Is a bulldozer a motor vehicle?

A scrap over two firms claiming a security interest in a bulldozer hit the High Court earlier this year. It threw up a wrinkle that will affect many finance firms.

Partners Finance and Lease Limited (Partners) leased a bulldozer to Westland Hire Limited in 2015 and registered a security interest on the Personal Property Security Register (PPSR).

Bulldozers go off the grid

The bulldozer wasn’t meant to be driven on the road. It had no licence plate, therefore no registration number. When you register on the PPSR you need to categorise the asset by various collateral types.

Partners, therefore, used the category ‘Goods Other’ and listed the VIN number and various other serial numbers that the bulldozer had.

Unfortunately, the good people at Westland Hire Limited were not good people. They sold the bulldozer to the Richmond Business Trust (Richmond) in 2017. Richmond took out a loan with the ASB to pay for the asset and the ASB did a PPSR security search and didn’t find the asset.

What price perfection?

Both the ASB and Partners had perfected security interests in the asset; perfected security is one where there is a valid loan and the security is registered on the PPSR. Normally, the person who registers first wins.

This should have meant Partners got the bulldozer and the ASB and Richmond would have to debate among themselves who was at fault. However, the issue went to court.

The ASB argued that because the bulldozer wasn’t listed as a motor vehicle, they didn’t find it when they did the PPSR search. Partners pointed to the fact that listing assets like bulldozers and other ‘yellow goods’ that are not licensed to go on a public road as ‘Goods – Other’ and not motor vehicles, is common.

“Seriously Misleading”; Seriously?

Under Sections 149 and 150 of the Personal Property Security Act, a registration that is ‘seriously misleading’ in ineffective. Had bulldozer been registered as a motor vehicle the ASB would have found Partner’s registration. They didn’t, and the court found in favour of the ASB and Partners were out of pocket $220,000 plus legal costs.

Ouch.

The full case is here