As the Personal Property Securities Act 2009 (Cth)
commenced operation on 30 January 2012, any person or business that
has been granted an interest that constitutes a security interest
under the PPSA will need to take action immediately to ensure that
their interest is protected. In most instances, this will mean
registering the interest on the Personal Property Securities
Here, partner Paul Cullen discusses the transitional provisions
under the PPSA and how they relate to master agreements.
Where a security interest has been created under an agreement
entered into on or after 30 January 2012, it is essential that the
interest is registered on the PPSR as soon as possible and, in any
event, within any timeframes prescribed under the PPSA.
Transitional provisions apply until January 2014, providing
protection for businesses and individuals for those security
interests created under agreements entered into before 30 January
2012. However, it is crucial that those relying on the transitional
provisions ensure that the provisions apply to their circumstances
and that they are adequately protected.
One area of concern for businesses is where a 'master
agreement' has been entered into before 30 January 2012, but
has given rise to new transactions occurring on or after 30 January
Master agreements are often entered into for the supply, lease
or bailment of goods. For example, a lessor of goods may have
entered into a master lease agreement before 30 January 2012, but
continued to lease goods to the same lessee under the master
agreement after 30 January 2012. The concern is whether any lease
of goods that has arisen after the PPSA commenced will have the
protection of the transitional provisions. If not, the lease may
need to be registered under the PPSR as a new security
Given the infancy of these provisions, there is no judicial
guidance on this point. However, it is likely that the answer will
depend on the manner in which the master agreement has been
drafted, and how the subsequent leasing of goods is carried out. In
this example, if the transitional provisions do not apply, the
owner could lose its rights to the goods if it fails to register
its security interest. Accordingly, it is essential that anyone
relying on the PPSA's transitional provisions carefully review
their arrangements to ensure they are protected.
In the years following the global financial crisis of 2008 many Australian investors lost their life savings as financial products failed and the Australian Stock Exchange shed over 3,000 points.
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