Australia: Register retention of title clauses on the Personal Property Securities Register correctly

Last Updated: 24 March 2014
Article by Greta Burkett

Key Points:

Suppliers relying upon their retention of title clauses to create "transitional security interests" must still ensure they're registered correctly.

A recent case has held that a seller's assumption that it was protected by the transitional provisions in the Personal Property Securities Act 2009 (Cth) (PPSA) was incorrect (Central Cleaning Supplies (Aust) Pty Ltd v Elkerton [2014] VSC 61).

The case has given a useful reminder of how crucial it is to identify security interests and to determine whether they are "transitional" under the PPSA.

Although the transitional period under the PPSA has now expired, the Court's findings in the case may help suppliers in determining whether their trading terms give rise to "transitional security interests" and whether they have made a correct registration on the Personal Property Securities Register (PPSR).

How the PPSA works

Under the PPSA:

  • if a supplier supplies goods subject to a retention of title clause that clause will create a security interest in its favour;
  • to protect that security interest, the supplier must "perfect" it;
  • if the supplier has not perfected its security interest and its customer is placed into administration or liquidation, the supplier's security interest will "vest" in the customer. If that occurs, the goods will become available to the customer's creditors as a whole (including the supplier, but only on an unsecured basis) even though they are owned by the supplier;
  • if an agreement which provided for a security interest was in force immediately before 30 January 2012 and continued to be force after that date then, during the "transitional period", that security interest was "temporarily perfected". That meant that those security interests were taken to be perfected by operation of the PPSA even though they were not registered on the PPSR. Those security interests were therefore protected (and did not vest) if the customer went into administration or liquidation.

The supply arrangement and retention of title clause

Central Cleaning Supplies (Aust) Pty Ltd sold cleaning equipment to Swan Services Pty Ltd.

In September 2009, Swan Services signed a credit application. That application confirmed that:

  • the supply of goods between Central Cleaning and Swan Services would be governed by Central Cleaning's "Standard Terms and Conditions"; and
  • Central Cleaning would give Swan Services 30 days to pay for any goods.

The credit application did have Central Clearing's "Standard Terms and Conditions" attached to it.

Central Cleaning supplied goods to Swan Services over a period of time. They developed a practice so that:

  • Swan Services would order goods by sending a purchase order to Central Cleaning; and
  • Central Cleaning would deliver goods and then issue an invoice to Swan Services. Each invoice included a "retention of title" clause (ROT Clause) which stated that the goods to which that invoice related remained the property of Central Cleaning until they were paid for in full.

Central Cleaning did not make any registration on the PPSR in relation to the security interests created by the ROT Clause.

After 30 January 2012, Central Cleaning supplied some goods to Swan Services, but Swan Services did not pay for them.

On 22 May 2013 Swan Services went into administration, and subsequently into liquidation.

Central Cleaning claimed the goods which had not been paid for from the Liquidators and asked for their return. The Liquidators refused to return them – they argued that Central Cleaning's security interest was not perfected and therefore it had vested in Swan Services when it went into administration. Central Cleaning appealed to the court to reverse the Liquidators' decision.

What – if any – interest did Central Cleaning have?

The key issue in the case was whether Central Cleaning had a transitional security interest. That depended upon whether its security interest was provided for in the credit application, giving it a transitional security interest, or in each invoice. If Central Cleaning's security interest was in each invoice, it would not have had a transitional security interest in the goods.

What the Court held

The Court held in favour of the Liquidators and dismissed Central Cleaning's application. It found that the ROT Clause:

  • created a security interest over the goods in favour of Central Cleaning;
  • was contained in each invoice as a "Condition of Sale"'; and
  • did not form part of Central Cleaning's "Standard Terms and Conditions" and therefore was not incorporated into the credit application.

The words "goods the subject of this sale" contained in each invoice were interpreted to infer that the parties intended each invoice to create a separate contract of sale (and a separate security agreement) for the goods supplied under that invoice (Sales Contract).

Each Sales Contract entered into after the 30 January 2012 was held not to be a transitional security agreement. Central Clearing's interests within them were therefore not temporarily perfected.

Those interests had therefore vested when Swan went into administration, and, as a result, the Liquidators' decision not to return the goods to Central Clearing was correct.

Lessons for suppliers of goods who want to have a security interest in goods supplied

  • Courts will carefully consider the contractual terms of each arrangement to determine which documents create the "security agreement" between the parties.
  • If a seller has the benefit of a retention of title clause, it must make a registration on the PPSR against its customer. Failure to do that may mean that it loses goods which it has supplied to that customer but which have not been paid for. The fact that the seller has title to those goods will not protect it.
  • Although temporary perfection for transitional security interests no longer applies, it remains important to determine whether or not a commercial relationship which existed before 30 January 2012 gives rise to any transitional security interests. Where a Court finds that a security interest is not transitional, a registration which indicates that it is transitional may be ineffective and may lead to the same consequences as shown in this case.

You might also be interested in...

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.