By Paul Cullen, Partner
As the Personal Property Securities Act 2009 (Cth) commenced operation on 30 January 2012, any person or business that has been granted an interest that constitutes a security interest under the PPSA will need to take action immediately to ensure that their interest is protected. In most instances, this will mean registering the interest on the Personal Property Securities Register (PPSR).
Here, partner Paul Cullen discusses the transitional provisions under the PPSA and how they relate to master agreements.
Key points
- Where a security interest has been created under an agreement entered into on or after 30 January 2012, it is essential that the interest is registered on the PPSR as soon as possible and, in any event, within any timeframes prescribed under the PPSA.
- Transitional provisions apply until January 2014, providing protection for businesses and individuals for those security interests created under agreements entered into before 30 January 2012. However, it is crucial that those relying on the transitional provisions ensure that the provisions apply to their circumstances and that they are adequately protected.
Master agreements
One area of concern for businesses is where a 'master agreement' has been entered into before 30 January 2012, but has given rise to new transactions occurring on or after 30 January 2012.
Master agreements are often entered into for the supply, lease or bailment of goods. For example, a lessor of goods may have entered into a master lease agreement before 30 January 2012, but continued to lease goods to the same lessee under the master agreement after 30 January 2012. The concern is whether any lease of goods that has arisen after the PPSA commenced will have the protection of the transitional provisions. If not, the lease may need to be registered under the PPSR as a new security interest.
Given the infancy of these provisions, there is no judicial guidance on this point. However, it is likely that the answer will depend on the manner in which the master agreement has been drafted, and how the subsequent leasing of goods is carried out. In this example, if the transitional provisions do not apply, the owner could lose its rights to the goods if it fails to register its security interest. Accordingly, it is essential that anyone relying on the PPSA's transitional provisions carefully review their arrangements to ensure they are protected.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
