On 19 March 2014, the Personal Property Securities Amendment
(Deregulatory Measures) Bill 2014 (Cth)
(Bill) was introduced into Federal Parliament to
remove the provision of the Personal Property Securities Act
2009(Cth) (PPSA) that deems leases of
serial-numbered goods of more than 90 days to be a 'PPS
lease' – the aim of these amendments primarily being to
reduce the costs of compliance with the PPSA for small and medium
sized businesses in the leasing industry.
The change will bring the PPSA into alignment with personal
property securities (PPS) regimes in other common
law countries (such as New Zealand and Canada).
What is a PPS Lease?
The PPS lease was a new concept introduced by the PPSA. A PPS
lease is defined as:
a lease or bailment of goods for more than one year;
a lease or bailment of goods for an indefinite term; or
a lease or bailment of serial numbered goods for 90 days or
However, a PPS lease does not include arrangements where the
lessor or bailor is not regularly engaged in the business of
leasing or bailing goods and it only includes bailments where the
bailee is paying the bailor.
A PPS lease covers operating leases as well as finance leases.
It would include arrangements where equipment or other goods (like
scaffolding or construction equipment) are provided as part of a
service or in connection with the service and the customer obtains
possession of the equipment.
How are PPS Leases treated under the PPSA?
The PPSA currently provides that if a lessor with goods subject
to a PPS Lease fails to register its interest on the PPS Register
(PPSR), the goods may be deemed by the PPSA to be property of the
lessee upon the lessee's insolvency. Therefore, a secured party
must register its 'security interest' in order to preserve
its priority against the world.
As highlighted above, a lease of serial numbered goods (i.e.
goods capable of being described by serial numbers such as motor
vehicles, machinery and some types of equipment) are deemed to be
PPS Leases where the term of the lease is over 90 days. This
shorter period has resulted in significant confusion and expense
being incurred and has placed lessors of equipment at considerable
risk if goods have been leased to a lessee who subsequently becomes
The Bill proposes to remove the provision deeming leases or
bailments of serial-numbered goods for 90 days or more to be a PPS
The removal of the provision will mean that the same test will
apply to determine whether a lease or bailment of goods is a PPS
lease, regardless of whether the goods bear a serial number or not
(i.e. only leases deemed to be PPS leases would be those for a term
of more than one year or an indefinite term).
The change would only apply in respect of transactions entered
into after the enactment of the amendment.
This will result in a reduction in the number of registrations
required for leases of serial numbered goods and will provide some
protection to small and medium businesses whose customers become
Watch this space to find out if the Bill receives Royal
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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