NSW Court of Appeal considers what is a "fixture" for the purposes of the PPSA

The PPSA was engaged if the lease was a PPS lease. That question turned on whether GE was regularly engaged in the business of leasing goods within the meaning of s 13(2)(a) of the PPSA and whether the turbines had become fixtures within the meaning of s 10 of the PPSA when installed on the site. The primary judge held that GE was regularly engaged in the business of leasing goods within the meaning of s 13(2)(a) of the PPSA. This finding was not challenged on appeal. The primary judge also held that the words “affixed to land” in the definition of “fixtures” in s 10 of the PPSA meant affixed according to common law concepts and that the turbines had not become fixtures. This finding was challenged on appeal.

The primary judge held, applying common law principles, that the turbines were not fixtures for the purposes of s 10 of the PPSA with the result that the lessor’s unperfected security interest in the turbines vested in the lessee.

On appeal, GE advanced two lines of argument. First, that the definition of “fixtures” in the PPSA did not import well-known common law concepts but instead adopted a bespoke definition in which affixation was the only relevant criterion. Correct application of that test, it was argued, should have resulted in a finding that the turbines had become fixtures. Secondly, and alternatively, if the definition of “fixtures” did involve common law concepts, the primary judge failed (or failed sufficiently) to take into account the purpose of affixation, the temporary nature of the affixation, and the physical characteristics of the turbines.

In dismissing the appeal, (Ward JA; Bathurst CJ and Beazley P agreeing), the Court relevantly held that:

(a) the clear legislative intent discernible from the extrinsic material was that the definition of “fixtures” in s 10 of the PPSA was intended to import common law notions of affixation;

(b) having regard to the considerations that may be taken into account in determining the purpose or object of annexation and the degree of annexation, the primary judge was correct in finding that the turbines were not fixtures; and

(c) the primary judge did not fail to take into account, or fail sufficiently to take into account the physical characteristics of the turbines; the purpose of affixation; or the “temporary” nature of the affixation.