11 September 2013
Practice Group(s):
Construction, Real
Estate and Finance
PPSR: A Reminder to All Owners Not in
Possession of Their Personal Property
By Richard Winter, Sandra Steele, Jennie Baker and Marcel Marquardt
Registration of Security Interests and the Transitional Provisions
under the Personal Property Securities Act 2009 (Cth)
In June 2013, the NSW Supreme Court in Maiden Civil (P&E) Pty Ltd; Richard Albarran and Blair
Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland
Excavation Services Pty Ltd & Ors [2013] NSWSC 852 (the Caterpillar case) provided guidance on
the application of the Personal Property Securities Act 2009 (Cth) (PPSA). It also set out the
importance of priorities of, and the registration of, security interests in personal property1 on the
Personal Property Securities Register (PPSR). The facts of the Caterpillar case are relevant to all
Owners who lease or hire out their personal property, particularly those in the construction industry.
Key Points
To protect your interest in your personal property:
 all security interests must be registered on the PPSR before relinquishing possession of the
personal property
 all Transitional Security Interests must be registered on the PPSR before 30 January 2014
 be aware that a lien in unfixed plant and material is not a "security interest" and is not registrable
on the PPSR, but the PPSA does contain priority rules for Priority Interests.
Summary
The Caterpillar case is a timely reminder for all Owners of personal property to register their security
interest in their personal property or risk losing the personal property to creditors. It is also a reminder
that the transitional period (being the period from 30 January 2012 to 30 January 2014), which
temporarily protects unregistered security interests in personal property, will not apply to security
interests which were registrable on a transitional register, but were not registered. Even if the
transitional provisions do apply, Owners must register those transitional security interests on the PPSR
prior to the end of the transitional period in order to perfect and protect those security interests. This
period is rapidly nearing its end.
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Personal property includes all property other than land and interests in land, which includes equipment, vehicles and
machinery.
PPSR: A Reminder to All Owners Not in Possession of
Their Personal Property
Facts of the Case
Queensland Excavation Services Pty (QES) purchased three Caterpillar excavation machines (the
Caterpillars) and provided the Caterpillars to Maiden Civil (P&E) Pty Ltd (Maiden), pursuant to an
oral lease. Maiden used the Caterpillars in the Northern Territory for civil construction matters. As
Maiden had possession of the Caterpillars, it included the Caterpillars as an asset when applying for a
loan in March 2012. Fast Financial Solutions Pty Ltd (Fast Financial) granted Maiden a loan and took
an interest over all of Maiden's assets under the Security Deed. The relationship between the parties to
the dispute is outlined below:
Oral Lease
QES


Payment of money
Owner
Lessor
Grant of interest (Security Deed)
Maiden
Funding of loan


Fast
Financial
Lessee
In possession
Unregistered interest
The
Caterpillars
Registered interest
Upon the execution of the Security Deed, Fast Financial registered its interest in the Caterpillars on
the PPSR. QES did not register their interest in the Caterpillars on the PPSR or under the Northern
Territory "transitional" register. Upon Maiden's insolvency and the termination of the lease, a dispute
arose as to the question of priority of interests between QES, the Owner of the Caterpillars (who did
not have a registered security interest in the Caterpillars on the PPSR) and Fast Financial, the creditor
of the leasee (Maiden) of the Caterpillars (who had registered its security interest in the Caterpillars on
the PPSR).
The Decision
Priorities
The PPSA created a unified system for creating priorities of interests over security interests in
personal property upon the registration of that interest in personal property on the PPSR. In the
Caterpillar case, Fast Financial had "perfected" its security interest in the Caterpillars by registering its
security interest on the PPSR. Fast Financials’ "perfected" interest was held to take priority over QES'
unregistered and "unperfected" interest. As a result, Fast Financial was able to take possession of the
Caterpillars, despite QES being the Owner of the Caterpillars and QES terminating its lease with
Maiden. The dispute was one of priority rather than ownership. This decision is consistent with the
priorities set out in the PPSA.2
2
Section 55(3) of the PPSA.
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PPSR: A Reminder to All Owners Not in Possession of
Their Personal Property
Transitional Provisions
The PPSA also contains transitional provisions3 that provide for the temporary "perfection" of security
interests for the period between 30 January 2012 to 30 January 2014. This only applies if the security
interest was created prior to 30 January 2012 (Transitional Security Interest). Any Transitional
Security Interest takes priority over any subsequently "perfected" interests.4 An exception to a
Transitional Security Interest is if the security interest was registrable under a "transitional" register5,
but was not registered.6 In the Caterpillar case, although QES created its interest in the Caterpillars
prior to 30 January 2012, QES' interest was registrable under the Northern Territory "transitional"
register and therefore was not "temporarily perfected" under the transitional provisions of the PPSA7.
Owners of personal property are reminded that the temporary protection for Transitional Security
Interests expires on 30 January 2014, and on that date any "perfected" interest under the PPSR will
take priority over all unregistered interests.8
The PPSR and Security of Payment Legislation
Not all interests in personal property are considered a "security interest" under the PPSA. For
example, the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act)9
entitles a claimant to "…exercise a lien in respect of any unpaid amount over any unfixed plant and
materials supplied by the claimant for use in connection with carrying out of construction work for the
respondent." The claimant's lien under the SOP Act is not considered a "security interest" under the
PPSA10 and is not registrable on the PPSR. Despite this, the PPSA contains an exception for statutory
interests arising under law (Priority Interest)11, which includes a lien created under the SOP Act. A
Priority Interest takes priority over a security interest if, amongst other things, the Priority Interest
arises in the ordinary course of business and the person who holds the declared statutory interest
provided the goods. Owners and contractors should be aware of these provisions in the SOP Act and
the PPSA when dealing with unfixed plant and materials in NSW. Note that there are similar SOP Act
provisions in other States (e.g., Vic12, SA13, Tas14, ACT15).
3
Part 9.4 Division 2 of the PPSA.
Section 320 of the PPSA.
5
Northern Territory Register of Interests in Motor Vehicles and Other Goods.
6
Section 322(3) of the PPSA and reg 9.3 of the Personal Property Securities Regulations (Cth) 2010.
7
Part 9.4 Division 2 of the PPSA.
8
Section 322(f) of the PPSA.
9
Section 11(3) of the SOP Act.
10
Section 8(b) of the PPSA.
11
Section 73(a) of the PPSA.
12
Section 12A of the Building and Construction Industry Security of Payment Act 2002 (Vic).
13
Section 11 (3) of the Building and Construction Industry Security of Payment Act 2009 (SA).
14
Section 14 of the Building and Construction Industry Security of Payment Act 2009 (Tas).
15
Section 13(3) of the Building and Construction Industry (Security of Payment Act) 2009 (ACT).
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PPSR: A Reminder to All Owners Not in Possession of
Their Personal Property
Authors:
Sandra Steele
Richard Winter
sandra.steele@klgates.com
+61 2 9513 2528
richard.winter@klgates.com
+61 2 9513 2383
Jennie Baker
jennie.baker @klgates.com
+61 2 9513 2402
Marcel Marquardt
marcel.marquardt @klgates.com
+61 2 9513 2524
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©2013 K&L Gates LLP. All Rights Reserved.
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