Personal Property Securities Reform
Melissa Tracey-Patte
Principal Legal Officer
Personal Property Securities Branch
Attorney-General’s Department
29 September 2011
Presentation overview
• Basic elements of the PPS
regime
• Definitions and terminology
• Transitional security
interests
• Data migration
• PPS Register
Current PPS laws in Australia
Liens On Crops Of Sugar Cane Act 1931 (Qld)
Major Sports Facilities Act 2001 (Qld)
Circuit Layouts Act 1989 (Cth)
Manufactured Homes (Residential Parks) Act 2003
(Qld)
Motor Vehicles and Boats Securities Act 1986
Partnership Act 1891 (Qld)
Police Powers and Responsibilities Act 2000 (Qld)
Property Agents and Motor Dealers Act 2000 (Qld)
Property Law Act 1974 (Qld)
Sale Of Goods Act 1896 (Qld)
Second-Hand Dealers and Pawnbrokers Act 2003
(Qld)
Storage Liens Act 1973 (Qld)
Transport Operations (Road Use Management) Act
1995 (Qld)
Bills Of Sale Act 1886 (SA)
Consumer Credit (South Australia) Act 1995 (SA)
Co-operatives Act 1997 (SA)
Criminal Law (Clamping, Impounding and Forteiture
of Vehicles) Act 2002 (Vic)
Natural Resources Management (Water
Management and Other Matters) Amendment
Act 2007 (SA)
Partnership Act 1891 (SA)
Second-Hand Vehicle Dealers Act 1995 (SA)
South Australian Meat Corporation Act 1936 (SA)
) Stock Mortgages And Wool Liens Act 1924 (SA)
Unclaimed Goods Act 1987 (SA)
Plant Breeders’ Rights Act 1994 (Cth)
Workers’ Liens Act 1893 (SA)
Commercial Arbitration Act 1984 (Vic)
Consumer Credit (Victoria) Act 1995 (Vic)
Warehouse Liens Act 1990 (SA)
Bills Of Sale Act 1899 (WA)
Bulk Handling Act 1967 (WA)
Consumer Affairs Act 1971 (WA)
Consumer Credit (Western Australia) Act 1996
Cooperative and Provident Societies Act 1903 (WA)
Chattel Securities Act 1987 (WA)
Disposal of Uncollected Goods Act 1970 (WA)
Hire Purchase Act 1959 (WA)
Motor Vehicles Dealers Act 1973 (WA)
Partnership Act 1895 (WA)
Pawnbrokers and Secod-Hand Dealers Act 1994 (WA)
Property Law Act 1969 (WA)
Road Traffic Act 1974 (WA)
Goods Act 1958 (Vic)
Goods Securities Act 1986 (SA)
Sale Of Goods Act 1895 (WA)
Settlement Agents Act 1981 (WA)
Trustees Act 1962 (WA)
Warehousemans’ Liens Act 1952 (WA)
Bills Of Sale Act 1900 (Tas)
Current PPS laws in Australia
Building Act 2000 (Tas)
Consumer Credit (Tasmania) Act 1996
Cooperatives Act 1999 (Tas)
Disposal Of Uncollected Goods Goods Act 1968
(Tas)
Factors Act 1891 (Tas)
Homes Act 1935 (Tas)
Motor Vehicle Securities Act 1984 (Tas)
Building and Construction Industry Security of
Payments Act 1999 (NSW)
Payments Act 1999 (NSW)
Tribunal Act 1998 (Vic)
Warehousemens’ Liens Act 1958 (Vic)
Agricultural Chemicals Distribution Patents Act
1990 (Cth)
Credit Act 1984 (NSW)
Consumer Credit (New South Wales) Act 1995
(NSW)
Duties Act 2000 (Vic)
Fair Trading Act 1999 (Vic)
Fisheries Act 1995 (Vic)
Conversion of Securities Adjustment Act 1931
(NSW)
Conveyancing Act 1919 (NSW)
Duties Act 1997 (NSW)
Factors (Mercantile Agents) Act 1923 (NSW)
Partnership Act 1892 (NSW)
) Payments Act 2002 (Vic)
Chattel Securities Act 1987 (Vic)
Pawnbrokers And Second-Hand Dealers Act 1996 (NSW)
Petroleum (Onshore) Act (NSW)
Building And Construction Industry Security Of Credit Act 1984 (Vic)
Sale Of Goods Act 1895 (SA)
