The Court of Appeal has confirmed that priority is determined by date of registration under the Personal Property Securities Act (PPSA).
In this decision1 concerning the priority of competing security interests under the PPSA, the Court of Appeal reversed the High Court’s decision, confirming that it is first to register who wins.
The High Court relied on section 36 of the PPSA, which deals with enforcement of security agreements against third parties. The Court of Appeal clarified that this section does not govern priority between secured parties – it is section 66 that applies.
Section 66 of the PPSA deals with priority of security interests in the same collateral when the Act provides no other way of determining priority, and provides that whichever secured party registers its financing statement first gets priority.
Relying on this general rule in section 66, the Court of Appeal confirmed that a financing statement may be registered in anticipation of entering into a security agreement, and that, in such cases, priority will still be based on the time of registration. Any party taking security must first search the register to ensure they will obtain the priority they want.
This case confirms that secured parties must always search the register, and should register their security interest on the Personal Property Securities Register at the earliest possible opportunity.