On 31 January 2014, the PPSA's two year grace period for
security interests that didn't migrate to the PPSR
automatically as well as various lease, retention of title and
other arrangements comes to an end. Now is the time to work out
what steps you need to take to protect your interests in personal
property and how you can otherwise deal with the risks that those
security arrangements are designed to manage.
With the implementation of the Personal Property Securities Act
(PPSA) regime on 30 January 2012, the question is no longer who
owns or has title to goods, but rather whose interest in goods has
priority under the PPSA regime.
As the recent Maiden Civil case made clear, the fact that someone
clearly owns, is the undisputed lessor of, or provides apparently
secured finance for goods is no longer in itself enough to trump
what used to be inferior interests if things go belly-up.
If you haven't 'perfected' your interest for PPSA
purposes, what you think of as your 'security interest' may
not help you much.
Perfection is achieved by due and timely registration of a
security interest on the Personal Property Securities Register
(PPSR) or where the secured party (lender, lessor, owner, consignor
etc) has possession or control of the goods.
The PPSA included a two year grace period for
holders of certain types of security interest which:
were registered pre-PPSA but where those registrations were not
automatically transferred to the PPSR (as charges on ASIC's
records were, for example); and/or
were previously not registered or not registrable.
This was to give these security interest holders time to
register their interests or otherwise put in place PPSA-compliant,
or at least PPSA-consistent, arrangements.
The PPSA provided deemed 'temporary perfection' during
the grace period for secured parties under things like certain
leases of goods, hire purchase arrangements, retention of title
arrangements, consignments and bailments that were already on
The grace period will come to an end on 31 January 2014.
This means that if, under an arrangement that was on foot as at
30 January 2012, your goods are in someone else's possession,
say under a financed lease or retention or title or consignment
arrangement, your interest as owner, lessor, consignor or financier
will soon cease to be 'perfected' under the PPSA's
Now is the time to work out what steps you need to take
to protect those interests and otherwise how you might deal with
the risk that those arrangements are designed to
It was readily apparent in the Maiden Civil case, and
it is apparent from our own experience and anecdotal evidence, that
there is a lot of confusion out there about the level of protection
of interests that people think they have under the new PPSA regime,
both generally and under the PPSA transition arrangements in
The obvious step is to register the relevant interest on the
PPSR now before it is too late, or to put in place fresh,
PPSA-compliant arrangements and register your interests under those
new arrangements on the PPSR.
Bear in mind, of course, that perfection of an interest by
registration on the PPSR is only one of the ways of managing the
risks which, after all, security arrangements are designed to
For example, suppliers who routinely supply goods on a retention
of title basis will need to weigh up the costs and administrative
burdens of registration of each and every RoT arrangement on the
PPSR against other means of making sure goods are paid for in a
timely manner and the likelihood and magnitude of the risk of
We are here to help so let us know if you have any questions or
need any assistance getting things in order before January
We discuss whether certain clauses commonly found in ordinary commercial contracts could be considered to be penalties.
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