Australia: The Personal Property Securities Act: Delaying the Inevitable

The PPSA, or its Registration Commencement Time (RCT), was expected to kick off on 31 October 2011 and we all waited with bated breath for this to occur...

Time passing

31 October 2011 has come and gone, so where are we now?

It has become clear that getting the PPS Register functional in time, meant that a commencement date of 31 October 2011 was no longer feasible. Section 306 of the PPSA provides that the RCT is the "start of the first day of the month that is 26 months after the month in which this Act is given the Royal Assent or an earlier time determined by the Minister."

The PPSA was given Royal Assent on 10 December 2009, so technically the latest RCT under the PPSA is 1 February 2012 (the "Deadline"). While no updated RCT has been formally announced as yet, 30 January 2012 is the date that the Attorney General's department is working towards and which is referred to on its website.

The Personal Property Securities Amendment (Registration Commencement) Bill 2011 is currently before Parliament. If passed, it will allow the PPSA to be amended granting an option to extend the RCT Deadline in the PPSA as it now stands.

However, we are still waiting with bated breath.

A little leeway is a good thing....

We are working on the assumption that the RCT is 30 January 2012. To that end we strongly recommend that if your business dealings fall within the ambit of the PPSA, you use the delay to have your trading terms, systems and procedures reviewed and updated to make sure you are PPSA ready.

Another day, another Amendment

The Personal Property Securities Amendment Regulations 2011 (No.1) were made on 29 September 2011. These resulted in certain amendments to the PPS Regulations 2010 and you need to be aware of these changes.

Some of the key changes are:

1. Narrowing the definition of a PPS Lease:

A lease or bailment will not be a PPS lease if it is part of a pooling arrangement. A pooling arrangement refers to an arrangement:

  • where goods are hired, bailed or leased out from time to time to one or more parties and these goods are pooled for collective use; and
  • the hire, lease or bailment does not secure payment or performance of an obligation; and
  • possession of the goods can be passed between a number of users of the goods without prior approval of the owner and regardless of whether it is subject to conditions; and
  • the goods are fungible (i.e. can be exchanged for another good of the same kind)

The most common example of this type of personal property and arrangement would be pallets which are used to store or transport goods and at times end up in the hands of third parties who are not a party to a lease agreement.

2. The definition of a motor vehicle has been clarified:

It already includes personal property that is capable, when being towed or attached to a motor vehicle, of travelling at a speed of greater than 10km/h and has a VIN, chassis or manufacturer's number. Now it includes as part of these that it is a piece of machinery or equipment that is equipped with wheels and designed to be attached to, or towed by, a motor vehicle (previously it was stated as being without motive power and designed for attachment to and towing behind a motor vehicle).

3. A further interest to which the PPSA does not apply has been introduced. It does not apply to an interest in an authority, lease, licence or permit that is created under the Offshore Minerals Act 1994 or the Offshore Petroleum and Greenhouse Gas Storage Act 2006.

4. The taking free of a security interest in motor vehicles has been clarified where it is subject to a transitional security interest. Previously under section 45(1) of the PPSA, if a motor vehicle was required to be described by serial number, and a search carried out between the previous day and the date of sale or lease to another did not show the registration, then subject to some exceptions, a third party could acquire the motor vehicle free of the security interest. The amendment now excludes from this, a motor vehicle subject to a transitional security interest that was not able to be registered by serial number on a State or Territory register that registered security interests in motor vehicles.

There have been a few other amendments to clarify the identifiers used when registering a financing statement and the Regulations are aimed at clarifying any areas of uncertainty.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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