Receiving assent on 25 June 2015, the Personal Property Securities Amendment (Deregulatory Measures) Act 2014 will amend the deeming provisions in the Personal Property Securities Act 2009 (PPSA) from 25 December 2015 (at the latest).*
The amendments remove leases of serial numbered goods (such as motor vehicles, boats, aircraft etc.) of 90 days or more from being deemed to be PPS leases under section 13 of the PPSA.
Adopting the approach of New Zealand and Canada, such amendments seek to reduce the confusion and costs associated with lease registration requirements.
This change has simplified the operation of the PPSA and will be of notable benefit to small and medium equipment hire businesses (where the majority of goods leased are serial numbered goods). Under section 13 whether the goods are serial numbered goods or not is now irrelevant, and unless the lease is longer than 12 months or indefinite, it will not be deemed to be a PPS lease. We recommend that you take specific legal advice if you are unsure whether your lease constitutes a PPS lease.
As a result, businesses will experience a reduction in compliance costs relating to the registration of such security interests by virtue of the fact that fewer transactions will be caught by section 13. In situations such as customer insolvency, hire businesses utilizing leases of serial numbered goods for a term of less than 12 months (where the lease does not extend over 12 months by renewal or continued possession of the goods) will be able to protect their interests by proving ownership of the leased goods.
It is noted however that a short term lease may still meet the definition of a security interest under section 12 where it is an interest in personal property that, in substance, secures the payment or performance of an obligation.
*Update: As of 1 October 2015 (the date fixed by proclamation), the amendments contained in the Personal Property Securities Amendment (Deregulatory Measures) Act have commenced operation.