FIRST CASE ON NEW PERSONAL PROPERTY SECURITIES LAW
The New South Wales Supreme Court handed down the first major decision in Australia, in 2013, on the new Personal Property Securities Act (“PPSA”). Although a NSW case, it involved a Queensland company. The dispute was about large pieces of personal property, caterpillar excavators, worth over $300,000.
The case, Maiden Civil (P&E) Pty Ltd (“Maiden”) v Queensland Excavation Services Pty Ltd (“QES”)  NSWSC 852 confirms that registration on the PPSA Register will give priority to a claimant to secured property even against that property’s “true owner.”
QES owned the excavators and leased them to Maiden but QES failed to register their leases on the Personal Property Securities Register (“the PPS register”).
Fast Financial Solutions Pty Ltd (“Fast”) provided finance to Maiden and required that it receive security over all its assets. Unlike QES, Fast registered their security interest on the PPS register.
Maiden became insolvent and Fast appointed receivers. QES claimed the excavators as theirs because “they owned them” but Fast said that its PPS registered interests were first in priority.
The Court’s Decision
The Court found that the lease to Maiden constituted a ‘PPS Lease’ under the PPSA and therefore QES should have registered it.
As Fast’s interest was registered on the Register and QES’s interest was not, Fast’s interest took priority over QES’s. Consequently, although QES “owned” the Caterpillar excavators, Fast could claim them ahead of other creditors of Maiden, including QES.
Take Home Message
Registration on the PPS register is essential to protect the interest of the owner of personal property who leases it out. If another creditor perfects registration over the assets of the lessee before the lessor does over their leased property, the lessor will lose priority in any winding up of the lessee.
The PPSA was based on the principle of registration overriding other interests and this case has upheld that principle.