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24 | HIRE
AND
RENTAL
NEWS
| AUGUST 2012
INDUSTRY IN FOCUS
By Kim Powell, EDX Australia, Director
If you have not complied with new
legislation which took effect from 30
January 2012, you are at risk of losing your
equipment when one of your customers
goes broke. The insolvency practitioner may
seize your equipment and sell it for the
benefit of other creditors.
The new law is the Personal Property
Securities Act 2009 or PPSA. It has
revolutionised the way creditors and
financiers take security over assets to
protect their position. The bad news is
many hire businesses are also caught in the
net.
PPSA introduces a new concept, a
security interest in an asset (also known as
collateral). There are two ways a security
interest can arise: by agreement between
the parties; or because the Act says so (a
deemed security interest).
There can be more than one creditor with
a security interest in the same collateral
and a creditor of your customer can have
a security interest in your equipment. The
importance of this is the creditor with the
Who stole my equipment?
highest ranking security interest in the
equipment may seize it and sell it for their
benefit, irrespective of who owns it.
If your hire agreement creates what is
called a PPS Lease, then you have a deemed
security interest in your equipment.
If someone else has an “all present and
after acquired property” security over the
assets of your customer, they also have
a security interest in your equipment.
Typically this would include banks, finance
companies, major trade credit suppliers (to
your customer) and possibly shareholders
for loans to the company.
When it comes to the rules of
priority, PPSA introduces the concept of
“perfection”. The most common way to
“perfect” a security interest is to register a
financing statement on the newly created
Personal Property Securities Register or
PPSR. If you have not registered then your
security interest will be “unperfected”.
Critically, a “perfected” security
interest will always have priority over an
“unperfected” security interest. This means
if a competing creditor has registered on
PPSR and you have not, your equipment is
at risk. You are only caught by this if your
hire agreements create a “PPS Lease”. This
is a lease for more than one year (90 days
for certain equipment) or of indefinite
term. Since hire agreements are nearly
always open ended, most hire businesses
are caught by the “indefinite term”
provision.
There is a transition period, running
for two years from 30 January 2012,
which may offer some protection. A basic
understanding of the transition rules is very
important.
All equipment hired out to customers
before 30 January 2012 should be protected
under the rules for the two year period. In
technical terms, the hire agreement which
creates the PPS Lease is called a transitional
security agreement, the security interest
arising is deemed to be “perfected” for the
two year period, even if you have not yet
registered on PPSR.
It is a bit unclear whether the transition
rules will give any protection for rentals
entered into after 30 January 2012. The
balance of legal opinion we have seen
is the rules are very unlikely to give any
protection and court cases are expensive.
It is best to assume all equipment rented
out since 30 January 2012 is at risk, which
means you need to act now.
PPSA is complex legislation and EDX
Australia recommends taking qualified
professional advice. The basic steps are:
• Review terms and conditions, hire
agreements and any related documents
to determine whether a “PPS Lease” is
created: it probably will be.
• Where necessary, redraft terms and
conditions, hire agreements to be PPS
compliant.
• Consider the need to re-issue terms to all
customers.
• Ensure you have all information to be
able to identify your customer compliant
with PPS Regulations.
• Ensure you know how to describe your
equipment that complies with the PPS
Regulations and you can answer other
mandatory questions on submitting an
application to register.
• Register all customers on PPSR.
• Maintain your own record of all
registrations.
Visit: www.ppsr.gov.au which has
support materials and useful fact sheets or
visit: www.edxppsr.com.au to download
materials from us.
EDX Australia Disclaimer: This article is provided
for general guidance only and should not be
construed as legal or professional advice.
HR
Forklift and access equipment rental
company, General Equipment Rentals
(GE Rentals) based in Braeside, Victoria,
recently invested more than $500K in new
rental forklifts and rough terrain
equipment as well as adding six access
units to its fleet.
“Other companies may be holding onto
older equipment, however our philosophy
is to continue to invest in new equipment,
making sure our fleet is optimised and
our R&M are managed efficiently,” Bruce
Roberts, Sales and Marketing Manager for
GE Rentals said.
Established in 1982 by Barry Hibbert, GE
Rentals began from a home office selling
to the then newly built wholesale fruit and
vegetable market in West Melbourne.
Within two years, Barry had a factory in
Cheltenham built on casual rental to the
‘on demand’ hirer. The on-demand hirer is
the customer who requires equipment for
a job for one day to a month or more, or
when extra production is required and they
need equipment through a peak period.
“We specialise in ‘on-demand’ or casual
hire. As part of this, we pride ourselves on
delivering ‘on time every time’.
“In 2000, we purchased a significant
fleet of new Genie scissor lifts and boom
equipment and this fleet has continued to
grow over the past nine years.
“In the past four years we have
purchased over a million dollars of new
rough terrain forklifts and telehandlers.
“We also carry the largest range of slip-
on and hydraulic attachments, such as
safety cages for stocktaking, container
ramps to hire with container masted fork-
lifts, crane jobs for building sites and rotat-
ing forks.”
Winner of the HRIA Rental Company of
the Year 2011, GE Rentals is now focused
on its online business, updating its web
site and fine tuning its Google ratings.
For more contact: 03 9580 8888 or visit:
www.gerentals.com.au
HR
On demand hire focused on updating
GE Rentals’ philosophy is to invest in new
equipment making sure its fleet is optimised