Amendments to the PPSA in the definition of Motor Vehicles

If you have a security interest in personal property and that personal property is defined under the PPSA, it is likely that you have (or should have) a PPSR registration to protect against your rights in that property being defeated by the rights of another party dealing with the property.

Since the PPSA was introduced, motor vehicles have been included as personal property for the purposes of the PPSA.

However, from 1 July 2014, the definition of “motor vehicle” under the PPSA has been amended in an effort to reduce the number of security interests that need to be registered by small and medium sized hire businesses.

Current (NEW) PPSA definition of “motor vehicle”

Personal property will be a motor vehicle under the PPSA if it fulfils either of the following two sets of conditions:

1. Self propelling motor vehicles

–       built to be propelled, wholly on land, by a motor that forms part of the property, AND

–       capable of a speed of at least 10 km/h AND has one or more motors that have a total           power greater than 200 W; AND

–       has a vehicle identification number, chassis number and/or manufacturer’s number; AND

–       does not run on rails, tram lines or other fixed path.

2. Other motor vehicles

–       capable, when being towed by, or attached to, a motor vehicle, of travelling at a speed greater than 10km/h; AND

–       a piece of machinery or equipment that is equipped with wheels and designed to be attached to, or towed by, a motor vehicle; AND

–       has a vehicle identification number, chassis number and/or manufacturer’s number.

Previous (OLD) PPSA definition of “motor vehicle”

The old definition of self propelling motor vehicles included personal property that is EITHER capable of a speed of at least 10 km/h OR has one or more motors that have a total power greater than 200 W.

If you have security interests in property that is within the previous definition of a motor vehicle, you may need to review the speed and power of the property to ensure that it is within the current definition of a motor vehicle. That is, that it has a speed of at least 10 km/h and one or more motors with a total power greater than 200 W.

Implications of the amendment

Personal property such as cars, trucks, utes, vans, motorbikes (and the like) will naturally still be defined as motor vehicles.  Examples of property that may no longer be defined as motor vehicles include dozers, pipelayers, motorized shovels, elevating work platforms and some asphalt pavers.

If you have security interests over property that is no longer a “motor vehicle”, you may need to amend the registration to being in respect of goods within the “Other goods” class.

Goods that are no longer “motor vehicles” will no longer fall within the list of property that may or must be described on the PPSR by serial number.  Therefore, a lease or bailment of these goods for 90 days or more (or less, with an option or authorization to extend over 90 days) may no longer be defined as a “PPS lease” that is required to be registered on the PPSR.

[You may recall the proposed amendments to remove the 90 day rule that applies to serial numbered goods (see our article here). Currently this rule still applies.]

Because goods affected by the amendments may now be covered by an “Other goods” registration and existing “motor vehicle” registrations may still be in existence, it would be best to use both the serial number and Grantor when searching the PPSR for security interests registered against the goods.

We recommend you promptly seek advice from one of our Brisbane Commercial & Business Lawyers if you are uncertain whether the PPS Act applies to your goods.

Please Note: This is not legal advice but it may help you understand the law. Read more...

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