The Personal Property Securities Act was introduced in January 2012. This act essentially combines approximately 40 previous registers of security interests (for example the ASIC register of company charges) into the 1 single register; the PPSR (Personal Properties Securities Register). On top of all previous registers, the PPSR also includes a further register not previously recorded, the ROT (Retention of Title).
From introduction, the PPSR included a 2 year transitional period, meaning that previously valid security arrangements, including company charges or an ROT are protected, however this is only on the basis of the previous agreement (Credit Application, Contract etc.) not having been altered and therefore is only in play until January 2014 – not too far away!
From this time onwards, to take a valid security interest you must;
Tell your customer of your interest;
Obtain their approval; and
Lodge the claim on the PPSR register.
In addition, further onus is placed upon the creditor to identify which goods have been supplied and, in respect of partial payments, identify which supplied goods have been paid for. The correct identification and allocation of payments as and when received is a tedious yet incredibly important coverall in terms of any chance of enacting an ROT clause but when the register comes into effect, if a Creditor is unable to identify the goods they have supplied, this is deemed as helpful to a claim as having no interest at all and may have severe consequences for any chance of recovery under the ROT.
Previously, an ROT claim entitled a Creditor to an ‘all monies’ ROT security interest, but under the PPSR a Creditor may only be entitled to a security interest which is limited to particular goods. Effectively, this gives priority to a ‘straight forward’ ROT arrangement but not an ‘all monies’ arrangement meaning that the task of allocation and identification is as paramount as ever.
In preparation for the encompassing PPSR after the demise of the transitional period, it is advised that you make sure;
You have registered your security interest on PPSR as soon as possible, but definitely before 31 January 2014;
Your security interest is one that the PPSR will recognise by correctly describing goods that you have supplied and can relate back to particular unpaid invoices; and
You update your PPSR interests if you have changed your trading terms since 31 January 2012 or have started a trading arrangement with a new customer.
Remember that you need to act quickly and due to the possible complexities which can easily arise from even a simple error, you should not be afraid to seek legal advice – sooner rather than later.
Source – AICM Credit Management Australia, July 2013.