The Personal Property Securities Act 2009 (Cth) (PPSA came into
effect 30 January 2012 but is still a confusing piece of
legislation for many, including councils.
PPSA affects any person or entity taking a security
interest over personal property.
What is personal property? The definition covers
tangible property (e.g. equipment, motor vehicles) as well as
intangible property (e.g. trademarks, patents). It is anything
other than buildings and fixtures forming part of the land.
What is a security interest? This is an interest in
personal property arising from a transaction that in
substance secures payment of performance of an obligation.
However, it can also extend to other interests that are
'deemed' to be security interests under PPSA such as the
The 'PPS Lease': A lease of:
serial numbered goods (e.g. waste collection trucks, forklifts,
trailers) for a term of more than 90 days or possibly extending to
more than 90 days; and
non serial numbered property (e.g. tools) for a term of more
than 1 year or an indefinite term.
However, the lessor must be regularly engaged in the business of
leasing out goods.
Where the Local Council may be caught:
If council enters into arrangements with contractors to carry
out work on its behalf and allows contractors to use trucks,
equipment or other personal property owned by council, this could
give rise to a PPS lease if the arrangement falls within the
What should council do?
Council can structure (and document) their contractual
arrangement to avoid it falling with the scope of the PPSA.
Alternatively, if is does fall within the scope of PPSA, ensure the
arrangement is carefully drafted and take the step of
'perfecting' the security interest. The most common way to
perfect a security interest, is to register the interest on the PPS
Register. There are certain time limits council should comply with
to maximize its protection under PPSA.
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.
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