CITATION  NSWSC 852
JUDGE/S BRERETON J
Maiden leased earth moving vehicles from QES, and granted a general security deed to Fast. QES did not make a registration; Fast did. Fast appointed receivers, who claimed possession of the vehicles in priority of QES, their owner. Maiden also went into administration and liquidation. The court upheld Fast’s claim.
The court noted s19(5) and held that Fast’s interest was a security interest which attached to the vehicles, not merely to Maiden’s leasehold interest in them. As Fast’s interest was perfected while Maiden’s was not, Fast’s interest had priority under s55(3). Further, upon Maiden’s administration and liquidation, QES’s unperfected security interest vested in Maiden.
Even though the lease of the vehicles to Maiden had been terminated, s112 (which provides that a secured party may deal with collateral only to the same extent as the grantor) did not, properly construed in the context of the PPSA as a whole, affect the position that Fast’s security interest entitled it to possession. Section 112 is not intended, as between competing security interests, to reinstate the nemo dat rule. In any case, s112 only limits exercise of rights and remedies under Chapter 4, and Fast was exercising rights and remedies under the security agreement rather than Chapter 4. Even though QES’s security interests arose before the registration commencement date under the PPSA, they were not temporarily perfected as transitional security interests, because they could have been but had not been registered on the NT motor vehicle securities register: s322(3).
Finally, QES sought to argue in reliance on s238(3) that the vehicles were ‘goods of a kind normally used in more than one jurisdiction’ and accordingly the relevant place for considering whether there had been an appropriate registration on a pre-PPSA register was not the NT (where the vehicles were used) but rather Queensland (where Maiden was located). The court rejected this argument for several reasons. including:
- that ‘jurisdiction’ in s238 did not refer to State or Territory jurisdictions, but rather to Australian or foreign jurisdictions; and
- that earth moving vehicles were not goods of a kind normally used in more than one State or Territory, even if these particular ones may have been used in that way.
This was the first major reported PPSA case. It is important for several reasons, including demonstrating a complete acceptance of the fundamental PPSA principle that priority is determined in accordance with the PPSA rules regardless of title.
The summary of the pertinent points in this legal case update has been provided by Steve Pemberton, Lawyer and Consultant, as an extract from his digest of PPSA cases.