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Week 5 Registration System for Security interests in personal property…
Week 5 Registration System for Security interests in personal property under the PPSA / PPSR
Personal Property Security Act 2009
(Cth) (PPSA)
https://www.legislation.gov.au/Details/C2014C00273
Personal Property Security Regulation 2009
(Cth) (PPSR)
Personal Property Securities (Ancillary Provisions) Act 2010
(Qld)
The basic idea of the PPSA is to create a single registration system to apply to personal goods.
s
applies to virtually all property except land and fixtures (part of land, PPSA s 10)
seeks to incorporate the following “old” rules in equity and common law
• the maxim
‘nemo dat quod non habet’
, (…a person gets no better title than the transferor to that person had.’);
• innocent purchaser for value; and
• first in time prevails (priorities).
PPSA is described as a system of registration- as it focuses on registration rather than the nature of the good (security interest)
several basic concepts that explain the system
Attachment of security Interest.
Perfection of Security Interest (registration).
Possession of Security Interest.
Unperfected security interest
fragile and easily defeated by newer property rights, execution creditors and the debtor's insolvency
subject to non-security rights acquired for value
potential scenarios of priority
debtor becomes insolvent
unperfected security interest in the debtor's assets will vest in the debtor and become available for distribution among the debtor's creditors
goods seized on behalf of execution creditor
execution creditor will obtain priority over unperfected security interests in goods
debts garnished by an execution creditor
assets used to satisfy the debt to the execution creditor before anything would be available to the creditor with the unperfected interest
Perfected security interest
perfected interest can give priority over older unperfected interest
protects interest from being subordinated to newer rights
new rights to assets are subject to any perfected security interests that already exist in those assets
following exemptions apply
money and investment instruments
1 more item...
temporary perfection
1 more item...
personal, domestic, or house hold goods
1 more item...
perfection by control
1 more item...
assets sold or leased in the ordinary course of business
1 more item...
ADI accounts (authorised deposit taking)
1 more item...
incorrect or missing serial numbers
1 more item...
purchase of money and security interests (PMSI)
1 more item...
agricultural products
1 more item...
Security Interest.
Consumer Property
Commercial Property
PPSA s 12(1):
‘A security interest means an interest in 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).’
PPS lease
(short for Personal Property Securities lease) see PPSA s 13.
“deemed security interests”
-see PPSA s12(3) –(4)
Priorities of competing interests.
Actual versus Constructive Knowledge.
notice registration system - financing statements are registered by creditor
identity of the debtor (called the grantor)
description of the assets (called the collateral and proceeds)
identify ad address if the secure creditor (called the secured party)
a few other details see PPSA ss 150, 153
PPSA does snot apply to land
if something is a fixture then that attaches to the land
Power Rental Op Co Australia, LCC v Forge Group Power Pty Ltd
[2007] NSWCA 8
Case regarding the determination of a fixture and whether it is attached to the land - in this scenario a large turbine was deemed not to be a fixture
https://moodle.cqu.edu.au/mod/resource/view.php?id=1482741&redirect=1
Accession, Specification and Mixture
Accession
on chattel attached to another
s 88-97
Specification and Mixture
Specification occur when new goods are manufactured or created naturally
Mixture of goods can be a issue if the goods belonged to different people and are now indistinguishable
No distinction in PPSA
goods are so manufactured, processed, assembled or commingled that their identity is lost the product or mass
s 99 - 101
Constructive Knowledge
Priority rule depend on actual and constructive knowledge of the person acquiring the new interest
s 297 (Constructive knowledge)
Enforcement
only apply for registration and priority purposes, does not apply to 'deemed' security interests
s 115
Creditor can seize assets and sell them if the debtor is in default
s 131