The Law surrounding the giving and taking of security (e.g. mortgages) over personal property is about to undergo some radical changes. Anyone who deals with personal property needs to carefully consider the provisions and impact of the Personal Property Securities Act (“PPS Act”) as a consequence.
“Personal Property” under the PPS Act is any kind of property other than land, fixtures, water rights and a few limited statutory licences such as minerals and petroleum licences.
Examples of some transactions involving personal property which are not currently considered to be “security” transactions but which under the PPS Act are deemed to be subject to that legislation include:
(a) The interest of a party supplying goods under a retention of title (i.e. Romalpa) clause;
(b) The interest of a consignor who delivers goods to a consignee under a commercial consignment;
(c) The interest of a Lessor or bailor of goods under a defined “PPS Lease”;
(d) A payment retention clause under a construction contact;
(e) An agent’s right under an agency agreement to retain the principal’s property until the agent has been paid their fees and expenses; and
(a) A security deposit under a supply Agreement.
If you have a transaction which is subject to the PPS Act, it will be important that you comply with the requirements of that legislation – or appreciate what the consequences are if you fail to so comply.
The PPS Act establishes a new regime whereby it will be essential that a secured party has “perfected” their security interest in order for that interest to prevail against other parties who may claim an interest in the goods/personal property.
“Perfection” will most commonly be effected by registration of the security interest upon the Register which will be established under the PPS Act. That Register will be maintained by ITSA.
There are prescribed time limits within which interests must be registered which will need to be carefully observed.
The PPS Act was to have commenced on 30 October 2011 however the commencement date has been deferred to a later date yet to be announced. It is anticipated that the new legislation and regime will commence prior to 1 February 2012.
We strongly recommend that you contact us immediately to discuss how the PPS Act will effect you in your business dealings and other transactions. Please feel free to contact either Peter Duffy or Chris Bowden of our office.
