We are gradually seeing more cases coming through regarding the PPSA (Personal Property Securities Act).
A recent case that was handed down in September, Auto Moto Corporation Pty Ltd v SMP Solutions Pty Ltd [NSW] 1403 (19 September 2013), involved a document that may have given a security interest over a Lamborghini Aventador.
Personally, I do not understand the excitement about cars, however, an interest in a Lamborghini (as opposed to a beaten up old Kingswood) would certainly give incentive to argue that there was a security interest pursuant to the PPSA.
At the end of the day the judge found that the documents did not create a security interest, and the director’s of the company were not bound to the agreement due to a technical argument that the person who signed the agreement did not have the authority to bind the directors.
The case highlights the importance of receiving legal advice on all PPSA issues prior to entering commercial agreements, ensuring the contract is drawn up correctly and is executed correctly. The technical aspects of the agreement and registration of an interest must be correct to create a security interest.
Getting PPSA positions wrong can be costly. In this case, getting it wrong was losing a Lamborghini as security.
When an argument exists about security, a Preservation Order might be an option to prevent interference with property. A Preservation Order is an order from a Court on application to detain property, or preserve property. Acting quickly to obtain the order is essential.
If you have any questions on the PPSA or its enforcement, contact us today.