On 19 March 2014 the Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 (Bill) was introduced to the House of Representatives by the Attorney-General, Senator Brandis. The Bill represents the first formal action by the Abbott Government to deliver on its election commitments to reduce regulatory ‘red tape’ and, if passed, will amend provisions of the Personal Property Securities Act 2009 (PPS Act) dealing with leases of serial numbered goods.
Purpose of the Bill
The Explanatory Memorandum provides that the purposes of the Bill are to:
- simplify the deeming provisions in the PPS Act;
- minimise the need for small and medium hire businesses to make registrations in respect of certain ‘PPS Leases’; and
- bring the PPSA Act into alignment with personal property securities regimes in other common law countries.
Current PPS Lease requirements
The PPS Act is arguably the most significant change to Australian business law since the implementation of the GST. The PPS Act governs the way security is taken over personal property and affects the way many common business transactions are now conducted including (amongst other things) with respect to the:
- supply of goods;
- leasing of plant or equipment; and
- hiring of motor vehicles and watercraft.
Currently, where serial numbered goods such as motor vehicles or watercraft are hired out for a period of 90 days or more (or for an indefinite period), the PPS Act deems a hire arrangement to be a ‘PPS Lease’. Generally, in order to protect its interest in the goods ahead of other parties, the lessor of the goods under a PPS Lease must ‘perfect’ its interest by registering that interest on the Personal Property Securities Register.
Proposed changes to PPS Lease requirements
If passed, the Bill will amend the deeming provisions of the PPS Act (from the date of royal ascent) so that hire or lease arrangements of serial numbered goods will be treated the same as other goods. Leases of all goods will now only be deemed to be PPS Leases where those arrangements are for:
- a term of 12 months or more; or
- an indefinite period.