PERSONAL PROPERTY SECURITIES BILL 2009

i Personal Property Securities Bill 2009 No. , 2009

Contents

Chapter 1--Introduction

Part 1.1--Preliminary

Short title ............................................................................................ 1

Commencement .................................................................................. 2

Guide to this Act ................................................................................. 2

Part 1.2--General application of this Act

Guide to this Part ................................................................................ 6

Crown to be bound.............................................................................. 6

Connection with Australia .................................................................. 6

Application in the external Territories ................................................ 7

Interests to which this Act does not apply .......................................... 8

Part 1.3--Definitions

Division 1--Introduction

Guide to this Part .............................................................................. 12

Division 2--The Dictionary

The Dictionary .................................................................................. 13

Application of the Acts Interpretation Act 1901............................... 28

Division 3--Concepts relating to security interests and personal

property

Meaning of security interest ............................................................. 29

Meaning of PPS lease....................................................................... 30

Meaning of purchase money security interest .................................. 31

Meaning of investment entitlement and related terms ...................... 34

Chapter 2--General rules relating to security interests

Part 2.1--Guide to this Chapter

Guide to this Chapter ........................................................................ 36

Part 2.2--Security interests: general principles

Guide to this Part .............................................................................. 37

General rules about security agreements and security

interests ............................................................................................. 37

Enforceability of security interests against grantors--

attachment......................................................................................... 38

Enforceability of security interests against third parties................... 39

Perfection--main rule....................................................................... 41

Personal Property Securities Bill 2009 No. , 2009 ii

Perfection--goods possessed by a bailee ......................................... 41

Part 2.3--Possession and control of pe rsonal property

Guide to this Part .............................................................................. 43

Possession ......................................................................................... 44

Control of an ADI account ............................................................... 45

Control of investment entitlements................................................... 46

Control of investment instruments.................................................... 47

Control of a letter of credit ............................................................... 48

Control of negotiable instruments that are not evidenced by a

certificate .......................................................................................... 49

Part 2.4--Attachme nt and perfection: specific rules

Division 1--Introduction

Guide to this Part .............................................................................. 50

Division 2--Proceeds and transfer

Meaning of proceeds ........................................................................ 52

Proceeds--attachment ...................................................................... 53

Proceeds--perfection and temporary perfection .............................. 55

Transferred collateral--temporary perfection after transfer............. 55

Division 3--Collateral returned to grantor or debtor

Returned collateral--from bailee ..................................................... 57

Returned collateral--negotiable instruments and investment

instruments........................................................................................ 58

Returned collateral--following sale or lease.................................... 58

Returned collateral--accounts and chattel paper ............................. 59

Division 4--Relocation of collateral or grantor to Australia etc.

Relocation--main rule...................................................................... 61

Relocation--intangible property and financial property .................. 62

Part 2.5--Taking personal property free of security interests

Guide to this Part .............................................................................. 64

Application of this Part ..................................................................... 65

Taking personal property free of unperfected security interest ........ 65

Taking personal property free of security interest if serial

number incorrect or missing ............................................................. 65

Taking motor vehicles free of security interest ................................ 66

Taking personal property free of security interest in ordinary

course of business ............................................................................. 68

Taking personal, domestic or household property free of

security interest ................................................................................. 68

Taking currency free of security interest .......................................... 69

iii Personal Property Securities Bill 2009 No. , 2009

Taking investment interest or entitlement free of security

interest in the ordinary course of trading .......................................... 69

Taking investment instrument free of security interest .................... 70

Taking investment entitlement free of security interest ................... 70

Taking personal property free of temporarily perfected

security interest ................................................................................. 71

Rights of secured party and transferee on taking personal

property free of security interest....................................................... 71

Part 2.6--Priority between security inte rests

Division 1--Introduction

Guide to this Part .............................................................................. 73

Division 2--Priority of security interests generally

Default priority rules......................................................................... 75

How a security interest is continuously perfected ............................ 76

Priority of security interests perfected by control............................. 76

Priority of advances .......................................................................... 77

Priority rules and intervening security interests ............................... 77

Transfer of security interests does not affect priority ....................... 77

Voluntary subordination of security interests................................... 77

Division 3--Priority of purchase money security interests

When purchase money security interests take priority over

other security interests ...................................................................... 79

Priority between competing purchase money security

interests in collateral ......................................................................... 80

Non-purchase money security interests in accounts ......................... 81

Possession of goods shipped by a common carrier .......................... 82

Division 4--Priority of security interests in transferred collateral

Application of this Division.............................................................. 83

Priority when transferor-granted interest has been

continuously perfected...................................................................... 83

Priority when there is a break in the perfection of the

transferor-granted interest................................................................. 84

Division 5--Priority of creditors, and purchasers of negotiable

instruments, chattel paper and negotiable

documents of title

Priority of creditor who receives payment of debt ........................... 86

Priority of person who acquires a negotiable instrument or an

interest in a negotiable instrument .................................................... 86

Priority of person who acquires chattel paper or an interest in

chattel paper...................................................................................... 87

Personal Property Securities Bill 2009 No. , 2009 iv

Priority of holder of negotiable document of title ............................ 88

Division 6--Priority of other interests

Priority between security interests and declared statutory

interests ............................................................................................. 89

Execution creditor has priority over unperfected security

interest............................................................................................... 90

Priority of security interests held by ADIs ....................................... 91

Priority of security interests in returned goods................................. 91

Priority of certain security interests if there is no foreign

Part 2.7--Transfer and assignment of interest in collateral

Guide to this Part .............................................................................. 94

Transfer of collateral despite prohibition in security

agreement.......................................................................................... 94

Rights on transfer of account or chattel paper--rights of

transferee and account debtor ........................................................... 95

Rights on transfer of account or chattel paper--contractual

restrictions and prohibitions on transfer ........................................... 97

Chapter 3--Specific rules for certain security interests

Part 3.1--Guide to this Chapter

Guide to this Chapter ........................................................................ 98

Part 3.2--Agricultural interests

Guide to this Part .............................................................................. 99

Relationship between security interest in crops and interest

in land ............................................................................................... 99

Priority of crops .............................................................................. 100

Priority of livestock ........................................................................ 100

Part 3.3--Accessions

101

Guide to this Part ............................................................................ 101

Continuation of security interests in accessions ............................. 101

Default rule--interest in accession has priority.............................. 102

Priority interest in whole--before security interest in

accession is perfected ..................................................................... 102

Priority interest in whole--security interest in accession

attaches after goods become accession ........................................... 102

Secured party must not damage goods when removing

accession ......................................................................................... 103

Reimbursement for damage caused in removing accessions.......... 103

Refusal of permission to remove accession .................................... 103

v Personal Property Securities Bill 2009 No. , 2009

Secured party must give notice of removal of accession................ 103

When person with an interest in the whole may retain

accession ......................................................................................... 105

Court order about removal of accession ......................................... 105

Part 3.4--Processed or commingle d goods

106

Guide to this Part ............................................................................ 106

Continuation of security interests in goods that become

processed or commingled ............................................................... 106

100

Perfection of security interest in goods that become

processed or commingled applies to product or mass .................... 106

101

Limit on value of priority of goods that become part of

processed or commingled goods ..................................................... 107

102

Priority where more than one security interest continues in

processed or commingled goods ..................................................... 107

103

Priority of purchase money security interest in processed or

commingled goods .......................................................................... 107

Part 3.5--Intellectual property

109

104

Guide to this Part ............................................................................ 109

105

Implied references to intellectual property rights ........................... 109

106

Intellectual property licences and transfers of intellectual

property........................................................................................... 110

Chapter 4--Enforcement of security interests

111

Part 4.1--Guide to this Chapter

111

107

Guide to this Chapter ...................................................................... 111

Part 4.2--General rules

112

108

Guide to this Part ............................................................................ 112

109

Application of this Chapter............................................................. 112

110

Rights and remedies ........................................................................ 114

111

Rights and duties to be exercised honestly and in a

commercially reasonable manner ................................................... 114

112

Rights and remedies under this Chapter ......................................... 114

113

Recovering judgment or issuing execution does not

extinguish a security interest in collateral ...................................... 115

114

Rights and remedies under this Chapter are cumulative ................ 115

115

Contracting out of enforcement provisions .................................... 115

116

Chapter does not apply to property in the hands of receivers

or controllers ................................................................................... 117

117

Obligations secured by interests in personal property and

land ................................................................................................. 117

Personal Property Securities Bill 2009 No. , 2009 vi

118

Enforcing security interests in accordance with land law

decisions ......................................................................................... 119

119

Relationship with consumer credit legislation................................ 121

