The final review of the Personal Property Securities Act 2009 (PPSA) was released by the Attorney General on 18 March 2015. The report makes 394 recommendations for the Senate to consider, the dominant theme being that substantial reform must be undertaken for the PPSA to achieve its original goals of providing more certain, consistent, simpler and cheaper arrangements for personal property securities.
The most notable consequence from the initiation of the PPSA is that ownership of an asset may no longer be sufficient to protect a party in a priority dispute. Since the PPSA’s inception, the majority of case law has been developed in relation to this issue.
Stakeholders made various submissions to the review that displayed competing perspectives on this issue. The initial policy behind the approach was an attempt to counter the issues stemming from the ostensible ownership problem – the concern that a lender could be misled upon taking a security interest in another person’s property that is already subject to an outsider retaining better title to the property. This issue was the subject of additional exposure for secured parties, particularly during recovery.
The report recommended the government provide stakeholders with an opportunity to present further arguments in support of the competing models of rights in collateral. Stakeholders are able to submit their perspective on whether the PPSA should continue to afford a loss of ownership upon absence of possession or a perfected security interest; or return to the original model, that subordinated all interests to original title.
No firm recommendations have been made on this issue so have your say before it is too late.
Registering your interest on the PPSR
Submissions from stakeholders indicated the PPS Register was too complex and recommendations reflect a desire to simplify the process for registering security interests, from the perspective of the unsophisticated user. In order to achieve this, recommendations were proposed for the PPSA and the PPS Register so that:
- a registration does not need to indicate whether the collateral is consumer or commercial property;
- all registrations against individuals (or against serial numbered property where the grantor is an individual) have a maximum term of seven years;
- a registration which does not have the PMSI box ticked can nonetheless perfect a PMSI, but on the basis that the PMSI would not benefit from priority over prior perfected security interests;
- a registration against serial numbered property has the same registration period as for any other collateral and is not capped at seven years; and
- a registration to perfect a security interest over trust assets can be made against the relevant details for the trustee, rather than the ABN or other identifying details for the trust.
As a side note on the PPSR, secured parties should be aware that the current definition of “business day” excludes a day on which the access to the register is refused due to scheduled maintenance. Secured parties may be interested to know that since 22 March 2015, each Wednesday has been a scheduled maintenance day. This may impact timing requirements for registrations on the PPSR. For example, where a secured party wishes to submit an amendment demand, it must wait 5 business days before it can submit this to the register. If this period includes a Wednesday, it may need to wait an additional day.
Have your say
The Government is expected to engage private sector input in the drafting of a bill for the amending legislation, in addition to releasing the draft bill for public consultation. Our clients are encouraged to contact Gadens to see how the recommendations, if implemented, affect their business.