Security Interests in Personal Property: Creation and Attachment under UCC Article 9, Australia PPSA and New Zealand PPSA

1. Introduction

Security interests in personal property enable creditors to secure obligations against a debtor’s assets. In the United States, Article 9 of the Uniform Commercial Code (UCC) provides a comprehensive framework for consensual security interests in personal property.

Australia and New Zealand have adopted functionally similar regimes through their Personal Property Securities Acts (PPSA).

These frameworks share a common conceptual approach to the creation of a security interest and its attachment to collateral, even as they differ in terminology and some details.

This post examines how a security interest is created and when it attaches (i.e. becomes legally enforceable against the debtor with respect to the collateral) under U.S. law (UCC Article 9) and the Australian PPSA and New Zealand PPSA.

The focus of this article is on the legal requirements for creation and attachment of security interests – not on perfection or priority, which are distinct steps beyond attachment and already discussed in a separate post.

Relevant statutes (such as UCC Article 9-203 and PPSA provisions) and case law will be cited to illustrate the principles.

1.1 Defining Security Interests in Personal Property

Both UCC Article 9 and the PPSAs in Australia and New Zealand take a functional approach to defining a “security interest.”

Substantively, a security interest is any interest in personal property that secures payment or performance of an obligation​. In other words, if a transaction in substance creates collateral to secure a debt or obligation, it will be treated as a security interest under these laws, regardless of the form or label of the transaction.

UCC Article 1-201(b)(35) (applicable through Article 9) defines “security interest” as an interest in personal property or fixtures which secures an obligation, and explicitly includes interests like the reservation of title by a seller of goods as a limited security interest rather than true ownership​.

Similarly, Australia’s PPSA, s 12(1) defines a security interest as an interest in personal property “provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to…the identity of the person who has title to the property)”​.

New Zealand’s PPSA is to the same effect. This means that transactions such as conditional sales (retention of title clauses), finance leases, and consignments are deemed security interests if they secure payment or performance, even though traditionally they might not have been characterised as security devices.

For example, the Australian PPSA expressly includes the interest of a consignor in delivered goods and the interest of a lessor under a PPS lease (a lease of goods meeting certain duration criteria) as “security interests,” whether or not they secure payment​.

By casting a wide definitional net, these regimes ensure that substance prevails over form. A creditor cannot evade the rules of attachment (or later, perfection and priority) by creative drafting that disguises a security arrangement as something else.

The broad definition was confirmed in cases like Waller v New Zealand Bloodstock Ltd [2005] 2 NZLR 549, where a lease of a valuable stallion with an option to purchase – a transaction retaining title in the lessor – was treated as creating a security interest under the NZ PPSA.

The High Court (Allan J) in Waller v New Zealand Bloodstock Ltd recited that under section 40 of the NZ PPSA, a “security interest” attaches when the elements of value, rights in collateral, and an enforceable security agreement are present​.

This functional approach aligns with UCC Article 9, under which retention-of-title sales are treated as security interests and finance leases are subject to separate leasing law unless deemed to secure an obligation.

For our purposes, we proceed with the understanding that if a transaction falls within the scope of these regimes, it gives rise to a security interest whose creation and attachment must meet the legal requirements discussed below.

1.2 The Moment of Attachment: When Security Interests Become Enforceable

Attachment is the point at which a security interest becomes enforceable against the debtor with respect to the collateral.

Until attachment occurs, the security interest is merely a theoretical or inchoate interest. UCC Article 9-203(a) succinctly states: “A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral, unless an agreement expressly postpones the time of attachment”​.

Likewise, the Australian PPSA provides that “a security interest is enforceable against a grantor in respect of particular collateral only if the security interest has attached to the collateral” (PPSA 2009 (Cth) s 19(1))​.

New Zealand’s PPSA contains a similar rule in s 40(1). In short, attachment is required for enforceability of the interest against the debtor (and, generally, against third parties as well, subject to additional conditions for third-party effectiveness).

Attachment is thus a critical threshold in the life of a security interest – it is the link between a mere agreement and a property right in the collateral.

For a security interest to attach, certain prerequisites must be satisfied. All three jurisdictions converge on the same core requirements, even if worded slightly differently.

