CONCEPTUALISING THE RIGHTS OF A LESSEE UNDER THE PERSONAL PROPERTY SECURITIES REGIME: THE CHALLENGE OF ‘NEW LEARNING’ FOR AUSTRALIAN LAWYERS

Sep 17, 2026

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Focuses on a statutory requirement under Australian, New Zealand, and Canadian personal property securities regimes: a security interest generally cannot attach unless the grantor has “rights in the collateral.” The paper examines how a Canadian line of reasoning, developed for certain lease transactions, may influence interpretation of equivalent Australian provisions. It argues that “new learning” held by a lessee—enabling attachment to leased goods—can be achieved through alternative reasoning, with broader implications for when security interests may attach to personal property.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages20

Reading Time50 min

AccessFree to download

Introduction

The statutory requirement of “rights in the collateral”

Portacom’s significance and its common law contrast

Persuasive authority from New Zealand and Canadian influence

Links to Canadian and US-derived legislative models

2011 Conceptualising the Rights of a Lessee under the Personal Property Securities Regime 547 CONCEPTUALISING THE RIGHTS OF A LESSEE UNDER THE PERSONAL PROPERTY SECURITIES REGIME: THE CHALLENGE OF ‘NEW LEARNING’ FOR AUSTRALIAN LAWYERS SHEELAGH MCCRACKEN* This paper focuses on a statutory provision common to Australian, New Zealand and Canadian personal property securities legislation which requires agrantor of a security interest generally to have ‘rights in the collateral’ before a security interest can attach to that collateral. It analyses the extent to which a particular construction of that provision, initially developed by Canadian courtsand commentators in the context of certain lease transactions and now applied in New Zealand, may and should colour construction of the equivalent Australian legislation. The paper argues that ‘new learning’, which holds the interest of alessee sufficient to enable a security interest to attach to leased goods, is capable of achievement through different reasoning to that currently adopted by New Zealand courts. Such reasoning has significant implications for understanding when a security interest may attach to personal property more broadly. I INTRODUCTION As Australian lawyers come to grips with the Personal Property Securities Act 2009 (Cth) (‘PPSA’), one New Zealand case on the equivalent New Zealand legislation tends quickly to come to their attention – Graham v Portacom New Zealand Ltd [2004] 2 NZLR 528 (‘Portacom’) . This was, in fact, the first case tobe decided by the High Court of New Zealand under the legislation and has gained some notoriety 1 amongst those encountering the personal property securities (‘PPS’) regime for the first time. It highlights a critical difference between the legislative regime and the common law: the fact that a lessee of goods may be able to create security over the goods despite having merely a * Professor of Finance Law, Faculty of Law, University of Sydney. 1 For articles and notes discussing the general impact of this case, see, eg, Mike Gedye, ‘What’s Yours is Mine: Attachment of Security Interests to Third Party Assets’(2004) 10 New Zealand Business Law Quarterly 203; Barry Allan,‘Personal Property Securities in the Courts: A New Era Begins’(2004) 32 Australian Business Law Review 372; Duncan Webb,‘Commercial Law: Personal Property Securities’ [2004] New Zealand Law Review 367; Richard North,‘The New Zealand Personal Property Securities Act: Growing Pains’(2005) 11 Canterbury Law Review 123. 548 UNSW Law Journal Volume 34(2) possessory interest in those goods at common law. The case drives home a fundamental point, reflected in the very definition of a security interest,2 that holding title to property is no longer a critical factor in creating a security interest over that property. While New Zealand cases can obviously only be of persuasive authority on the interpretation of Australian legislation, the judicial approach is nonetheless of significant interest. The NZPPSA came into force in 2002 and there is now a growing body of case law on its interpretation and application. Australian courts are likely, at least in the early days of the operation of the Australian legislation,3 to consider the reasoning of their New Zealand counterparts and to reflect on the extent to which that reasoning may shed light on the issues before them. In doing so, Australian courts are also likely to be drawn into considering Canadian case law, given the extent to which the New Zealand legislation is based4 on Canadian legislation which was largely introduced across the provinces in the 1980s and 1990s, following its initial implementation in Ontario in 1976.5 In Portacom, the High Court of New Zealand described the relevant Canadian authorities as directly applicable,6 although in the following year the Court of Appeal in Waller v New Zealand Bloodstock Ltd [2006] 3 NZLR 629 (‘Bloodstock’) emphasised 2 ‘[A]n interest in personal prop

FAQs

What requirement must be satisfied before a security interest attaches to collateral?

A grantor generally must have “rights in the collateral” before the security interest can attach to that collateral.

How does Portacom highlight a difference between the statutory regime and common law?

It shows that a lessee may create security over goods even with only a possessory interest under common law, emphasizing that title is not a critical factor under the statutory definition.

Why does the paper consider Canadian reasoning when analysing Australian legislation?

The New Zealand scheme is based on Canadian legislation, and Canadian approaches were described as directly applicable in relevant New Zealand decisions, making them influential for interpreting Australian equivalents.

Sep 17, 2026

Uploaded by Fez