From the viewpoint of the business owner supplying the equipment, many understandably are of the belief that in the event something goes wrong, they will be able to reclaim possession of their equipment.

However, as recent history suggests, there have been examples within various industries where suppliers of equipment or materials have lost title to their goods or have been trumped by a financier in a property dispute.

The Personal Property Securities Act 2009 (Cth) (PPSA) provides suppliers of goods with a system to mitigate their risk by allowing them to register their security interest on the Personal Securities Property Register (PPSR).

This is due to the fact that the introduction of the PPSA has resulted in title not being everything, as owners of goods can no longer rely upon their ownership to defeat potential claims of other secured parties. 

To put things into perspective, if a business owner hires out machinery to a subcontractor and that subcontractor becomes insolvent during the hire period, the rightful owner of the goods runs the risk of losing possession of the machinery if they have not registered their security interest on the PPSR.

To avoid these risks, business owners supplying property through hire agreements are strongly advised to follow two steps. 

The first is that they should enter into a written agreement which specifically identifies the relevant goods, with the party taking possession having signed that agreement before taking possession. 

Having a written agreement in place is crucial for the security interest to be enforceable. 

The second is that the business owner registers the interest on the PPSR as early as possible from the time the goods pass from them to the third party. 

Specifically, registering your interest within the timeframes specified by the PPSA can result in the creation of a purchase money security interest (PMSI). 

A PMSI provides a silver lining for business owners who supply goods as a correctly registered PMSI will confer "super priority'' over all other non-PMSI security interests.

Further, if you are in the business of selling goods subject to a payment plan or if you are a franchisor or wholesaler providing stock to retailers, you will also need to protecting your interests through the PPSR.

Disclaimer: Readers should seek independent legal advice as this article is for information purposes only. Nick McConnell is a graduate lawyer at Beck Legal, Bendigo.