Understanding Legal Jurisdictions and Overlaps in Australia
Explore the complexities of legal frameworks in Australia regarding inconsistencies and overlaps between Federal, State, and common laws. Delve into the identification of grantors and debtors, as well as the types of collateral involved in transactions across different locations. This comprehensive overview sheds light on the intricate legal landscape governing various aspects of commercial activities in Australia.
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A NEW WORLD: PPSA IN AUSTRALIA David Brown, University of Adelaide
BACKGROUND/CONTEXT Federal, State and common law inconsistency and overlap within/ between jurisdictions Form-based Identity of grantor/debtor Location Type of collateral
Li e ns O n C r ops O f S uga r C a ne Ac t 1 9 3 1 ( Q l d ) M a j or S por t s Fa c i l i t i e s Ac t 2 0 0 1 ( Q l d ) C i r c ui t La yo u t s Ac t 1 9 8 9 ( C t h ) M a nuf a c t u r e d H om e s ( R e s i d e n t i a l P a r k s ) Ac t 2 0 0 3 ( Q l d ) M ot or V e hi c l e s a nd B oa t s S e c ur i t i e s Ac t 1 9 8 6 P a r t ne r s h i p Ac t 1 8 9 1 ( Q l d ) P ol i c e P ow e r s a nd R e s pons i b i l i t i e s Ac t 2 0 0 0 ( Q l d ) P r ope r t y Age nt s a nd M ot or D e a l e r s Ac t 2 0 0 0 ( Q l d ) P r ope r t y La w Ac t 1 9 7 4 ( Q l d ) S a l e O f G oods Ac t 1 8 9 6 ( Q l d ) S e c ond - H a nd D e a l e r s a nd P a w nbr o k e r s Ac t 2 0 0 3 ( Q l d ) S t or a ge Li e ns Ac t 1 9 7 3 ( Q l d ) Tr a ns p or t O pe r a t i o n s ( R oa d U s e M a na ge m e n t ) Ac t 1 9 9 5 ( Q l d ) B i l l s O f S a l e Ac t 1 8 8 6 ( S A) C ons um e r C r e di t ( S out h Aus t r a l i a ) Ac t 1 9 9 5 ( S A) C o - ope r a t i v e s Ac t 1 9 9 7 ( S A) C r i m i na l La w ( C l a m p i n g , I m poun d i n g a nd For t e i t ur e of V e hi c l e s ) Ac t 2 0 0 2 ( V i c ) N a t ur a l R e s our c e s M a na ge m e n t ( W a t e r M a na ge m e n t a nd O t he r M a t t e r s ) Am e ndm e n t Ac t 2 0 0 7 ( S A) P a r t ne r s h i p Ac t 1 8 9 1 ( S A) S e c ond - H a nd V e hi c l e D e a l e r s Ac t 1 9 9 5 ( S A) S out h Aus t r a l i a n M e a t C or por a t i o n Ac t 1 9 3 6 ( S A) S t oc k M or t ga ge s And W ool Li e ns Ac t 1 9 2 4 ( S A) U nc l a i m e d G oods Ac t 1 9 8 7 ( S A) P l a nt B r e e de r s R i ghts Ac t 1 9 9 4 ( C t h ) W or k e r s Li e ns Ac t 1 8 9 3 ( S A) C om m e r c i a l Ar bi t r a t i o n Ac t 1 9 8 4 ( V i c ) C ons um e r C r e di t ( V i c t or i a ) Ac t 1 9 9 5 ( V i c ) W a r e hou s e Li e ns Ac t 1 9 9 0 ( S A) B i l l s O f S a l e Ac t 1 8 9 9 ( W A) B ul k H a ndl i n g Ac t 1 9 6 7 ( W A) C ons um e r Af f a i r s Ac t 1 9 7 1 ( W A) C