The first big decision on the PPSA dealing with the PPSA priority rules between a registered security interest and an unregistered interest has been handed down.
In Maiden Civil v QES  the NSW Supreme Court found that a registered security interest had priority over an unregistered interest, even though the unregistered interest was that of the owner.
Queensland Excavation Services (QES) purchased and leased three Caterpillar vehicles to Maiden Civil, comprising a wheel loader, a 20 tonne 320D excavator and a 30 tonne excavator. Maiden Civil used Fast Financial (Fast) to finance its obligations under the lease and granted Fast security over all of Maiden Civil’s property, including the three Caterpillar vehicles.
Fast registered its interest in the vehicles on the Personal Property Securities Register (PPSR). But QES did not register its interest as owner on the PPSR.
Maiden Civil made part payments to QES under the lease before going into liquidation, still in possession of the vehicles and before the expiry of the lease.
Fast took steps to enforce its security in accordance with its financing agreement with Maiden. Maiden Civil’s liquidator demanded possession of the vehicles. And QES asserted its legal title. A dispute arose as to who was entitled to vehicles: Maiden Civil or QES.
The security interest beat the ownership interest
The case turned on the fact that QES did not register its interest on the PPSR. It was the owner, but Fast had priority because it registered its interest.
This case illustrates the dire consequences that follow from a failure to understand the PPSA and to register your in property.
What the owner should have done
The owner should have registered its interest on the PPSR. It could have done this even before purchasing the vehicles, and before entering into the lease. This is because the PPSA allows a person who has reasonable grounds for believing that it is, or will become, a secured party to register an interest on the PPSR.
The take out
The results from the application of the PPSR priority rules can surprise you. Register early. Register often.