On 25 June 2015 the Personal Property Securities Amendment (Deregulatory Measures) Act 2015 (Act) received Royal Assent after being passed by both Houses. The Act is intended to simplify the Personal Property Securities Act 2009 (Cth) (PPSA) so that leases of serial numbered goods (e.g. motor vehicles, watercraft and aircraft) of 90 day or more but less than 12 months (Short Term Leases), will no longer be deemed to be PPS Leases for the purposes of the PPSA.
The changes in the Act bring the PPSA in line with the personal property securities regimes in other common law countries, such as New Zealand and Canada, where only leases for more than 12 months or an indefinite term are deemed to be security interests. The amendments will simplify the deeming provisions in the PPSA and minimise the need for businesses in the hire industry to register Short Term Leases on the PPS Register.
However, care should be taken by businesses in the hire industry to ensure that their Short Term Leases do not satisfy the definition of a security interest in the PPSA. Some leases used as a means for financing the acquisition of personal property may still be considered security interests even though they are for a term of between 90 days and 12 months. The rights of the lessor are more likely to be considered a security interest where the lease is for the substantial life of the goods and/or where the risks of ownership rest with the lessee, such as in finance leases.
The commencement date for the Act is yet to be finalised (either through gazettal proclamation or on 25 December 2015 (6 months after Royal Assent)). Until the Act formally commences, however, Short Term Leases will still need to be registered on the PPS Register to minimise the risk of the lessor losing its rights in the leased equipment.
If you have any queries in relation to this article, please contact the writer on (07) 3009 9300.
Rodgers Barnes & Green Brisbane