ons um e r C r e di t ( W e s t e r n Aus t r a l i a ) Ac t 1 9 9 6 C oope r a t i v e a nd P r ovi d e n t S oc i e t i e s Ac t 1 9 0 3 ( W A) C ha t t e l S e c ur i t i e s Ac t 1 9 8 7 ( W A) D i s pos a l of U nc ol l e c t e d G oods Ac t 1 9 7 0 ( W A) H i r e P ur c ha s e Ac t 1 9 5 9 ( W A) M ot or V e hi c l e s D e a l e r s Ac t 1 9 7 3 ( W A) P a r t ne r s h i p Ac t 1 8 9 5 ( W A) P a w nbr o k e r s a nd S e c od - H a nd D e a l e r s Ac t 1 9 9 4 ( W A) P r ope r t y La w Ac t 1 9 6 9 ( W A) R oa d Tr a f f i c Ac t 1 9 7 4 ( W A) G oods Ac t 1 9 5 8 ( V i c ) G oods S e c ur i t i e s Ac t 1 9 8 6 ( S A) S a l e O f G oods Ac t 1 8 9 5 ( W A) S e t t l e m e n t Age nt s Ac t 1 9 8 1 ( W A) Tr us t e e s Ac t 1 9 6 2 ( W A) W a r e hou s e m a n s Li e ns Ac t 1 9 5 2 ( W A) B i l l s O f S a l e Ac t 1 9 0 0 ( Ta s ) S t oc k M or t ga ge s And W ool Li e ns Ac t 1 9 2 4 ( S A) U nc l a i m e d G oods Ac t 1 9 8 7 ( S A) P l a nt B r e e de r s R i ghts Ac t 1 9 9 4 ( C t h ) W or k e r s Li e ns Ac t 1 8 9 3 ( S A) C om m e r c i a l Ar bi t r a t i o n Ac t 1 9 8 4 ( V i c ) C ons um e r C r e di t ( V i c t or i a ) Ac t 1 9 9 5 ( V i c ) W a r e hou s e Li e ns Ac t 1 9 9 0 ( S A) B i l l s O f S a l e Ac t 1 8 9 9 ( W A) B ul k H a ndl i n g Ac t 1 9 6 7 ( W A) C ons um e r Af f a i r s Ac t 1 9 7 1 ( W A) C ons um e r C r e di t ( W e s t e r n Aus t r a l i a ) Ac t 1 9 9 6 C oope r a t i v e a nd P r ovi d e n t S oc i e t i e s Ac t 1 9 0 3 ( W A) C ha t t e l S e c ur i t i e s Ac t 1 9 8 7 ( W A) D i s pos a l of U nc ol l e c t e d G oods Ac t 1 9 7 0 ( W A) H i r e P ur c ha s e Ac t 1 9 5 9 ( W A) M ot or V e hi c l e s D e a l e r s Ac t 1 9 7 3 ( W A) P a r t ne r s h i p Ac t 1 8 9 5 ( W A) P a w nbr o k e r s a nd S e c od - H a nd D e a l e r s Ac t 1 9 9 4 ( W A) P r ope r t y La w Ac t 1 9 6 9 ( W A) R oa d Tr a f f i c Ac t 1 9 7 4 ( W A) G oods Ac t 1 9 5 8 ( V i c ) G oods S e c ur i t i e s Ac t 1 9 8 6 ( S A) S a l e O f G oods Ac t 1 8 9 5 ( W A) S e t t l e m e n t Age nt s Ac t 1 9 8 1 ( W A) Tr us t e e s Ac t 1 9 6 2 ( W A) W a r e hou s e m a n s Li e ns Ac t 1 9 5 2 ( W A) B i l l s O f S a l e Ac t 1 9 0 0 ( Ta s ) P a ym e n t s Ac t 2 0 0 2 ( V i c ) C ha t t e l S e c ur i t i e s Ac t 1 9 8 7 ( V i c ) P a w nbr o k e r s And S e c ond - H a nd D e a l e r s Ac t 1 9 9 6 ( N S W ) P e t r ol e u m ( O ns h o r e ) Ac t ( N S W ) B ui l di n g And C ons t r u c t i o n I ndus t r y S e c ur i t y O f C r e di t Ac t 1 9 8 4 ( V i c ) S a l e O f G oods Ac t 1 8 9 5 ( S A) S e c ond - H a nd D e a l e r s a nd P a w nbr o k e r s Ac t 1 9 9 6 ( S A) C o - ope r a t i v e s Ac t 1 9 9 6 ( V i c ) Fi