120

Enforcement of security interests in liquid assets--general........... 121

121

Enforcement of security interests in liquid assets--notice to

higher priority parties and grantor .................................................. 122

Part 4.3--Seizure and disposal or retention of collateral

124

Division 1--Introduction

124

122

Guide to this Part ............................................................................ 124

Division 2--Seizing collateral

125

123

Secured party may seize collateral ................................................. 125

124

Secured party who has perfected a security interest in

collateral by possession or control.................................................. 125

125

Obligation to dispose of or retain collateral ................................... 126

126

Apparent possession of collateral ................................................... 126

127

Seizure by higher priority parties--notice...................................... 127

Division 3--Disposing of collateral (including by purchasing

collateral)

130

128

Secured party may dispose of collateral ......................................... 130

129

Disposal by purchase ...................................................................... 131

130

Notice of disposal of collateral ....................................................... 131

131

Duty of secured party disposing of collateral to obtain

market value.................................................................................... 133

132

Secured party to give statement of account .................................... 133

133

Disposing of collateral free of interests .......................................... 135

Division 4--Retaining collateral

136

134

Proposal of secured party to retain collateral ................................. 136

135

Notice of retention of collateral ...................................................... 136

136

Retaining collateral free of interests ............................................... 137

Division 5--Objection to purchase or retention

139

137

Persons entitled to notice may object to proposal .......................... 139

138

Person making objection may be requested by secured party

to prove interest .............................................................................. 139

Part 4.4--Rules applying after enforcement

140

139

Guide to this Part ............................................................................ 140

140

Distribution of proceeds received by secured party ....................... 140

141

Secured party may take steps to reflect transfer of title.................. 142

142

Entitled persons may redeem collateral .......................................... 142

143

Entitled persons may reinstate security agreement......................... 142

vii Personal Property Securities Bill 2009 No. , 2009

144

When certain enforcement notices are not required ....................... 143

Chapter 5--Personal Property Securities Register

144

Part 5.1--Guide to this Chapter

144

145

Guide to this Chapter ...................................................................... 144

Part 5.2--Establishme nt of the register

145

146

Guide to this Part ............................................................................ 145

147

Personal Property Securities Register............................................. 145

148

What the register contains .............................................................. 146

Part 5.3--Registration

147

149

Guide to this Part ............................................................................ 147

150

Registration--on application .......................................................... 147

151

Registration--belief that collateral secures obligation................... 148

152

Registration--location of personal property and interested

persons outside Australia ................................................................ 150

153

Financing statements with respect to security interests .................. 151

154

Financing statements with respect to prescribed property.............. 153

155

Meanings of verification statement and registration event ............ 154

156

Verification statements--Registrar to give to secured parties ....... 154

157

Verification statements--secured parties to give notice to

grantors ........................................................................................... 155

158

Verification statements--publication as alternative ....................... 156

Part 5.4--When a registration is effective

157

159

Guide to this Part ............................................................................ 157

160

Registration time--general ............................................................. 157

161

Registration time--security agreements and interests.................... 158

162

Registration time--transfers ........................................................... 158

163

Effective registration ...................................................................... 158

164

Defects in registration--general rule.............................................. 159

165

Defects in registration--particular defects ..................................... 159

166

Defects in registration--temporary effectiveness .......................... 160

167

Security interest in certain property becomes unperfected............. 161

168

Maintenance fees ............................................................................ 162

Part 5.5--Searching the register

163

169

Guide to this Part ............................................................................ 163

170

Search--general.............................................................................. 163

171

Search--criteria .............................................................................. 164

172

Search--by reference to details of grantor who is an

individual ........................................................................................ 165

Personal Property Securities Bill 2009 No. , 2009 viii

173

Search--interference with privacy ................................................. 168

174

Search--written search results and evidence etc............................ 169

175

Copy of financing statement ........................................................... 171

176

Reports by Registrar ....................................................................... 171

Part 5.6--Amendment demands

173

Division 1--Introduction

173

177

Guide to this Part ............................................................................ 173

178

How amendment demands are given .............................................. 173

Division 2--Amendment demands: administrative and judicial

process

175

Subdivision A--Administrative process

175

179

Scope of Subdivision ...................................................................... 175

180

Administrative process--amendment notices ................................ 176

181

Administrative process--registration amendments ........................ 177

Subdivision B--Judicial process

178

182

Judicial process for considering amendment demand .................... 178

Part 5.7--Removal of data and correction of registration errors

180

183

Guide to this Part ............................................................................ 180

184

Removal of data--general grounds ................................................ 180

185

Removal of data--registration ineffective for 7 years or

more ................................................................................................ 181

186

Incorrectly removed data--restoration ........................................... 181

187

Records of removed data ................................................................ 182

188

Correction of registration errors ..................................................... 182

Part 5.8--Fees, administrative review and annual reports

183

189

Guide to this Part ............................................................................ 183

190

Registration and search fees ........................................................... 183

191

Review of decisions ........................................................................ 184

192

Annual reports ................................................................................ 185

Part 5.9--Registrar of Personal Property Securities

186

193

Guide to this Part ............................................................................ 186

194

Registrar--establishment of office ................................................. 186

195

Registrar--functions and powers ................................................... 186

196

Registrar--acting appointments ..................................................... 186

197

Registrar--delegation ..................................................................... 187

198

Registrar--resignation .................................................................... 188

199

Registrar--termination ................................................................... 188

200

Deputy Registrar--establishment of office .................................... 188

ix Personal Property Securities Bill 2009 No. , 2009

201

Deputy Registrar--functions and powers....................................... 188

202

Deputy Registrar--resignation ....................................................... 189

203

Deputy Registrar--termination ...................................................... 189

Chapter 6--Judicial proceedings

190

Part 6.1--Guide to this Chapter

190

204

Guide to this Chapter ...................................................................... 190

Part 6.2--Judicial proceedings generally

191

Division 1--Introduction

191

205

Guide to this Part ............................................................................ 191

206

Scope of this Part ............................................................................ 191

Division 2--Conferral of jurisdiction

193

207

Jurisdiction of courts....................................................................... 193

208

Cross-jurisdictional appeals............................................................ 193

209

Courts to act in aid of each other .................................................... 195

Division 3--Transfers between courts

196

210

Application of this Division............................................................ 196

211

Exercise of transfer power .............................................................. 197

212

Criteria for transfers between courts............................................... 198

213

Initiating transfers between courts.................................................. 199

214

Documents and procedure .............................................................. 199

215

Conduct of transferred proceedings ................................................ 199

216

Entitlement to practise as barrister or solicitor ............................... 200

217

Limitation on appeals ..................................................................... 200

Division 4--Registrar's role in judicial proceedings

201

218

Intervention in judicial proceedings ............................................... 201

219

Initiation of judicial proceedings .................................................... 201

Part 6.3--Civil penalty proceedings

202

Division 1--Introduction

202

220

Guide to this Part ............................................................................ 202

221

What is a civil penalty provision? .................................................. 202

Division 2--Obtaining an order for a civil penalty

203

222

Federal Court may order person to pay p ecuniary penalty for

contravening civil penalty provision .............................................. 203

223

Contravening a civil penalty provision is not an offence ............... 204

224

Persons involved in contravening civil penalty provision .............. 204

225

Recovery of a pecuniary penalty .................................................... 204

Personal Property Securities Bill 2009 No. , 2009 x

Division 3--Civil penalty proceedings and criminal proceedings

205

226

Civil proceedings after criminal proceedings ................................. 205

227

Criminal proceedings during civil proceedings .............................. 205

228

Criminal proceedings after civil proceedings ................................. 205

229

Evidence given in proceedings for penalty not admissible in

criminal proceedings ....................................................................... 205

Division 4--Enforceable undertakings relating to contraventions

of civil penalty provisions

207

230

Acceptance of undertakings relating to contraventions of

civil penalty provisions................................................................... 207

231

Enforcement of undertakings .......................................................... 207

Chapter 7--Operation of laws

208

Part 7.1--Guide to this Chapter

208

232

Guide to this Chapter ...................................................................... 208

Part 7.2--Australian laws and those of othe r jurisdictions

209

233

Guide to this Part ............................................................................ 209

234

Scope of this Part ............................................................................ 209

235

Meaning of located ......................................................................... 210

236

Commonwealth laws may provide for governing law .................... 210

237

Express agreement .......................................................................... 211

238

Governing laws--goods ................................................................. 211

239

Governing laws--intangible property ............................................ 212

240

Governing laws--financial property and rights evidenced by

letters of credit ................................................................................ 213

241

Governing laws--proceeds............................................................. 215

