PPSA: calls for change continue

process (yet another layer of red-tape facing small businesses) — it is deemed to be the property of the liquidator or administrator.

In 2017, after five years of lobbying by business owners and industry associations led by the HRIA, the scope of the ‘PPS lease’ definition was cut down, greatly reducing the kinds of hires that could be deemed ‘security interests’. After May 2017, hires only fell into the ‘PPS lease’ definition when:

• the agreed term of the hire and any options actually exceeds two years; or

• the hire actually extends for more than two years. The two-year threshold replaced the previous one year or period in the current PPSA.

Another win for the hire industry was the removal of hires ‘for an indefinite term’ from the PPS lease definition meaning a lease for an unspecified term would no longer be caught unless and until it actually lasts more than two years.

Hire and rental business owners need to know where they stand when it comes to the PPSA, especially the potential pitfalls.

That’s the message from Alan Moody who owns and operates a trailer rental business in WA. Having recently been ‘burned’ by the PPSA, he’s on a mission to change the legislation and ensure other business owners don’t suffer the same consequences.

Alan’s story could apply to anyone in the hire and rental business.

When a customer with a low-loader dolly on hire from Alan’s business, Haulmore Trailer Sales, went into voluntary liquidation, Alan contacted the administrators to arrange the return of his equipment. He was told the PPSA document he’d filed was incorrect and they (the administrators) had the right to retain and sell the equipment to collect funds for creditors.

It’s a scenario that Alan could not believe. “How can that happen in Australia? I manufactured and licenced the equipment which was 100% owned by Haulmore but because we hadn’t properly dotted the i’s or crossed the t’s in the PPSA document, our equipment could be seized and sold.”

“It’s unfair and unjust. How can anyone say that’s a fair crack of the whip in Australia? It’s blatantly bad and I won’t rest until we get it fixed.”

So what does the PPSA legislate and who does it apply to?

Under the PPSA, hire company assets can be seized by another secured creditor (usually a bank) when in the possession of a liquidated business, despite this equipment being owned by the hire company. If the equipment is on hire for more than 2 years or if it is not registered on the PPS register — or an error has been made in the registration

While most of our members only do short-term hire business and are now outside the PPSA, the amendments did not remove the hire industry entirely. In 2023, that’s the focus of the HRIA’s ongoing advocacy to the federal government — with a goal of achieving further change urgently to protect the hire and rental industry. This is important in the current economic climate, where unfortunately we continue to see builders go into liquidation.

HRIA CEO, James Oxenham, urges members with assets on hire for longer than 2 years to register on the PPSR. “Failure to do so can leave hire companies at risk of losing their assets, should a customer go into liquidation.” The HRIA’s lobbying efforts continue, and a meeting is being sought with the Attorney General, Mark Dreyfus to address the legislation which in its current state leaves long term hires exposed.

To find out more about the PPSA, visit our resource page: hireandrental.com.au/resources/ ppsa-and-the-hire-and-rentalindustry/