Australia's hire industry has, for several years now, been
seeking relief from the draconian effects of the Personal
Property Securities Act 2009 (Cth) (PPSA).
Those efforts finally look set to bear more fruit with the
introduction today into Federal Parliament of a Bill to cut down
significantly the scope of the 'PPS lease'. That is the
statutory definition that currently deems certain leases (including
hires) and bailments to be PPSA 'security interests'.
The 'PPS lease' concept has trapped and damaged numerous
hire and leasing businesses who have either been unaware of it, or
have not managed to grapple with the complex PPSA registration
regime they need to master to protect their ownership. It is likely
that the PPSA has cost owners many hundreds of millions of dollars
in lost title to leased or hired assets. There are two decided
cases about PPS leases (involving the Forge and Onesteel
insolvencies) which show losses to owners exceeding $80 million.
website for more details. Those reported cases are undoubtedly
the tip of the unreported PPSA iceberg.
Under the Bill introduced today, the PPSA would be amended so
that leases and bailments only fall into the 'PPS lease'
the agreed term of the lease and any options actually exceeds
two years; or the lease actually extends for more than two
The two year threshold replaces the current one year term.
Critically, the proposed amendments will also remove leases
'for an indefinite term' from the PPS lease definition. A
lease for an unspecified term (so common in the hire industry) will
now not be caught unless and until it actually lasts more than two
We understand the proposed amendments are not contentious and
are likely to become law. They will significantly reduce the
regulatory impact which the PPSA is having on typical short term
hire and rental business, the majority of which is written by small
to medium enterprises.
The amendments don't take the hire industry entirely out of
the woods. The PPSA will still catch any lease which is in
substance functioning as a security – such as a rent-to-buy
or deferred purchase agreement and it will still apply to finance
leases written by the finance industry. And some hire agreements
have been known to exceed two years. Those would still be
The amendments are not retrospective and would only apply to a
lease or bailment of goods entered into after the commencement of
the new definition.
The amendments are contained in the Personal Property Securities
Amendment (PPS Leases) Bill 2017 which can be found
Bartier Perry is pleased to have worked since 2011 with the hire
industry as PPSA adviser to its peak bodies, the Hire & Rental
Industry Association and Elevating Work Platform Association. If
you have any questions, contact our PPSA team.
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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