An unjust “acquisition of property” is no defence for failed registration and loss of priority

White v Spiers Earthworks Pty Ltd [2014] WASC 139


In 2010, Spiers Earthworks Pty Ltd (Spiers) operated an earthmoving business and agreed to sell the business to BEM Equipment Pty Ltd (BEM).  In addition, pursuant to a Hire Agreement, Spiers agreed to hire to BEM vehicles and other equipment (Hire Assets).  In February 2011, BEM granted a fixed and floating charge to the National Australia Bank (nab) as security for amounts owing by BEM to nab.  Voluntary administrators were appointed to BEM on 24 July 2013 and on 31 July 2013 nab appointed receivers and managers to BEM pursuant to its charge.  As at the date of the appointment of receivers, Spiers had not registered financing statements on the Personal Property Securities Register (PPSR) and had not registered its interest in the Hire Assets pursuant to the Chattel Securities Act 1987 (WA) (CS Act).


The issue for the Court was to determine whether by operation of section 267 of the Personal Property Securities Act 2009 (Cth) (PPSA), Spiers’ interest in the Hire Assets vested in BEM.

Findings of the Court

The Court established that Spiers’ interest in the Hire Assets was a security interest as the Hire Agreement satisfied the definition of a “PPS Lease”.  It was held that the security interest of Spiers was unperfected at the time of the appointment of voluntary administrators and that section 267 of the PPSA would apply. Spiers contended for the application of section 267 PPSA on the following grounds:

The first contention was that by applying the PPSA and vesting its security interest in BEM, there would be an unjust “acquisition of property” under section 252B PPSA, which incorporates section 51(xxxi) of the Constitution.  The Court held that a statutory provision is not subject to the definition of “acquisition of property” within the meaning of section 51(xxxi) of the Constitution where the provision is part of and incidental to a general regulatory scheme aimed at adjusting competing rights and liabilities.1  The Court went on to say that section 267 of the PPSA is in place to regulate circumstances where a grantor becomes insolvent and requires the adjustment of competing rights in relation to secured property.  The operation of this section therefore had no effect on the “acquisition of property" as defined in the Constitution.

The second contention was that Spiers’ failure to register its security interest under the CS Act did not affect the validity and enforceability of its interests in the Hire Assets by reason of section 261(3) of the PPSA.  Furthermore, Spiers argued that the PPSA took effect before the registration commencement date (30 January 2012) and at that date the CS Act enabled registration of the Hire Assets.  The Court rejected this argument and said that section 261 of the Act did not apply before the registration commencement time and section 322(3) of the PPSA in conjunction with Regulation 9.2 of the Personal Property Securities Regulations 2010 (Cth) would apply.  As a result of this, Spiers would have an unperfected security interest in the Hire Assets as they were considered “registrable goods” under the old CS Act and Spiers failed to register its interest.  The Court held section 267 of the PPSA would apply and that the security interest of Spiers would vest in BEM.

Lavan Legal comment

The decision makes it clear that the failure to register a security interest on a transitional register will result in an unperfected security interest and grantors then face the prospect of losing priority in the property.  This is increasingly dangerous as the transitional grace period has now concluded and any property not registered will be unsecured.  Additionally a reliance on the Constitution and the unjust acquisition of property provision will not be a suitable defence for failure to register a security interest which has resulted in the loss of priority.

1 Australian Tape Manufacturers Association Ltd v The Commonwealth (1993) 176 CLR 480 at 510

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