Second-Hand Dealers and Pawnbrokers Act 1996 (SA)
Co-operatives Act 1996 (Vic)
Fines Act 1996 (NSW)
Impounding Act 1993 (NSW)
Confiscation Act 1997 (Vic)
Disposal Of Uncollected Goods Act 1961 (Vic)
Domestic (Refal and Nuisance) Animals Act 1994 (Vic)
Co-operatives Act 1992 (NSW)
Co-operatives Housing and Starr-Bowkett Societies Act 1998 (NSW)
Forestry Rights Act 1996 (Vic)
Legal Practitioners Act 1968 (SA)
Finance Brokers Control Act 1975 (WA)
Fines, Penalties and Infringement Notices
Partnership Act 1891 (Tas)
Penalty Unites and Other Penalties Act 1987
Motor Car Traders Act 1986 (Vic)
Partnership Act 1958 (Vic)
Property Law Act 1958 (Vic)
Road Safety Act 1986 (Vic)
Sale of Goods (Vienna Convention) Act 1987 (Vic)
Second-Hand Dealers and Pawnbrokers Act 1989 (Vic)
Current PPS laws in Australia
Transport Act 1983 (Vic)
Trustee Act 1958 (Vic)
Designs Act 2003 (Cth)
Victorian Civil and Administration
Control Act 1966 (Qld)
Bills of Sale and Other Instruments Act 1955 (Qld)
Legal Aid Commission Act 1979 (NSW)
Mining Act 1992 (NSW)
Offshore Minerals Act 1999 (NSW)
Warehousemans’ Liens Act 1935 (NSW)
Water Management Act 2000 (NSW)
Cooperatives Act 1997 (QLD)
Credit (Rural Finance) Act 1996 (Qld)
Pharmacy Practice Act 2006 (NSW)
Sale Of Goods Act 1896 (Tas)
Second-Hand Dealers and Pawnbrokers Act 1994
(Tas)
Corporations Act 2001 (Cth)
Consumer Credit Act 1995 (ACT)
Cooperatives Act 2002 (ACT)
Credit Act 1985 (ACT)
Instruments Act 1933 (ACT)
Hemp Fibre Industry Facilitation Act 2004 (ACT)
Pawnbrokers Act 1902 (ACT)
Conversion Act 1921 (Cth)
Loans Securities Act 1919 (Cth)
Public Trustee Act 1985 (ACT)
Road Traffic Act (NT)
Uncollected Goods Act 2004 (NT)
Offshore Petroleum Act 2006 (Cth)
Shipping Registration Act 1981 (Cth)
Warehouseman's Liens Regulations 2007
Chattel Securities Regulations 1997
Copyrights Act 1968 (Cth)
Co-operatives Regulations 1997
Instruments (Fees) Regulations
Bills of Sale (Fees) Regulations 1995
Bills of Sale (Requirements as to Instruments) Regulations 1995
Co-operatives Regulations 1997
Public Trustee Act 1941 (WA)
Rights in Water and Irrigation act 1914(WA)
Goods Securities Regulations 1997
Registration Of Interests In Motor Vehicles And Other Goods Act 1983
(NT)
Sale Of Goods Act 1972 (NT)
Cooperatives Regulationsa 2003
Co-operatives Regulations and Admiralty Act 1988 (Cth)
Trade Marks Act 2995 (Cth)
Air Navigation Act 1920 (Cth)
Australian Industry Development Corporation Act 1970 (Cth)
Commonwealth Inscribed Stock Act 1911 (Cth)
Mercantile Law Act 1962 (ACT)
Partnership Act 1963 (ACT)
Fisheries Management Act 1991 (Cth)
Current PPS laws in Australia
Loans Securities Redemption and
Offshore Minerals Act 1994 (Cth)
Warehousemen's Liens Act (NT)
Motor Dealers Regulations
Taxation Administration Act 1953 (Cth)
Treasury Bills Act 1914 (Cth)
Wool International Act 1993 (Cth)
Traffic Act (NT)
Bills of Sale (Fees) Regulations 1983
Current PPS registers in Australia
The Register (Chattel Securities Act 1987 (WA))
Register of Patents (Cth)
Register of Co-operative Charges (NSW)
Register of Encumbered Vehicles (REVS) (NSW)
State Offshore Mining Register (NSW)
Australian Register of Ships (Cth)
Register of Designs (Cth)
