Thread: Another timber 'theft' story. The joys of business......

The Jacksons story probably should have been tested in the courts to clear some of the remaining issues up with the PPSA - however for the guitar owners, it was the best possible outcome. I suspect it was due to the nature of the particular consignment agreement (which while not perfected, was attached) and it's likely that the secured creditors didn't kick up a fuss. Although given the value of the instruments, and the fact that they usually take whatever they can, it's unusual. Perhaps they had some guitar players in their number or just didn't want the adverse PR it would have caused. This is especially true given how new the PPSA is and the fact that 24 months ago, the consignment agreements would have allowed for retention of title such that the consignors would have received their instruments back (unless they were sold and the consignor just hadn't been paid yet - one of the worst case scenarios). It would have been very unfortunate had it gone against them due to a new piece of legislation that it supposed to offer everyone additional clarity and protection - but entirely possible.

The PPSA itself is a good piece of legislation that was sorely needed. Now investors can search a register to see what other interests are out there as opposed to relying on what the person happens to disclose. No-one thought that retention of title clauses were security interests in the first place - but under the PPSA, they are. So one of the unfortunate side effects (although in the long run it will be better) is that a huge number of businesses have no idea it exists and continue to rely on interests that have not been registered, putting them at risk. The side of things that badly needs to be addressed/reformed is the ease with which directors can mismanage their companies into the ground and then setup phoenix companies a few months later.

I ordered a drill press from a local company the other day - the invoice contained a retention of title clause. I'm certain they won't register it. Of course, they are unlikely to ship it to me until I've paid, but if I was a corporate client...