Personal Property Securities Act
1 January 2014 | Minutes to read: 3

Personal Property Securities Act

By William Buck

Introduced in January 2012, the Personal Property Securities Act (PPSA) has transformed the manner in which personal property is treated from a legal and financial perspective.

While the legislation has been in place for some time, its ramifications are not widely understood.

The Act establishes a single national priority registration regime which replaces the traditional notions of title and ownership.    Any personal property, ie. property other than real land and some improvements, that has been pledged as a security interest needs to be registered on the Personal Property Securities Register (PPSR) and satisfy certain criteria in order to be water tight and enforceable.

The introduction of this legislation represents a fundamental change in commercial law and replaces 70 plus State and Territory Acts which were previously managed by 30 agencies.

What is affected by PPSA?
It is easier to describe what is not affected.  Land is not affected because the interest is registered by mortgage.  Where you are not in possession of goods that you own, the PPSA needs appropriate consideration.  Examples of this include:

  • Supplying goods on retention of title or consignment terms
  • Leasing, hiring or renting equipment to customers
  • Lending goods to customers or contractors
  • Storing goods on third party premises or transporting goods in equipment or systems owned by someone else
  • Assigning book debts, receivables, leases or hire purchase agreements


Failure to properly register these interests on the Personal Property Securities Register (PPSR) has severe consequences for the traditional owner if there are other competing security interests where the customer or lessee becomes insolvent.  Title or ownership of the goods no longer offers sufficient protection.


Retention of Title Clauses not sufficient protection

It is important to note that a retention of title clause will not necessarily hold water when a customer becomes insolvent.  The party with the highest ranking security under the PPSA will have the ability to seize both ‘stand-alone’ goods and commingled goods, and to also have security in the commingled goods.

A retention of title supplier who has fully complied with the provisions of the PPSA can:

  • Seize goods that remain in the hands of the debtor
  • Remove goods supplied which have been fixed to other goods (accessions)
  • Get security in manufactured product where the good supplied has been used in the manufacturing process (not previously possible).
  • Get security in the product of commingled or mixed goods (new law)
  • Get security in the proceeds where the goods supplied have been on-sold. This may be of limited use where the goods sold have been paid for. However where the goods sold remain an outstanding book debt security can be achieved in the book debt (new law).


What Can Happen?

Failing to register interest on the PPSR could result in a loss of $50 million for US Energy Company APR.

Early this year, mining services firm Forge Group went into receivership.  Forge Group had been leasing wind turbines to the value of $50million from APR.  However, the turbines had not been registered on the PPSR by APR.  Under the PPSA, all assets not registered under the act vest with the lessee – in this case, Forge.

Whilst the case is not yet determined by the Court it would appear that the turbines owned by APR will be able to be sold by the receivers and the proceeds paid to Forge’s creditors,  ANZ.

What Do You Need To Do?

Careful consideration should be given to your business position, particularly where you allow others to use your equipment or store goods on your behalf – you could have exposure to the PPSA.  If you believe your business may be affected by the legislation then contact your local William Buck advisor for assistance.

Firstly, you will need to consider your business position and exposure to the PPSA.  If you believe that you are, or will be affected, then get in contact with us for assistance.

The PPSA law is quite complex and securing your interest via the PPSR is the domain of the legal fraternity. Whilst William Buck will not register interests under the PPSA, we can assist with your enquiries and progress the advice with you.

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