Part 7.3--Constitutional operation

216

242

Guide to this Part ............................................................................ 216

243

Constitutional basis for this Act ..................................................... 216

244

Meaning of referring State ............................................................. 218

245

Meaning of referred PPS matters ................................................... 221

246

Non-referring State operation--overview ...................................... 222

247

Non-referring State operation--persons......................................... 223

248

Non-referring State operation--activities....................................... 223

249

Non-referring State operation--interests........................................ 224

250

Non-referring State operation--inclusion of data in register ......... 225

251

Personal property taken free of security interest when Act

begins to operate ............................................................................. 225

252

Priority between constitutional and non-constitutional

security interests ............................................................................. 225

xi Personal Property Securities Bill 2009 No. , 2009

Part 7.4--Relationship between Australian laws

226

Division 1--Introduction

226

253

Guide to this Part ............................................................................ 226

Division 2--Concurrent operation

227

254

Concurrent operation--general rule ............................................... 227

255

Concurrent operation--regulations may resolve

inconsistency................................................................................... 228

Division 3--When other laws prevail

231

256

When other laws prevail--certain other Commonwealth Acts ...... 231

257

When other laws prevail--security agreements ............................. 231

258

When other laws prevail--personal property, security

interests and matters excluded from State amendment

referrals ........................................................................................... 232

259

When other laws prevail--exclusion by referring State law

or Territory law............................................................................... 233

260

When other laws prevail--no constitutional preference to

one State over another .................................................................... 234

Division 4--When this Act prevails

235

261

When this Act prevails--registration requirements ....................... 235

262

When this Act prevails--assignment requirements........................ 235

263

When this Act prevails--formal requirements relating to

agreements ...................................................................................... 236

264

When this Act prevails--attachment and perfection of

security interests ............................................................................. 238

Chapter 8--Miscellaneous

239

Part 8.1--Guide to this Chapter

239

265

Guide to this Chapter ...................................................................... 239

Part 8.2--Vesting of certain unperfected security interests

240

266

Guide to this Part ............................................................................ 240

267

Vesting of unperfected security interests in the grantor upon

the grantor's winding up or bankruptcy etc. ................................... 240

268

Security interests unaffected by section 267 .................................. 242

269

Certain lessors, bailors and consignors entitled to damages........... 243

Part 8.3--Exercise and discharge of rights, duties and

obligations

245

270

Guide to this Part ............................................................................ 245

271

Entitlement to damages for breach of duties or obligations ........... 245

272

Liability for damages ...................................................................... 245

Personal Property Securities Bill 2009 No. , 2009 xii

273

Application of Act not affected by secured party having title

to collateral ..................................................................................... 246

Part 8.4--Provision of information by secured parties

247

274

Guide to this Part ............................................................................ 247

275

Secured party to provide certain information relating to

security interest ............................................................................... 247

276

Obligation to disclose successor in security interest when

request made ................................................................................... 250

277

Time for responding to a request .................................................... 250

278

Application to court for exemption or extension of time to

respond to requests ......................................................................... 250

279

Persons may recover costs arising from request............................. 251

280

Application to court for response to request etc. ............................ 252

281

Application to court in relation to costs charged ............................ 252

282

Consequences of not complying with court order .......................... 254

283

Estoppels against persons who respond to a request ...................... 254

Part 8.5--Notices and timing

256

284

Guide to this Part ............................................................................ 256

285

Application of this Part--notices etc. ............................................. 256

286

Notices--writing............................................................................. 256

287

Notices--registered secured parties ............................................... 256

288

Notices--more than one registered secured party .......................... 257

289

Notices etc. must be given to persons registered as secured

parties using identifier .................................................................... 257

290

Notices--deceased persons ............................................................ 257

291

Notices--Court orders .................................................................... 258

292

Notices--formal defects ................................................................. 258

293

Timing--applications for extension of time................................... 258

294

Timing--references to time in this Act .......................................... 259

Part 8.6--Onus of proof and knowledge

261

295

Guide to this Part ............................................................................ 261

296

Onus of proof .................................................................................. 261

297

Meaning of constructive knowledge ............................................... 262

298

Actual or constructive knowledge by bodies corporate and

other entities.................................................................................... 263

299

Actual or constructive knowledge in relation to certain

property transfers ............................................................................ 264

300

Registration of data does not constitute constructive notice .......... 264

Part 8.7--Forms and regulations

265

301

Guide to this Part ............................................................................ 265

xiii Personal Property Securities Bill 2009 No. , 2009

302

Approved forms .............................................................................. 265

303

Regulations ..................................................................................... 266

Chapter 9--Transitional provisions

267

Part 9.1--Guide to this Chapter

267

304

Guide to this Chapter ...................................................................... 267

Part 9.2--Key concepts

268

305

Guide to this Part ............................................................................ 268

306

Meaning of migration time and registration commencement

time ................................................................................................. 268

307

Meaning of transitional security agreement................................... 269

308

Meaning of transitional security interest ....................................... 269

Part 9.3--Initial application of this Act

271

309

Guide to this Part ............................................................................ 271

310

When this Act starts to apply, and in relation to which

matters............................................................................................. 272

311

Enforceability of transitional security interests against third

parties.............................................................................................. 272

312

Declared statutory security interests ............................................... 272

313

Enforcement of security interests in intellectual property

licences ........................................................................................... 273

314

Enforcement of security interests provided for by security

agreements ...................................................................................... 273

315

Starting time for registrations ......................................................... 273

316

Governing laws ............................................................................... 273

317

Constitutional and non-constitutional interests .............................. 273

318

References to charges and fixed and floating charges .................... 274

Part 9.4--Transitional application of this Act

275

Division 1--Introduction

275

319

Guide to this Part ............................................................................ 275

Division 2--Priority protection for certain transitional security

interests

276

320

Scope............................................................................................... 276

321

Priority protected transitional security interests--attachment

rule .................................................................................................. 277

322

Priority protected transitional security interests--temporary

perfection rule (non-migrated security interests)............................ 277

323

Priority protected transitional security interests--perfection

by registration (migrated security interests) ................................... 278

Personal Property Securities Bill 2009 No. , 2009 xiv

324

Priority protected transitional security interests--priority

between interests............................................................................. 278

325

Priority protected transitional security interests--migrated

security interests and acquisition of property ................................. 280

Division 3--Non-protected priority for other transitional

security interests

281

326

Non-protected priority--general rule ............................................. 281

Division 4--Taking free and vesting of transitional security

interests in certain situations

282

327

Scope............................................................................................... 282

328

Rules about taking free and vesting................................................ 283

Division 5--Taking free and vesting of transitional security

interests in other situations

284

329

Existing rules to apply in other situations....................................... 284

Division 6--Migration of personal property interests

285

330

Scope of Division ........................................................................... 285

331

Requirement for Commonwealth officers etc. to provide data....... 285

332

Meaning of migrated security interest............................................ 285

333

Registration with respect to migrated data ..................................... 286

334

Incorrectly registered migrated data ............................................... 287

335

No requirement for notice of verification statement....................... 287

Division 7--Preparatory registration relating to transitional

security interests

288

336

Preparatory registration--transitional security interests ................ 288

Division 8--Transitional security interests: registration defects

289

337

Registration continues despite certain defects ................................ 289

Part 9.5--Charges and fixed and floating charges

291

338

Guide to this Part ............................................................................ 291

339

References to charges and fixed and floating charges .................... 291

340

Meaning of circulating asset .......................................................... 292

341

Control of inventory and accounts.................................................. 293

Part 9.6--Review of operation of Act

295

342

Guide to this Part ............................................................................ 295

343

Review of operation of Act............................................................. 295

Chapter 1 Introduction

Part 1.1 Preliminary

Section 2

2 Personal Property Securities Bill 2009 No. , 2009

2 Commence ment

This Act commences on the day after it receives the Royal Assent.

3 Guide to this Act

Overview

This Act is a law about security interests in personal property.

A security interest is an interest in personal property provided for

by a transaction that secures payment or the performance of an

obligation. The form of the transaction and the identity of the

person who has title to the property do not affect whether an

interest is a security interest.

Personal property includes many different kinds of tangible and

intangible property, other than real property. Examples include

motor vehicles, household goods, business inventory, intellectual

property and company shares. Personal property is known as

collateral if it is (or is anticipated to be) the subject of a security

interest.

A security interest is enforceable against a grantor when it attaches

to collateral. A security interest attaches to collateral when a

person gives value for acquiring the security interest (or does

something else to acquire it), and in return, the person gains rights

in the collateral.