ne s Ac t 1 9 9 6 ( N S W ) I m poun d i n g Ac t 1 9 9 3 ( N S W ) C onf i s c a t i o n Ac t 1 9 9 7 ( V i c ) D i s pos a l O f U nc ol l e c t e d G oods Ac t 1 9 6 1 ( V i c ) D om e s t i c ( R e f a l a nd N ui s a n c e ) Ani m a l s Ac t 1 9 9 4 ( V i c ) C o - ope r a t i v e s Ac t 1 9 9 2 ( N S W ) C o - ope r a t i v e s H ous i n g a nd S t a r r - B o w k e t t S oc i e t i e s Ac t 1 9 9 8 ( N S W ) For e s t r y R i ght s Ac t 1 9 9 6 ( V i c ) Le ga l P r a c t i t i o ne r s Ac t 1 9 6 8 ( S A) Fi na nc e B r ok e r s C ont r o l Ac t 1 9 7 5 ( W A) Fi ne s , P e na l t i e s a nd I nf r i n g e m e n t N ot i c e s P a r t ne r s h i p Ac t 1 8 9 1 ( Ta s ) P e na l t y U ni t e s a nd O t he r P e na l t i e s Ac t 1 9 8 7 M ot or C a r Tr a de r s Ac t 1 9 8 6 ( V i c ) P a r t ne r s h i p Ac t 1 9 5 8 ( V i c ) P r ope r t y La w Ac t 1 9 5 8 ( V i c ) R oa d S a f e t y Ac t 1 9 8 6 ( V i c ) S a l e of G oods ( V i e nn a C onve n t i o n ) Ac t 1 9 8 7 ( V i c ) S e c ond - H a nd D e a l e r s a nd P a w nbr o k e r s Ac t 1 9 8 9 ( V i c ) Tr a ns p or t Ac t 1 9 8 3 ( V i c ) Tr us t e e Ac t 1 9 5 8 ( V i c ) D e s i gn s Ac t 2 0 0 3 ( C t h ) V i c t or i a n C i vi l a nd Adm i n i s t r a t i on C ont r o l Ac t 1 9 6 6 ( Q l d ) B i l l s of S a l e a nd O t he r I ns t r u m e n t s Ac t 1 9 5 5 ( Q l d ) Le ga l Ai d C om m i s s i o n Ac t 1 9 7 9 ( N S W ) M i ni n g Ac t 1 9 9 2 ( N S W ) O f f s h or e M i ne r a l s Ac t 1 9 9 9 ( N S W ) W a r e hou s e m a n s Li e ns Ac t 1 9 3 5 ( N S W ) W a t e r M a na ge m e n t Ac t 2 0 0 0 ( N S W ) C oope r a t i v e s Ac t 1 9 9 7 ( Q LD ) C r e di t ( R ur a l Fi na nc e ) Ac t 1 9 9 6 ( Q l d ) P ha r m a c y P r a c t i c e Ac t 2 0 0 6 ( N S W ) S a l e O f G oods Ac t 1 8 9 6 ( Ta s ) S e c ond - H a nd D e a l e r s a nd P a w nbr o k e r s Ac t 1 9 9 4 ( Ta s ) C or por a t i o n s Ac t 2 0 0 1 ( C t h ) C ons um e r C r e di t Ac t 1 9 9 5 ( AC T) C oope r a t i v e s Ac t 2 0 0 2 ( AC T) C r e di t Ac t 1 9 8 5 ( AC T) I ns t r u m e n t s Ac t 1 9 3 3 ( AC T) H e m p Fi br e I ndus t r y Fa c i l i t a t i o n Ac t 2 0 0 4 ( AC T) P a w nbr o k e r s Ac t 1 9 0 2 ( AC T) C onve r s i o n Ac t 1 9 2 1 ( C t h ) Loa ns S e c ur i t i e s Ac t 1 9 1 9 ( C t h ) P ubl i c Tr us t e e Ac t 1 9 8 5 ( AC T) R oa d Tr a f f i c Ac t ( N T) U nc ol l e c t e d G oods Ac t 2 0 0 4 ( N T) O f f s h or e P e t r ol e u m Ac t 2 0 0 6 ( C t h ) S hi ppi n g R e gi s t r a t i o n Ac t 1 9 8 1 ( C t h ) W a r e hou s e m a n' s Li e ns R e gul a t i o n s 2 0 0 7 C ha t t e l S e c ur i t i e s R e gul a t i o n s 1 9 9 7 C opyr i g h t s Ac t 1 9 6 8 ( C t h ) C o - ope