Recently developed model PPSA provisions in Australia are likely to reduce time and costs incurred in documenting secured transactions in Australia, and will also be of benefit to New Zealand businesses wishing to take security under the Australian regime.
The Personal Property Securities Act 2009 came into effect in Australia in January 2012. Similarly to New Zealand's PPSA, there are provisions in the Australian regime which could be loosely described as 'mechanical' (relating to matters such as the granting of security, contracting out, grantors dealings with collateral and the exercise of powers by secured parties). These provisions are typically found in all security documents and are not, therefore, considered controversial. To reduce time and costs incurred in parties negotiating/agreeing these provisions, a group of international law firms who each have an Australian presence, have got together and agreed a set of model PPSA provisions including suggested clauses and associated definitions, together with footnoted explanations. The model provisions take a balanced approach and so while some negotiation may be required in certain circumstances, it is intended that the model provisions will be generally acceptable to both secured parties and grantors of security.
We think that this cooperative approach to negotiating 'standard' provisions in commercial agreements could have much wider application than just the Australian PPSA regime, particularly in documenting mechanical or statutorily-prescribed provisions where there is minimal debate on the meaning and/or application of the regime.
New Zealand's PPSA regime has had the luxury of time as compared to the Australian regime and, with that time, we think that informal industry-accepted 'mechanical' provisions have, to some extent, naturally arisen. However, early guidance/agreement as appears to be emerging will likely expedite that natural progression in Australia, and may also be useful as a guide for New Zealand businesses wishing to take security under the Australian regime.