Farmers who sell crops on consignment, agist cattle and lease out machinery could risk losing their assets if they don’t register on the new Personal Property Securities Register (“PPS” Register) which came into effect on Monday.
The old saying “possession is nine-tenths of the law” has never been more true than as of 30 January 2012, with the introduction of the Personal Property Securities Act, warns Accredited Property Specialist, Tony Randall of Toowoomba based law firm Murdoch Lawyers.
“This law significantly changes the long established principles about who legally owns the assets,” Mr Randall said.
While the new regime will not directly affect real estate, the changes could impact businesses that supply goods valued over $5000 including motor vehicles, machinery, crops and livestock.
Mr Randall recommended that people who supply goods on retention of title terms, have goods or assets located at other people’s premises or who rent, lease or hire goods to others (including to related parties), need to familiarise themselves with the new law.
“In very simple terms, if Farmer Bill owned some cattle and had it being agisted at Farmer Joe’s property, and Farmer Joe went broke, then Joe’s bank could possibly deal with the cattle as part of Farmer Joe’s personal property and sell it up. In this kind of scenario, Farmer Bill could ensure this doesn’t happen by firstly ensuring he has a written agreement with Farmer Joe and secondly by registering his interest in the cattle on the PPS Register.
“There was a case in New Zealand, which has a similar law, where a stallion was leased to a company and that company was later placed into receivership. The Court found that despite the stallion’s owner having legal title, a third party had the right to sell him because it had “perfected” its security interest by registration while the owner had not registered its interest at all.
Any suppliers who sell goods that are subject to retention of title are no longer able to rely on their title to protect their interests in those goods. Instead they are required to register their interest on the new national Personal Property Securities Register in order to preserve their priority over the goods that have been sold. Failure to do so will mean that the supplier may lose the right to re-take possession of the goods, if not paid.
“Obviously there are complexities with the legislation that mean every situation will be different, so people need to consult the government website www.ppsr.gov.au and consider taking legal advice to determine whether they need to update their practices and documents to ensure that they have a right or ability to register a security interest over their personal property.”
Previously the interests of banks and other third parties in motor vehicles and other assets were registered in different ways in different states.
“This new register aims to bring it all into one national register – so there will be benefits for receivers and liquidators when it comes to working out who owns what assets,” Mr Randall said.
While there is a transitional period for transactions which pre-date the commencement of the new legislation, Mr Randall said there were still situations where it would be best to "perfect" those past interests with the PPS Register.
“Even licences or leases that are in place with related entities as asset protection measures should be reviewed and “perfected” during the transition phase.”
More information on the Personal Property Securities Register can be found here