Australia: PPSA Alert - migrated security interests to lose statutory protections

The Personal Property Securities Act 2009 (Cth) (PPSA) regime commenced on 30 January 2012. It applies to security interests arising both before and after that date.

Prior to commencement of the PPSA regime, many security interests were registered on various State, Territory and Federal registers (such as the ASIC register of company charges and the State and Territory registers of encumbered vehicles). Registrations on many of these pre-PPSA registers (Migrated Registrations) were automatically migrated to the Personal Property Securities Register (PPSR).

Migration of registrations to the PPSR was a complex process which resulted in a number of issues. For example, in some cases, there was a mismatch between the data required for a registration under the PPSA and the data available on the migrated register. In other cases required data was not recorded on the migrated register at all. Because of this, statutory protections were enacted to preserve the validity of Migrated Registrations affected by certain migration issues (Statutory Protections). A number of Migrated Registrations still benefit from those Statutory Protections.

The Statutory Protections will cease at midnight (Canberra time) on 29 January 2017 (we are aware that others may have differing views on the precise end date, which could be as late as midnight on 31 January 2017).

Secured parties who may currently benefit from the Statutory Protections should consider whether remedial action is necessary before those protections cease. While there are a number of issues which could result in a registration on the PPSR (including a Migrated Registration) failing to meet the requirements of the PPSA, this article focuses on some key risks you should be considering.

  1. Migrated security interests over trust property where the trust has an ABN

Before the PPSR commenced operation, security granted by a company or natural person over property held in trust (Trust Property) was registered on the applicable Federal, State or Territory register by reference to the trustee's details (since a trust is not a separate legal person). For example, a charge over Trust Property by an Australian company would have been registered on the ASIC register of company charges by reference to the ACN of the trustee.

When these registrations were migrated to the PPSR, the identifier applied to them was generally the identifier for the trustee used on the migrated register.

The registration requirements for trustee grantors under the PPSA are open to different interpretations. As a result, the correct identifier for registration of some migrated security interests over Trust Property may be the ABN for the trust (if it has one). Where a migrated security interest covers Trust Property and the trust has an ABN, the appropriate course is to register against that ABN before the Statutory Protections cease.

  1. Migrated security interests covering property with a serial number

In some cases, a registration which covers property with a 'serial number' for the purposes of the PPSA must include the prescribed serial number. If this rule applies, failure to include the serial number will result in the registration being defective in respect of the relevant serial numbered property.

Registrations affected by the above are:

  • registrations covering an aircraft engine, airframe, helicopter or small aircraft;
  • registrations covering the following types of property where the property is described as 'consumer property' in the registration:
    • motor vehicles;
    • watercraft; and
    • certain intellectual property being a design, patent, plant breeder's right, trade mark or licence over any of those things.

Many Migrated Registrations did not include the prescribed serial number. Some of those Migrated Registrations may only be effective by virtue of the operation of the Statutory Protections. Secured parties with Migrated Registrations affected by the above rule should ensure that registrations which record the prescribed serial number are made before the Statutory Protections cease.

Note that the Statutory Protections do not extend to the operation of the PPSA "taking free" rules. Therefore, even though a Migrated Registration covering property of a kind referred to above may currently be effective absent a serial number (by virtue of the Statutory Protections), the absence of a serial number means the secured party faces a significantly increased risk of a buyer or lessee of that property taking it free of the security interest.

  1. Migrated registrations missing grantor details or with incorrect identifiers

Registrations which were migrated from various State and Territory registers of encumbered motor vehicles did not include details of the grantor. Instead, those registers only recorded the serial number for the vehicle.

Where a motor vehicle is not held as 'consumer property', the applicable identifier is not the serial number for the vehicle (although the operation of the PPSA "taking free" rules means there are significant advantages in including the serial number in the registration). Instead, the applicable identifier is dictated by the nature of the grantor. For example, for a corporate grantor this may be its ACN or, for a natural person, it may be the name of that person based on their driver's licence.

Some other migrated registers, such as the various State and Territory registers for bills of sale, co-operative charges, deeds and stock, wool and crop mortgages, used an ABN or organisation name to identify the grantor. As migrated, these registrations may not meet the requirements of the PPSA (depending on the nature of the grantor entity and the capacity in which the security was granted).

Secured parties who have not already checked the status of their Migrated Registrations will need to ensure that, where a Migrated Registration is affected by a missing or incorrect identifier, additional registrations on the PPSR are made by reference to the grantor's prescribed details before the Statutory Protections cease.

  1. ASIC migrated registrations with incomplete secured party details

Approximately 27,000 registrations migrated from the ASIC register of company charges were migrated without details of all of the secured parties (where there were multiple secured parties recorded on the ASIC register).

The Registrar of the PPSR has since identified Migrated Registrations affected by this issue and has inserted an alert against those registrations. A list of affected registrations is available on the PPSR website. The Statutory Protections may currently apply to security interests affected by this issue. However, affected secured parties who have not already addressed this issue should do so as soon as possible. How this is addressed will depend on the current status of the relevant security interest. In some cases it may be appropriate to create a new secured party group with all relevant secured parties included and transfer the affected Migrated Registration to that new secured party group.

Even if a security interest affected by this issue is currently perfected by virtue of the Statutory Protections, a secured party missing from the registration could be adversely affected by actions taken by the named secured party with respect to the registration.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions