Retention of Title Clauses are no longer enough!
Do you supply goods or services on credit? Are you still relying on your retention of title clause in your credit application terms and conditions to repossess goods sold that have not been paid for?
The recent case of Central Cleaning Supplies (Aust) Pty Ltd (“CCS”) v Elkerton  is a timely reminder to sellers to register their interests on the Personal Properties Securities Register against their customers.
In that case, CCS sold cleaning equipment to Swan Services. Swan Services signed a credit application which included a ‘retention of title’ clause which stated that the goods sold remained the property of CCS until they were paid for in full.
CCS did not register its security interest created by the retention of title clause on the Personal Properties Securities Register.
Swan Services went into liquidation. CCS tried to claim the goods which had not been paid for from the liquidators, but the liquidators refused to return them as they had not registered their interest in the goods on the Personal Properties Securities Register. CCS took the matter to Court to reverse the liquidator’s decision, but the Court ruled in favour of the liquidator.
Lessons for suppliers of goods or services
If a seller has the benefit of a retention of title clause, it must make a registration on the Personal Properties Securities Register against its customer. Failure to do that may mean that it loses goods which it has supplied to that customer but which have not been paid for. The fact that the seller has title to those goods will not protect it in the event the customer goes into liquidation or bankruptcy, so registration is the best protection.