A security interest is enforceable against third parties when it has

attached to the collateral and either the secured party has

possession or control of the collateral, or a security agreement

covers the collateral.

If a security interest in collateral is perfected, it takes priority over

another security interest that is unperfected when the security

interest comes to be enforced. A security interest is perfected if:

(a) it has attached to collateral; and

Introduction Chapter 1

Preliminary Part 1.1

Section 3

Personal Property Securities Bill 2009 No. , 2009 3

(b) certain extra steps (possession or control of the

collateral, or registration on the Register of

Personal Property Securities) have been taken to

protect the interest, or the interest is perfected by

force of this Act.

The secured party whose security interest has the highest priority is

entitled to enforce that interest ahead of secured parties with

security interests that have a lower priority.

Between perfected security interests, perfection by control has a

higher priority than other forms of perfection. The next level of

priority is given (subject to certain rules) to perfected purchase

money security interests. If no other way of working out priority

between perfected interests is provided, the highest priority is

given to the security interest that has been continuously perfected

for the longest period.

The Register of Personal Property Securities enables secured

parties to give notice of actual or prospective security interests.

Notice is given by the recording of data about secured parties,

grantors and collateral. The register may be kept electronically, for

example in a form that is interactive and accessible over the

internet.

Summary

Chapter 1 deals with some preliminary matters, including the

general application of the Act (Part 1.2) and its interpretation

(Part 1.3).

Chapter 2 sets out general rules relating to security interests. These

include the following:

(a) general principles relating to security agreements,

security interests, attachment and perfection

(Part 2.2);

(b) interpretation provisions about possession and

control (Part 2.3);

Chapter 1 Introduction

Part 1.1 Preliminary

Section 3

4 Personal Property Securities Bill 2009 No. , 2009

security interests occurs in particular situations

(Part 2.4);

(d) the circumstances in which personal property is

taken free of a security interest in the property

(Part 2.5);

(e) how to work out the priority between competing

security interests (and in some cases, other sorts of

interests) in personal property (Part 2.6);

(f) rules about the transfer and assignment of interests

in collateral (Part 2.7).

Chapter 3 contains specific rules about the following:

(a) agricultural interests (Part 3.2);

(b) security interests in accessions to personal property

and their priority (Part 3.3);

processed or commingled and their priority

(Part 3.4);

(d) intellectual property and intellectual property

licences (Part 3.5).

Chapter 4 deals with how to enforce a security interest in personal

property. Parties can contract out of some of the provisions of

Chapter 4.

Chapter 5 provides for the establishment and maintenance of a

prescribed personal property (the Register of Personal Property

Securities).

Introduction Chapter 1

Preliminary Part 1.1

Section 3

Personal Property Securities Bill 2009 No. , 2009 5

The Registrar of Personal Property Securities is responsible for

maintaining the register. Chapter 5 also deals with how the register

can be searched.

A search by reference to the details of an individual grantor must

be made for an authorised purpose set out in the Act. A person who

carries out an unauthorised search, or uses data from an

unauthorised search, may be liable to pay compensation or a civil

penalty (or both).

Chapter 6 deals with the role of the courts in proceedings that

relate to security interests in personal property. It confers

jurisdiction on courts and provides rules for the transfer of

proceedings between courts. It also describes the Registrar's role in

judicial proceedings and contains provisions about proceedings for

contravention of a civil penalty provision.

Chapter 7 deals with how this Act interacts with foreign laws, the

constitutional operation of this Act and the relationship between

this Act and other Australian laws.

Chapter 8 deals with the following:

(a) rules about the vesting of certain unperfected

interests (Part 8.2);

(b) rights to damages and compensation in relation to

contraventions of this Act (Part 8.3);

notices may be given and certain other procedural

and administrative matters (Parts 8.4 to 8.7).

Chapter 9 deals with the initial application of this Act.

Chapter 9 also deals with references to charges and fixed and

floating charges in this Act and in security agreements, and

provides for an independent review of the Act within 3 years after

it is enacted.

Chapter 1 Introduction

Part 1.2 General application of th is Act

Section 4

6 Personal Property Securities Bill 2009 No. , 2009

Part 1.2--General application of this Act

4 Guide to this Part

This Part contains general rules about the application of this Act.

These deal with the following matters:

(a) binding the Crown;

(b) geographical rules;

apply.

5 Crown to be bound

This Act binds the Crown in each of its capacities.

6 Connection with Australia

(1) This Act applies to a security interest in goods or financial property

if:

(a) the location of the goods or property is in Australia; or

(b) the grantor is an Australian entity.

Note:

For when personal property is located in a jurisdiction, see

section 235.

(2) This Act applies to a security interest in intangible property if:

(a) the grantor is an Australian entity; or

(b) the intangible property is an account that is payable in

Australia; or

chattel paper if:

(i) the assignor is an Australian entity; or

(ii) the account or chattel paper is payable in Australia; or

(d) the intangible property is an ADI account; or

Introduction Chapter 1

General application of this Act Part 1.2

Section 7

Personal Property Securities Bill 2009 No. , 2009 7

(e) the intangible property is created, arises or is provided for by

a law of the Commonwealth, a State or a Territory.

Note:

For the application of Australian and foreign law in relation to a

security interest, see Part 7.2.

7 Application in the external Te rritories

Extension to Norfolk Island

(1) This Act extends to Norfolk Island.

(2) A reference in this Act to "Australia" includes a reference to

Norfolk Island.

Extension to other external Territories

(3) This Act extends to such other external Territories (if any) as are

prescribed by the regulations for the purposes of this section.

(4) Without limiting subsection (3), if an external Territory is

prescribed for the purposes of this section, regulations prescribing

the external Territory may provide that:

(a) only some of the provisions of this Act apply in the external

Territory; and

(b) provisions that apply in the external Territory only apply in

specified circumstances.

(5) If:

(a) an external Territory is prescribed by the regulations for the

purposes of this section; and

(b) in a provision of this Act that applies (either generally or in

particular circumstances) in the external Territory there is a

reference to "Australia" or a reference to a term the definition

of which includes a reference to "Australia";

then, unless the contrary intention appears, the reference to

"Australia" in that provision as so applying, or in that definition as

applying for the purposes of that provision as so applying, includes

a reference to that external Territory.

Chapter 1 Introduction

Part 1.2 General application of th is Act

Section 8

8 Personal Property Securities Bill 2009 No. , 2009

Acts Interpretation Act 1901 definition of Australia

(6) To avoid doubt, this section applies despite paragraph 17(a) of the

Acts Interpretation Act 1901 (definition of Australia).

8 Inte rests to which this Act does not apply

(1) This Act does not apply to any of the following interests (except as

provided by subsection (2) or (3)):

(a) the interest of a seller who has shipped goods to a buyer

under a negotiable bill of lading, or its equivalent, to the

order of the seller, or to the order of an agent of the seller,

unless the parties have otherwise evidenced an intention to

create or provide for a security interest in the goods;

(b) a lien, charge, or any other interest in personal property, that

is created, arises or is provided for under a law of the

Commonwealth (other than this Act), a State or a Territory,

unless the person who owns the property in which the interest

is granted agrees to the interest;

is created, arises or is provided for by operation of the

general law;

(d) any right of set-off or right of combination of accounts;

(e) any right or interest held by a person, or any interest provided

for by any transaction, under any of the following (as defined

in section 5 of the Payment Systems and Netting Act 1998):

(i) an approved netting arrangement;

(ii) a close-out netting contract;

(iii) a market netting contract;

(f) an interest provided for by any of the following transactions:

(i) the creation or transfer of an interest in land;

(ii) the creation of an interest in a right to payment, or the

creation or transfer (including a successive transfer) of a

right to payment, in connection with an interest in land,

if the writing evidencing the creation or transfer

specifically identifies that land;

(iii) a transfer (including a successive transfer) of an

unearned right to payment under a contract to a person

Introduction Chapter 1

General application of this Act Part 1.2

Section 8

Personal Property Securities Bill 2009 No. , 2009 9

who is to perform the transferor's obligations under the

contract;

(iv) a transfer of present or future remuneration (including

wages, salary, commission, allowances or bonuses)

payable to an individual as an employee or a contractor;

(v) a transfer of an interest or claim in, or under, a contract

of annuity or policy of insurance;

(vi) an assignment of an account made solely to facilitate the

collection of the account on behalf of the person making

the assignment;

(vii) without limiting subparagraph (vi), an assignment of an

account, if the assignee's sole purpose in acquiring the

account is to collect it;

(viii) an assignment of an account or negotiable instrument to

satisfy (either wholly or partly) a pre-existing

indebtedness;

