Time for registration of existing interests in the PPSR running out
The two-year grace period for registering pre-PPSA security interests in the PPSR expires on 31 January 2014.
Under the Personal Property Securities Act 2009 (Cth), security interests in personal property must be registered in the Personal Property Securities Register (PPSR). The PPSR is a national online register and is the single authoritative record of registered security interests in respect of most personal property, tangible and intangible. Registrations in the PPSR commenced on 1 February 2012.
Security interests registered in other registries as at 1 February 2012 (known as transitional security interests), such as mortgages over ships in the Australian Shipping Register or fixed and floating charges over company assets in the ASIC Register of Company Charges, ought to have been automatically 'migrated' into the PPSR by now. However, we have noticed that the migration process has been riddled with problems, and so not all interests may have been properly migrated. It will be prudent to double-check to ensure that these transitional interests are now properly recorded in the PPSR.
There are a range of pre-PPSA security interests that may not have previously required registration previously, but now do. These include interests such as those of an owner under a bareboat charter, purchasers under a shipbuilding contract, suppliers under a ROT or hire-purchase arrangement, or bailors in a long-term bailment.
If these pre-PPSA interests have been registered in the PPSR (either by way of migration or physical registration) before 31 January 2014, their priority in terms of date is preserved. If not, they risk losing out in priority to subsequently created and registered interests in the same property.
The failure to have these interests registered in the PPSR can have significant implications.
We refer you to the relatively recent NSW Supreme Court decision of Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd  NSWSC 852. In that case, the owner of earthmoving vehicles, QES, leased the vehicles to Maiden, who subsequently went into liquidation. The lease was for more than a year, and therefore, under the PPSA, QES ought to have registered its interest in the vehicles as the holder of an interest under what is known as a PPS lease. One of the questions before the court was whether QES' interest in the vehicles prevailed over that of one Maiden's secured crditors, Fast. Maiden had granted Fast a charge over the vehicles as collateral for a loan. Fast registered its interest. QES had not. The court held that in having failed to register its interest as a lessor of the vehicles under a PPS lease, QES had an unperfected security interest in the vehicles and therefore the registered security interest, held by Fast, prevailed over that of the unregistered interest, held by QES. Therefore, despite QES being owner of the vehicles, Fast, as registered secured creditor of Maiden, was given effectively better title to the vehicles because QES had failed to register its own interest in the vehicles in the PPSR.