r a t i v e s R e gul a t i o n s 1 9 9 7 I ns t r u m e n t s ( Fe e s ) R e gul a t i o n s B i l l s of S a l e ( Fe e s ) R e gul a t i o n s 1 9 9 5 B i l l s of S a l e ( R e qui r e m e n t s a s t o I ns t r um e n t s ) R e gul a t i o n s 1 9 9 5 C o - ope r a t i v e s R e gul a t i o n s 1 9 9 7 P ubl i c Tr us t e e Ac t 1 9 4 1 ( W A) R i ght s i n W a t e r a nd I r r i ga t i o n a c t 1 9 1 4 ( W A ) G oods S e c ur i t i e s R e gul a t i o n s 1 9 9 7 R e gi s t r a t i o n O f I nt e r e s t s I n M ot or V e hi c l e s And O t he r G oods Ac t 1 9 8 3 ( N T) S a l e O f G oods Ac t 1 9 7 2 ( N T) C oope r a t i v e s R e gul a t i o n s a 2 0 0 3 C o - ope r a t i v e s R e gul a t i o n s a nd Adm i r a l t y Ac t 1 9 8 8 ( C t h ) Tr a de M a r k s Ac t 2 9 9 5 ( C t h ) Ai r N a vi g a t i o n Ac t 1 9 2 0 ( C t h ) Aus t r a l i a n I ndus t r y D e ve l o pm e n t C or por a t i o n Ac t 1 9 7 0 ( C t h ) C om m onw e a l t h I ns c r i be d S t oc k Ac t 1 9 1 1 ( C t h ) M e r c a nt i l e La w Ac t 1 9 6 2 ( AC T) P a r t ne r s h i p Ac t 1 9 6 3 ( AC T) Fi s he r i e s M a na ge m e n t Ac t 1 9 9 1 ( C t h ) Loa ns S e c ur i t i e s R e de m pt i on a nd O f f s h or e M i ne r a l s Ac t 1 9 9 4 ( C t h ) W a r e hou s e m e n' s Li e ns Ac t ( N T) M ot or D e a l e r s R e gul a t i o n s Ta x a t i o n Adm i n i s t r a t i o n Ac t 1 9 5 3 ( C t h ) Tr e a s ur y B i l l s Ac t 1 9 1 4 ( C t h ) W ool I nt e r n a t i on a l Ac t 1 9 9 3 ( C t h ) Tr a f f i c Ac t ( N T) B i l l s of S a l e ( Fe e s ) R e gul a t i o n s 1 9 8 3
JUSTIFICATION AND HISTORY Economic benefits of rationalisation incl.cheaper access to credit, greater pool of credit International initiatives Trans-Tasman Memorandum of Understanding for Harmonisation and Cooperation in Commercial Law, 2000, 2010 NZ PPSA 1999 in force 2002 Molomby 1971 Law reform 1990-2000 Federal/state Political adoption at Commonwealth level, 2005 Draft Bill 2008
LEGISLATION AND TIMELINE Personal Property Securities Act 2009 (Cth)( PPSA ) PPS (Consequential Amendments)Act 2009 PPS Regulations 2010 PPS (Corporations and other Amendments) Acts 2010 & 2011 After several delayed starts, all above came into force or operative effect on 30 Jan 2012, including the PPS Register 30 Jan 2014- end of transitional period 30 Jan 2015- completion date for review of PPSA
STATISTICS There were 281,010 registrations of transitional security interests created on the PPSR in January 2014, a 552% increase from 43,074 in December 2013. The number of searches on the PPSR reached 1 715 747 for the quarter to December of 2013. There were 7 719 882 registrations on the PPSR as at 31 December 2013.
