On 19 March 2009, the Senate Legal & Constitutional Affairs Committee ("the Committee") tabled its report in the Senate on the Exposure Draft of the Personal Property Securities Bill 2008 ("PPS Bill").
The Committee recommended, among other things, that the Federal Attorney General's Department ("Department") delay the commencement of the scheme by at least 12 months to May 2011.
Background
Over the course of last year, we updated you on the progress of the draft PPS Bill, which was released on 16 May 2008 by the Federal Attorney-General. The PPS Bill is proposed to replace over 70 pieces of Commonwealth, State and Territory law and includes provisions relating to:
- the creation of valid security interests in personal property and priority of competing security interests in personal property;
- when a person acquires personal property free of a security interest; and
- enforcing security agreements upon default by the debtor.
A national "PPS Register" is also proposed so that security interests can be searched on a centralised online database.
The Council of Australian Governments ("CoAG") previously agreed to implement the PPS Bill by May 2010. On 2 October 2008, the CoAG Ministers signed an Inter-Governmental Agreement on PPS Reform, the effect of which is that the State governments have agreed to refer power to the Commonwealth to facilitate the operation of the PPS Bill.
Update
In our last e-alert dated 3 December 2008, we informed you that the Exposure Draft of the PPS Bill had been referred to the Committee on for inquiry and report.
Last night, the Committee tabled its report in the Senate ("Report"). The Committee made 11 recommendations to the Department in the Report, including:
- simplification of the language, structure and terms used in the PPS Bill and greater use of "overseas provisions" to allow overseas experience to provide guidance for the Australian model;
- the commencement date for the scheme be extended by at least 12 months to May 2011 to allow the Committee's recommendations to be implemented and for advice from stakeholders to be taken into account before the PPS Bill is finalised;
- inclusion of a requirement that the operation of the PPS Bill be reviewed in three years;
- inclusion of key privacy protections for individuals, including a prohibition on making the address of any individual public and that a Privacy Impact Assessment be undertaken by an independent body;
- a detailed explanation in the explanatory memorandum on the requirements for rights and duties to be exercised honestly and in a commercially reasonable matter;
- the duty to act in a commercially reasonable matter should not interfere with parties with similar bargaining power agreeing about what constitutes commercially reasonable behaviour;
- inclusion of conflict of law provisions;
- review of the scope and content of the enforcement provisions of the PPS Bill by the Department; and
- consideration be given to improving the priority of an unperfected lessor as against unsecured or other unperfected interests of the goods.
It remains to be seen what action the Department will take in relation to Committee's recommendations. We will continue to keep you updated on any further developments.
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