In essence, three conditions must be met before a security interest attaches:

(1) value must be given by the secured party; (2) the debtor (grantor) must have rights in the collateral (or the power to transfer rights in the collateral); and (3) there must be an agreement or act that establishes the security interest in the collateral (typically a security agreement with an adequate description of the collateral, or the secured party’s possession or control of the collateral).​

UCC Article 9-203(b) enumerates these requirements clearly: a security interest is enforceable (and thus attaches) only if value has been given, the debtor has rights in the collateral or power to transfer rights, and one of the following is met: the debtor has authenticated a security agreement describing the collateral, or the collateral is in the possession of the secured party pursuant to agreement, or for certain collateral (like investment property, deposit accounts, etc.), the secured party has control pursuant to agreement​.

The Australian and New Zealand PPSAs mirror these attachment criteria. Section 19(2) of the Australian PPSA provides that a security interest attaches to collateral when the grantor has rights in the collateral and either “value is given for the security interest” or “the grantor does an act by which the security interest arises.”​

New Zealand’s PPSA s 40(1) similarly requires that value is given, the debtor has rights in the collateral, and (except as between the immediate parties) a security agreement is enforceable against third parties (per NZ PPSA s 36) – the latter effectively being the written security agreement or possession requirement​.

Thus, across these systems, the same triad of value, rights in collateral, and a binding security agreement (or equivalent) is the foundation for attachment. We will examine each of these elements of attachment in turn.

2. Giving Value: The Role of Consideration in Security Interest Creation

The first prerequisite for attachment is that the secured party gives value. This requirement ensures there is a substantive transaction underlying the security interest – typically a loan, credit, or other obligation owing to the secured party.

Under UCC Article 9, “value” is broadly construed. UCC Article 1-204 (the general definition section) states that value can be given by providing any consideration sufficient to support a simple contract, and it explicitly includes an antecedent debt (a pre-existing claim) as constituting value.

In other words, a creditor can take a security interest to secure past debt as well as new credit – no new loan is required for attachment, as long as the security interest is intended as security for an obligation.​

This flexible notion of value is mirrored in the PPSAs. The Australian PPSA does not define “value” in a narrow or technical way; generally, the concept encompasses making a loan, supplying goods on credit, or any other consideration given in exchange for the security interest.

The PPSA even recognises that in some transactions the secured party’s “giving value” may simply be entering into the transaction that creates the security interest. Indeed, PPSA s 19(2)(b) offers an alternative to value: attachment can occur if “the grantor does an act by which the security interest arises”​.

This phrasing accounts for scenarios like a conditional sale where a seller retains title to goods until paid – one might say the buyer (grantor) “does an act” (buying the goods on those terms) by which the seller’s security interest arises, even though one could also characterise the seller as giving value (the goods) to the buyer.

The alternative clause ensures no gap in coverage – whether one frames it as the seller giving value (the goods on credit) or the buyer’s act creating the interest, attachment is satisfied so long as the deal is made.

New Zealand’s law does not explicitly use the “grantor’s act” language, sticking to the requirement that value be given by the secured party​.

In practice, however, this is not a point of divergence: virtually any security transaction will involve either an extension of credit, a loan, a sale on credit, or some forbearance or obligation that counts as “value.”

It is notable that consideration in this context does not fail for past consideration. For example, if a debtor grants a security interest to secure an existing debt (perhaps to avoid a lawsuit or as part of a refinancing), that existing debt counts as value given, allowing attachment.

U.S. courts have long accepted this; an illustration is In re Mulvania, 214 B.R. 1 (B.A.P. 9th Cir. 1997), where a debtor’s promise of collateral for a pre-existing loan was deemed to attach because the antecedent debt constituted value (the court relying on UCC Article 1-204).

Likewise, Australian courts would treat a security interest granted for past indebtedness as satisfying the value requirement – the obligation is the value. The overarching principle is that value = consideration in the contract sense, and it is a low threshold, easily met in most secured transactions.

One nuance under UCC Article 9 (not directly echoed in the PPSA language, but conceptually similar) is the idea of “new value” in certain contexts – for instance, the special priority for purchase-money security interests requires that the loan be actually used to acquire the collateral.

