Articles and legal news from the Atkinson Vinden Team.

Personal Property Securities Information Series (Part 5)

Property Law

If you attended our recent seminar on the Personal Property Securities Act 2009 (Cth) (“PPSA”) you will be aware that there are a number of issues to come to grips with before the PPSA is law.

As mentioned at the seminar, we have prepared a checklist to assist in determining how the PPSA will affect you and your business.  Please click here for the checklist.

Here are some examples of the likely effect of the PPSA on businesses.


John Smith grants a security interest in a motor vehicle to Westbank, and later grants a security interest in the same motor vehicle to Eastbank.

Eastbank registers its security interest. Westbank does not. Consequently, the security interest held by Eastbank is ranked with a higher priority than the security interest granted by Westbank.

This means that if John Smith defaults on the arrangements with both Eastbank and Westbank, Eastbank will be able to take possession of the motor vehicle, whereas Westbank will have difficulty in enforcing an unregistered interest as it will rank lower than Eastbank’s security interest.

Retention of Title

Jones Pty Ltd is a supplier of womens footwear. Prior to the PPSA, Jones Pty Ltd would secure payment for the footwear by using a retention of title clause in its sale terms.

Jones Pty Ltd registers the supply of womens footwear to a buyer as a security interest. It registers the security interest before the buyer takes possession of the footwear in order to ensure that the security interest is perfected.

The buyer grants a security interest over the womens footwear to a third party such as a bank and the bank proceeds to register that security interest. As Jones Pty Ltd already has a registered security interest, it has the highest priority and it will be entitled to recover the footwear or to be paid before the bank in the event that the buyer defaults.

If Jones Pty Ltd had not registered its security interest its interests would have ranked second in priority to the bank’s interests, jeopardising its right to recover the footwear or to be paid if the buyer defaulted.

Migration of existing personal property interests to the Register

Eastbank has a security interest in a car owned by Smith Pty Ltd. This security interest is registered on the NSW Register of Encumbered Vehicles (“REVS”) and is migrated across to the PPS Register as a migrated security interest. Eastbank’s security interest is taken to be perfected from immediately before the registration commencement time until the time the registration would have ended in accordance with the law under which REVS was maintained.

Using the same facts as above, after the security interest is migrated to the Register, Eastbank amended the registration to extend the end time. On 15 February 2012, which is before the end date of both the REVS registration and the amended PPS registration, Smith Pty Ltd gives Eastbank an amendment demand stating that the car does not secure the loan to Smith Pty Ltd. Eastbank fails to respond. On 21 February 2012, the Registrar removes Eastbank’s registration from the Register.

On 1 March 2012, a liquidator is appointed to Smith Pty Ltd’s company. Eastbank’s security interest stopped being continuously perfected on 21 February 2012 – its unregistered security interest would be void against the liquidator and the car would become part of the assets that would be distributed to pay the debts of Smith Pty Ltd. Given that Eastbank no longer has a registered security interest it will lose its rights to claim against the car and therefore will suffer a loss.

Our Recommendation

We recommend that businesses carry out a “PPS health check” and we can assist by reviewing your agreements, advising on the PPSA generally and ensuring compliance and protection of interests.

Atkinson Vinden Lawyers understands the importance of your business becoming PPSA compliant.  Please contact us on (02) 9411 4466 if you would like assistance in this area.


Protecting your reputation starts with simplifying the complex. This handy checklist should quickly point you in the right direction and help you understand whether you have a case, and where to start to secure the best possible outocme.