Personal Property Securities Act 2009 Cth Practical implications
- Slides: 47
Personal Property Securities Act 2009 (Cth) Practical implications and what you need to know! Petrina Macpherson – Senior Associate 28 May 2011
Personal Property Securities Act 2009 § The Personal Property Securities Bill 2009 and the Personal Property Securities (Consequential Amendments) Bill 2009 were passed by both Houses of Parliament on 26 November 2009 § The PPS Act will apply after the registration commencement time which was expected to be May 2011 § In February 2011 COAG determined that the commencement date be deferred to October 2011 2 11950375_1
Personal Property Securities Act 2009 § Aim of the legislation is: 4 to bring an end to the inconsistent and duplicate laws and registers which presently govern personal securities law in the various Australian jurisdictions § It will replace 70 Commonwealth and State Acts, administered by 30 government agencies 3 11950375_1
Objectives of PPS Reform § Increase certainty in insolvency and for holders of competing security interests § Increase consistency with consistent and comprehensive legislation § Reduce complexity with simpler registration procedures § Reduce costs with security interests being identified on one site § Alignment with overseas developments in this area (NZ, Canada and US) 4 11950375_1
PPS Register § Up to 30 existing federal and state registers will be migrated to the PPS Register, including: 4 ASIC register of company charges 4 co-operatives register of charges 4 bills of sale 4 motor vehicle securities 4 ship mortgages 4 crop liens 4 stock liens 4 register of trade marks 5 11950375_1
PPS Register § Notices are currently being sent out to ensure only current securities are migrated § Once migrated a verification certificate will be sent to the grantor and grantee of the security interest 6 11950375_1
PPS Register § On the PPS register, the end time for the security must be defined, in particular 4 goods used by consumers - security can’t be for more than 7 years (but can be renewed) 4 motor vehicles - security can’t be for more than 7 years (but can be renewed) 4 BUT no stated end time needed for company charges § Will be wholly electronic § Accessible 24/7 7 11950375_1
PPS Register Key differences to current position - § Operates on the basis of notice rather than document registration § Registration is by ‘financing statement’ § Notice can be registered before any secured transaction takes place § One registration can cover multiple security interests 8 11950375_1
Registration § Not mandatory to register security interests § No time limit for registering § PMSIs to be registered within 15 days § However failure to register/perfect will have consequences for enforcement and priority 9 11950375_1
Searching register § PPS Register can be searched by 4 grantor details 4 property details (if there is a serial number on the particular property) § PPS register will be maintained by ITSA § Existing registers will be migrated and verified 10 11950375_1
Access to register § Unlike current company charges - copies of the security documents are not included in the register § Information is included via the financing statement § Interested persons will be able to receive a copy of the security agreements from the grantor within 10 business days of a request being made 11 11950375_1
Access to register § Only authorised users can access the register e. g. credit providers and current and potential security holders § To protect privacy there will be no general public access except for authorised purpose – but may be difficult to police 12 11950375_1
What is Personal Property § Personal Property means property (including a licence) including: 4 tangible items such as cars, boats, aircraft, livestock, crops and minerals that have been extracted in any form 4 intangible items such as intellectual property and contract rights, designs, patents, plant breeders rights and trademarks 4 financial property such as currency, a document of title, investment instruments and negotiable instruments. 4 investment entitlements (e. g. stockbroker accounts) 13 11950375_1
Personal Property § It specifically excludes 4 land 4 fixtures 4 water rights 4 a right, entitlement or authority (including access entitlements) that is § granted by or under a law of the Commonwealth, a State or Territory § declared by that law not to be personal property for the purposes of the Act 14 11950375_1
What is personal property security § Three elements 4 an interest in relation to personal property 4 provided for by a transaction 4 that, in substance, secures payment or performance of an obligation § This is regardless of the form of the transaction or the identity of the person who has title to the property 15 11950375_1
Security interests – examples § Charges that secure obligations - no distinction between fixed and floating charges § Retention of title arrangements § Chattel mortgages § Lease of goods § Hire purchase agreements § Consignment 16 11950375_1
Form of documentation § There is no prescribed form of security agreement: 4 General security agreement 4 Specific security agreement § All security is effectively ‘fixed’ - parties need to agree terms of security arrangements § Parties to determine when the property can be disposed of by the grantor § PPSA determines how current fixed and floating securities are dealt with in future 17 11950375_1
Entities covered § PPSA applies to security interests granted by 4 corporations 4 partnerships 4 managed investment schemes 4 registrable and non registrable legal entities 4 individuals 18 11950375_1
