Despite its name, the PPSA does not just affect transactions which give rise to traditional security interests in personal property; it also affects many transactions which were not previously thought to be security arrangements by expressly providing that they give rise to actual or deemed security interests. In particular, suppliers (particularly suppliers using retention of title terms or consignment arrangements), lessors and bailors of goods need to be aware that the PPSA can override their general law ownership rights in the goods.
The PPSA is based on the equivalent personal property securities legislation adopted in New Zealand and Canada.
One aim of the PPSA is to create a single registry for security interests (PPS Register) that applies regardless of the legal personality of the entity that creates the security interest (called the “grantor”), be it a natural person, company, trust or partnership. This overview focuses on corporate grantors.
Another aim of the PPSA is to try to overcome the so-called “evil of apparent ownership” which can arise when a person or entity is in possession of goods owned by another.
An express intention in the approach taken by the PPSA is to look to the substance of a transaction rather than its strict legal form in order to determine whether a transaction is a security interest. The intention is that it should not be possible to structure a transaction which is in substance a security arrangement as another type of transaction so to avoid the effect of the legislation.