(ix) a sale of an account or chattel paper as part of a sale of

business, unless the seller remains in apparent control

(within the ordinary meaning of that term) of the

business after the sale;

(x) an assignment of the beneficial interest in an account

where, after the assignment, the assignee holds the

account on trust for the assignor;

(g) the following interests in property created under the

Bankruptcy Act 1966:

(i) the interest of the Official Trustee or a registered trustee

who has taken control (within the meaning of section 50

of that Act) of a debtor's or grantor's property under

that section;

(ii) the interest of the Official Trustee or a registered trustee

in property of a debtor or grantor that has vested in the

Official Trustee or the registered trustee under

section 58 of that Act;

(iii) a charge created under section 139ZN of that Act;

(iv) a charge created under section 139ZR of that Act;

(v) an interest created under a personal insolvency

agreement under Part X of that Act;

Chapter 1 Introduction

Part 1.2 General application of th is Act

Section 8

10 Personal Property Securities Bill 2009 No. , 2009

(h) a trust over some or all of an amount provided by way of

financial accommodation, if the person to whom the financial

accommodation is provided is required to use the amount in

accordance with a condition under which the financial

accommodation is provided;

(i) a right entitlement or authority, whether or not exclusive, that

is granted by or under the general law or a law of the

Commonwealth, a State or a Territory in relation to the

control, use or flow of water;

(j) an interest in a fixture;

(k) a particular right, licence or authority (the statutory right)

granted by or under a law of the Commonwealth, a State or a

Territory, if, at the time when the statutory right is granted, or

at any time afterwards, a provision of that law declares that

kind of statutory right not to be personal property for the

purposes of this Act (no matter whether the provision

remains in force);

Note:

Personal property does not include such a statutory right if it has

been declared by such a law not to be personal property for the

purposes of this Act (see section 10).

(l) an interest of a kind prescribed by the regulations for the

purposes of this section.

Exceptions to subsection (1)

(2) The following table has effect:

Provisions of this Act that apply to interests mentioned in subsection (1)

Item

Despite subsection (1), the

following provision:

applies in relation to the following

interest mentioned in

subsection (1):

section 73

(a) a lien, charge or other interest in

personal property of a kind

described in paragraph (1)(b) or

(c); and

(b) an interest provided for by a

transaction described in

subparagraph (1)(f)(ii).

section 80

a right of set-off (see

Introduction Chapter 1

General application of this Act Part 1.2

Section 8

Personal Property Securities Bill 2009 No. , 2009 11

Provisions of this Act that apply to interests mentioned in subsection (1)

Item

Despite subsection (1), the

following provision:

applies in relation to the following

interest mentioned in

subsection (1):

paragraph (1)(d)).

sections 117 and 118

an interest provided for by the

creation or transfer of an interest in

land (see subparagraph (1)(f)(i)).

paragraph 140(2)(a)

a lien, charge or other interest in

personal property of a kind

described in paragraph (1)(b) or (c).

paragraph 148(c) and regulations

made for the purposes of that

paragraph

a lien, charge or other interest in

personal property of a kind

described in paragraph (1)(b) or (c).

(3) The regulations may provide that, despite subsection (1), this Act

applies in relation to a kind of interest prescribed by the regulations

for the purposes of this subsection.

Transfer and assignments of interests and rights

(4) To avoid doubt, the interest provided for by a transfer or

assignment of an interest or right (see paragraph (1)(f)) is the

interest that the transferee has to claim against the transferor.

Chapter 1 Introduction

Part 1.3 Definitions

Division 1 Introduction

Section 9

12 Personal Property Securities Bill 2009 No. , 2009

Part 1.3--Definitions

Division 1--Introduction

9 Guide to this Part

This Part is about the terms that are defined in this Act.

Division 2 contains the Dictionary. The Dictionary is a list of every

term defined in this Act. A term will either be defined in the

Dictionary itself, or in another provision of this Act. If another

provision defines the term, the Dictionary will have a signpost to

that definition.

Division 3 contains some longer definitions. These include the

definition of security interest (in section 12).

A security interest is an interest in personal property provided for

by a transaction that secures payment or the performance of an

obligation. The form of the transaction and the identity of the

person who has title to the property do not affect whether an

interest is a security interest. Certain transactions that do not secure

payment or the performance of an obligation may also give rise to

a security interest: transfers of accounts, consignments and certain

long-term leases and bailments (called PPS leases).

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 13

Division 2--The Dictionary

10 The Dictionary

In this Act:

ABN (short for Australian Business Number) has the meaning

given by section 41 of the A New Tax System (Australian Business

Number) Act 1999.

accession to other goods means goods that are installed in, or

affixed to, the other goods, unless both the accession and the other

goods are required or permitted by the regulations to be described

by serial number.

account means a monetary obligation (whether or not earned by

performance, and, if payable in Australia, whether or not the

person who owes the money is located in Australia) that arises

from:

(a) disposing of property (whether by sale, transfer, assignment,

lease, licence or in any other way); or

(b) granting a right, or providing services, in the ordinary course

of a business of granting rights or providing services of that

kind (whether or not the account debtor is the person to

whom the right is granted or the services are provided);

but does not include any of the following:

(d) chattel paper;

(e) an investment entitlement;

(f) an investment instrument;

(g) a negotiable instrument.

Example: An account that is a credit card receivable is covered by paragraph (b).

account debtor means a person who is obligated under an account

or chattel paper.

ADI (short for authorised deposit-taking institution) has the same

meaning as in the Banking Act 1959.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

14 Personal Property Securities Bill 2009 No. , 2009

ADI account means a protected account within the meaning of the

Banking Act 1959.

advance:

(a) means the payment of currency, the provision of credit or the

giving of value; and

(b) includes any liability of a debtor to pay interest, credit costs

and other charges or costs payable by the debtor in

connection with the advance or the enforcement of a security

interest securing the advance.

after-acquired property means personal property acquired by the

grantor after a security agreement is made.

agency includes an authority or instrumentality.

amendment demand has the meaning given by section 178.

amendment notice has the meaning given by section 180.

amendment time, of a registration, has the meaning given by

section 160.

approved form has the meaning given by section 302.

attaches has the meaning given by section 19.

Australia has a meaning affected by subsection 7(4).

Australian entity means any of the following entities:

(a) an individual who is located in Australia;

Note:

For the location of individuals, see section 235.

(b) a company or registrable Australian body (within the

meaning of the Corporations Act 2001);

Commonwealth, a State or a Territory;

(d) a public authority or an agency or instrumentality of the

Crown in right of the Commonwealth, a State or a Territory.

bankruptcy has the same meaning as in paragraph 51(xvii) of the

Constitution.

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 15

Note:

Other parts of speech and grammatical forms of "bankruptcy" (for

example, "bankrupt") have a corresponding meaning (see section 18A

of the Acts Interpretation Act 1901).

business day means a day other than:

(a) a Saturday or a Sunday; or

(b) a day which is a public holiday for the whole of:

(i) any State; or

(ii) the Australian Capital Territory; or

(iii) the Northern Territory; or

(d) a day on which the Registrar has refused access to the

in whole or in part (see subsection 147(5)); or

(e) a day that is prescribed by the regulations for the purposes of

this definition.

carrying on an enterprise has the meaning given by section 41 of

the A New Tax System (Australian Business Number) Act 1999.

chattel paper means one or more writings that evidence a monetary

obligation and either or both of the following:

(a) a security interest in, or lease of, specific goods, or specific

goods and accessions to the specific goods (even if the

description of the goods (and accessions) is taken to include a

description of intellectual property, or an intellectual property

licence, under section 105);

(b) a security interest in specific intellectual property or a

specific intellectual property licence;

but does not include any of the following:

(d) an investment entitlement;

(e) an investment instrument;

(f) a negotiable instrument.

circulating asset has the meaning given by section 340.

civil penalty provision has the meaning given by section 221.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

16 Personal Property Securities Bill 2009 No. , 2009

clearing and settlement facility has the meaning given by

Chapter 7 of the Corporations Act 2001.

collateral:

(a) means personal property to which a security interest is

attached; and

(b) in relation to a registration with respect to a security

interest--includes personal property described by the

registration (whether or not a security interest is attached to

the property).

