Commercial Law News, March-April 2011

The new Personal Property Securities Act

You will recall that Forum Law has included regular updates on this new legislation in our previous News Issues. The start date for the introduction of the new legislation has been postponed until October 2011 as the Government recognises the significant effect it will have on business in Australia.

The Personal Property Securities Act [“the PPS Act”] will replace in excess of 70 pieces of legislation Australia-wide concerning the securing of title in property owned by others [other than real property i.e. land].

The new Act will affect all personal property including goods, motor vehicles, debts, and any intellectual property which is currently governed by a statutory system of registration [namely trade marks, designs and patents and possibly copyright as this form of property is governed by an Act].

The registration of your interest in any personal property will secure your interest [as a secured creditor] in the property and give you priority over others who may claim an interest in the said property, for example a liquidator, or another creditor who may registered their interest in the Company’s property after you have registered your interest on the PPS Register.

We advise that your retention of title clauses on your invoices, or any other Romalpa clause in contracts or agreements be sufficient to support your claim to goods you have sold to a buyer where those goods have not yet been paid for in full [under a “retention of title” /Romalpa clause on your invoice]. So, if your buyer is wound up and a liquidator is appointed to the buyer company, you, [as the seller] will no longer be able to claim an interest in unpaid for goods under your retention of title clause unless you have registered that interest under the PPSA.

To be eligible to register an interest in the property, a person will have to satisfy the following pre-conditions:

Have an interest [the Security Interest]in the property [the property is referred to as the Collateral]

Having the nature of that interest recorded in a document [the Attachment]

Registering the Security Interest on the PPS Register [or taking possession of the Collateral]

If you wish to secure your interest in another’s property under the new PPS Act you will need to enter into an Agreement which can be the basis of the registration of a Security Interest. This type of interest can be likened to what is currently known as one of the following:

• a charge over a company’s assets,
• a retention of title clause in a contract/sales invoice
• a bill of sale

Or other secured interest in personal property.

Your registered interest  be known as a “perfected” Security Interest under the new PPS Act.

All company charges currently registered with ASIC will be automatically transferred to the new PPS Register when the new Act comes into force in October 2011.

We advise you to contact us to assist you with

• identifying what interests you currently have and are likely to have over other’s property
• the nature of those interests and whether you require those interests to be documented and registered under the new PPS Act
• whether any already documented interests require registration under the new PPS Act

Please do not hesitate to telephone us or arrange to visit us for an obligation free discussion of up to 30 minutes to discuss your requirements.