Hire and Rental News - November 2014

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12 HIRE AND RENTAL NEWS • NOVEMBER 2014
INDUSTRY in FOCUS
Having worked with clients in the hire
industry for many years, Leigh Adams
Lawyers, a firm of lawyers in North Sydney,
understands the frustrations clients face
and their concerns, particularly regarding
the new PPSA.
Leigh Adams said it was in working
through these frustrations and concerns
the company came up with solutions.
“For example, we now have boiler-plate
agreements for all the documents required
to ensure compliance with the PPSA. They
usually have a schedule at the back and
this helps to reduce costs,” Leigh said.
“Many head-lessors are generally wary
of entering into sub-hire arrangements.
And rightly so. We have identified ways
of reducing the stress of doing business
in this space. One way, which our clients
have been quick to adopt, is by using the
new types of securities which are now
available under the PPSA. For example:
where applicable, chattle paper.
“Furthermore, many hirers are justifiably
concerned about their risk profile
in circumstances where they have
entered into a one-off hire arrangement,
particularly where the lessee keeps the
equipment ‘as long as he likes’. An easy
way to reduce the hirer’s risk in those
circumstances is by describing the
PPSA and damage control
The Personal Property Securities Act 2009 (PPSA) is causing a great deal of confusion and
pain not only to equipment hirers but also to other members of the business community.
secured property in ways that contemplate
the on-going supply of goods, whether or
not any one or more of the future supplies
are actually caught by the PPSA.
“A substantial number of businesses have
guarantees in place but with the PPSA, it
is easy to make them void unfortunately.
Again, this issue has been identified and
ever since the introduction of the PPSA,
our guarantees have covered the situation
where the amount guaranteed increases
over time,” Leigh said.
“Many arrangements cause frustration
because the PPSA does not apply to
fixtures, but many pieces of equipment
can inadvertently end up being bolted
or grouted to the ground - and therefore
become ‘fixtures’. This can cause the
arrangement to fall outside the PPSA and
the secured party can lose their security
entirely in such circumstances! Again, this
has been addressed and our clients do not
have to be concerned about this scenario.
“Other ways of reducing PPSA risk include
creating a charge against the lessee’s real
property (ie: land) to secure the amount
outstanding.
“Businesses planning their principals’
succession (ie: planning for the entry and
exit of business partners) often want
to ensure their business structure is tax
effective. However, when looking at these
issues, we also ensure the PPSA does not
torpedo what might otherwise be a good
succession plan. Often, trust deeds can
be changed or updated without any tax
consequences at all, but this can only be
done effectively if the drafter is mindful of
how the PPSA can wreak havoc on such
arrangements.
“The PPSA is also relevant to asset
protection strategies. We recently advised
on the transfer of a $7.5m business from a
father to his two sons, and by embracing
the PPSA, we not only avoided potentially
colossal stamp duty and CGT, but also
protected the sons moving forward as
the PPSA clauses were in place in the
transaction documents.”
Leigh welcomes no-obligation calls
on: 0411 712850 or 02 9964 0022 or:
"The PPSA is also
relevant to asset
protection strategies.
We recently advised
on the transfer of a
$7.5m business..."
1300 537 742 | |
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