When it comes to the Personal Property Securities Register (PPSR), we can't help but ask: "It's been six years - what have we learnt?"
When it comes to the Personal Property Securities Register (PPSR), we can't help but ask: "It's been six years – what have we learnt?"
To address this, Madgwicks is publishing an informative series of articles over the next few weeks for those of you currently using the PPSR and those who may need to register the occasional dealing. The aim of these 6 articles is to help you better understand how the Personal Property Securities Act (PPSA) applies to you and to avoid the common pitfalls in registration.
The PPSR has been in effect since 30 January 2012. Its purpose was (and is) to provide a register which can be searched to see if there is an existing security interest attached to personal property (other than land).
Despite six years of case law providing guidance from the Court with regards to registering on the PPSR, we continue to see the same mistakes being made time and time again – these can result in the loss of priority of security by a party, which can have expensive and disastrous outcomes.
Madgwicks' PPSR series is aimed at exploring the common mistakes associated with the PPSR and ways to avoid them, through the following topics:
Part 1: Do you have a security interest under the PPSR? Getting it right is vital
It is important to ensure your documents actually give rise to a security interest. Many times we ask someone, who has registered an interest on the PPSR, for the document evidencing their security interest and they either:
- do not understand the request; or
- rely on documents which do not actually give rise to a security interest.
This article will provide advice on how to ensure that your documents actually provide you with a security interest and give you a basis to register on the PPSR.
Part 2: Your handy guide to avoiding common PPSR registration mistakes
Once you have established that you have a security interest, it is important that you:
- Register your interest.
- Register it on time – you need to be familiar with the time frames relevant to registration. For example, a Purchase Money Security Interest (PMSI) for tangible, non-inventory property must be registered within 15 days of the grantor obtaining possession of the property.
- Register it correctly.
This article will provide examples of common defects in registrations on the PPSR..
Part 3: The $23 million mistake: the consequences of getting your PPS registration wrong!
The PPSR has been created for users to be able to easily search and identify security interests. It is important to know that:
- If the grantor enters the agreement as a trustee of a trust which holds an ABN, the registration should be under the ABN of the trust.
- If the grantor has an ACN and entered the agreement in its own capacity (not as a trustee of a trust), the registration should be under the ACN of the company.
This article outlines how to avoid getting it wrong by considering the case of OneSteel Manufacturing Pty Ltd (administrators appointed)  NSWSC 21
Part 4: PPSR and Leases – the $44 million mistake
This article will look at the case of Forge Group Power Pty Limited v General Electric International Inc  NSWSC 52.
This case was one where General Electric had not considered that turbines it leased to Forge Group had fallen within the PPSA requirements for the registration of a lease. The Court disagreed and the reports were that it became a $50 million mistake!
Part 5: Short term hire agreements – should your lease be registered under the PPSA?
Short term leases are exempt from registration on the PPSR. The rules, however, with respect to short-term leases and the PPSA have recently changed. For example, leases which are for less than two years need not be registered on the PPSR.
This article explores the changes in the short-term leasing requirements and the PPSA.
Part 6: Getting super results from a super priority: learning how to use a PMSI under the PPSA
A PMSI is a Purchase Money Security Interest. Often they occur with retention of title arrangements. PMSI's grant a super priority over other interests; however, if an interest is registered as a PMSI and is in fact not a PMSI, then the registration can be considered void and the security interest lost.
This article will explain what PMSIs are and how to ensure that you are using them correctly.
We trust you will find this series of articles of interest and benefit. Whilst not exhaustive in terms of topics, they address many PPSR-related issues which many of our clients are confronted with in their business dealings.
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. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.