November 22, 2011

PPS Register commencement time decided

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.

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Posted 22nd November 2011 by admin in Legislation, PPS register

Senate Committee report on PPS Register commencement extension

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.

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Posted 22nd November 2011 by admin in Legislation, PPS register

October 12, 2011

Personal Property Securities Amendment (Registration Commencement) Bill 2011

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.

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Posted 12th October 2011 by admin in Legislation, PPS register

October 6, 2011

PPS Amendment Regulations made

The Personal Property Securities Amendment Regulations 2011 (No. 1)
commenced on 6 October 2011.

The Regulations clarify and resolve some outstanding issues including:

  • Subregulation 1.4(1A) excludes all interests, including security interests, in the relevant statutory authorities, leases, licences or permits under the Offshore Petroleum and Greenhouse Gas Storage Act 2006 (Cth) and the Offshore Minerals Act 1994 (Cth) from the scope of the Act.
  • refining the definition of "motor vehicle": The earlier definition of ‘motor vehicle’ was too broad and had the potential to create uncertainty, in particular when considering whether personal property met the definition of motor vehicle or an accession under the Act; for example, a battery installed in a forklift may have met the definition of a ‘motor vehicle’ under 1.7(3)(b)(i). This item narrows the definition of motor vehicle but it is still wide enough to cover the various definitions of motor vehicle found in State and Territory legislation.
  • excluding a lease or bailment of goods that is part of a pooling arrangement from the definition of ‘PPS Lease’
  • providing secured parties, in respect of those transitional security interests in motor vehicles which were not previously registrable by serial number on State or Territory registers, a period of 24 months within which their motor vehicles would be excluded from the definition in regulation 2.1 and not be transferable free of a security interest under subsection 45(1). For example, a plough used for agricultural production may meet the definition of motor vehicle in regulation 1.7 but not all state definitions.
  • clarifying the application of Corporations Act provisions to investment instruments.

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Posted 6th October 2011 by admin in Legislation

September 5, 2011

PPS Register commencement date deferral discussion

The risks of ineffective implementation of a transition to the new PPS Register on 31 October has generated discussion about deferring the registration commencement time to Monday 30 January 2012.

Under section 306(2) of the PPS Act the registration commencement time is 1 February 2012, unless the Attorney-General determines an earlier time (based on Royal Assent having been given on 14 December 2009).

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Posted 5th September 2011 by admin in PPS register

August 11, 2011

The rights of consignors under PPS

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.

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Posted 11th August 2011 by admin in Legislation, PPS register

August 8, 2011

PPS and real estate purchase, lease or finance 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.

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Posted 8th August 2011 by admin in Legislation, PPS register

August 3, 2011

PPSR Credit Applications

If you wish to operate a regular account with ITSA for Personal Property Securities Register access you need to lodge a credit application and have it accepted in time before the Register commences operation. ITSA is now taking applications.

The credit application form is now available on the ITSA website here.

All applications received at least one month before ‘go live’ (currently expected to be 31 October 2011) will be processed before ‘go live’, otherwise ITSA expects there will be 14 days processing time from the time that the application is received in full.

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Posted 3rd August 2011 by admin in PPS register

August 1, 2011

The rights of repairers under PPS

A repairer's lien is a legal right for repairers to hold goods (such as motor vehicles) until they have been paid for work they have done on them. The right is "possessory". That is, it is a right of the repairer to retain possession of the goods until paid. Does the Personal Property Securities Act change that? No, subject to conditions.

Section 8(1)(c) of the PPSA provides that the Act does not apply to a lien, charge or other interest in personal property that is created, arises or is provided for by operation of the general law. Accordingly, repairers' liens are not registrable security interests under the PPSA. Priorities between a repairer's lien and a holder of a registered security interest (such as a financier) will be determined by section 73(1) of the PPSA.

Section 73 (1) of the PPSA provides that a lien created by operation of general law or under statute arising out of providing goods or services in the ordinary course of business has priority over a security interest registered under the Act if the person who provided the goods or services did not know that the agreement that created the security interest prohibited the establishment of a lien by the debtor.

For example, a car repairer who carries out repairs to a car in the ordinary course of business might be aware that the car has a registered security interest to a financier but is not aware of the terms of the security agreement which might prevent the car owner from creating other interests in the car. As a result of s 73(1) of the PPSA, the car repairer's lien over the car will have priority over the financier's interest in the car.

State legislation regarding repairers' liens may also be relevant.

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Posted 1st August 2011 by admin in Legislation

July 22, 2011

PPS Registrar videos for business

David Bergman, the Registrar of Personal Property Securities (PPS), has released a series of 3 videos (about 5 minutes each) focussing on the implications of PPS for business and giving information on what businesses need to consider in preparing for the commencement of the PPS Act and PPS Register in October 2011.

He urges businesses to particularly look at their agreements and business practices relating to the supply of goods on credit involving retention of title (Romalpa clauses) or by consignment as these are currently not capable of registration.

The first video discusses the meaning of security interests.

You can see all 3 videos on You Tube: Video 1, Video 2 (which discusses the register), Video 3 (which discusses transition and the timeline).

Langes+ is currently giving presentations to industry associations and individual businesses on the impact of PPS. Contact David Jacobson on 07 3878 5098 if you would like to arrange to speak to your local Langes+ lawyer.

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Posted 22nd July 2011 by admin in PPS register
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