• John Lowry

Do you know if you have secure title over your plant and supplies on a construction site?



Do you own materials, plant and equipment that you leave on a construction site? Examples of plant are excavation plant, cranes, formwork. Materials waiting to be installed often include reo, bricks and blocks, partitions & plasterboard, plumbing fixtures, electrical fixtures, doors and door hardware.

Subcontractors need to ensure that they have secure title over these items in the event of the insolvency of the contractor.

The Personal Properties Securities Act (PPSA) changed the game in 2009. In order to guarantee your title to you plant, equipment and supplies on site you must register your interest before someone else (like a contractor or a receiver).

There are a number of major subcontracts circulating in the industry that specifically require the subcontractor to sign over all rights in relation to the subcontractor's own equipment and supplies, even to the extent of attempting to gazzump an interest that a financier might have. These are outrageous and unnecessary conditions.

Our colleagues at Ledger Guard are experienced with hands-on advice, training and assistance in relation to the PPSA Act. Larry Brownson, a director at ledger Guard, has compiled the following general advice:

The PPSA legislation gives suppliers the right to record, on an online government register (“the PPSR”), a security interest in goods supplied on credit (on a per customer basis) so the supplier becomes a secured creditor in a customer insolvency. If you are slow to register on the PPSR, other creditors are likely to rank ahead in priority and you could end up with nothing if a customer goes into liquidation or administration. A registration fee of $6.80 covers all supplies to a customer for a 7 year period, renewable for additional 7 year periods as required.

Under the PPSA there are 2 great benefits for suppliers:

  • If you register a PMSI within the required timeframe your secured creditor priority in your goods is higher than your customer’s bank, their employees and the ATO; and

  • You have a strong defense against liquidators’ unfair preference claims. This, in my opinion is one of the most powerful protections provided by the PPSA. As a secured creditor, the liquidator can’t claw back payments you have received from a debtor within 6 months of their official insolvency.

To claim a PPSA security interest in your goods, you need a valid security agreement, meaning agreed terms and conditions that include retention of title and PPSA clauses (which you have), plus a valid security interest registered on the PPSR.

Registering a security interest correctly is not as easy as you would expect. Unfortunately, mistakes, even large ones are only identified when a debtor is insolvent and you need to rely on your registration. The process itself does not alert you to any errors. There are also strict deadlines depending on the legal entity you are supplying and how your customer will be using your goods. The good news is that once you know how to correctly answer the questions during the registration process, it becomes a routine exercise that is easily managed.

Ledger Guard can provide in-house training that usually takes a couple of hours in the morning or afternoon, plus preparation work via email. We supply a registration checklist and a manual to supplement the training session.

We can facilitate credit reports on potential customers to ensure contractors are not supplying an insolvent customer. None of the clients Ledger Guard has trained and supported have had any issues with liquidated businesses owing them money or seizing their equipment.

Contact Larry Brownson at Ledger Guard for assistance with the PPSA Act.

T: 07 3630 2533

M: 0439 630 722

E: larry@ledgerguard.com.au

W: www.ledgerguard.com.au


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