Published on November 22, 2013
Hamish Scott Commercial Lawyer Murfett Legal © Murfett Legal 2013 1
Hamish Scott| Lawyer| Commercial Law • Hamish is a Commercial Lawyer at Murfett Legal. He deals with a range of PPSA, commercial and property law matters. • He was also a specialist PPSA consultant with Australia’s largest PPSA consultancy firm providing advice, training and seminars to a range of clients. • He practiced as a Commercial Lawyer in New Zealand, the forerunner to Australia’s PPSA, for a number of years prior to moving to Australia in 2012. © Murfett Legal 2013 2
Disclaimer • The information presented in this workshop is intended only as a guide, as to the topic and the matters discussed. • This workshop is not legal advice and must not be relied on as such. • If you have a matter which relates to this workshop or you require legal advice, careful review and analysis of your matter’s particular facts, information and documents is required before proper legal advice can be given or applied to your matter. © Murfett Legal 2013 3
Outline • The Gold Mine story • What is PPSA? • PPSA Terminology • How PPSA works • Security Agreement • What is personal property? • PMSI v APAAP • Retention of Title v Security for Payment • Priorities upon insolvency • Website information © Murfett Legal 2013 4
The Gold Mine story loosely based on fact • • • • Modern day 3 little pigs Miner with great prospects suddenly became insolvent 3 suppliers leasing equipment to miner First supplier had spoken to advisors, had a PPSA policy and valid registrations in place and had all equipment returned • Second supplier had heard of PPSA but not registered, argued unsuccessfully that it had deemed security interest, did not get equipment back but was large enough to ride out the loss • Third supplier was a small family company. Never heard of PPSA and had no registrations. Lost equipment which was financed and personally guaranteed. Lost family home © Murfett Legal 2013 5
WHAT IS PPSA? • Regulates all “non land” (ie. non real property) asset securities throughout Australia • Creates the national Personal Property Securities Register (PPSR) • Specifies the priority of competing Security Interests • Australia PPSA enacted: 2009 - in force 30 January 2012 • Integrated state and national registers including – ASIC charges register – REVS – Shipping register © Murfett Legal 2013 6
PPSA Terminology • Security Interest (charge) s.12 PPSA 2009 - “Interest in Personal Property Securing payment or performance of an obligation” – Like a “mortgage over assets” • Personal Property – all non land assets eg. Equipment, goods, vehicles, shares, • Secured Party (obtaining security interest) = Supplier • Grantor (giving security) = Customer • Security Agreement (document that creates Security Interest) eg. Terms and Conditions, Credit Application, Supply agreement © Murfett Legal 2013 7
PPSA Terminology cont. • Collateral – the Personal Property that secures the Grantor’s obligations under the Security Agreement • “Perfected” Security Interest s.14 PPSA 2009 – security interest is enforceable via valid registration or possession of collateral © Murfett Legal 2013 8
How PPSA works © Murfett Legal 2013 9
Purchase Money Security Interest (PMSI) versus All Present and After Acquired Property (APAAP or ALLPAAP) PMSI (similar to previous ASIC fixed charge): • • • provides security in relation to specific goods only. No goods (or direct proceeds) remaining = no security only available to a party who: – Supplies goods on credit – Funds the purchase of the secured goods - Financiers – Leases, bails or consigns goods under a “PPS Lease” (eg. Equipment hire) Must be registered within 15 business days of goods delivery (0 days for goods to be on sold or sub-hired) APAAP (similar to previous ASIC fixed and floating charge): • provides security over all the grantor’s goods - General Security – Banks and other suppliers to Tenant business – Suppliers with Customer payment arrears and other lease obligations © Murfett Legal 2013 10
Security Agreement • No specific form required but must be in writing • Signed by customer is best but not crucial – may be accepted by actions of customer s.20(2) PPSA • Examples - Terms and conditions of trade, supply agreement, agreement for sale, hire, lease, credit application, loan agreement or combination • Must include a charging clause - creating Security Interest – “The Agreement creates a security interest…” – “The customer charges…” – “title of the goods remains with the seller until…” Retention of title “ROT” clause • Must describe the particular collateral – ALLPAAP - “All Present and After Acquired Property” or – PMSI - “All Goods supplied, leased or otherwise made available to the grantor” © Murfett Legal 2013 11
What is Personal Property? • All non-real property (land) assets • Intangible and intellectual property eg. patents, • Financial property – shares and other securities (eg. options and rights) • Accessions - goods that are installed in, or affixed to, the other goods s.10 PPSA 2009 • Mixed or “co-mingled” goods • Proceeds of sale of goods (eg. cash or account receivable) • May include “After Acquired Property” Excludes • Fixtures to land = goods, other than crops, that are affixed to land s.10 PPSA 2009 • Personal, domestic or household property less than $5,000 value © Murfett Legal 2013 12
Retention of Title v Security for Payment • Retention of title allows Secured Party to get back Equipment supplied / sold • Generally a PMSI registration is used in these cases as ROT relates to specific Collateral • Security for Payment allows a Secured Party to dispose of the Grantor’s assets to recover amounts owed • An APAAP registration together with guarantees and real property charges are used to secure payments • Terms of Trade need to specify that these securities are available © Murfett Legal 2013 13
Priorities upon Insolvency • Perfected security interest (either registered or by possession of collateral) beats unperfected • Purchase Money Security Interest (PMSI) beats All Present and After Acquired Property (APAAP) in relation to specific goods covered by PMSI • First registration in time wins • Clients should register early. Registration may be based on reasonable belief that security interest exists or will arise s.151 PPSA 2009 © Murfett Legal 2013 14
Registrations © Murfett Legal 2013 15
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THANK YOU firstname.lastname@example.org email@example.com www.murfett.com.au © Murfett Legal 2013 18
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