The Register (Motor Vehicle Securities Act 1984
(Tas))
Register (Bills Of Sale Act 1886 (SA))
Register of Co-operative Charges (SA)
The Register (Goods Securities Act 1986 (SA))
The Register (Liens On Fruit Act 1923 (SA))
Registry Book (Bills Of Sale Act 1899 (WA))
Register of Cooperative Charges (Tas)
Register of Trade Marks (Cth)
Register of Co-operative Charges (Vic)
Register of Cooperative Charges (ACT)
The Register (Bills Of Sale Act 1900 (Tas))
Register of Co-operative Charges (NT)
Fisheries Act (Vic)
Registrar-General to collate (Instruments Act 1933
(ACT))
Land Titles Registry and General Registration
Office (NT)
Register of Charges for Co-operative housing
bodies (NSW)
Register of Plant Breeder’s Rights (Cth)
The Register (Stock, Wool And Crop Mortgages Act 1930 (Tas))
Register of legal and equitable interests in petroleum titles (NSW)
General Register of Deeds (Registration of Deeds Act 1957 (ACT))
Register under Registration of Interests in Goods Act 1986 (NSW)
Australian Register of Company Charges (Cth)
Register of Interests in Motor Vehicles and Other Goods (NT)
Register of Liens (Liens on Crops of Sugar Cane Act 1931 (Qld))
Vehicle Securities Register (Chattel Securities Act 1987 (Vic))
Register of mortgages of mineral development licences (Vic)
Register of Security Interests (Bills of Sale and Other Instruments Act
1955 (Qld))
Register of Liens on Crops, Register of Liens on Wool and Mortgages of
Stock (Vic)
Register of legal and equitable interests in exploration licences,
assessment leases and mining leases (NSW)
Register of Security Interests (Motor Vehicles and Boats Securities Act
1986 (Qld))
Register of authorisations (Fish Resources Management Act 1994 (WA))
General Register of Deeds (Security Interests in Goods Act 2005 (NSW))
The case for reform
• Existing PPS arrangements are too
complex
• PPS law and practice vary according to:
– Location of the collateral
– Nature of the collateral
– Whether the Grantor is a company or individual
– Legal form of the transaction
• charge, pledge, mortgage
Objectives of PPS reform
• Increase certainty
• Increase consistency
• Reduce complexity
• Reduce costs
Functional approach to reform
Treat like transactions alike
Single Commonwealth PPS Act
Repeal Commonwealth, State & Territory PPS laws
Single national online PPS register
Closure of Commonwealth, State and Territory PPS
registers
Functional approach to reform
The PPS Act treats security interests
differently:
– only when there are compelling policy
reasons to do so
– not just because the law has developed
in an ad hoc manner
Functional approach to reform
‘Security interest’ (s. 12(1))
‘… an interest in relation to personal property
provided for by a transaction that, in substance,
secures payment or performance of an
obligation (without regard to the form of the
transaction or the identity of the person who
has title to the property)…’
Functional approach to reform
Deemed security interest
A title holder is deemed to be a secured party in certain
circumstances by s.12(3)
– interest of a consignor under a commercial consignment;
– interest of a transferee of accounts; and
– interest of a lessor or bailor under a PPS lease or
bailment.
