Owning Racehorses and the Personal Property Securities Act
The new personal property securities regime (“PPS”) under the Personal Property Securities Act 2009 (Cth) (“PPSA”) came into effect in Australia on 30 January 2012 and it is extremely important that all racehorse owners immediately become familiar with the benefits and risks arising under it.
This is new Commonwealth Government Legislation that impacts ownership of many assets, including racehorses. We recommend that you read this notice carefully and act immediately.
Racing or breeding leasing arrangements by racehorse owners will be deemed to be “PPS Leases” under this new law. Any owner leasing their horse to another party should act immediately.
They will need to register their ownership of the horse on the government’s new national PPSA register. This is a separate process to lodging the usual racing lease document with RISA or Racing NSW.
Also, it is possible that the broad wording of the PPSA in its present form would be interpreted so as to extend to arrangements between owners, trainers, agistment properties or any other entities that have care of the owners’ horses.
The Australian Racing Board, on behalf of the Industry, has made representations to the Attorney General pointing out that the broad nature of the PPSA may unexpectedly capture these arrangements which appears to be contrary to the Government’s intent. However, pending any decision by Government, for the moment these agreements (whether they be written or oral) should also be registered.
What does the PPSA protect?
It protects your ownership of the horse. If you don’t register your interest on the PPSA register whilst ever your horse is in someone else’s care, a third party could register an interest over your horse and gain possession of it should the lessee or other carer strike financial trouble.
In New Zealand where similar legislation has been in force for some years, a stallion on Lease to a stud was lost by the owners because they had not registered their interest on the PPSA. The stud leasing the horse was in financial trouble and a third party (finance company) had registered an interest over the horse.
Under the legislation, the finance company took possession of the horse when payments weren’t met. Known as the Generous case (the name of the horse) a court challenge against the loss was unsuccessful.
What should you do?
You should prepare to register your interests in all the horses that you own, including part shares, from 30 January 2012. You should also ensure that any other persons that share an interest with you in the horse do the same.
If 100% of each horse is not validly registered, then your interest may be jeopardized. To register your interest, you can set up an account now in preparation for the start date. See below for options to be redirected to the PPSA register.
Is there help?
How much time do you have?
The law took effect 30 January 2012, and you are best to begin preparations immediately, especially for any new Leases for your horse.
Also, at present all other racehorse transactions are also captured under the Act (such as owner/trainer, owner/agistment property and owner/pre-training provider etc). Whilst the Australian Racing Board has sought exemption from the Attorney-General’s Department, it is recommended that you should register all interests as described in case exemption is denied.
The material on this notice is provided for general information only, and on the understanding that Racing NSW is not providing professional advice on a particular matter.
This notice contains information that is intended to simplify the law for ease of comprehension. In addition, errors or omissions can occur in the preparation of notices. Therefore, before relying on the material, users should independently verify its accuracy, completeness, relevance for their purposes and that it is up-to-date.
Before any action or decision is taken on the basis of any material in this notice the user should obtain appropriate independent professional advice.