Wappett, Craig; Krasnostein, David --- "Personal Property Security Reform: Weighing Up the Benefits" [2002] BondLawRw 7; (2002) 14(1) Bond Law Review 7

• 1. Determing Which Legislation Applies – An Overview
• PPSA
• 2. Security3 Over Motor Vehicles (Including Most Farm Machinery) Given By A Company.
• 3. Charge Over Adi Deposits Given By A Company
• 4. Security Assignment Of Receivables/book Debts
• 5. Retention Of Title

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Personal Security Reform: Weighing up the Benefits

Craig Wappet and David Krasnostein

A Comparison of Some Common Security Transactions under Existing Law and the Proposed PPSA - A Practitioner’s Perspective

Craig Wappett – Partner, Mallesons Stephen Jaques; Deputy Chair, Personal Property Security Law Reform Committee of BFSLA

1. Determing which Legislation Applies – an Overview

(Figure 1)

Existing Law

Link to footnote[1] (as in diagram)

Link to footnote[2] (as in diagram)

• form of registration will be dictated by who the security provider is, the nature of the secured property and where that property is located
• must lodge security documents as well as registration forms
• cannot register security interest until after it is created - this leads to time delays and risk of a competing interest being registered first
• necessary for lenders to have many different types of documentation.

PPSA

The PPSA will apply to all securities, regardless of form or who the security provider may be.

• cost savings from rationalisation of security documentation
• one page financing statement (which can be lodged electronically), no need to lodge copies of security documents
• can be filed before security interest arises - this saves time and risk of another competing registration being made between settlement and registration

2. Security[3] over Motor Vehicles (including most farm machinery) given by a company.

(Figure 2)

3. Charge over ADI deposits given by a company

(Figure 3)

Existing Law

PPSA[6]

Link to footnote[4] (as in diagram)

Link to footnote[5] (as in diagram)

4. Security assignment of receivables/book debts

(Figure 4)

Existing Law

PPSA[7]

5. Retention of title

(Figure 5)

Link to footnote[8] (as in diagram)

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[1] ie chargor, mortgagor, lessee or hirer, as the case may be. “Security” is used in the broad sense to encompass charges, mortgages, liens, leases and hire-purchase arrangements.

[2] Examples: Bills of sale legislation

• Chattel securities/motor vehicle securities legislation
• Crop lien or stock mortgages legislation
• Trade mark, patents, designs legislation
• Hire purchase legislation
• Consumer Credit Code
• Shipping and aviation legislation
• Legislation establishing or regulating the entity granting the security
• Legislation creating or giving effect to the property being secured

[3] “Security” in this context is used in its broadest economic sense to include a charge, mortgage, finance lease, hire purchase or any other interest that secures payment or performance of an obligation.

[4] Broad v Commissioner of Stamp Duties [1980] 2NSWLR 40; Wily v Rothschild [1999] NSWSC 915

[5] Re Old Inns of NSW Pty Ltd (1994) 13 ACSR 141; Re Brightlife Limited [1987] Ch 200

[6] Sections 42 and 43, draft PPSA

[7] Section 49, draft PPSA

[8] Definition of “security interest” in schedule 1, draft PPSA