Note:

Section 161 authorises the registration of a financing statement

that describes personal property before or after a security

agreement is made covering the property, or a security interest

has attached to the property.

commercial consignment means a consignment if:

(a) the consignor retains an interest in goods that the consignor

delivers to the consignee; and

(b) the consignor delivers the goods to the consignee for the

purpose of sale, lease or other disposal; and

kind in the ordinary course of business;

but does not include an agreement under which goods are delivered

to:

(d) an auctioneer for the purpose of sale; or

(e) a consignee for sale, lease or other disposal if the consignee

is generally known to the creditors of the consignee to be

selling or leasing goods of others.

commercial property means personal property other than consumer

property.

commingled: goods that are commingled include goods that are

mixed with goods of the same kind.

company means:

(a) a company registered under Part 2A.2 or Part 5B.1 of the

Corporations Act 2001; or

(b) a registrable body (within the meaning of that Act) that is

registered under Division 1 or 2 of Part 5B.2 of that Act.

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 17

constitutional corporation means a corporation to which

paragraph 51(xx) of the Constitution applies.

constructive knowledge has the meaning given by section 297.

Note:

Section 298 deals with knowledge in relation to bodies corporate and

other entities.

consumer property means personal property held by an individual,

other than personal property held in the course or furtherance, to

any degree, of carrying on an enterprise to which an ABN has been

allocated.

continuously perfected has the meaning given by section 56.

control has the meaning given by Part 2.3.

Note:

Control has an extended meaning in section 341 (control of inventory

and accounts in relation to fixed and floating ch arges).

crops means crops (whether matured or not and whether naturally

grown or planted) that have not been harvested, including:

(a) the products of agriculture or aquaculture, if the products

have not been harvested; and

(b) trees (but only if they are personal property), if the trees have

not been harvested.

currency means currency authorised as a medium of exchange by

the law of Australia or of any other country.

debtor means:

(a) a person who owes payment or performance of an obligation

that is secured by a security interest in personal property

(whether or not the person is also the grantor of the security

interest); or

(b) a transferee of, or successor to, an obligation mentioned in

paragraph (a).

defect, in relation to a registration, includes an irregularity,

omission or error in the registration.

Deputy Registrar means a Deputy Registrar of Personal Property

Securities.

Note:

See Part 5.9 for the office of Deputy Registrar.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

18 Personal Property Securities Bill 2009 No. , 2009

description of personal property (including collateral and

proceeds) means:

(a) in the case of a particular item of personal property--a

description that identifies the item, or that identifies a class to

which the item belongs; or

(b) in the case of a class of personal property--a description that

identifies the class.

document of title means a writing issued by or addressed to a

bailee:

(a) that covers goods in the bailee's possession that are identified

or are fungible portions of an identified mass; and

(b) in which it is stated that the goods identified in it will be

delivered:

(i) to a named person, or to the transferee of that person; or

(ii) to the bearer; or

(iii) to the order of a named person.

effective: a registration is effective with respect to particular

collateral if it is effective with respect to that collateral under

Part 5.4.

enterprise has the meaning given by section 9-20 of the A New Tax

System (Goods and Services Tax) Act 1999.

evidential burden, in relation to a matter, means the burden of

adducing or pointing to evidence that suggests a reasonable

possibility that the matter exists or does not exist.

execution creditor means a creditor who has recovered judgment

and issued execution against a grantor.

expenses, in relation to the enforcement of a security interest in

collateral, includes advances, costs and taxes for obtaining

possession of, protecting (including insuring), maintaining,

preserving or repairing the collateral.

Example: For collateral that is intellectual property, expenses include the costs

of legal proceedings against infringers of the intellectual property.

Note:

Reasonable expenses in relation to the enforcement of a security

interest are taken to be secured by a security interest unless the parties

agree otherwise (see subsection 18(5)).

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 19

express amendment, of this Act, has the meaning given by

section 244.

Family Court means the Family Court of Australia.

Federal Court means the Federal Court of Australia.

financial product has the meaning given by the Corporations Act

2001.

financial property means any of the following personal property:

(a) chattel paper;

(b) currency;

(d) an investment instrument;

(e) a negotiable instrument.

financing change statement means data amending a registered

financing statement.

financing statement means data registered (or that is to be

registered) pursuant to an application for registration under

subsection 150(1).

Note:

For requirements relating to financing statements, see Part 5.3

(Registration).

fish means any of the following, while alive:

(a) marine, estuarine or freshwater fish, or other aquatic animal

life, at any stage of their life history;

(b) oysters and other aquatic molluscs, crustaceans, echinoderms,

beachworms and other aquatic polychaetes;

but does not include any fish prescribed by the regulations for the

purposes of this definition.

fixtures means goods, other than crops, that are affixed to land.

foreign jurisdiction has the meaning given by section 39.

future advance means:

(a) an advance secured by a security interest (whether or not

made pursuant to an obligation), if the advance is made after

the security agreement was made; or

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

20 Personal Property Securities Bill 2009 No. , 2009

(b) expenses in relation to the enforcement of a security interest

that are secured by the security interest.

Note:

For the meaning of expenses, see the definition elsewhere in this

section. Reasonable expenses in relation to the enforcement of a

security interest are taken to be secured by the security interest unless

the parties agree otherwise (see subsection 18(5)).

general law means the principles and rules of the common law and

equity.

goods means personal property that is tangible property, including

the following:

(a) crops;

(b) livestock;

(d) minerals that have been extracted (including hydrocarbons)

in any form, whether solid, liquid or gaseous and whether

organic or inorganic;

(e) satellites and other space objects;

but does not include financial property or an investment

entitlement.

grantor means:

(a) a person who owns the personal property, or has the interest

in the personal property, to which a security interest is

attached (whether or not the person owes payment or

performance of an obligation secured by the security

interest); or

(b) a person who receives goods under a commercial

consignment; or

(d) a transferor of an account or chattel paper; or

(e) a transferee of, or successor to, the interest of a person

mentioned in paragraphs (a) to (d); or

(f) in relation to a registration with respect to a security interest:

(i) a person registered in the registration as a grantor; or

(ii) a person mentioned in paragraphs (a) to (e).

insolvency has the same meaning as in paragraph 51(xvii) of the

Constitution.

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 21

Note:

Other parts of speech and grammatical forms of "insolvency" (for

example, "insolvent") have a corresponding meaning (see section 18A

of the Acts Interpretation Act 1901).

intangible property means personal property (including a licence)

that is not any of the following:

(a) financial property;

(b) goods;

intellectual property means any of the following rights (including

the right to be a party to proceedings in relation to such a right):

(a) the right to do any of the things mentioned in paragraphs

10(1)(a) to (f) of the Designs Act 2003 in relation to a design

that is registered under that Act;

(b) the right to exploit or work an invention, or to authorise

another person to exploit or work an invention, for which a

patent is in effect under the Patents Act 1990;

trade mark that is registered under the Trade Marks Act 1995;

(d) the right to do, or to license another person to do, an act

referred to in section 11 of the Plant Breeder's Rights Act

1994 in relation to propagating material of a plant variety;

(e) the right to do an act referred to in section 17 of the Circuit

Layouts Act 1989 in relation to an eligible layout during the

protection period of the layout;

(f) the right under the Copyright Act 1968 to do an act

comprised in the copyright in a literary, dramatic, musical or

artistic work or a published edition of such a work, or in a

sound recording, cinematograph film, television broadcast or

sound broadcast.

intellectual property licence means an authority or licence (within

the ordinary meaning of that term) to exercise rights comprising

intellectual property.

interest, in relation to personal property, includes a right in the

personal property.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

22 Personal Property Securities Bill 2009 No. , 2009

inventory means personal property (whether goods or intangible

property) that, in the course or furtherance, to any degree, of an

enterprise to which an ABN has been allocated:

(a) is held by the person for sale or lease, or has been leased by

the person as lessor; or

(b) is held by the person to be provided under a contract for

services, or has been so provided; or

(d) is held, used or consumed by the person, as materials.

investment entitlement has the meaning given by section 15.

investment entitlement account has the meaning given by

section 15.

investment entitlement intermediary has the meaning given by

section 15.

investment instrument means any of the following financial

products:

(a) a share in a body, or a debenture of a body;

(b) a debenture, stock or bond issued or proposed to be issued by

a government;

(d) a foreign exchange contract that is not a derivative;

(e) an assignable option to have an allotment of an investment

instrument (apart from this paragraph) made to the holder of

the option;

(f) an interest in, or a unit in an interest in, a managed

investment scheme;

(g) a unit in a share in a body;

(h) a financial product that is traded on a financial market that is:

(i) operated in accordance with an Australian market

licence; or

(ii) exempt from the operation of Part 7.2 of the

Corporations Act 2001;

(i) any other financial product that is prescribed by the

regulations;

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 23

(j) any financial product that consists of a combination of any 2

or more of the financial products mentioned in paragraphs (a)

to (i);

but does not include any of the following:

(k) the creation or transfer (including a successive transfer) of a

right to payment in connection with interests in land, if the

writing evidencing the creation or transfer does not

specifically identify that land;

(l) a document of title;

(m) an investment entitlement;

(n) a negotiable instrument.

