In a newsletter published in March 2014 entitled ‘Out of time – transitional PPSA provisions no longer provide protection’, Carter Newell discussed a decision of the Supreme Court of Victoria where it was held a business involved in the hire of industrial cleaning equipment and supply of cleaning services was unable to rely on a retention of title (ROT) clause in their standard credit application agreement to recover property that was claimed to have vested in one of its customers immediately prior to that customer’s insolvency. At the time, the decision in Central Cleaning Supplies (Aust) Pty Ltd v Elkerton [2014] VSC 61 served a vital reminder to business owners to ensure that adequate steps had been taken to protect their security interests in personal property and, in particular, whether the transitional protections provided by the Personal Property Securities Act 2009 (Cth) (PPSA) could be relied upon as giving rise to such protection.
On 12 May 2015 the Court of Appeal in Victoria handed down their decision of the appeal brought by Central Cleaning Supplies (Aust) Pty Ltd (Central Cleaning).1 In allowing the appeal and determining that the commercial arrangement between Central Cleaning and its customer Swan Services Pty Ltd (Swan Services) was a ‘transitional security agreement’, the Court of Appeal’s decision essentially relied on principles of contractual interpretation which may be relevant to future PPSA disputes involving parties transacting business on the basis of standard terms of supply supplemented by individual purchase order or invoicing terms.
