Retention of title agreements made before 31 January 2012 lose their transitional security interest protection if they are not registered on the PPS Register by 30 January 2014.

After 31 January 2014, unpaid sellers of goods cannot rely on their retention of title agreements to recover the goods from other creditors, third party buyers or liquidators if their interest is not registered.

But even over the next 7 months unpaid sellers may still face challenges to their unregistered interests.

The most common argument from liquidators is that unpaid sellers cannot rely on their retention of title agreement for goods supplied from 31 January 2012 as there is a new agreement for each sale after that date which does not have transitional protection if it is not registered.

This argument seeks to distinguish each contract for the supply of goods made after 31 January 2012 which relies on pre-31 January 2012 standard terms (eg on a website or printed on the back of each invoice) from goods supplied after 31 January 2012 under a pre-31 January 2012 “master” credit agreement.

In Industrial Progress Corporation Pty Ltd v Wilson [2013] WASC 225 the Supreme Court of Western Australia had to decide whether an unpaid seller had the right to place a caveat on a guarantor’s property to secure debts for goods supplied. The guarantor challenged the validity under the Personal Property Securities Act of the retention of title agreement under which the goods were sold. In rejecting the challenge, the Court held that it was at least seriously arguable that the 1998 credit account application terms governed all future deliveries and the unpaid seller had a right to repossess under that agreement in respect of each delivery.

Judge Beech did not accept the defendant’s submission that the transaction constituted by the credit account application is not itself an agreement but only a platform that sets out the terms and conditions on which future agreements will be entered when and if products are supplied.

Judge Beech preferred the argument that the terms of the contract were that the seller would supply to the Customer goods on credit when requested to do so, on the standard terms and conditions that formed part of the credit account application.

But it is not a final decision and each case will depend on their own facts.

If you do not yet have a PPS Register procedure in your business, do not wait any longer.