We are going to cover:

  1.  Priorities under the PPSA – working through the mess;
  2.  Enforcement Regime – how chapter 4 of the PPSA applies to you in practice;
  3.  Exclusions from the PPSA – what doesn’t get a look in, and what that means in reality.  

As always, your first port of call in any PPSA matter should be to the legislation itself, and the associated regulations. Although I have endeavoured to reproduce in the legislation pack which accompanies this presentation a smattering of the relevant sections, there is simply no substitute for reviewing the legislation yourself to see how it functions. Don’t just accept what I or anybody else says – form your own view, or get specific advice on the issues.

Priorities in the PPSA Regime

The table in the slides sets out a basic “cheat sheet” for the priorities that are generally dealt with in the PPSA.

The table is not designed to be comprehensive, but gives a good flavour for how the PPSA works in terms of the priorities that you are likely to come across. Specifically it is worth noting the following:

  1. Although perfection by control gets a high priority, it’s not likely to come up too frequently in day to day practice. At least, not in any meaningful way.
  2. The vaunted “Super Priority” associated with a PMSI registration starts down at number 5 out of a list of 12. That said, the first 3 may not come up every day, and the fourth is a pretty easy one to spot.
  3. The PPSA does attempt to deal with pre-PPSA interests, as well as unperfected interests. Take note of these as for at least a while they will continue to come up in practice as the transitional protections brought in at the commencement of the PPSA come to an end.
  4. The “default rule” for determining priorities is contained in the 9th priority listed in the table. That is the easiest way of sorting out a priority dispute in the event of competing interests, but only applies to a limited range of likely disputes.

Enforcing Your Security under the PPSA

Enforcement procedures in the PPSA are not yet widely known. To date, the majority of seminars like these and papers that have been produced relate more generally to the operation of the PPSA, which I have specifically chosen to avoid in an effort to go beyond the abundance of “101” style presentations that have been given to date.

Hopefully the enforcement summary will give you a general idea of the basic concepts in Chapter 4 of the PPSA, so that should you have a need to put them into practice you will know what you are dealing with.

Enforcement of Security Interests – Exclusions

You need to be aware of what IS NOT covered by Chapter 4 before you run off spending time and money looking up a complex series of sections which might not apply.

The most significant exclusion is property over which receivers have been appointed. The rationale behind this decision was, apparently, that the existing law relating to receivers, their duties and the sale of personal property, were sufficiently articulated in other laws (for example, the Corporations Act).

However, the decision to simply “exclude” such property from the operation of Chapter 4 remains a bit of a mystery so far as I am concerned. Presumably it means that others seeking to enforce their own securities via chapter 4 are precluded from doing so for the duration that receivers might be appointed.

Also importantly, many of the provisions in Chapter 4 can be contracted out of in certain circumstances. As with all such matters, always double check the security documents to make sure nothing has been contracted out of before taking action under the Chapter.

Seizure of Collateral

Not surprisingly, the enforcement provisions of the PPSA allow a secured creditor to seize the relevant property.

Take note that seizure and possession are different concepts in the PPSA. Seizing collateral does not mean that you have taken possession of it for perfection purposes.

Obligation to Dispose of or Retain Collateral

Once you have seized your collateral, you must either dispose of it or retain it, within the auspices of the PPSA.

Disposal of Collateral

You may dispose of the relevant collateral provided you have jumped through the necessary hoops, give the necessary notices, and work your way through the relevant sections.

Note the obligations in relation to disposal and sale process.

Also note that compliance (to the extent set out in the Regulations) with the PPSA or the National Consumer Code will constitute compliance with the other. Check to make sure you have ticked off all of the necessary legislative boxes before you proceed.

Retaining Collateral

You may retain collateral, should you go down the relevant path.

The ability to retain is consistent with the old concept of foreclosure. In essence, it allows you to transfer title of the relevant personal property to yourself, with a view (obviously) to then selling that property.

An example of where you might do so is if the value of the property exceeds what remains of the debt that is secured by the property.


Another secured party or the grantor may choose to redeem the security at any stage up until disposal. This ensures that the legislation does not operate as a clog on the equity of redemption. The grantor’s right to redeem has priority of the right of redemption of any other party.

Reinstating the Security Agreement

The grantor may, once only, reinstate the security agreement by, in essence, bringing it up to date and paying any expenses incurred.

Rules applying after Enforcement – Application of Proceeds

Unsurprisingly, there are rules about the application of proceeds following the instigation of enforcement procedures. Those rules are set out quite succinctly in the legislation and require little explanation.

Exclusions from the PPSA that you need to know

The list of exclusions to the PPSA is wide and varied. Different exclusions operate in different ways, and it is important to understand some of the key exclusions so that you don’t fall afoul of trying to operate under the PPSA when you can’t, or shouldn’t.

The author has referred to sources within his paper which can be viewed for further detailed analysis on this topic.

To view slides from a recent presentation on this issue please click here.

The Legislation Pack which accompanied this presentation can be viewed here.