Creating a security interest § Step 1 – entering into a transaction § Step 2 – attachment of the security interest to the personal property (enforceable against the grantor) § Step 3 – possession, control or written security agreement (enforceable against third parties) § Step 4 – perfecting the security interest 19 11950375_1
Attachment § A security interest attaches to personal property when § The grantor has rights in the collateral* that are transferrable to the secured party and § The secured party gives value in return for the security interest § *Collateral is the personal property to which a security interest is attached 20 11950375_1
Attachment § For an attached security interest to be enforceable against third parties, section 20 of the PPSA requires that either 4 the collateral is in the possession of the secured party 4 the collateral has been perfected by control or 4 the grantor and the secured party have entered into a valid written security agreement § PPSA contemplates that security agreements can be entered into electronically 21 11950375_1
Perfection § Perfection is required to obtain priority over another security interest, or survive a dealing in the same collateral § The main methods of ‘perfection’ are (section 21) 4 taking control of collateral that is controllable property (e. g. bank accounts, investments) 4 registering a security interest in the collateral 4 taking possession of the collateral or 4 temporarily perfecting a security interest in the collateral 22 11950375_1
Control § Controllable property is defined as 4 an investment instrument 4 an ADI account (e. g. bank account) 4 investment entitlements 4 investment instruments (e. g. shares) 4 letters of credit 4 negotiable instruments not evidenced by a certificate (e. g. bills of exchange) 23 11950375_1
Priority § A perfected security interest will have priority over an unperfected security interest – section 55(3) 4 example § ABC Cranes Pty Ltd (ABC) grants a security interest in one of its cranes to Bendigo Bank § ABC later grants a security interest in the same crane to NAB § NAB registers the crane on the PPS register, Bendigo Bank does not § the security interest held by NAB will have a higher priority 24 11950375_1
Priority § A security interest perfected by control (of controllable property) will have priority over a security interest perfected by any other means – section 57(1) 4 Example (investment instrument) § Bob borrows $20, 000 from ANZ to invest in a pizza oven and grants ANZ a security interest in shares issued by Macquarie § ANZ perfects its security interest by registering the shares on the PPS register § Bob later borrows another $25, 000 from Westpac and grants Westpac a security interest in the same shares issued by Macquarie 25 11950375_1
Priority § Westpac perfects its security interest by taking control of the shares § Westpac’s security interest would have priority over ANZ’s interest because Westpac has perfected its interest through control, while ANZ has perfected only by registration § Where competing security interests are both perfected by control, priority is determined by the order in which the secured parties took control of the collateral – section 57(2) 26 11950375_1
Priority § Priority between security interests perfected by means other than control is also determined by the first in time principle – section 55(4) 4 it is necessary to determine the priority time 4 the priority time will not necessarily be when the security interest was perfected 27 11950375_1
Priority time § Providing a security interest is continuously perfected, the priority time will be the earliest of 4 registration on the PPS register 4 possession of the collateral 4 when the interest is temporarily perfected by force of the PPS Act 28 11950375_1
Priority § Priority between unperfected security interests is determined by the order of attachment of the security interest – section 55(2) 29 11950375_1
Exceptions to the general priority rules § Purchase money security interests (PMSI) 4 PMSI is essentially where the secured party has provided finance or given value required by the grantor to acquire the collateral, (e. g. vendor finance) 4 PMSIs have ‘super-priority’ over the same collateral (which has been granted by the same grantor) which has been perfected by registration or possession 4 however, a security interest which has been perfected by control has priority over a PMSI 30 11950375_1
New Zealand Cases § Graham and Portacom New Zealand Limited (the Portaloo case) § Waller and Ors v New Zealand Bloodstock Limited and Anor 31 11950375_1
Graham and Portacom New Zealand Limited (the Portaloo case) § NDG leased five Portaloos from Portacom § NDG gave a security interest over all of its property in favour of HSBC to secure a loan § When the NZ PPS Act came into force in 2002, HSBC registered its interest on the PPS register, but Portacom did not § NDG went into default, a Receiver was appointed and took possession of ALL assets under the security agreement 32 11950375_1
Graham and Portacom New Zealand Limited (the Portaloo case) § Despite retention of legal ownership, Portacom’s unregistered title was deemed subordinate to that of NDG § Receiver sold off the Portaloos 33 11950375_1
Waller and Ors v New Zealand Bloodstock Limited and Anor § Glenmorgan Farm Limited gave a general security over all of its property in favour of SH Lock Ltd. § SH Lock registered its interest on the PPS register when it came into existence § NZ Bloodstock Ltd leased a racehorse to Glenmorgan, retained the legal ownership but did not register its interest on the PPS register 34 11950375_1