DESIGN ISSUES Federal/State jurisdictional difficulties Requires State Acts to refer power to Commonwealth Advantage one national system Disadvantages - political trade-offs, some jurisdictional consequences (eg forum for disputes) Registration system Chose exact , not similar/close match search system Only concession -search tool case insensitive Approach to transition 2 year grace period for existing agreements as at 30/1/12 Migration of existing registries by government, prior to 30/1/12 Alignment with Corporate insolvency legislation How to deal with other registers, eg ships, patents
TERMINOLOGY Security Interest Secured Party Grantor (debtor) Practice terms emerging- General Security Agreement (GSA) All present and after-acquired property (ALLPAAP) Australian Financial Security Authority (AFSA) administers Register, answers to Commonwealth Attorney-General
SCOPE-COLLATERAL Personal Property Not land or interests in land Not fixtures- common law test should apply Also the case in NZ Licences Private commercial ones if transferable, incl. IP licences But most govt.ones carved out, eg fishing, minerals, taxi etc. Water Rights 3 yr review currently under way, to report by January 2015 Reviewer, Bruce Whittaker, Partner, Ashursts (Melbourne) Other exclusions, eg pawnbrokers
SCOPE-SECURITY INTERESTS Overriding substance test- irrespective of ID of debtor, form, or who has title Security agreement takes effect according to terms Contract interpretation/incorporation principles apply Examples given -fixed, floating charges, pledge, mortgage, but also HP, conditional sale (ROT), leases, consignments, flawed assets, trusts Can take security over own obligation ie ADI can take security over customer s credit balance with that ADI Exclusions for avoidance of doubt Set-off Quistclose trusts Sale of accounts on business sale Interests arising by operation of general law, eg customary liens, statutory charges
DEEMED SECURITY INTERESTS PPS Leases - where over one year, or could last over one year- leases or bailments Must also be regularly engaged in business of bailing/leasing those type of goods Bailments must be for value given by bailed Serial numbered goods over 90 days but Deregulatory Measures Bill 2014 to remove this Commercial consignments Where both regularly engaged Outright transfer of accounts Remedies provisions do not apply Not debtor/creditor Insolvency effect of non-perfection not applied to deemed SI
ATTACHMENT AND ENFORCEABILITY Attachment is pre-req of enforceability against Grantor When grantor has rights in collateral, and SI gives value for SI After-acquired property- when G takes possession in case of title- based (now) SI Mere used of floating charge language will not imply postponed attachment Would need express words to postpone attachment Enforceability against third parties require written evidence and signed by G, unless possession/control Maiden Civil (2013) dicta, no writing there But alternative where G conduct assents to terms by act or omission Description of collateral required , item or class
PERFECTION GENERALLY Perfection requires attachment and enforceability, AND one of Registration Possession Actual physical possession, not apparent or constructive possession But cannot be re-possession ie for enforcement Control, only for ADI and other accounts, financial property, and space/satellite objects Contrast NZ, only has possession Control of ADI accounts, v powerful as have priority over other perfected SI with no control Definitions of control for different types, e.g shares, letters of credit Order irrelevant, as long as continuously perfected by any combination of means, at relevant time of priority conflict Temporary perfection e,g when G changes name, when new proceeds, but not as good as other perfection Third parties take free of temporarily perfected interests
NOTICE FILING AND THE PPS REGISTER File financing statement notifying a claimed SI over collateral Don t lodge security agreement, e.g previous Register of company charges Misunderstanding/nostalgia Migrated company charges do have the instruments attached Interested persons can apply to SP to provide copy and information, 10 business days to respond. If no response, then to AFSA, then judicial process Could be confidentiality agreements between SP and G PPS Register run by AFSA 24/7 online registration and searching. No shopfront, call centre staff and managers in Adelaide
