Mark McKillop Barrister

On 10 October I had the privilege of speaking at the Arita Vic/Tas Conference. A copy of the powerpoint from the presentation can be downloaded here:

The theme was disputes arising over high value plant and equipment under the PPSA. Why do seemingly avoidable disputes arise over millions of dollars of collateral under the PPSA?

The key takeaways of the session:

• The concept of a security interest under the PPSA is one of substance over form. As a result, security interests are harder to find and register than common law securities.

• Ironically, the creation and inclusion of deemed security interests in the PPSA means that legal form is still important in identifying leases or bailments that are a PPS Lease

• Security interests are often overlooked and unregistered, giving rise to litigation over vesting of those interests.

• Liquidators and administrators need to think outside the box. They need to examine if security interests apply to any major equipment with the company. This applies to equipment currently in the possession of the company or recently recovered by a creditor or counterparty.

• These disputes often arise in mining or heavy industrial contexts. Liquidators or VAs in such cases ought be attentive to interests arising in unexpected places.

I discussed four cases involving multi million dollar plant and equipment related to disputes involving the PPSA in four cases:

• Kirkalocka Gold SPV Pty Ltd (Receivers and Managers Appointed) v Zenith Pacific (KLK) Pty Ltd [2024] FCA 428
• Re Qenos Pty Ltd (administrators appointed) [2024] NSWSC 483
• Forge Group Power Pty Limited (in liquidation) (receivers and managers appointed) v General Electric International Inc [2016] NSWSC 52
• Bluewaters Power 1 Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2019] WASC 438

The transactions involved in the cases were diverse:

• Step in rights – Bluewaters
• Build, Operate, Own and Transfer arrangements – Kirkalocka
• Operating leases – Forge
• Bulk Storage – Qenos

Some key points from the cases:

• Qenos – “looks like a duck but doesn’t quack” – no security interest if no secured obligation or payment
• Kirkalocka – location is not paramount, but possession can be
• Forge – operating leases can easily be a PPS Lease and should be carefully checked
• Bluewaters – step in rights are a form of security interest

Thanks to the Arita Vic/Tas Committee for the invitation to speak and a wonderful dinner afterwards.

Not one of my best profile shots, but I’ll take it.