Western Australia
Thu 17 August 2017

Changes to PPS Leases – analysis

Is your business wasting time and money by generating unnecessary Personal Property Securities Act (PPSA) registrations? HHG Legal Group’s Daniel Morris comments on recent changes to the PPSA legislation.

CCF WA members will by now have heard about amendments to the Personal Property Securities Act (PPSA) affecting PPS Leases. The main beneficiaries of these amendments will be plant hire companies.

The changes basically increase the length of time that plant, equipment and other business assets (such as computer hardware) has to be on hire to a particular customer, before the PPSA will apply to the hire agreement.  Under the changes, it is only when plant and equipment is hired out to the same customer for more than two years in total that registration on the Personal Property Securities Register (PPSR) becomes necessary to protect plant and equipment from being seized by an insolvent customer’s liquidator and sold to pay out that customer’s employees, lenders and subcontractors. Now, if assets are on continuous hire to a particular customer for a total of two years or less, then if the customer becomes insolvent, the hire company that owns those assets can simply take them back.

Whilst hire companies will no doubt welcome this news, we have seen instances where businesses are paying many thousands of dollars to administrative personnel, lawyers and self-proclaimed PPSA specialists to generate multiple unnecessary registrations for little if any commercial benefit.  As long as this continues, much of the commercial benefit of recent changes to the law is likely to be lost to many hire companies.

To take full advantage of recent PPSA reforms and maximise returns on their PPSA investment, members are encouraged to take commercially-savvy and technically accurate advice from trusted PPSA and construction industry lawyers.  As specialist industry lawyers, dedicated to contractors and our fellow CCF members, we have advised industry and run numerous cases on these issues, over many years.