Some key terms
•
•
•
•
•
•
Grantor
Secured party
Personal property
Security interest
Collateral
Perfection
Changes to current financing
arrangements
Fixed and floating charges
• Abandon idea that charge floats over property and later
crystallise
• Charge will attach to property as per terms of
agreement
• Company charges registrable on PPS Register (not
ASIC)
• Failure to register can lead to a loss of:
(i)
priority
(ii)
charge on transfer of collateral
(iii) charge on grantor’s insolvency
Changes to current financing
arrangements
Retention of title arrangements
• Suppliers under retention of title arrangements will no
longer be able to rely solely on their title – including in
insolvency
• Will be a security interest under PPS Act
• To preserve their priority, title holders must register their
interest on PPS Register (generally one registration for
series of transactions)
• If registered in accordance with the PPS Act, suppliers
maintain current position
Changes to current financing
arrangements
Long term leases and finance leases
• PPS Act treats leases as security interests where:
• Lease for term > 12 months
• Lease over serial numbered goods >= 90 days
• Finance leases
• Lessors of PPS leases should therefore register to
protect their interest on the PPS Register
A new kind of security interest
‘Purchase money security interest’ (PMSI)
• A PMSI can provide a ‘super priority’ to a
secured party when the security interest:
– secures purchase price due to seller (ROT)
– secures finance enabling purchase
– arises under a PPS lease (lease > 12
months or 90 days for cars and watercraft)
(s13)
– is the result of a commercial consignment
Attachment and perfection
• Attachment
– Grantor has rights in the collateral
– Value is given
• Perfection
– Attachment, Enforceability against 3rd
parties and one of
• Registration
• Possession
• Control
Default priority rules
The following
security interest...
has priority over...
because of...
Perfected security
interest
Unperfected security
interest
Subsection 55(3)
Perfected by control
Perfected by other
means
Section 57
Perfected by control
(first in time)
Perfected by control
(later in time)
Subsections 55(4) and
(5)
Unperfected
(attached first)
Unperfected
(attached later)
Subsection 55(2)
PPS Register
• Register of all security interests in all types of
personal property
• Continuously available
• Low cost under strict cost recovery rules
• A consultation draft of the PPSR’s Cost
Recovery Impact Statement shows a search fee
of $3.70 and a registration fee of $7.40 (for
registration up to 7 years)
PPS Register
Serial-numbered goods
• Registrations will be made against the property
of a grantor or by serial number
• Serial numbers that can be used as the basis for
a registration are listed in the PPS Regulations
(Part 2 of Schedule 1)
• Includes motor vehicles, boats, aeroplanes and
intellectual property
PPS Register
What number to use?
• The PPS Regulations set out the serial number
that should be used
• An extract of regulation 2.2(3)(c), providing the
rules for motor vehicles, is shown on the next
slide
• It is important to note that details for migrated
registrations on the PPSR will be as they appear
on the donor register
PPS Register
(2) ...a description of collateral by serisl number must include
the following information: ...
(c) for a motor vehicle:
(i)
the vehicle identification number; or
(ii)
if it has no vehicle identification
number but has a chassis number –
the
chassis number; or
(iii)
if it has no vehicle identification
number or chassis number – the
manufacturer’s number
PPS Register
Vehicle information
• It is intended that whenever a vehicle is searched for or
registered on the PPS Register, vehicle information will
be provided from NEVDIS
• Vehicle information includes:
make, model, colour, type (body/vehicle), year of
manufacture, month/year of compliance, engine number,
registration plate number, registration expiry date, writeoff details, stolen notifications
PPS and consumer lending
•
The PPS Act does not apply to the security interests of
pawn brokers where the collateral and the security
interest are less than $5000 in value and the collateral
cannot be registered by serial number
•
The PPS Act does not change the need to comply with
consumer credit laws
PPS and consumer lending
•
For collateral used predominantly for personal domestic
and household purposes:
–
–
–
PMSIs are unvailable except for property that can be registered by
serial number
There are obligations on the secured party to remove defunct
registrations within 5 days. A failure to remove a registration can
lead to liability for damages under the PPS Act
There are constraints on the enforcement options that are available
PPS and consumer lending
•
Security interests in personal property worth less than
$5000 and bought predominantly for non-commercial
purposes will not be enforceable against the purchaser
(the ‘garage sale’ rule for taking free)
•
However, this does not apply to collateral that can be
registered by serial number including motor vehicles and
boats
Transitional security interests
• Pre-existing security interests not currently
registrable or not being migrated – transitional
security interest
• If migrated from a ‘transitional register’ –
migrated security interest
Data migration
• Migration of data from existing registers
• Registrations that provide a priority to a secured
party’s interest will be migrated unless the
relevant property has been specifically excluded
from the reforms
• Some registers, including REVS registers, will
be closed down at registration commencement
time
Questions?
More information
• www.ppsr.gov.au
• enquiries@ppsr.gov.au