PPSA and the Importance of Perfecting Your Internest

Friday, April 15, 2016 - Posted by Philip Harvey

In the recent decision of Forge Group Power Pty Limited (In Liquidation) (Receivers and Managers Appointed) v General Electric International Inc [2016] NSWSC 52 (11 February 2016) the importance of perfecting your interest under the PPSA was emphasised.

GE leased 4 Gas Turbines (electricity generators) to Forge Power who subsequently went into administration. GE did not register their interest under the PPSA.

The rental term over 2 years provided for a total of $33 million in payments. Payments commenced January 2014. Forge Power entered administration 3 months later in March 2014.

GE attempted to argue that there were two exceptions available to it under the PPSA:

1. A lease is not a PPS lease if GE is not regularly engaged in leasing goods (s13(2)(a)).
   In answering 1, the court may look to the global leasing activity of the company (not just Australia) and the test is performed when the lease is into. Regardless of the global test, GE was held to regularly engage in leasing activities in Australia.
   
   
2. That the gas turbines were actually fixtures per s10. The judge noted, GE was trying to argue that its leased goods would actually be lost forever by becoming fixtures. The Judge held that the Turbines were not fixtures and subject to the PPSA.

The consequence of not perfecting their interest meant that the turbines became available to the liquidators and GE became an unsecured creditor.

Please note that this article does not constitute legal advice and should not be relied on as such.

Repairable Write-Offs can no longer be re-registered

Thursday, July 01, 2010 - Posted by Philip Harvey

The NSW government has is bringing in legislation that will ban the re-registration of all repairable written off vehicles to clamp down on car re-birthing.

This will see the value of any car you repossess that has been a write off fall dramatically. The cost of the repossession & selling costs will exceed the price obtained for the car, as the only interested parties will be parties seeking spare parts.

These changes are to take effect from August 2010.

The announcement / media release from the NSW made by the minister for Transport David Campbell is below;

BAN ON ‘REPAIRABLE WRITE-OFFS’ TO HIT CAR RE-BIRTHING RACKETS Thursday, 8 April 2010 

The NSW Government will introduce legislation to ban the re-registration of all ‘repairable written-off’ vehicles to clamp down on car rebirthing, Minister for Transport and Roads David Campbell announced today.

Mr Campbell said the legislation will mean that write-offs will no longer be able to be sold at auctions, where the vehicles can then be re-birthed and on-sold to unsuspecting consumers.“ There is a black market for purchasing written-off vehicles at auctions, then using stolen parts to rebirth and register the car, to be sold for a tidy profit,” Mr Campbell said.

 

“This isn’t being done by licensed repairers - in most instances it’s not financially viable for genuine repairers to repair these cars using legitimate parts. “In many cases, it’s being done by unscrupulous operators in backyards and workshops using stolen parts, who then sell the vehicles to unwary motorists.

“Some consumers are being taken for a ride - motorists might be driving around in what’s effectively a stolen vehicle. 

“More importantly, many of these vehicles have had dodgy repairs which can mask major structural damage. It’s extremely unsafe.

“Car re-birthing is a significant problem which has been known to have links to organised crime syndicates.

“Today’s announcement will put a massive dent in these illegal operations.

“It’s estimated that as many as six out of ten of the 20,537 repairable written-off vehicles presented for re-registration in 2009 posed serious questions about the origin of the parts used to repair them.

“Around 19,000 vehicles were stolen in NSW in the 2008-09 financial year – of these, around 5,700 have not been recovered.

“Today’s announcement means any car which is written off will not be able to be reregistered even if it can be repaired.”

Mr Campbell said the NSW Government made the decision to ban repairable write-offs after a discussion paper was released for consultation in August last year.

“What we found was that consumers – as well as legitimate car dealers and repairers – wanted better protections in place,” he said.

“NSW is the first state to introduce this ban on repairable write-offs, and we would encourage other states to follow our lead and implement similar laws.

“There will be very limited exemptions to the new laws – for some vehicles written off because of hail damage, and for some classic antique cars.

“We will also strengthen written-off vehicle notification requirements – for example, vehicles currently being sent to a scrap yard for crushing are not required to be registered on the Written-off Vehicle Register (WOVR) and this presents an additional opportunity for rebirthing.”

Mr Campbell said the new laws are on top of the RTA’s Vehicle History Check service launched last year.

“The RTA’s Vehicle History Check service allows potential buyers to check whether a used car has ever been written-off anywhere in Australia,” he said.

“The service also provides customers with details of a car’s history including the number of previous owners, when it was first registered in NSW and odometer readings.

“All you need is the car’s registration plate details, vehicle type and the last four digits of the VIN/chassis number,

“It’s a simple check you can do on the RTA website for under $20.”

The new laws will be implemented following stringent legislative change and will take effect in August this year.  

REVS - Putting Them On and Keeping Them Current

Wednesday, July 01, 2009 - Posted by Philip Harvey

We have recently had 2 different examples where the security of a loan has been jeopardised and our ability to repossess the security has been limited through REVS listings not being performed in a timely manner. 

The scenarios were:

1. REVS Listing placed 4 hours after the finance was providedIn this case example, a debtor applied for a secured car loan. The loan was granted on the basis of the security. When the funds were then provided to the debtor, the interest in the motor vehicle was not immediately listed on REVS. The listing was placed some 4-5 hours after the debtor had already received the funds, and driven the motor vehicle off the dealers lot.
   The debtor then proceeded to drive the motor vehicle down the road to another car dealer & immediately sold the vehicle. When the 2nd dealer completed the REVS check, there were no interests noted on the motor vehicle.
   Subsequently, payments on the loan were defaulted.
   We were not able to effect repossession of the motor vehicle under the above circumstances, with clear title being received by the 2nd dealer by means of a REVS check. Without going into the fraudulent activity in this example, subsequent collection of the loan to mitigate any loss is more difficult without being able to realise sale proceeds from the motor vehicle.
   To avoid this problem, we suggest that as part of a checklist before the funds are released, that you register your interest on REVS.
2. A REVS listing lapsed before it is renewed.
   The financial provider had provided a secured loan to a debtor and listed their interest in the security on REVS. Repayments were being met for a long period of time. The interest in the security on REVS lapsed, and was not renewed by the financial provider for 7 days.
   During this period where the interest was not noted on REVS, the security was sold / transferred to an associate of the debtor & payments were subsequently defaulted.
   We were unable to effect repossession as the new owner was able to produce a REVS check showing clear title to the security.

It is therefore important to ensure that your listing with REVS is current & does not lapse