By Leigh Adams -
Snapshot
- The case confirms what many legal advisors have expected – that businesses like those offering storage services, including businesses storing furniture for travellers, old and completed files for professionals, will likely not be caught by the provisions of the PPSA
- The court did not consider the meaning of “value” in s 13(3) of the PPSA and decided this issue on other grounds. Section 13(3) provides that a bailment is only a PPS lease (and therefore, a deemed security interest) if the bailee provides “value” and value is defined in s 10 to include any consideration sufficient to support a contract
- To be consistent with the Arcabi conclusion, that should just mean ‘money’. In the Arcabi case, it was the bailor who provided the money. The bailee provided the services. However, this issue is still unresolved for the time being
The recent case of Re Arcabi Pty Ltd; ex parte Theobald [2014] WASC 310 provides an interesting insight into the way the courts interpret the interaction between the rights of secured creditors under the Personal Property Securities Act 2009 (Cth) (PPSA) and the rights of an external controller to a lien over property (whether or not the subject of such a security). It also clarifies the application of the PPSA to bailments and consignments.
Facts
Arcabi’s business included the storage and sale of rare coins and bank notes. The goods were stored in Albany WA (the premises). Many of the goods were owned by third parties (investors).
Arcabi defaulted on its loan from Westpac (the bank), which had a perfected general security interest over all Arcabi’s present and after acquired property.
Could the bank’s receiver take the investor’s goods and sell them and apply the proceeds to reduce the indebtedness of Arcabi to the bank? To answer this question, the receivers applied to the court for directions under s 424 of the Corporations Act.
The goods were broadly of two types:
- Mixed storage goods: these were goods that were stored only, and the investors who owned them were charged a storage fee and issued with an invoice.
- Consignment only goods: these goods were part of an arrangement between Arcabi and some Investors whereby the investor in each instance requested Arcabi to sell the goods on consignment (to either third parties or Arcabi itself if it chose to buy them). These goods had not been sold at the time of the appointment of the liquidators and remained at the premises at that time.