REGISTRATION- DESIGN ISSUES Exact match searching Grantor details- Regulations lay down hierarchy Serial numbered goods Defects-errors in above two render financing statement ineffective, ie as if no perfection Other types of errors may be seriously misleading and therefore FS ineffective Whether search would be capable of disclosing the information A reasonable searcher ? Objective, no actual search needed here Knowledge or motive irrelevant for priorities Collateral classes
REGISTRATION- OTHER DETAIL Privacy issues for individuals Apply to serial numbered goods, cannot register against grantor details Registration periods. Commercial property, indefinite or max 25 yrs 7 for consumer property and serial numbered goods Collateral descriptors in Regs Currently can only register against one single collateral class, or all PAAP Civil liability for SP or agent who registers when no reasonable belief that SI over collateral or that it secures any obligation
DEFAULT RULES FOR PRIORITY Perfected Earlier perfected Where both unperfected:first to attach Beat unperfected Beat later perfected Beat later to attach Beat perfection by any other method Perfection by control Crucial date- when SIs come into conflict, eg on receivership Subordination agreements as per contract
PURCHASE MONEY SECURITY INTERESTS- DEFINITION Seller or lender finance of acquisition, eg ROT, HP, lease, including PPS Leases, consignments Later PMSI will have priority over earlier perfected SI (unless control), IF: Claim PMSI on registration Register before delivery of inventory or, Within 15 business days for non-inventory Not approach in NZ, Canada Only works for collateral where secured purchase money obligations, not allmonies now Contrast Armour v Thyssen, HL Allocation of payments default provisions
PURCHASE MONEY SECURITY INTERESTS- EXCEPTIONS ETC. Exceptions-sale and leaseback,financial property, accounts Not possible for consumer property unless serial numbered goods Treatment of accounts financiers- take priority over PMSI on proceeds, provided notice given to PMSI SP before registration or attachment of account financiers SI Crop and livestock superpriority for inputs-priority over non PMSIs in collateral or its proceeds
PROCEEDS Direct or indirect result of dealing with collateral If authorised dealing, then SP claim proceeds If unauthorised, SP can claim collateral and proceeds, subject to value of original collateral at time of dealing Grantor interest in proceeds SI attaches automatically No fiduciary requirement But tracing rules apply Perfection almost automatic Proceeds expressly includes insurance payments, redemption or discharge of financial property, license and other IP payments, dividends etc on investment instruments or intermediated security
ACCESSIONS Goods installed or fixed to other goods Presupposes separate identity, distinguish commingled Removable- seizure implicit but compensation to owner of whole if damage Owner or other SP may discharge debt and retain whole Notice to higher ranking SP and grantor
COMMINGLING Mixed, processed,manufactured or commingled goods where ID lost in product or mass and where not commercially practical to restore Replaces need for disputes re aggregation clauses and charges eg Clough Mill v Martin, Borden etc. Automatic perfection of SI in mass if SI in input was perfected Claims of competing perfected input SIs proportionate to obligations secured Priority limit of value at time of input, to avoid windfall Preserves input PMSI status over non PMSIs in product if non PMSI given by grantor
THIRD PARTIES AND TAKING FREE RULES Where SP would otherwise have SI in collateral, third parties can take free of SI in certain cases Not where third party takes a SI Serial numbered where omitted (eg commercial) or wrong, search only by serial no. would not have disclosed reg. Not inventory Former State laws- Motor vehicles, non inventory buyers/lessees from licensed dealers Separate provision for serial number searches of motor vehicles Low value domestic garage sales $5000-value difficulties Knowledge carveouts, actual or constructive, of what? Other priority rules have similar effect- Debtor payments to creditors, payments of currency, cheque, shares
ORDINARY COURSE OF BUSINESS Ordinary course of seller/lessor s business of selling etc kind of goods SI given by seller Sale, buyer Not inventory purchases of serial no goods, eg vehicles Lessee takes free of SI, so takes lessee s interest only Case law from Canada and New Zealand tensions between SP and buyer protection policy