However, for basic attachment purposes, any value suffices; it need not be “new” value. The Australian PPSA makes a similar distinction in terminology only for certain priority or transitional rules (defining “new value” to exclude antecedent debt for those limited purposes​.

But for attachment, neither system requires the secured party to prove the money went to purchase the collateral or any such restriction – so long as the debtor owes an obligation and the security interest is granted in exchange, the value element is satisfied.

In summary, the requirement of value given ensures that gratuitous or purely nominal security agreements (with no debt or obligation behind them) do not create enforceable security interests.

In practice, this element is seldom contentious in attachment disputes, as most secured transactions clearly involve a loan, credit sale, or other consideration.

It tends to become an issue only in unusual cases, such as when a purported security interest is created without a clear underlying obligation. As long as there is a debt or commitment, the law will find that “value” was given.

3. The Debtor’s Rights in the Collateral

The second fundamental requirement for attachment is that the debtor (or “grantor” in PPSA terminology) has rights in the collateral (or the power to transfer rights in the collateral)​.

This rule is grounded in basic property logic: one cannot give a security interest in what one does not own or at least have some rights in – nemo dat quod non habet (one cannot give what one does not have).

However, in applying this requirement, Article 9 and the PPSAs focus on practical rights and interests, not necessarily full legal title. A debtor’s limited or contingent interest in property can be enough to support a security interest. ​

UCC Article 9-203 states that a debtor with a limited interest (such as a buyer under a contract of purchase where title is reserved to the seller, or a lessee of goods) can grant a security interest in whatever rights the debtor has. The secured party’s rights are then limited to the debtor’s rights.

For instance, if a lessee grants a security interest in leased equipment, and the lessee’s interest is merely possessory for a term, the secured party obtains a security interest in that leasehold interest – which may be extinguished if the lease ends.

This principle was put to the test in the leading Australian case Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd [2013] NSWSC 852 (“Maiden”). In that case, a company (Maiden) in possession of certain Caterpillar vehicles under an unregistered finance lease attempted to grant a security interest over those vehicles to a financier (Fast Financial)​.

​The grantor (Maiden) did not hold title – the lessor (QES) had title – but Maiden undeniably had possession and use of the vehicles.

The New South Wales Supreme Court held that Maiden, as the grantor and lessee in possession, had sufficient rights in the collateral to grant a security interest to Fast​ Financial..

In reaching this result, the court pointed to PPSA s 19(5)​, a provision which explicitly says that if the secured party (such as a lessor or retention-of-title seller) has title to goods, the grantor’s obtaining possession is deemed to give the grantor rights in the goods sufficient for security interests to attach to those goods​.

In other words, the PPSA overrides any argument that the lessee or buyer “had no rights” because they lacked title – it clarifies that possessory or conditional rights count as rights in the collateral for attachment purposes. New Zealand’s PPSA has a similar practical approach.

In Waller v NZ Bloodstock (cited earlier), the debtor company’s limited interest in a leased racehorse was held sufficient to support a security interest, especially since the PPSA’s functional approach deemed the lessor’s interest a security interest; accordingly, the debtor’s rights were those of a grantee of a security interest, enough to grant a competing security interest to its financier​.

U.S. law, though not codifying this scenario in the statute’s text, reaches the same end result through the UCC’s flexible concept of “rights in the collateral or the power to transfer rights”​.

A buyer under a conditional sale has rights in the goods even if title remains with the seller, and a licensee of a patent has rights in the licensed patent that it can encumber (limited to its licensed interest, of course).

Notably, UCC Article 9-203 extends to a debtor who has the “power to transfer rights in the collateral to a secured party”​.

This covers situations of consent by the true owner. For example, if the owner of an asset authorises the debtor to use the asset as collateral, the debtor can effectively grant a security interest even without owning the asset outright.

The case In re Rudick, Bankr. N.D. Okla. 2022, illustrates this: a business entity (debtor) pledged vehicles as collateral for a bank loan, but the vehicles were in fact owned by the business principal individually.

The individual owner had implicitly consented by signing the security agreement on the company’s behalf. The bankruptcy court held that the debtor company had sufficient rights in the collateral by virtue of the owner’s permission – “an owner’s permission to use goods as collateral creates rights in the debtor sufficient to give rise to an enforceable security interest”​.

In essence, the debtor had the power to transfer rights in the collateral because the actual owner authorised it.

