In certain circumstances, the assets that you or your company own may actually end up being legally transferred to someone else – without your agreement. This is because of the introduction of new laws which have changed the system of determining ownership of an asset, in the event of a dispute, and the way the courts apply these new principles to establish ownership.
The Supreme Court of New South Wales has recently clarified the rules in relation perfection and priority of security interests under the Personal Properties Securities Act 2009 (PPSR).
The decision was handed down by Justice Brereton on 27 June 2013 In the matter of 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
This case is the first to give detailed consideration to the provisions of the PPSA and demonstrates how the PPSA acts in practice in resolving priorities between completing security interests.
The proceedings involved competing claims to three (3) commercial vehicles.
The vehicles were originally purchased by Queensland Excavation Services Pty Ltd (“QES”) who then leased them to Maiden Civil (P&E) Pty Ltd (“Maiden”) pursuant to a hire purchase/lease agreement/arrangement.
The loan was secured by the execution of a Loan Agreement and General Security Deed as between Maiden and Fast.
The plaintiff was the receiver of both Maiden and a company called Fast Financial Solutions Pty Ltd (“Fast”), a secured creditor.
The plaintiff claimed that Maiden Civil had granted a security interest in the three vehicles within the meaning of the PPSA to Fast, in return for a loan of $250,000.00, who therefore had priority under the PPSA over any interest of the owner, QES.QES claimed that as the lessor and true owners of the Caterpillars.The plaintiff sought a declaration that they were entitled to possession of the vehicles.
The Court determined that QES’s lease to Maiden Civil was capable of definition as “a PPS lease” but that it had not been “perfected” by being registered on the PPSR.The Court then had to assess which of the two security interests (QES’s or Fast’s) would take priority?In determining priority as between the competing security interests the Court relied on section 55 and whether the relevant security interests had been “perfected”.The concept of “perfection” is dealt with in section 21, which directs attention to whether the security interest had “attached” to the vehicle and whether the “security interest” was enforceable against a third party.
The Court found that Fast’s security interest was enforceable and had priority against all other parties, including QES, the owner!!
What parties need to know as a result of this case
As a result of this case owners of goods who lease or hire them out, (or otherwise part with actual possession) should ALWAYS register their interests on the PPSR.
