Unperfected security interests: how much can it cost you?

Recently, the Supreme Court of New South Wales handed down the first major Australian decision regarding the Personal Property Securities Act 2009 (PPSA). This decision highlights the dramatic way in which the PPSA has affected ownership under Australian law, and serves as a warning to contractors who have left security interests unperfected.

In this case an equipment hire company obtained finance to purchase several items of caterpillar excavators and loaders (the equipment). The company then leased the equipment to a contractor for use in civil construction work in the Northern Territory, before the Personal Property Securities Register (PPSR) commenced. Neither the company nor its financiers registered their security interests in the equipment on the Northern Territory motor vehicle register prior to the PPSR commencement date, or with the PPSR following the commencement date.