North Sydney Commercial Lawyers

The Best Six Ways to Recover a Personal Property Securities DebtPrint This Post

Article in Hire and Rental News, May 2016 (page 22)



To recover a debt secured over personal property, you need to start with the end in mind. So consider the following:


  1. Ensure the security transaction is managed by an expert.

The omission of little things can make a big difference, for example trying to enforce a security interest by the appointment of an administrator where the lawyer has forgotten to stamp the general security agreement. Many cases have ground to a halt because of this simple oversight.


  1. Don’t hesitate, litigate!

Sounds absurd, but it is true. In a recent case, the secured creditor (SC) had a security interest in all present property and after acquired property of the company.


The company entered into a deed of company arrangement (DOCA) for its unsecured creditors which expanded the assets of the company moving forward.


The SC then appointed a receiver, but the Court said that it could only access the assets which existed immediately before the DOCA came into existence.


By that time unfortunately, almost all of the assets covered by the security agreement   had disappeared.  Had the SC taken action immediately upon breach, it would have been much better off.


  1. Manage the Personal Property Securities Register (PPSR)

In one case, the financier financed the purchase of a motor vehicle and registered its security interest. On default, it repossessed the vehicle but before the sale, a third party claimed to have bought it and to have paid part of the purchase price. The Court said that the third party did not have a security interest but could have had a purchaser’s lien if it had possession of the motor vehicle. However, the vehicle was  with the financier.

Compliance with the PPSR won the day.


  1. Know how to use the Personal Property Securities Register

In January 2012, a luxury car was bought at a substantial discount. It began to show mechanical problems. A PPSR search subsequently showed that the car had been previously written off in another State.


This information was successfully used in the subsequent litigation to recover damages for breach of contract which arose from the mechanical problems.


  1. Make sure your employees are authorised

In another case,  Primaplas supplied resin to Gelpack under Retention Of Title terms prior to the start of the  PPSA.


When the PPSA started, Primaplas sent through new terms and conditions (Ts and Cs) and registered its security interest. The operations manager of Gelpack signed the new Ts and Cs but an argument arose as to whether he had the authority to do so.


The Court held that Gelpack was bound by the new Ts and Cs even if the operations manager didn’t have authority.


If the operations manager had had a written employment agreement setting out his duties and authority in detail, the stress and cost of the litigation could have been avoided.


  1. Handle those security interests over trust assets with care

A security interest over a trust most often cannot be perfected by way of registering the security interest against the ACN of the trustee company. You need the ABN of the trust.


(a)       you will  have to rely on the trust deed  which might  limit the amount of debt that can be reimbursed from the trust to the trustee.

(b)      the trustee might change the trust’s name to muddy the waters and this will  cause additional confusion and cost.


  1. Start your debt recovery in the right Court!

In another case,  the security agreement was governed by Victorian law. But the litigation was commenced in NSW which was the primary place of business. In addition,  many of the   witnesses were in NSW and  most of the personal property (68 motor vehicles) were in NSW.


Despite challenge to transfer the proceedings to Victoria, the proceedings remained in NSW.


Getting the Court location right can save thousands of dollars in legal fees, as well as travel costs and accommodation costs too.


Leigh Adams

HRIA member

Contact Leigh Adams: 02 9964 0022.