Waller and Ors v New Zealand Bloodstock Limited and Anor § Glenmorgan defaulted under the lease, NZ Bloodstock terminated the lease and repossessed the horse § Glenmorgan then defaulted under its finance agreement with SH Lock and a receiver was appointed § The receiver asserted the right under the PPS Act to take possession of and sell the horse in priority of the claim of NZ Bloodstock 35 11950375_1
Waller and Ors v New Zealand Bloodstock Limited and Anor § Court was required to determine the priority of competing security interests held over a race horse. § In the end, the perfected security interest (SH Lock’s interest) took priority over the unperfected security interest of NZ Bloodstock § Even though NZ bloodstock had retaken possession that was not sufficient to defeat SH Lock’s claim 36 11950375_1
Enforcement and remedies § Chapter 4 PPSA governs the enforcement of security interests § Any secured party regardless of priority ranking, may enforce its interest § Secured parties are not required to obtain judgment prior to enforcement § The PPSA is not a code and will be able to be used in conjunction with other rights and remedies available 37 11950375_1
Important rules regarding enforcement § A general standard of honesty and commercial reasonableness is to apply to enforcement actions § Parties can contract out of enforcement provisions (depending on use of collateral) § May use land law to enforce security interest in some circumstances § May seize liquid assets from third party 38 11950375_1
Seizure of collateral § Secured party may seize collateral by any lawful method § Higher ranking priority holders may seize collateral from lower ranking priority holders § Higher ranking priority holder must pay enforcement costs of lower ranking priority holder where lower ranking priority holder initially seized the collateral 39 11950375_1
Disposal of collateral § Three methods of disposing of collateral 4 sale to a third party 4 sale where the collateral is purchased by the enforcing secured party 4 lease or license to a third party § Must obtain market value for collateral or best price reasonable – same duty required as a controller under Corporations Act 2001 40 11950375_1
Retaining collateral § Secured party may retain collateral if it is not predominantly used for a personal, domestic or household purpose § Retention of seized collateral is not an absolute right § The grantor and other interest holders may object – in which case collateral must be sold 41 11950375_1
Rules after enforcement § Proceeds must be distributed in accordance with the provisions in section 140 PPSA § Statement of account must be provided within 20 business days of a request to do so 42 11950375_1
Redemption and reinstatement § There is a right of redemption available to the debtor, the grantor and higher ranking secured creditors. § Redeemer must pay the amount required to discharge the obligation § Reinstatement is allowed prior to the exercise of enforcement. Achieved by paying amount of arrears and any enforcement costs. § A security agreement can only be reinstated once 43 11950375_1
Transitional provisions § It is hoped that the transitional provisions in the PPSA will remove the risk of a Portacom or NZ Bloodstock situation occurring in Australia § Any existing security interest that is not migrated to the PPS register after commencement of the Act will be deemed ‘temporarily perfected’. § Applies for the period starting immediately before the registration commencement time and ending on the earlier of 4 the time when the security interest ceased to be continuously perfected otherwise than by temporary perfection 4 the end of the month that is 24 months after the registration commencement time 44 11950375_1
Transitional provisions § After the 24 month transitional period ends, the priorities will be determined under the substantive provisions of the legislation 45 11950375_1
Preparing for the storm § You should be taking the following action: 4 increasing knowledge of the concepts and timeframes involved across your firm 4 considering the consequences of non compliance for clients 4 informing clients of the implications of the PPS reform on any ongoing securities that they hold 4 updating your precedents to incorporate the new concepts 46 11950375_1
Contact details Presenter: Petrina Macpherson Position: Senior Associate Direct line: 07 3233 8551 Email: 47 11950375_1 pmacpherson@mccullough. com. au
- Kata majmuk tetapi
- Copy resep did
- Rcfce act in odisha
- Features of rte
- Coroners and justice act
- Eastbourne coroners office
- Tax agents services act 2009
- Macbeth act 2 summary
- Commutative and associative properties
- Obstructed heritage in hindu law
- Chemical property of water
- Database approach
- Constructivist approach to language learning
- Implications table
- Nursing implications for synthroid
- Father of personal identification?
- How audience negotiate meaning in mil
- Marketing implications
- Tautological implication
- Mathmatical proposition
- Philosophies of education
- Marketing implications
- Nursing implications
- Educational implications examples
- Legal implications of social media
- Implications of nativist theory
- Language
- Implikasi etis
- Learning curve in physical education
- Multiverse (entangled)
- Social implications of computers
- Legal implications of nursing documentation
- Ranexa nursing implications
- Glargine nursing implications
- Classical conditioning theory
- Discussion and implications
- Implications of vygotsky's sociocultural theory
- Medical implications of developmental biology
- What is legal implications
- Epistemology of existentialism
- Trends and issues in nursing
- Chronotropic
- Legal dimensions of nursing practice
- Future implications definition
- Benzonatate nursing implications
- Antifungal mechanism of action
- Defense personal property system
- Joint personal property shipping office