Monthly Archives: April 2014

The Personal Property Securities Act A Revolution in Australia’s Commercial Law System

What is the Personal Property Securities Act?

In general terms the Personal Property Securities Act, the PPSA in short, is a revolution in Australia’s commercial law system. It changes the way debts are secured over personal property (being any property other than an interest in land).

Specifically security taken to secure payment of a debt should be registered on the Personal Property Securities Register, the PPSR in short. The PPSR is an electronic register accessible 24 hours a day.

As the PPSA only involves personal property it does not affect any charges that may be taken over land and any caveats that are lodged over the land, to secure debts.

What else should be registered on the PPSR?

While the PPSA most commonly covers security taken over personal property, it also extends to some leases or bailments of personal property, even though the lease or bailment is not a security.

A bailment is a situation where items are delivered to another person for safekeeping or a specific purpose. An example of a bailment would be when a car is delivered to a mechanic to have the car serviced.

If the lease or bailment is one to which the PPSA applies, then the lease or bailment should be registered on the PPSR.

A retention of title clause provides that when goods are sold, even though possession of the goods is transferred to the purchaser, ownership does not pass until payment is made. It has been commonly used in Australia to help a seller of goods ensure that it receives payment. A retention of title clause is not a security, but it should also be registered on the PPSR.

Who should consider the PPSA?

Any person who sells goods or services on a credit basis and wants to secure the debt needs to carefully consider the PPSA.

How long do you have to register?

If the item to be secured is inventory, then registration of the security interest should take place before transfer of possession of the inventory.

If the item to be secured is not inventory, then registration should take place within 15 business days of transfer of possession.

What happens if you do not register within the specified time?

If you miss the time specified for registration it is possible to have a late registration, although there may be a loss of priority for the security interest.

The effect this has on Unfair Preferences

An unfair preference arises when a purchaser of an item, having paid a seller a debt due to the seller which is not secured, becomes insolvent. The insolvency practitioner is then entitled, under certain circumstances, to claim this money back from the seller.

Registration of a retention of title clause on the PPSR may assist the seller avoiding such unfair preferences if they were secured at the time of payment.

What happens if you fail to register?

The consequences of not registering are severe, potentially leading to a loss of priority for the security. Also in the cases of the leases, which are required to be registered under the PPSA, a failure to register may lead to a loss of ownership by the lessor of the assets.

How does this affect existing arrangements?

The PPSA commenced on 30 January 2012 however it still applies to all securities taken prior to that date. It also applies to certain leases and bailments taken prior 30 January 2012. The PPSA allowed a period of 2 years, expiring on 30 January 2014, where the existing arrangements were deemed to be registered. If the existing arrangements were registered before 30 January 2014, they were deemed to be registered from 30 January 2012 onwards without any loss of priority or rights.

If you have any queries or require any assistance with regards to the PPSA and PPSR please do not hesitate to contact Harrick Lawyers on (03) 9670 2266.

Mergers And Acquisitions


The day has finally arrived when after years of hard work you are ready to sell your business. Or are you? Selling your business requires a lot of work to be done in advance.

Firstly you should have a reliable and accurate accounting system which can show at least 3 years of accounts. It is only from such accounts that a proper valuation can be obtained.

The second step is to ensure that your staff are on appropriate contracts with appropriate restraints on poaching your customers. Such restraints are regarded as void unless they can be shown to be fair and appropriate. This is important to protect the goodwill of your business . If as if such restraints are considered found to be excessive they can be struck out by the courts.

The third step is to ensure that you have appropriate contracts with your customers. A prospective purchaser will want to see that your customers will be likely to continue with the purchaser after the sale.

The fourth step is to ensure that you have time available on your lease with options for further terms. A purchaser of a business that relies upon a certain location will be reluctant to purchase a business if it does not have the ability to conduct the business from the premises for a reasonable period of time.

Having satisfied these steps the next step is to allow prospective purchasers to review the operations of the business, but only after the purchaser has signed a confidentiality agreement, so that your trade secrets and methods of operation are kept secret if the purchaser does not proceed.

The prospective purchaser should also agree that they will not approach any staff to work for them in the event that the sale does not proceed and that they will not employ any of those staff for a period in case they are approached by such staff.

Implementing these steps can make the sale process proceed smoothly and successfully.

For further information about things to consider when selling your business please contact us on (03) 9670 2266.


Our Experience

Starting, merging or acquiring a business

Making business agreements
– Drawn up General Security Agreements in compliance with the Personal Properties Securities Act to secure amounts outstanding
– Drafted Terms and Conditions ensuring coverage of the Australian Consumer Law, Privacy Act and the Personal Properties Securities Act
– Prepared various shareholder and partnership agreements to avoid litigation
Collecting debts
– Successfully recovered debt in excess of $1 million dollars for client in complex litigation and allegation of supply of defective products
– Acted on behalf of various trustees and liquidators assisting with the recovery of small to large preference payments
Resolving disputes
– Acted for property developer in respect of retail tenancy and shareholder issues
– Acted for architectural firm in respect of disputes relating to shareholder and employment issues
– Resolved retention of title claim by client with a security interest under the PPSA?
– Defended Supreme Court proceedings commenced in the Supreme Court of Victoria for relief for oppressive conduct of affairs
– Recovered in excess of $3m for a public authority
Managing insolvency or bankruptcy
– Resolved $1 million trading whilst insolvent claim for $150,000
– Assisted directors with an insolvent company including advice re personal liability for personal guarantees, outstanding tax debts and trading whilst insolvent and assisted in having the company placed into voluntary administration
Selling or closing a business
– Drafted and negotiated execution of a sale of a partnership agreement for sale of shares in a retail business to the remaining partners
– Acted on behalf of a food supplier in the sale of business valued in excess of $4 million