Three determinations have been made under the Personal Property Securities Act in anticipation of registration commencement on 30 January 2012:

• Fees: The Attorney General has determined the fees to apply. The fees include:
  1. To apply to register a financing statement that has no end time: $130
  2. To apply to register a financing statement with an end time of up to the end of the day 7 years after the registration time: $7.40
  3. To apply to register a financing statement with an end time of more than the end of the day 7 years after the registration time and up to the end of the day 25 years after the registration time: $37
  4. To apply to search the register using a grantor’s details, using the serial number by which collateral has been described or using a unique identifier allocated to a registered financing statement: $3.70

The fees will be higher if a person requires the contact centre to process an application or produce a document.

• Priority of statutory interests: The Attorney General has determined to maintain the priorities that existed under the Corporations Act and Bankruptcy Act in relation to an administrator’s lien and a controlling trustee’s lien provided for under those Acts over company debts secured by a security interest.
• Reports: The Registrar of Personal Property Securities has determined that he may produce the following reports:
  1. The registration of a security interest if the grantor is not an individual
  2. Any other matter relating to registered data in relation to the person
  3. Registrations that are due to expire in a particular period
  4. Registrations conducted in a particular period
  5. Searches conducted in a particular period
  6. Transactions that incur a fee and are conducted on the Register in a particular period

The Attorney-General has made a formal Determination that:

• the migration time (of existing security interests to the PPS Register) is the start of 21 November 2011; and
• the registration commencement time is the start of Monday 30 January 2012.

It is expected that the existing registers will be closed on the weekend of 28-29 January 2012 to permit the transfer to the new Register of all data as at close of business on 27 January 2012.

The Senate Legal and Constitutional Affairs Legislation Committee’s Report on the Personal Property Securities Amendment (Registration Commencement) Bill 2011 has recommended the Bill be passed by the Senate subject to the Attorney-General’s Department revising and reissuing the Explanatory Memorandum.

The purpose of the Bill is to amend the PPS Act to ensure that it will not automatically commence on 1 February 2012 if the PPS Register is not ready for use by that date.

The Report quotes the Attiorney-General’s Department submission that “Based on the level of testing already undertaken and the progress of work across the program, the target dates that have been planned with industry are that data migration commences on 28 November 2011 and the registration commencement time is 30 January 2012. However, meeting these dates is dependent on an assessment of readiness after user acceptance testing is completed.”

The Department also advised the Committee that it has developed a communications campaign, which is proposed to begin the week commencing 22 January 2012 and continue through until June 2012.

The Government has introduced the Personal Property Securities Amendment (Registration Commencement) Bill 2011 into Parliament.

UPDATE 25 November 2011: The Bill has been passed by both Houses.

If passed, the definition of “registration commencement time” will be amended so that the Attorney-General may determine any time other than 1 February 2012 as currently fixed by section 306 of the PPS Act.

Without the amendment, the Attorney-General could determine an earlier time for the registration commencement time. However, the Attorney-General could not determine a later time.

The amendment ensures that the relevant provisions will not automatically commence before the national online PPS register is ready to be made available for public use.

Any decision by the Attorney-General under the proposed amendments to determine the registration commencement time to be a date after 1 February 2012 would need to be made before that date is reached.

Under current law a consignor remains the owner of goods it has delivered to someone else for sale, lease or disposal.

Under PPS, consignment of goods (including livestock such as cattle and horses and extracted minerals) is a registrable security interest if the transaction, in substance, secures payment or performance of an obligation, whether or not it is a commercial consignment: PPSA section 12(2)(h).

From the PPS Register commencement date (expected to be 31 October 2011), the consignment must be registered to be enforceable against third parties.

In the case of a consignment, the consignor is the secured party and the consignee is the grantor.

Once the consignee has possession of the goods, failure to have a written description of the consigned goods and agreed written consignment terms which are “perfected” (by registration) leaves a consignor at risk that its rights will not be enforceable against a third party, for example in the event of the consignee’s insolvency or failure to account for a sale to a third party: PPSA section 20.

The interest of a consignor who delivers goods to a consignee under a commercial consignment will be a security interest whether or not the transaction, in substance, secures payment or performance of an obligation: PPSA section 12(3)(b).

A “commercial consignment” is defined in section 10 as a consignment where:
(a) the consignor retains an interest in goods that the consignor delivers to the consignee; and
(b) the consignor delivers the goods to the consignee for the purpose of sale, lease or other disposal; and
(c) the consignor and the consignee both deal in goods of that kind in the ordinary course of business,
but excludes consignments where the consignee is an auctioneer to whom the goods are delivered for the purpose of sale or the consignee is generally known to its creditors to be selling or leasing goods of others.

A consignor of inventory under a commercial consignment will have a purchase money security interest (PMSI) in the inventory
[PPSA section 14(1)(d)]. But section 62(2) requires that such PMSI be registered by the consignor before the consignee obtains possession of the supplied goods and that the registration states that the interest is a purchase money security interest.This should be done at the beginning of a commercial relationship.

A security interest in consigned goods will attach to the proceeds of sale.

Langes can review your consignment documentation and advise you on registration procedures.

If you are buying or leasing real estate or financing a purchase of real estate do you need to worry about PPS?

Yes. Although security interests in real estate or fixtures are not registrable under the Personal Property Securities Act, there may be personal property security interests which may affect the value or your enjoyment of the property you are buying, leasing or financing.

There may be registered security interests in the following on the property:

• machinery or equipment not fixtures
• removable fittings
• stock
• consignment items
• bailment items (eg construction equipment)

You should therefore consider including a PPSR search in your procedures against the name of the counterparties or in respect of any serial numbered goods included in your real estate purchase.

Once the PPS Register goes live, an ASIC company search will no longer include details of charges against the company’s assets (other than historical).

In addition, if your contracts give you rights in respect of rent, insurance proceeds or a security deposit then these will not be enforceable in the event of insolvency if your security interest has not been registered.