The new Personal Property Security (PPS) registration system will now commence on 30 January 2012.

If you:

  1. sell goods on consignment
  2. sell goods with serial numbers, including motor vehicles
  3. supply goods using hire purchase agreements or lease arrangements
  4. supply goods under retention of title agreements

Then you need to register your interest on the PPS register or risk losing ownership of your property.

How to register your security interest

You will be able to register your security interest online once the registry becomes available at

The idea is that once you register your interest on the register then you are able to claim ownership of your property in the event that the party with possession is unable to pay up or goes into liquidation. Failure to do so means that you could lose your property to other registered interests.

A similar registry has been in force in New Zealand with some remarkable results that highlight the importance of registering your assets.

Two recent examples from New Zealand

  1. In Graham and Gibson v Portacom New Zealand Ltd [2004] 2 NZLR 528, Portacom leased portable buildings to NDG Pine Limited but did not register its interest in the buildings on the PPS Register. NDG later granted HSBC a debenture which covered NDG’s property generally. HSBC duly registered the debenture on the PPS. When NDG went into liquidation, the court held that HSBC had the right to sell the portable buildings to recoup its losses even though Portacom would previously have been considered the legal owner of them.
  2. In Waller v New Zealand Bloodstock [2005] CIV 2004-404-4093, S H Lock held a debenture over Glenmorgan Farm Limited (‘Glenmorgan’) which was registered on the PPS Register. Glenmorgan subsequently entered into a lease to purchase a stallion from New Zealand Bloodstock. This lease to purchase was not registered on the PPS Register. Glenmorgan fell behind in repayments and Bloodstock repossessed the horse in accordance with the terms of the agreement.

    Glenmorgan went into liquidation not long after and S H Lock claimed that it was able to sell the horse to recoup its losses as it had registered the debenture. The court followed the finding in Portacom and held that as New Zealand Bloodstock had not registered its interest it was not entitled to reclaim the horse.

These two cases highlight the imperative to register any transactions that involve your personal property and the harsh consequences that may follow by failing to register your interests.

Property deemed as being free of security interest

Generally, property that is purchased in the ordinary course of business or is used predominately for personal, domestic or household purposes, and its value is below $5,000.00 will be free of security interest. This ensures that day to day transactions are not effected drastically by the implementation of the Act.

What this means for you

If you transact business that you think may fall within the ambit of the Act, we suggest that you contact our office to assist you in preparing for the registry. The Act provides for a transitory phase and it is important to use the transition phase to your advantage. It is an idea to think about the following before the registry becomes available:

  1. A review of your operations to determine the impact of the reform – what goods fall within the registry guidelines;
  2. Inform your trading partners, suppliers, distributors and customers as to any change in procedures upon implementing of the Act;
  3. The cost of registration and whether that will be passed on to customers; and
  4. Training of staff as to when registration is required and how to register.

For more information on how RKL can help you, please contact the author.


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