A word or expression used in this definition has the same meaning

as in the Corporations Act 2001, subject to this Part.

land includes all estates and interests in land, whether freehold,

leasehold or chattel, but does not include fixtures.

land law has the meaning given by section 117.

law of the Commonwealth, a State or a Territory means:

(a) an Act of the Commonwealth, the State or the Territory; or

(b) an instrument made under such an Act.

licence means either of the following, if it is transferable by the

licensee (whether or not the right, entitlement, authority or licence

is exclusive, and whether or not a transfer is restricted or requires

consent):

(a) a right, entitlement or authority to do one or more of the

following:

(i) to manufacture, produce, sell, transport or otherwise

deal with personal property;

(ii) to provide services;

(iii) to explore for, exploit or use a resource;

(b) an intellectual property licence;

but does not include a right, entitlement or authority that is:

Territory; and

(d) declared by that law not to be personal property for the

purposes of this Act.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

24 Personal Property Securities Bill 2009 No. , 2009

Note:

A right, entitlement or authority to which paragraph (c) or (d) applies

is not personal property for the purposes of this Act (for the meaning

of personal property, see elsewhere in this section).

livestock includes:

(a) while they are alive--alpacas, cattle, fish, goats, horses,

llamas, ostriches, poultry, sheep, swine and other animals;

and

(b) the unborn young of animals mentioned in paragraph (a).

located, in relation to personal property, or a person, has the

meaning given by section 235.

lower court has the meaning given by section 211.

matter includes act, omission, body, person and thing.

migrated security interest has the meaning given by section 332.

modification includes addition, omission and substitution.

motor vehicle has the meaning given by the regulations.

negotiable instrument means:

(a) a bill of exchange (within the meaning of the Bills of

Exchange Act 1909); or

(b) a cheque (within the meaning of the Cheques Act 1986); or

Bills of Exchange Act 1909); or

(d) any other writing that evidences a right to payment of

currency and that is of a kind that, in the ordinary course of

business, is transferred by delivery with any necessary

endorsement or assignment; or

(e) a letter of credit that states that it must be presented on

claiming payment;

but does not include any of the following:

(f) the creation or transfer (including a successive transfer) of a

right to payment in connection with interests in land, if the

writing evidencing the creation or transfer does not

specifically identify that land;

(g) a document of title;

(h) an investment entitlement.

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 25

new value means value other than value provided to reduce or

discharge an earlier debt or liability.

non-referring State means a State that is not a referring State.

Note:

For the meaning of referring State, see section 244.

notice of objection has the meaning given by section 137.

penalty unit has the meaning given by section 4AA of the Crimes

Act 1914.

perfected has the meaning given by section 21.

personal property means property (including a licence) other than:

(a) land; or

(b) a right, entitlement or authority that is:

(i) granted by or under a law of the Commonwealth, a State

or a Territory; and

(ii) declared by that law not to be personal property for the

purposes of this Act.

Note:

This Act does not apply to certain interests even if they are interests in

personal property (see section 8).

possession has a meaning affected by section 24.

PPS lease (short for Personal Property Securities lease) has the

meaning given by section 13.

PPS matter (short for Personal Property Securities matter) has the

meaning given by section 206.

predominantly: personal property is intended to be used

predominantly for personal, domestic or household purposes if:

(a) the personal property:

(i) is intended to be used only for those purposes; or

(ii) is intended to be used for other purposes as well, but is

intended to be mostly used for personal, domestic or

household purposes; and

(b) the personal property is not acquired as an investment.

present liability means a liability:

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 10

26 Personal Property Securities Bill 2009 No. , 2009

(a) that has arisen; and

(b) whose extent or amount is fixed or capable of being

ascertained;

whether or not the liability is immediately due to be met.

proceeds has the meaning given by section 31.

provides: a security agreement provides for a security interest if the

interest arises under the agreement.

purchase money security interest has the meaning given by

section 14.

receiving court has the meaning given by section 210.

referring State has the meaning given by section 244.

register means the Personal Property Securities Register

established under section 147.

Registrar means the Registrar of Personal Property Securities.

Note:

See Part 5.9 for the office of Registrar.

registration means a registered financing statement (as amended

by any registered financing change statement) with respect to:

(a) a security interest; or

(b) personal property prescribed by regulations made for the

purposes of paragraph 148(c);

registration commencement time has the meaning given by

section 306.

registration event has the meaning given by section 155.

registration time, with respect to collateral described in a

registration, has the meaning given by:

(a) section 160; or

(b) section 336 (preparatory registration with respect to

transitional security interests).

relevant superior court has the meaning given by section 211.

secured party:

Introduction Chapter 1

Definitions Part 1.3

The Dictionary Division 2

Section 10

Personal Property Securities Bill 2009 No. , 2009 27

(a) means a person who holds a security interest for the person's

own benefit or for the benefit of another person (or both); and

(b) if the holders of the obligations issued, guaranteed or

provided for under a security agreement are represented by a

trustee as the holder of the security interest--includes the

trustee; and

interest--includes a person registered as a secured party in

the registration.

security agreement means:

(a) an agreement or act by which a security interest is created,

arises or is provided for; or

(b) writing evidencing such an agreement or act.

security interest has the meaning given by section 12.

serial number, in relation to collateral, means a serial number by

which the regulations require, or permit, the collateral to be

described in a registration.

State Family Court, in relation to a State, means a court of that

State to which section 41 of the Family Law Act 1975 applies

because of a Proclamation made under subsection 41(2) of that

Act.

superior court has the meaning given by section 211.

term deposit means a deposit made with an ADI that matures on a

particular date (whether or not the ADI can be required to repay the

deposit before that date).

this Act includes the regulations.

time of execution has the meaning given by section 74.

transfer matter has the meaning given by section 210.

transferring court has the meaning given by section 210.

transitional register has the meaning given by section 330.

Chapter 1 Introduction

Part 1.3 Definitions

Division 2 The Dictionary

Section 11

28 Personal Property Securities Bill 2009 No. , 2009

transitional security agreement has the meaning given by

section 307.

transitional security interest has the meaning given by

section 308.

value:

(a) means consideration that is sufficient to support a contract;

and

(b) includes an antecedent debt or liability; and

interest--has a meaning affected by section 14.

verification statement has the meaning given by section 155.

wool means the natural fibre from any livestock that produce fleece

that can be shorn (such as sheep, goats, alpacas and llamas).

writing includes:

(a) the recording of words or data in any way (including

electronically), if, at the time the recording was made, it was

reasonable to expect that the words or data would be readily

accessible so as to be useable for subsequent reference; and

(b) the display, or other representation, of words or data by any

form of communication (including electronic), if:

(i) the display or representation is recorded in any way

(including electronically); and

(ii) at the time the recording was made, it was reasonable to

expect that the words or data would be readily

accessible so as to be useable for subsequent reference.

11 Application of the Acts Interpretation Act 1901

(1) The Acts Interpretation Act 1901, as in force at the start of the day

on which this Act receives the Royal Assent, applies to this Act.

(2) Amendments of the Acts Interpretation Act 1901 made after that

time do not apply to this Act.

Introduction Chapter 1

Definitions Part 1.3

Concepts relating to security interests and personal property Division 3

Section 12

Personal Property Securities Bill 2009 No. , 2009 29

Division 3--Concepts relating to security interests and

personal property

12 Meaning of security interest

(1) A security interest means an interest in relation to personal

property provided for by a transaction that, in substance, secures

payment or performance of an obligation (without regard to the

form of the transaction or the identity of the person who has title to

the property).

Note:

For the application of this Act to interests, see section 8.

(2) For example, a security interest includes an interest in relation to

personal property provided by any of the following transactions, if

the transaction, in substance, secures payment or performance of

an obligation:

(a) a fixed charge;

(b) a floating charge;

(d) a conditional sale agreement (including an agreement to sell

subject to retention of title);

(e) a hire purchase agreement;

(f) a pledge;

(g) a trust receipt;

(h) a consignment (whether or not a commercial consignment);

(i) a lease of goods (whether or not a PPS lease);

(j) an assignment;

(k) a transfer of title;

(l) a flawed asset arrangement.