This principle aligns with earlier U.S. cases (e.g., In re Atchison, 832 F.2d 1236 (10th Cir. 1987)) and is entirely consistent with the PPSA approach that focuses on the substance of rights and consent rather than formal title.

Of course, if a debtor truly has no rights in an item of property – no title, no possession, no authority – then a purported security interest in that property simply cannot attach.

For example, if a company purports to grant a security interest in a piece of equipment it never owned or possessed (and without the owner’s consent), the “rights in collateral” requirement fails and the security interest is ineffective as to that equipment.

A secured party takes the risk that the debtor’s asserted rights are valid; if they are not (e.g., the debtor was a thief or the collateral description accidentally included someone else’s assets), there is no attachment, and the secured party cannot enforce that interest.

A special scenario worth noting is after-acquired property, which tests the timing of when a debtor has rights. Both UCC Article 9 and the PPSAs allow a security interest to cover property that the debtor does not yet own at the time of the agreement – so-called after-acquired property (future property).

In such cases, the security interest will attach to each item of collateral at the moment the debtor acquires rights in that item. UCC Article 9-203 and UCC Article 9-204 provide that a security agreement may provide for a security interest in after-acquired property, and except for limited cases (like certain consumer goods and commercial tort claims), this is permitted.

The Australian PPSA explicitly says in s 18(2) that a security agreement may cover after-acquired property, and s 18(3) that a security interest in after-acquired property attaches without the need for any new act of appropriation by the debtor​.

The effect is that when the debtor acquires the new item, the condition “debtor has rights in the collateral” is satisfied at that time, and if value was given and a security agreement is in place, attachment occurs automatically at that later time.

This enables floating lien arrangements (e.g., a security interest in all of a company’s present and future inventory) to operate smoothly – new inventory coming into the debtor’s hands becomes subject to the security interest instantly upon acquisition.

The PPSA even allows parties to agree to delay attachment until a later time (PPSA s 19(3))​, though in practice most security agreements want attachment as soon as possible.

In summary, the debtor’s “rights in collateral” requirement is foundational but flexible: it demands some connection between debtor and asset, but recognises possessory and conditional interests, authorised use, and future acquisitions as sufficient connections to allow a security interest to latch on.

4. The Security Agreement: Formalities and the Evidence of Creation

The final essential element for attachment is the presence of a security agreement or equivalent act that evidences the creation of the security interest in the stated collateral.

Security interests are consensual and typically arise from a contract – the security agreement – between debtor and secured party.

UCC Article 9 famously requires an authenticated security agreement with a description of the collateral (unless the secured party has taken possession or control of the collateral)​.

​In UCC 9-203(b)(3), the law sets out alternatives: the debtor must have authenticated a security agreement describing the collateral or the collateral must be in the possession of the secured party pursuant to an agreement (commonly called a pledge) or for certain intangibles like deposit accounts and investment property, the secured party must have control pursuant to agreement​.

The PPSAs in Australia and New Zealand have functionally similar requirements, though the structure in the statute differs.

Under the Australian PPSA, the distinction is made between enforceability against the grantor (which requires attachment) and enforceability against third parties, which additionally requires that the security interest be perfected or otherwise made ostensible via a writing or possession (PPSA s 20).

In substance, PPSA s 20(1) provides that a security interest is enforceable against third parties only if the collateral is attached and one of the following is true: the secured party possesses the collateral, or (for certain collateral) has control, or there is a security agreement that covers the collateral and meets the writing requirements.​

​Section 20(2) then spells out the writing requirement: the security agreement must be evidenced by writing that is signed by the grantor (or adopted/accepted by the grantor) and includes a description of the collateral.​

New Zealand’s PPSA s 36 is analogous, requiring a signed security agreement describing the collateral (or the secured party’s possession of the collateral) for the security interest to be enforceable against third parties. And, as we saw, NZ’s attachment provision s 40(1)(c) effectively incorporates that by reference, except as between the immediate parties​.

The upshot is that in all jurisdictions, a written security agreement describing the collateral (signed or authenticated by the debtor/grantor) is the usual and recommended way to create a security interest, but the law also upholds oral or unwritten agreements if the secured party takes possession of the collateral (or control, where applicable).