REMEDIES-SCOPE Chapter 4 PPSA- Scope- commercial collateral-contract out of nearly all, including right of redemption Except duties on sale/good faith; distribution rules, buyer from SP taking free Consumer collateral- aligned with National Credit Code eg notices, if any inconsistency, NCC prevails Some provisions not for consumer cases, eg right to retain/foreclose Does not apply to company receivers powers and duties- governed by Part 5.2 Corporations Act Does apply to receivers of individual s property But does apply to other controllers of corporate property, eg SP direct enforcement, amended in 2011 Does not apply to deemed SI, eg operating leases
REMEDIES-CONTENT General duty to act in good faith and commercially reasonable manner But only re Chapter 4 Duty to take reasonable care to obtain market value or best price reasonably obtainable in circumstances at time of sale Taken from receivership duty, post Downsview, contrast Medforth v Blake, Silven in UK PPSA gives reasonable time to store, value and consider options Seizure (on default), dispose or retain-latter rare because foreclosure and party can object, without any adjudication. On objection, disposal becomes only option Provisions as to disposal of intangibles Buyer from enforcing SP takes free of SI and G s interest, and any junior SI
INSOLVENCY AND NON-PERFECTION Unperfected SI vest in grantor (ie ineffective) on liquidation, administration, bankruptcy (NB also against execution creditors if unperfected at time of seizure or court order) This reflects philosophy in pre PPSA registers eg company charges But contrast NZ parallel requirement that corporate PPSA SIs must be registered within 20 business days of agreement, or more than six months before insolvency event, otherwise ineffective on insolvency Vesting does not apply to commercial consignments, transfers of accounts or chattel paper, but applies to leases, whether or not actual security interests
PPSA - ALIGNMENT WITH INSOLVENCY LAW Terminology, eg reference to charges, pledges, liens, fixed, floating in corporation legislation Policy -Attempt to be insolvency-neutral But how to preserve priority claimants (eg employees) over former floating charge realisations type of assets circulating concept of control used differently from in perfection sense-PPSA Attempt to exclude ROT etc refers to grantor not having title How to align with broader SI concept to include title-based security eg ROT- concept of PPSAROT property Other provisions, particularly voluntary administration, whether property of the corporation includes title based SI such as ROT Eg whether security over all or substantially all of company s property Generally on liquidation, the definition of property of corporation only covers secured property that has vested in grantor due to non-perfection
CONFLICT OF LAWS Territorial scope of PPSA- if Australian grantor entity, OR goods, financial property, ADI account or account payable in Australia, or IP under Australian law But then Part 7.2 conflict rules govern disputes in Australia re validity, perfection and its effect Law (other than conflicts rules) of place where goods located Law where debtor located if intangible ADI accounts- law of place that governs the account Other specific rules, including for mobile goods, and where destined for another jurisdiction Special priority rule for accounts, financial property-where other jurisdiction has no register, then SP that registers in Australia prior to attachment of other interests will have priority Can contract for Australian law to apply but only if grantor is Australian entity Overrides statutory rules in Part 7.2 Not apply to intangible and transfers of accounts, in practice, applies to goods Enforcement - Chapter 4 on remedies does not apply to goods outside Australia Where PPSA applies due to Aus entity, probably the remedies law of the location of goods applies
REVIEW AND PROGNOSIS Education Impact on SMEs and particular sectors Transition/migration issues Case law to date- Maiden Civil case, 2013 Review timeline- completion and report Jan 2015 Streamlining and simplification particularly register issues Relationship with insolvency legislation Application of overseas jurisprudence Political risk and regulatory capture Overseas developments NZ, Asia, EU? International cooperation In 2013, Australia passed legislation to enable it to ratify and incorporate the Cape Town Convention, Aircraft Protocol in domestic law- it will prevail over any inconsistent laws, including PPSA
