Agisted Stock: Ownership Risk
by Jacqui Brauman
A recent local case has brought to my attention the risks of agistment without a written agistment agreement. Where stock is agisted on a property for 12 months or more, ownership can be jeopardised if the agistment property goes into receivership or insolvency. The situation I came across was that a farmer had his cattle on another manâ€™s property, under a handshake deal. The land and the cattle were then taken by an administrator that was appointed, and the farmer had to prove that the cattle were his. This still hasnâ€™t been accepted and he still hasnâ€™t got his cattle back.
Under old laws, if you owned something, then it was yours in almost every situation. Now with the introduction of the Personal Property Securities Act, possession is king. This piece of legislation was one of the biggest reforms since the introduction of GST, and allows you to register your interest in personal property (property other than real estate). If you donâ€™t register your interest, then very often your claim is not recognised.
So, failure to register a security interest on the Personal Property Security Register (PPSR) could result in the owner losing their property or interest. A security interest includes common agricultural arrangements including agistment agreement and livestock leases. The rationale of registration on the PPSR is to ensure that third parties (creditors/banks) are aware of the ownership of the asset (livestock, for example) when the asset is on someone elseâ€™s property. If your interest is not registered, it is difficult to prove your ownership.
The Act says that any item of stock, plant or equipment, that does not have an identifiable serial number, that is leased or in anotherâ€™s possession for more than 12 months must be registered on the PPSR to protect ownership.
Advice: agistment agreements canâ€™t be handshake deals if they are over 12 months. They need to be written, and then registered on the PPSR.
If agistment agreements are under 12 months, it is preferable still to get a written agistment agreement (it can be very simple) for a specific term. It can always allow for automatic renewal of the term , over a number of terms, to get around the 12 month requirement.
Contact us to arrange a chat with one of our legal professionals. It doesnâ€™t hurt to ask.
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