This flexibility accommodates traditional pledges (where handing over the collateral to the creditor serves as the evidence of the agreement) and certain modern transactions like control agreements over deposit accounts.

Despite the formal requirement of a writing or possession, courts have been pragmatic about what satisfies the “security agreement” component.

There is no requirement that the parties execute a standalone document formally entitled “Security Agreement.”

The crucial thing is that there is an agreement, evidenced in a record, that creates or provides for the security interest (per the UCC definition of “security agreement”). It may be an appropriately worded clause within a broader contract.

U.S. case law demonstrates this pragmatism. For instance, in Komas v Future Systems, Inc. (1977) 71 Cal.App.3d 809, a California court held that no magic words or separate document are necessary to create a security interest, as long as the writing, in context, reflects an intent to grant a security interest in specified collateral​.

Similarly, the Ninth Circuit in In re Amex-Protein Development Corp., 504 F.2d 1056 (9th Cir. 1974) ruling that an absolute bill of sale could be shown (by parol evidence) to have been intended as security, thereby constituting a security agreement​.

In Australia and New Zealand, one might expect similar outcomes. The PPSA’s insistence on a written record can be satisfied by piecing together documents or electronic communications, so long as they contain a description of collateral and indication that the debtor has agreed to give a security interest.

Indeed, the Acts allow that a security agreement can be a composite of documents, and a signature can be electronic or even an act of assent.

In Maiden Civil v QES [2013] NSWSC 852, while primarily about rights in collateral and priorities, also implicitly demonstrated that multiple documents (in that case, the finance arrangement, invoices, etc.) established the security arrangement between the parties.

As long as the evidence satisfies the court that an agreement exists and identifies the collateral, the formal requisite is met.

One policy reason for these formalities is to prevent disputes and fraud – a clear written record prevents a debtor from falsely claiming they never gave a security interest, and it prevents secured parties from claiming a security interest in collateral never agreed to by the debtor.

Thus, collateral must be described reasonably in the agreement.

UCC Article 9-108 and equivalent PPSA provisions require a description that reasonably identifies the collateral (generic categories like “all equipment” or “all present and after-acquired personal property” are generally acceptable under the PPSA and UCC, whereas a super-generic “all assets” is permitted under the PPSA but under UCC the phrase “all assets” is not a sufficient description in a security agreement – instead, “all assets” works in a financing statement but the security agreement needs “all personal property” or equivalent wording, which is effectively the same meaning).

For most cases, the security agreement is a straightforward document clearly enumerating the collateral and signed by the debtor, so litigation on this point is rare.

But when litigation does occur, courts in all three jurisdictions aim to uphold a security interest that the parties appear to have intended, rather than frustrate expectations on technicalities.

As a final note on this element:

Possession by the secured party, as an alternative to a written agreement, is more commonly utilised for tangible collateral like goods, negotiable instruments, or documents.

For example, a pawnshop’s pledge of a diamond ring involves the debtor handing over the ring; no written security agreement is needed because possession is clear evidence of the pledge agreement.

In the context of the PPSA, possession or control is also often relevant for perfection, but at the attachment stage it serves to dispense with a writing.

New Zealand’s PPSA s 40(1)(c) phrase “except for the purpose of enforcing rights between the parties” implies that as between debtor and secured party, they might enforce an oral pledge even without writing, but to affect third-party rights (like priority claims), writing or possession is needed​.

Practically speaking, secured parties will almost always want a written agreement and will often take the extra step of possession/control or registration for perfection, but those latter steps are beyond our current scope.

5. After-Acquired Property and Future Advances: Attachment over Time

As an extension of the creation and attachment discussion, it is important to recognise that security agreements can secure not only present obligations and present collateral, but also future obligations (future advances) and after-acquired collateral.

This means the creation of a security interest can have a dynamic quality, with attachment occurring at different times for different elements.

Both UCC Article 9 and the PPSAs expressly allow a single security agreement to cover future loans or credit and future property acquisitions by the debtor, without need for new documentation each time. UCC Article 9-204(c) states that a security agreement may provide that collateral secures future advances or other value whether or not given pursuant to commitment.

On the collateral side, Article 9-204(a) generally allows after-acquired property clauses (with the few exceptions mentioned earlier for consumer goods and tort claims).

