NCO Finance Australia Pty Ltd v Australian Pacific
Airports (Melbourne) Pty Ltd  FCCA 2274
In a judgment delivered on 24 December 2013, the Federal Court
determined that a possessory lien in Victoria will take priority
over a migrated registration in a priority dispute between
transitional security interests under the Personal Property
Securities Act 2009 (Cth)
Possessory liens are commonly used by carriers, repairers and
many other businesses as a means of security.
In April 2009, St George Finance Ltd advanced $21,383.80 to Ms
Susan Ann Bessalem for the purchase of a 2007 Holden Astra
Hatchback. In April 2011, St George issued a default notice to Ms
Bessalem and following her subsequent failure to pay the
outstanding sum of $18,520.43, St George assigned the debt to NCO
Finance Australia Pty Ltd ("NCO").
Ms Bessalem failed to pay the debt to NCO. In late September
2011, she abandoned the vehicle in the short term car park at the
Melbourne Airport, owned by Australian Pacific Airports Melbourne
Pty Ltd ("APAM"). Melbourne Airport
staff deemed the vehicle abandoned on 14 December 2011 and
transferred the vehicle to APAM's long term car park. Over
$6,000 in car parking fees and $400 in towing fees accrued for the
A dispute arose between NCO and APAM as to who had the right to
possession of the vehicle. NCO made an application to the Federal
Court for delivery of the vehicle under provisions of the National
Consumer Credit Code, or alternatively the right to enter
APAM's long term car park to take possession of the
APAM claimed it had the right to possess the vehicle through a
possessory lien until all outstanding parking fees had been paid
because of Clause 7 in its terms and conditions:
"Without limiting the
general and/or particular lien we have over the vehicle left in the
car park (which liens are expressly preserved), we reserve the
right to retain possession of the vehicle until all parking fees
and other costs incurred by us in respect of the vehicle have been
paid. Parking fees will continue to accrue during the period that
we retain the vehicle until we recover all fees and
Did APAM have a security interest?
O'Dwyer J found that APAM held a "repairer's
lien" under the Chattel Securities Act 1987
A repairer's lien was defined within the Chattel
Securities Act as "a lien on goods in the possession of a
person as security for payment for services or materials furnished
in respect of those goods by that person in the ordinary course of
O'Dwyer J held that the parking of the vehicle in APAM's
car park for a fee was a transaction under the PPSA. This created a
possessory lien. APAM had a security agreement and consequentially
a security interest in the vehicle.
Who had Superior Priority?
Both parties held security interests in the vehicle for the
purposes of the PPSA. NCO's security interest was
perfected by its registration on the Queensland Register of
Encumbered Vehicles on 12 August 2011, and migrated into the
Personal Property Securities Register
("PPSR") on 27 November 2011.
APAM's security interest derived from the possessory lien in
Clause 7. Although APAM's security interest had not been
registered, it was perfected because APAM took possession of the
vehicle on 21 September 2011.
NCO argued, because of section 55 of the PPSA, that
priority should be determined by reference to which security
interest had been perfected earlier. NCO argued the applicable date
was 12 August 2011, when its interest was registered on the
Queensland Register of Encumbered Vehicles; while for APAM it was
from 21 September 2011, when possession was taken of the
APAM argued that the requisite attachment of the security
interest to the vehicle for both NCO and APAM was immediately
before the PPSA registration commencement time of 30
January 2012. Although APAM had not registered its security
interest in the PPSR, the PPSA allowed it to be
registered up until 1 February 2014 without loss of priority.
O'Dwyer J held that both parties had continuously perfected
security interests in the same collateral (the vehicle), with the
same registration time, being the commencement time of the
Section 323 of the PPSA provided the solution:
"If the priority between two
transitional security interests is not otherwise able to be
determined under this Act, they have the priority between
themselves that they would have had under the law that applied to
such priority immediately before the registration commencement
time, and as if this Act had not been enacted."
O'Dwyer J then referred to Section 10(4) of the Chattel
Securities Act which at the relevant time provided:
"A repairer's lien on
goods, whether or not registered under Part 3, ranks in priority to
any registered security interest in respect of those goods
irrespective of the date and time of the registration of that
registered security interest."
As a result APAM was entitled to rely on section 10(4) of the
Chattel Securities Act and held a superior security
interest to NCO's security interest.
IMPACT OF THE DECISION
The decision confirms that a possessory lien can be a security
interest and be perfected by possession.
Section 10(4) and the definition of "repairer's
lien" of the Chattel Securities Act have been
repealed and the transitional period under the PPSA ends on 1
February 2014. Businesses that use contractual liens in their terms
and conditions may not have the same rights as they had prior to
the PPSA's commencement and during the transitional
Any business which includes contractual liens (as opposed to
common law liens) in its terms and conditions should seek our
advice as to their effectiveness and priority. Please contact your
commercial partner in your local Hunt & Hunt office.
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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