The Personal Property Securities Act 2009
(Cth) (PPSA) commenced on 30 January 2012. The PPSA is
broad in its application and will impact on the mining industry. It
is important that contracts contain comprehensive provisions
dealing with the PPSA to ensure that a party who may have a
security interest is adequately protected.
It is common for mining services contracts to contain provisions
dealing with plant and equipment. In some instances the Contractor
will be responsible for the provision of plant and equipment to be
used to perform the mining services, such equipment may be owned by
the Contractor or leased or hired by the Contractor. The Principal
will want the right to use the Contractor-supplied plant and
equipment in the event the contract is terminated, so as to enable
it to continue with the mining services. In other cases, the
Principal may provide the plant and equipment for the
Contractor's use. In either event, the parties will need to
consider whether there are any security interests in that plant and
equipment and the PPSA implications of the particular
By way of example, version 3 of the AMPLA Model Mining Services
Contract (MSC) contains a clause dealing with the
PPSA. Clause 22.3 of the MSC provides that:
The Contractor must not assign all or any of its rights under
this agreement or create any Security Interest or allow any
Security Interest to subsist over this agreement without the prior
written approval of the Principal.
The Principal may assign all or any of its rights under this
agreement or create any Security Interest at any time, provided
that the Principal procures a covenant from the assignee in favour
of the Contractor before doing so that the assignee will be bound
by the terms of this agreement.
The first paragraph of the definition of "Security
Interest" in the MSC provides that "in relation to any
Personal Property", Security Interest "has the same
meaning as in the PPSA". "Personal Property" is
then, in turn defined as having the meaning given in the PPSA.
However, to adequately address the PPSA implications for the
mining industry, users of the MSC may wish to amend the MSC to deal
with the following issues:
Given that Clause 13 envisages that the Contractor may use
hired Plant and Equipment to provide the Mining Services,
principals should be aware that, because of the PPSA, the
Principal's contractual right (under clause 13.6) to use that
Plant and Equipment after termination may no longer be enforceable.
Accordingly, Principals should consider their options, including
strengthen their rights (eg: by taking a security interest over
such property) or as a minimum, requiring the Contractor to give an
assurance that it will do certain things to enable the Principal to
enforce its rights under clause 13.6.
Given that there are special PPSA rules relating to goods that
are required to be or may be described by serial number (as defined
in the PPS Regulations), Principals may wish to amend clause 13.2
and Schedule 7 to require the Contractor to specify the relevant
serial number of such Plant and Equipment.
The PPSA requires disclosure of certain information relating to
a security interest (including the agreement which gives rise to
the security interest) to certain interested persons on request.
There are certain exceptions, including if a confidentiality
agreement exists at the time the agreement was entered into. Clause
20.2 of the MSC does not provide any protection as it expressly
allows disclosure where required by Law (which would include the
PPSA). Accordingly, users of the MSC may wish to include a
comprehensive confidentiality arrangement to prevent the MSC or
other information having to be disclosed.
Users of the MSC who believe that a security interest arises
under it should consider amending the MSC to require the other
party to provide such information and take such other steps as
required to enable the secured party to register its security
interest. The secured party may also wish to include provisions
whereby certain enforcement provisions and notice provisions of the
PPSA are contracted out of.
It would be in both parties' interest to require the other
party to notify it if it believes that a security interest arises
under the MSC.
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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