An agistment is when you let someone graze their stock on your
land for reward.
Normally an agistment is a bailment. A bailment is simply where
one person (the bailor) gives possession of goods, such as stock,
to another person (the bailee), and the bailor has the right to
receive the goods back. When the agistment is a bailment, the stock
owner does not have a right to occupy the land and is not
responsible for looking after the stock.
An agistment can also be in the form of a licence or lease of
land rather than a bailment. This will be the case when the stock
owner has the right to enter the land and to look after the
Under the Personal Property Securities Act 2009 (Cth)
(the PPSA), some kinds of bailment interests are
security interests governed by the PPSA. If an agistment falls
within this class of regulated bailments, the interest of the stock
owner will be a security interest under the PPSA. If it is a
security interest, the stock owner may want to register the
interest under the agistment on the Personal Property Securities
Register (the PPSR), to preserve the priority of
the owner's interest in the stock.
The PPSA says that the type of bailment interest that is a
security interest is the interest of a bailor of goods under a
"PPS lease." Therefore an agistment arrangement would
need to be a "PPS lease" in order to qualify as a PPSA
A PPS lease is a special type of security interest under the
PPSA called a purchase money security interest, or PMSI for short.
A security interest registered as a PMSI on the PPSR will in some
cases have priority over prior-ranking registered security
A bailment of stock will be a PPS lease if it meets certain
Term of bailment
To be a PPS lease, the bailment must be for a term of more than
one year, or an indefinite term. It will also be sufficient if it
has a term of up to one year that is automatically renewable, or
that is renewable at the option of one of the parties, for one or
more terms, if the total of all the terms might exceed one
Even if the term is one year or less, if the bailee, with the
consent of the bailor, retains uninterrupted or substantially
uninterrupted possession of the bailed property for a period of
more than one year after the day the bailee first got possession of
the property, this will meet the bailment term requirement,
although not until the bailee's possession extends for more
than one year.
Bailor must be regularly engaged in business of bailing
However, a bailment that meets these requirements will
not be a PPS lease if it is a bailment by a bailor
who is not regularly engaged in the business of
Rabobank New Zealand Ltd v McAnulty  NZCA 212 is
a recent New Zealand case where a similar provision in the New
Zealand PPSA was considered. There was one-off bailment of a race
horse with a stud farm. The court held that this was a lease or
bailment by a lessor or bailor who was not regularly engaged in the
business of leasing or bailing goods. The court said that the words
"the business of leasing goods should be read as importing a
requirement that the owner actually be intending to profit from the
bailment or lease." The court also said that "a single
transaction in circumstances where it can be established that the
transaction was a one-off would not be regular."
If the stock owner is not regularly engaged in the business of
bailing stock, intending to profit from the transaction, the
agistment will not be a PPS lease.
Bailee must provide value
In addition, a bailment will only be a PPS lease if the bailee
provides value – that is, where the bailee provides something
of value for taking possession of the goods. Under an agistment,
the landowner provides something of value to the stock owner: the
opportunity to graze the stock on the land. An agistment should
therefore normally meet this condition.
In summary, an agistment will give rise to a PPSA security
it is a bailment (rather than a lease or licence);
the bailment is for a term of more than one year or an
the bailor (the owner of the stock) is regularly engaged in the
business of bailing goods (such as stock); and
the bailee (the owner of the land) provides value for the
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.
Kemp Strang has received acknowledgements for the quality of
our work in the most recent editions of Chambers & Partners,
Best Lawyers and IFLR1000.
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