(3) A security interest also includes the following interests in relation

to personal property, whether or not the transaction concerned, in

substance, secures payment or performance of an obligation:

(a) the interest of a transferee under a transfer of an account or

chattel paper;

(b) the interest of a consignor who delivers goods to a consignee

under a commercial consignment;

Chapter 1 Introduction

Part 1.3 Definitions

Division 3 Concepts relating to security interests and personal property

Section 13

30 Personal Property Securities Bill 2009 No. , 2009

(4) An account debtor, in relation to an account or chattel paper, may

take a security interest in the account or chattel paper.

(5) A security interest does not include:

(a) a licence; or

(b) an interest of a kind prescribed by the regulations for the

purposes of this section.

(6) A security interest is not created only by an agreement or

undertaking to do either of the following:

(a) to postpone or subordinate a person's right to payment or

performance of all or any part of a debtor's obligation to

another person's right to payment or performance of all or

any part of another of the debtor's obligations;

(b) to postpone or subordinate all or any part of a secured party's

rights under a security agreement to all or any part of another

secured party's rights under another security agreement with

the same grantor.

13 Meaning of PPS lease

(1) A PPS lease means a lease or bailment of goods:

(a) for a term of more than one year; or

(b) for an indefinite term (even if the lease or bailment is

determinable by any party within a year of entering into the

lease or bailment); or

or that is renewable at the option of one of the parties, for one

or more terms if the total of all the terms might exceed one

year; or

(d) for a term of up to one year, in a case in which the lessee or

bailee, with the consent of the lessor or bailor, retains

uninterrupted (or substantially uninterrupted) possession of

the leased or bailed property for a period of more than one

year after the day the lessee or bailee first acquired

possession of the property (but not until the lessee's or

bailee's possession extends for more than one year); or

(e) for goods that may or must be described by serial number in

accordance with the regulations, if the lease or bailment is:

Introduction Chapter 1

Definitions Part 1.3

Concepts relating to security interests and personal property Division 3

Section 14

Personal Property Securities Bill 2009 No. , 2009 31

(i) for a term of 90 days or more; or

(ii) for a term of less than 90 days, but is automatically

renewable, or is renewable at the option of one of the

parties, for one or more terms if the total of all the terms

might be 90 days or more; or

(iii) for a term of less than 90 days, in a case in which the

lessee or bailee, with the consent of the lessor or bailor,

retains uninterrupted (or substantially uninterrupted)

possession of the leased or bailed property for a period

of 90 days or more after the day the lessee or bailee first

acquired possession of the property, (but not until the

lessee's or bailee's possession extends for 90 days or

more).

(2) However, a PPS lease does not include:

(a) a lease by a lessor who is not regularly engaged in the

business of leasing goods; or

(b) a bailment by a bailor who is not regularly engaged in the

business of bailing goods; or

the use of the property is incidental to the use and enjoyment

of the land; or

(d) a lease or bailment of personal property prescribed by the

regulations for the purposes of this definition, regardless of

the length of the term of the lease or bailment.

Bailments for value only

(3) This section only applies to a bailment if the bailor provides value

for the bailment to the bailee.

14 Meaning of purchase money security interest

General definition

(1) A purchase money security interest means any of the following:

(a) a security interest taken in collateral, to the extent that it

secures all or part of its purchase price;

(b) a security interest taken in collateral by a person who gives

value for the purpose of enabling the grantor to acquire rights

Chapter 1 Introduction

Part 1.3 Definitions

Division 3 Concepts relating to security interests and personal property

Section 14

32 Personal Property Securities Bill 2009 No. , 2009

in the collateral, to the extent that the value is applied to

acquire those rights;

(d) the interest of a consignor who delivers goods to a consignee

under a commercial consignment.

Exceptions

(2) However, a purchase money security interest does not include:

(a) an interest acquired under a transaction of sale and lease back

to the seller; or

(b) an interest in collateral (as original collateral) that is chattel

paper, an investment instrument, an investment entitlement, a

monetary obligation or a negotiable instrument; or

attaches to the collateral) the grantor intends to use

predominantly for personal, domestic or household purposes.

Mixed securities

(3) If a security interest in collateral secures obligations covered by

subsection (7) (purchase money obligations) and other obligations,

the security interest is a purchase money security interest only to

the extent that it secures the purchase money obligations.

(4) If a security interest is granted in personal property (purchase

money collateral) that secures a purchase money obligation,

together with other collateral, the security interest is a purchase

money security interest only to the extent that it is granted in the

purchase money collateral.

Renewal etc.

(5) A purchase money security interest does not lose its status as such

only because the purchase money obligation is renewed,

refinanced, consolidated or restructured (whether or not by the

same secured party).

Introduction Chapter 1

Definitions Part 1.3

Concepts relating to security interests and personal property Division 3

Section 14

Personal Property Securities Bill 2009 No. , 2009 33

Application of payments to obligations

(6) In any transaction, if the extent to which a security interest is a

purchase money security interest depends on the application of a

payment to a particular obligation, the payment must be applied:

(a) in accordance with any method of application to which the

parties agree; or

(b) if the parties do not agree on a method--in accordance with

any intention of the debtor manifested at or before the time of

the payment; or

order:

(i) to obligations that are not secured, in the order in which

those obligations were incurred;

(ii) to obligations that are secured, but not by purchase

money security interests, in the order in which those

obligations were incurred;

(iii) to obligations that are secured by purchase money

security interests, in the order in which those obligations

were incurred.

Purchase money obligations

(7) This subsection covers an obligation of a debtor incurred:

(a) as all or part of the purchase price of the collateral; or

(b) for value given to enable the grantor to acquire or use the

collateral (provided the collateral is so acquired or used).

References to purchase price and value

(8) In this section, a reference to a purchase price, or value, includes a

reference to credit charges and interest payable for the purchase or

loan credit.

Chapter 1 Introduction

Part 1.3 Definitions

Division 3 Concepts relating to security interests and personal property

Section 15

34 Personal Property Securities Bill 2009 No. , 2009

15 Meaning of investment entitlement and related terms

Meaning of investment entitlement

(1) An investment entitlement is the rights of a person in whose name

an investment entitlement intermediary maintains an investment

entitlement account.

Meaning of investment entitlement intermediary

(2) An investment entitlement intermediary is:

(a) a person who, in the course of business or other regular

activity, maintains investment entitlement accounts on behalf

of others, and includes a central securities depository; or

(b) a person (a CS facility licence holder) who operates a

securities transfer and settlement facility under an Australian

CS facility licence (within the meaning of the Corporations

Act 2001).

(3) To avoid doubt, an investment entitlement intermediary may also

maintain an investment entitlement account on its own behalf.

(4) An investment entitlement intermediary (including a central

securities depository) is an investment entitlement intermediary

only while acting in the capacity of an investment entitlement

intermediary.

(5) A person is not an investment entitlement intermediary merely

because the person:

(a) acts as a registrar or transfer agent for an issuer of a financial

product; or

(b) records details of interests in financial products in its own

books, being interests credited to investment entitlement

accounts in the names of other persons for whom the person

acts as manager or agent or otherwise in a purely

administrative capacity.

(6) A person is not an investment entitlement intermediary, in relation

to particular (or any) financial products issued under the laws of

Australia or a foreign country, if:

Introduction Chapter 1

Definitions Part 1.3

Concepts relating to security interests and personal property Division 3

Section 15

Personal Property Securities Bill 2009 No. , 2009 35

(a) the person credits interests in financial products to

investment entitlement accounts maintained by the person, in

the person's capacity as operator of a system for holding and

transferring such interests, on records of the issuer or other

records which constitute the primary record of entitlement to

them as against the issuer; and

(b) the country under which the financial products are issued

makes a written declaration that the person is not to be an

investment entitlement intermediary for the purposes of this

Act in relation to the particular financial product, or in

relation to all financial products; and

subsection.

Meaning of investment entitlement account

(7) In this Act:

investment entitlement account means:

(a) an account to which interests in financial products may be

credited or debited; or

(b) in the case of an account maintained by a CS facility licence

holder--writing that records holdings and transfers

maintained by the CS facility licence holder in the course of

operating the facility.

Chapter 2 General rules relating to security interests

Part 2.1 Gu ide to this Chapter

Section 16

36 Personal Property Securities Bill 2009 No. , 2009

Chapter 2--General rules relating to security

interests

Part 2.1--Guide to this Chapter

16 Guide to this Chapter

This Chapter sets out general rules relating to security interests in

personal property.

Part 2.2 contains some general principles relating to these security

interests, the agreements that govern them and their enforceability.

The Part describes how a security interest is attached to personal

property and perfected.

Part 2.3 deals with the concepts of possession and control of

personal property.

Part 2.4 contains some rules about attachment and perfection of

security interests in particular situations.

Commonwealth of Australia Bills

PERSONAL PROPERTY SECURITIES BILL 2009