The fight that has been in the making over the past 18 months has finally seen two protaganists stepping into the ring to determine a winner.
The decision in Richard Albarran and Blair Alexander Pleash as receivers and managers of Maiden Civil (P&E) Pty Ltd & Ors v Queensland Excavation Services Pty Ltd & Ors (2013) APPSR; [2013] NSWSC 852 Albarran and Pleash were appointed by Fast Financial Solutions Pty Ltd (FFS).
Background to this was that QES bought 3 earthmoving vehicles and then leased them to Maiden. Maiden obtained finance from FFS and FFS took a GSA over the assets of Maiden. Those with a familiarity with the PPSA legistlation would understand that Maiden as lessee had an interest in these vehciles and therefore it follows that it can pledge this interest to its financier as security. It was not disputed that QES owned these vehicles.
QES attempted to rely upon the Transitional Provisions of the PPSA in order to defeat the later claim of FS. Unfortunately for QES it had failed to register its interest on a vehicle register maintained in the Northern Territory prior to the introduction of the PPSA. Accordingly, when this register was migrated, QES’s interest did not migrate over (because it was never there). Therefore it was held that QES did not have a Transitional interest. Therefore its unperfected claim was defeated by FFS’s perfected one. If QES had registered its interest on this register I am sure the court would have found in its favour against FFS.
An unperfected security interest will always be defeated by a perfected one… this is PPSA 101 stuff
The court held that a PPS Lease created before the commencement of the PPSA (which is what QES had given the vehicles were classified as Serial Numbered goods and were leased for a period of more than 90 days) that is capable of registration on a “transitional register” (of which the Northern Territory vehcile securities register was one) must be registered in order to protect against a later-in-time perfected security interest taking priority in the subject property.
I would speculate that this failure to register would be a very common occurance for ‘yellow goods’ (that are now ‘Serial Numbered goods’) which are solely used in mines or for civil works etc.
If only QES had spent the $7 to register its interst it might have stood a chance.. I’d hate to think of the loss that this leason as taught them. We can only hope that others learn by this simple mistake.
It was also good to see that the Court looked at the New Zealand approach in order to help resolve this dispute. This should give some comfort to Australian lawyers looking to interpret our largely untried legislation.
The approach taken by the Court to determination of the priority dispute between the PPS Lease holder and the bank was (unsurprisingly) consistent with the New Zealand and Canadian approach – this is likely to be influential in subsequent resolution of priority issue.
There are more of these common traps that owners of goods are likely to fall foul of. Happy to disucss these with you!
Adrian Hunter 