The Australian PPSA, in s 18(1) and (4), similarly provides that a security agreement may secure obligations that arise after the security agreement is made, and that it may cover after-acquired property.​

In fact, PPSA s 18(4) explicitly says a security interest can secure the performance of an obligation that arises after the security interest is granted, making clear that future loans or contingent obligations (like guarantees that might be called upon later) can be covered.

This concept is sometimes referred to as a “dragnet clause” in U.S. parlance when all debts – present and future – of the debtor to the secured party are secured by the collateral. Courts generally uphold such clauses as long as the language of the security agreement is sufficiently clear.

From an attachment perspective, the important point is: attachment can be a continuous process, not a one-time event. Initially, when the security agreement is executed and the first value given, the interest attaches to the collateral the debtor presently has (assuming all conditions met).

Later, if the debtor acquires new collateral of a type covered by the agreement, attachment of the security interest to that item occurs at the moment the debtor acquires a right in it (and if at that time the secured party has given value – which it usually has in the form of a continuing loan or a line of credit, etc., or the original loan is still unpaid, which suffices).

Similarly, if the secured party extends new credit under the same agreement (e.g., an additional loan or an advance on a revolving line), that new value is secured by the already attached collateral; no reattachment is needed, because the security interest was already attached to the collateral, but one might say the security interest now additionally secures the new advance.

In effect, the scope of secured obligations can expand without any new attachment conditions, as long as the original security agreement contemplated future advances.

The UCC and PPSA frameworks ensure that the initially attached security interest can secure later advances without new formalities – this is crucial for commercial flexibility.

It avoids the need for lenders to constantly execute new security agreements every time a borrower draws on a credit facility. The attached security interest simply “floats” over future loans.

There is also the concept of a floating charge in older common law (where security could float over changing assets like inventory and then crystallise). Article 9 and PPSAs effectively replicate the effect of a floating charge through the combined mechanisms of after-acquired property and future advance clauses, without the old concept’s formalities.

The Australian PPSA even includes a provision to clarify terminology: PPSA s 19(4) notes that a reference in a security agreement to a “floating charge” is not to be taken as an agreement postponing attachment – i.e., simply calling something a floating charge does not delay attachment; attachment still occurs per the statute unless expressly agreed to be delayed​.

This ensures continuity with pre-PPSA practice where documents might still use floating charge language.

Therefore, the creation of a security interest via a security agreement can be thought of as laying a groundwork that allows attachment to happen initially and continue happening as new collateral or obligations come into play.

Each new item of collateral is encumbered once the debtor has rights in it and the general conditions (value, etc.) are in place, without needing a fresh security agreement.

6. Case Law Illustrations of Attachment Principles

Throughout the discussion above, we have noted various cases that exemplify the principles of creation and attachment.

It may be helpful to gather a few key illustrations in one place to reinforce how the law operates in practice across jurisdictions:

6.1 In re Rudick (Bankr. N.D. Okla. 2022): United States

Demonstrates the “rights in collateral” concept where the debtor did not have title to the collateral. The bankruptcy court found attachment because the actual owner consented to the collateral being used.

The case affirms that Article 9’s requirement of debtor’s rights can be satisfied by permission giving the debtor the power to transfer rights. It also confirms that the three requirements of UCC 9-203 (value, rights, security agreement) must be met and were met in that scenario​.

6.2 Tough Company Inc. v. Wurlitzer (California Ct. App. 2014): United States

It is described in a 2014 appellate decision where a seller reclaimed equipment due to nonpayment and the buyer challenged the security interest for lack of a formal agreement.

The court implied a security agreement from the context, citing that no magic words are needed to create a security interest. This shows the courts’ willingness to look at the substance of documents (invoices, bills of sale) to find the creation of a security interest.

It ruled on the importance of collateral description and the intent to secure payment, even absent a single document labeled “security agreement”.

6.3 Maiden Civil v QES [2013] NSWSC 852: Australia

One of the first major Australian PPSA cases, it exemplifies both the broad scope of security interests and the attachment requirements.

QES’s interest was a PPS lease (lessor’s interest deemed a security interest) which it failed to register (hence unperfected). Maiden (the lessee) gave a general security interest to Fast Financial over all its assets.

