The Personal Property Securities Act 2009 (Cth) (the Act) commenced on 30 January 2012. It established a national online register for securities over personal property (the PPSR). In addition, it standardised the definition of “security interest” to capture transactions such as retention of title arrangements and leases of personal property.

There is a two-year transitional period under the PPSA which allows secured parties to register without prejudice interests which arose prior to the commencement of the regime. The interests are “transitional security interests” under the Act. The transitional period will expire at midnight on 31 January 2014.

NCO Finance Australia Pty Ltd v Australian Pacific Airports (Melbourne) Pty Ltd [2013] FCCA 2274 (NCO Finance) (delivered on 24 December 2013) demonstrates how priority is determined between transitional security interests under the PPSA. It raises also the problematic question of under what conditions a particular State’s legislation will prevail over that of another State, or general equitable principles.


The case centres on the question of whether the applicant, the assignee of a bad debt in Queensland, or the respondent, an unpaid car park operator in Victoria, had priority to the possession of a vehicle to secure payment of outstanding debts to both the applicant and respondent.

The competing claims were as follows:

  • On 16 April 2009, St George Finance Ltd advanced a sum to Ms Bessalem for the purchase of a vehicle under a loan agreement. Ms Bessalem defaulted under the agreement. On 23 April 2011, a default notice demanded the outstanding balance. Upon further failure by Ms Bessalem to pay, the delinquent loan was assigned to the applicant (NCO Finance).
  • Around 27 September 2011, the vehicle entered the respondent’s (Australian Pacific Airports) Short Term Car Park. On 14 December 2011, it was deemed to have been abandoned. The respondent then asserted a possessory lien over the vehicle.

Did the parties have a valid security interest?

Both parties were held to have a valid security interest:

  • The applicant registered its security interest on the Queensland Register of Encumbered Vehicles on 12 August 2011 pursuant to the then legislative regime in Queensland. This security interest was migrated onto the PPSR on 21 November 2012.
  • The respondent successfully contended that its security interest was likewise perfected when it took possession of the vehicle on 21 September 2011.

How is priority determined under the PPSA regime?

The priority time is the earliest of (a) the registration time; or (b) the taking of possession or control of the collateral, provided the security interest remains continuously perfected thereafter: sub-ss 55(5), (6). Applying this, NCO Finance’s security interest would prevail.

However, the respondent’s security interest could, up to 1 February 2014,1 be registered without loss of priority. That is, under section 322(1) of the Act, the respondent’s security interest could be deemed to have been registered on the PPSR at the same time as that of the applicant.

His Honour found accordingly that there were two continuously perfected security interests in the same collateral with the same registration time. To resolve this, he applied the priority rule in section 323, which provides that:

If the priority between 2 transitional security interests is not otherwise able to be determined under this Act, they have the priority between themselves that they would have had under the law that applied to such priority immediately before the registration commencement time, and as if this Act had not been enacted(emphasis added).

Hence, the respondent could invoke a provision under Victorian legislation, the Chattel Securities Act 1987 (Vic). Section 10(4) of that Act asserted the priority of a repairer’s lien on goods over any registered security interest in respect of those goods irrespective of the date and time of the registration of that registered interest. A “repairer’s lien” is defined in that Act as “a lien on goods in the possession of a person as security for payment for services or materials furnished in respect of those goods by that person in the ordinary course of business” (emphasis added). His Honour held that the respondent’s provision of a car park service enlivened this section, giving the respondent a superior security interest over that of the applicant notwithstanding the applicant’s earlier registration of its interest under the Queensland regime.


The judgment makes no reference to ordinary equitable principles, specifically the rule concerning priority in time. The implications of this are, perhaps, limited. As of the date of this paper, three weeks remain until the expiry of the transitional period. Thereafter, secured parties will lose their right to take advantage of the attachment and perfection rules under the PPSA.2 The default priority rules under Division 2 of the Act will then apply. Hence, if the case had been decided after the expiration of the deadline, the applicant’s interest would have prevailed, having been perfected first in time.

We note two exceptions under the Act which could lead to the same outcome as NCO Finance. The first is the priority of an interest arising under a law of the Commonwealth, a State or a Territory in relation to the provision of goods or services in the ordinary course of business. In the absence of another Commonwealth, State or Territory law providing for the priority between the interests, an innocent secured party3 will prevail.4 The second is where an interest arises under a Commonwealth, State or Territory law which does declare the priority of the interest. Provided that (1) the law invokes subsection 73(2); and (2) the interest arises after the declaration comes into effect, the declared statutory interest will prevail. An example of this is section 3 of the Warehousemen’s Liens Act 1935 (NSW), which commenced effect on 30 January 2012.

Ultimately, however, the message remains unchanged. Register promptly.