In Australia’s first breakthrough case, applying the priority rules under the Personal Property Securities Act 2009 (Cth) (PPSA), the Court found that the registered security interest of a financier had priority over the unregistered ownership interest of QES in relation to several Caterpillar vehicles.
QES had not registered its security interest in the vehicles on the relevant register in the Northern Territory before the enactment of the PPSA and therefore the interest was not perfected under the transitional security provisions of the PPSA. Maiden had possession of the vehicles under a verbal financing lease agreement with QES. When Maiden became insolvent, QES’ ownership interest in the vehicles vested in Maiden because the interest was not perfected.
This case demonstrates the importance of ensuring that security interests are registered to ensure priority is maintained. It is also essential to recognise that transitional security interests that were not registered on the relevant state or body register before the PPSA are not perfected by the transitional provisions of the PPSA.