The court held Maiden’s security interest attached to the leased vehicles because Maiden had sufficient rights by possessing them, per PPSA §19(5)​. Fast Financial’s security interest thereby attached and (being perfected) had priority over QES’s unperfected interest​.

This case illustrates how attachment can occur even when the debtor is not owner, and shows the functional equality of title-based and non-title-based security interests under the PPSA.

It also demonstrates the danger for a retention-of-title holder who doesn’t perfect – though we won’t digress into perfection, the case outcome (QES’s interest vested in the debtor upon insolvency because it wasn’t perfected) flows from the fact that attachment had occurred for both interests (QES’s upon supplying and Maiden’s upon taking possession) putting them in competition.

6.4 Waller v New Zealand Bloodstock [2006] NZCA 333: New Zealand

In this case (on appeal from the High Court decision by Rodney Hansen J that we quoted earlier), the New Zealand Court of Appeal dealt with a Romalpa clause (retention of title) in the context of PPSA.

A racehorse was leased/sold under a conditional arrangement (the seller retained title until full payment). The buyer went insolvent after sub-leasing the horse.

The court treated the seller’s interest as a security interest under the PPSA, and because the seller had not perfected it, the financier’s perfected security interest won.

The attachment point was straightforward: the debtor had rights in the horse (possessory and use rights) and the seller had given value (allowing deferred payment), so the seller’s security interest attached under s 40 New Zealand PPSA; likewise the debtor’s grant of a security interest to the financier attached when the debtor got the horse.

Waller reinforces that even ownership-retention arrangements are subject to attachment and perfection rules of the PPSA, just like any other security interest.

6.5 JS Brooksbank & Co Ltd v EXFTX Ltd [2009] 2 NZLR 740: New Zealand

This case is sometimes discussed for the proposition that a security interest will not attach if the parties did not intend a security arrangement at all. It involved a supplier mistakenly delivering wool to a buyer without payment, under a misunderstanding.

The court held no security interest was created because the arrangement was not intended to secure an obligation (it was supposed to be an outright sale that went awry).

This serves as a reminder that the transaction must in substance secure payment or performance (per the definition of security interest). If it doesn’t, Article 9/PPSA doesn’t apply, and thus no attachment analysis is needed.

In Brooksbank, since no security interest existed, the supplier could reclaim its wool outside of PPSA because the PPSA only deals with consensual security interests.

Thus, one might say the “attachment” failed at the very first conceptual hurdle: there was no security interest to attach because it wasn’t a secured transaction in substance.

These cases collectively show the law of attachment in action, confirming the consistency across jurisdictions. They highlight that when disputes arise, it is often about whether the factual elements for attachment were present: Was there an agreement that can count as a security agreement? Did the debtor actually have rights in the collateral or did someone else? Was value given? Once those questions are resolved, the legal conclusion on attachment follows readily from the principles in UCC Article 9-203.

7. Conclusion

The creation and attachment of security interests in personal property under U.S. and Australasian law rest on a common bedrock of principles.

Through UCC Article 9 and the PPSAs of Australia and New Zealand, we see a harmonised approach that emphasises the substance of secured transactions: any arrangement that in effect secures an obligation with personal property can create a security interest, and that interest attaches (becomes legally enforceable) only when the key conditions of value, rights in collateral, and a security agreement or equivalent act are satisfied.

Attachment is a key moment, marking the transition from a mere contractual promise to a proprietary interest in the collateral.

By requiring attachment for enforceability​, the law protects debtors (ensuring no security interest can encumber their property unless they indeed granted it in a legally cognisable way) and provides clear rules for secured parties (who can know that once they have given value, ensured the debtor’s rights, and gotten a signed security agreement or possession, they have an enforceable interest).

Although we did not delve into perfection or priority in this article, it bears noting that attachment is the foundation upon which those subsequent steps build.

A security interest must attach before it can be perfected, and only attached (enforceable) security interests compete in priority contests. Thus, attachment is the first and most fundamental step in any secured transaction.

The U.S., Australia, and New Zealand, through incremental improvements in Article 9 and PPSA legislation, have created systems that largely eliminate archaic formal distinctions and focus on practical commercial realities – ensuring that the law of security interests facilitates commerce while maintaining fairness and clarity.