The first significant decision under the Australian Personal Properties Securities Act 2009 has followed New Zealand and Canadian law.
The case involved competing claims by a general security holder and a lessor to three civil construction vehicles located in the Northern Territory.
The relationship between the parties
The NSW Supreme Court
The New South Wales Supreme Court took an orthodox approach to determining that Fast’s perfected security interest in the three vehicles had priority over QES’s unregistered security interest.
- It looked at whether the competing creditors had a proprietary interest in the vehicles. Fast had an interest in all three vehicles because of its general security interest. In respect of one of the vehicles, QES did not have an interest, because it was no longer the owner (it had transferred title to Maiden). In respect of the other two vehicles, QES had an interest because it was the owner and lessor.
- The Court looked at whether the competing property interests had attached to the collateral and agreed that they had.
- The Court asked whether the interests had been perfected. It found that Fast had perfected its interest by registration, but that QES had not perfected its interest as lessor (it had failed to register).
- The Court applied the priority rules to find that Fast’s perfected security interest trumped QES’s unperfected interest. The transitional provisions of the Australian PPSA did not save QES.
Chapman Tripp comment
The Court followed recognised Canadian and New Zealand cases, including the Portacom and Waller decisions and ordered that the vehicles be delivered up to the receivers.
The decision in Maiden is the right result and would come as no surprise to anyone familiar with New Zealand PPSA law.