The Personal Property Securities Act 2009 (PPSA) took effect from 30 January 2012 creating significant changes for owners, syndicators, trainers and breeders of thoroughbred and standardbred horses and greyhounds.
Any owner of a horse or greyhound who enters into an agreement for the training, leasing, care, purchase or sale of a horse or greyhound may be affected by this legislation. This includes all types of ownership agistment and training.
The failure by an owner to register an interest in a horse or greyhound could result in other parties gaining possession of the horse or greyhound in certain circumstances.
Information Link for Thoroughbred Owners and Trainers from Racing Australia: Racing Australia Information
Information Link for Queensland Racing Integrity Commission (QRIC): QRIC
Information Link for Australian Government PPSA: Australian Government: Personal Property Securities Register
Australian Government Help Line: 1300 007 777
Email enquiries to Australian Government: firstname.lastname@example.org
What are the PPSA and the PPS Register?
The PPSA is relatively new legislation intended to protect the interests of owners of personal property when that property is placed in the care of another party. Under the PPSA, personal property includes livestock, including horses and dogs as well as the unborn young of those animals. This includes horses in the racing and breeding industry as well as greyhounds.
The PPSA creates a national online register, the Personal Property Securities Register (PPS Register), that allows you to check whether someone is claiming an interest in the personal property. It also allows you to make a registration to show others that you have an interest in the personal property.
The PPS Register does not replace the Registrar of Racehorses operated by Racing Australia.
It allows a more transparent system of advising interests in property and operates 24/7.
How does it work?
As noted above, anyone who has an interest in an item of personal property (which includes horses and greyhounds) can and should register the interest on the PPS Register if they have an agreement with another party to lease, train, race, care for, agist or sell on vendor finance, a horse or greyhound.
Whenever an owner enters into such an agreement, they may be creating a security interest in the animal. A lease or bailment of a horse or greyhound for a term of 2 years or more, or for an indefinite term, creates a security interest known as a "PPS Lease".
An owner who creates a security interest, in particular a PPS Lease, should protect their interest by registering it on the PPS Register as soon as possible. If an owner does not register its interest, others with a registered interest may take possession of the horse or greyhound.
For example, a horse (or a greyhound) is leased or consigned to a trainer for 3 years who has mortgaged their stables (or kennels) to a bank. The bank registers an interest over all the assets including stables and horses (or kennels and greyhounds) but the horse (or greyhound) owner fails to register an interest in the horse (or greyhound) they have leased or consigned. The trainer defaults on the loan and the bank takes possession of all the assets. As the horse (or greyhound) owner has not registered their interest the bank may be entitled to take possession of the animals.
The PPS Register also enables a party interested in purchasing a horse or dog to determine whether the animal is being used as security for a debt or other obligation. If a seller has failed to make payments under a loan with a bank, the bank can repossess the animal without compensating the buyer for its loss.
For example, Mr A wants to buy a horse from Ms B and learns that Ms B runs her farm through an incorporated entity, BB Pty Ltd. Mr A obtains the Australian Company Number (ACN) of BB Pty Ltd and searches the PPSR and finds only one entry.
The entry states that the collateral is "commercial property: motor vehicle" and the secured party is a bank. The horse is "livestock", within the collateral class "agriculture".
While there is a security interest listed in the search result, no security interest is registered over the horse, so Mr A can proceed to purchase the horse knowing that the horse is free of other security interests.
What does it apply to?
The PPSA will apply to almost any property of value - except for land, building and fixtures, but including horses and greyhounds within Australia.
Similar laws also exist in New Zealand, the USA and other countries.
PPSA Registration - why register and how?
Failure to properly register a PPS Lease can result in the owner (or lessee) of a racehorse or greyhound losing all of their rights in the racehorse or greyhound, or a third party (e.g. a bank who did register) having priority over the race horse or greyhound.
There are strict time frames within which a registration must be made on the PPS Register. Further detail regarding the timeframes is available at this link: Register Security Interests
Not covered by a contract
It is no longer enough to have a clause in a contract stating that the title in goods remains with you until the goods are paid for in full (retention of title clause).
Under the PPSA, retention of title arrangements may need to be registered on the PPS Register in order to avoid another party's interest being placed ahead of you in the queue of creditors if the other party is in financial difficulty.
How to register your interest?
The PPS Register is available at this link: Australian Government: Personal Property Securities Register
You can create an account here as a first step.
Interests created before 30 January 2012 are deemed to have been registered for 2 years from January 2012. After 2 years, the deemed registration lapses.
For interests created on or after 30 January 2012, there is no 2 year honeymoon/ transition period within which to register. In effect you should register immediately.
There is no exemption under PPSA given for owner/trainers if one of the part owners is also the trainer. The group of owners should still register their interest against the horse or greyhound.
The PPSA and the PPS Register are complex. The above information is provided by Racing Queensland as information only and should not be taken as legal advice. Any persons affected by the PPSA or PPS Register should take steps to obtain professional advice in this specialist area if required. This information was last updated in February 2019 and does not constitute legal advice.