On 1 March 2017, the Personal Property Securities Amendment
(PPS Leases) Bill 2017 was tabled in the House of
Representatives. The Bill addresses in part the concerns raised by
the Review of the Personal Property Securities Act 2009
(Whittaker Review) in relation to "PPS
The Personal Property Securities Act 2009 (Cth)
(PPSA) provides for holders of security interests
in personal property to register those interests to protect them.
This applies not only to interests which in substance secure
performance of an obligation, but also to "deemed"
security interests including PPS leases.
Currently, a PPS lease includes (with some exceptions) any lease
or bailment of personal property for an indefinite term or a term
of more than one year. This captures many arrangements in the
equipment hire industry, where businesses often hire out equipment
for an "indefinite" term even though in effect many of
these leases will typically be terminated in a matter of days or
weeks. As it stands, those leases must be registered, otherwise the
lessor risks losing its rights in the equipment if the lessee
This has placed significant burden and risk on businesses in the
equipment hire industry, particularly small to medium enterprises,
many of whom voiced criticism of the current arrangements in
submissions for the Whittaker Review. The Bill does not directly
reflect the recommendations of the Whittaker Review, but adopts a
similar approach in restricting the definition of a PPS lease.
If passed, the effect of the Bill will be to amend the PPSA such
a lease or bailment for a defined term will only be a PPS lease
if its term (including any options) exceeds two years (currently
a lease or bailment for an "indefinite term" will not
become a PPS lease unless and until the lessor or bailor retains
uninterrupted (or substantially uninterrupted) possession of the
leased or bailed property for more than two years.
By increasing the relevant term from one to two years and
excluding "indefinite" arrangements which terminate
within two years, the amendments would prevent short-term hire
arrangements from being caught by the PPSA regime, and would
significantly reduce the administrative burden and risk for
businesses in the equipment hire industry.
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