PPSA – Changes proposed for those hiring serial numbered goods.

19^th March saw the tabling of the Personal Property Securities amendment (Deregulatory measures) Bill 2014 in parliament.  Not the most helpfully titled Bill, its contents are nevertheless pleasantly short and to the point and concern themselves with making life easier for small and medium sized businesses hiring out equipment that can be classified as either motor vehicles, watercraft or aircraft.

The Current Position

At the moment if you are leasing goods to another business for a period of 12 months or more (or for an indefinite period) you need to register that lease as a security interest on the PPSR in order to protect your ownership rights in the event that the business leasing your goods goes into administration. 

However, if the goods you are leasing can be defined as motor vehicles, watercraft or aircraft, then the qualifying criteria that the leasing period be at least 12 months is reduced to 90 days and hirers need to lodge registrations on the PPSR for comparatively short term leases in order to protect their ownership.

The Proposition

This Bill proposes to amend the Personal Property Securities Act 2009 (PPSA) so that leases of motor vehicles, watercraft and aircraft of 90 days or more will no longer be deemed to be PPS leases for the purposes of the PPSA.  This will minimise the need for small and medium hire businesses to make registrations in respect of leases of a term of less than 12 months.

The change will bring the PPSA into alignment with personal property securities (PPS) regimes in other common law countries (such as New Zealand and Canada) where a lease is deemed to be subject to PPS laws where the lease is for more than 12 months or an indefinite term. 

By reducing the number of transactions giving rise to PPS leases, the Bill should substantially reduce the compliance cost born by small and medium hire businesses.

Conclusion

The original decision in the PPSA to operate a two tier system for leased goods, one for serial numbered goods (motor vehicles etc) and another for everything else, seemed an unnecessary complication that provided no obvious benefit to anyone and a lot of pain for anyone unfortunate enough to have their equipment fall under the very broad definition of ‘motor vehicle’.

The decision to rectify this should be welcomed.

The provisions of the Bill will take effect not later than 6 months from it receiving Royal Assent.