goods with a 'retention of title' or 'Romalpa' clause. These clauses allow you retain ownership of any goods you supply or deliver to a buyer until you receive payment for those goods.
  • Consignments: that is, a supply of goods to a retailer for sale where you retain an interest in the goods until they are sold.

If you are involved in any of these types of arrangements, where goods that you own are no longer in your possession, then you should seriously consider making a registration to protect the ownership of your property.

If you fail to register, then you may run the risk of someone else gaining a superior interest in your property. For example, if the purchaser or consignee of your goods becomes insolvent or goes bankrupt, then any of your property in their possession could vest in the (for example) liquidator and you would lose title to the property even though you own the property.

These are real risks that you may not have previously had to consider before the introduction of the PPS laws. The new PPS system often gives more weight to possession of the goods, rather than ownership. Therefore, as owners of property you may now have to consider registering your ownership interest in any circumstance where you part with possession of your property (which also includes leasing as outlined below).

In addition to the protection offered by registration, the PPS laws also offer some other advantages to people with a registered security interest which were often difficult to achieve before these new PPS laws were introduced. They include:

  • Accessions: if you have a security interest in goods that are later installed in, or affixed to other goods, then your security interest may continue in goods as a whole.
  • Commingled or processed goods: if you have a security interest in goods that are later processed, or mingled with other goods such that you can no longer identify them, then your security interest may continue in the now processed or mass of goods.
  • Proceeds: a security interest in goods will usually now extend to the proceeds of the sale of these goods.

Kott Gunning is available to offer you further advice regarding the registration process or in structuring or amending your contracts to take advantage of the protection under the new PPS laws.

Leasing or hire of goods, equipment or other property

If you own personal property which you lease or hire out, then, as the owner of these leased items of personal property, you are able to register your interest on the new PPS Register. Personal property is any form of property other than land, buildings or fixtures. It includes leases of all sorts of personal property, including office or factory equipment, machinery and vehicles.

As mentioned above, if you fail to register on the PPS Register, then you may run the risk of someone else gaining a superior interest in your property, if it is in their possession. Not only will this include situations where the lessee becomes insolvent, but also a third party could 'purchase' the leased equipment from the lessee and you may have no recourse against the purchaser to regain your property (although you may still have a claim against the lessee). Again, the new PPS laws place an emphasis on possession of property and therefore a third party could gain better rights than you in property even though you are technically the owner.

If you are entering into any new leases or hire agreements of personal property, then Kott Gunning is able to provide advice and help with protecting your interests on the PPS Register.

Deposits, bonds and rights upon default of contracts

Other rights that you may be granted under sale or supply contracts could include:

  • security deposits or bonds held as security for payments due to you; and
  • any rights which you may have to deal with another person's property if they default or breach a contract with you.

These rights may also be capable of registration on the PPS Register and can be commonly found in standard terms and conditions of a contract. However, depending on the particular contract there may be other interests that are capable of being protected under the PPS laws.

You should consider registering interests such as these to prevent other parties gaining a superior right in, say, bond payments or a defaulting party's property. We suggest you seek advice with regards to your specific contract document, or drafting new provisions to create such rights, before entering into new contracts.

Current interests temporarily protected – review your contracts

Many contracts existing as at 30 January 2012 will include provisions we have mentioned above. The PPS laws provide temporary protection of such interests for a two year transitional period only. While there may be temporary protection, you are still able to formalise these transitional interests on the PPS Register and, in any event, may wish to conduct a review of any existing contracts before the transitional period expires on 29 January 2014.

Buying a business

Purchasers of businesses should consider whether the purchase includes any personal property. Common types of personal property included in a business purchase might be:

  • inventory or stock;
  • vehicles;
  • equipment;
  • trade marks or other intellectual property;
  • rights under contracts.

Prudent purchasers should now be conducting searches on the PPS Register of all such personal property before purchasing a business to check that no other person has a prior registered interest in it.

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.

Kott Gunning is a proud member of

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

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

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
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”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions