Personal Property Securities Act 2009

No. 130, 2009

Compilation No. 10

Compilation date:                              25 March 2015

Includes amendments up to:            Act No. 5, 2015

Registered:                                         14 April 2015

 

About this compilation

This compilation

This is a compilation of the Personal Property Securities Act 2009 that shows the text of the law as amended and in force on 25 March 2015 (the compilation date).

This compilation was prepared on 25 March 2015.

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on ComLaw (www.comlaw.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on ComLaw for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on ComLaw for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  

Contents

Chapter 1—Introduction                                                                                       1

Part 1.1—Preliminary                                                                                                         1

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

2............ Commencement................................................................................... 1

3............ Guide to this Act................................................................................. 1

Part 1.2—General application of this Act                                                               7

4............ Guide to this Part................................................................................ 7

5............ Crown to be bound............................................................................. 7

6............ Connection with Australia................................................................... 7

7............ Application in the external Territories................................................. 8

8............ Interests to which this Act does not apply........................................... 9

Part 1.3—Definitions                                                                                                          16

Division 1—Introduction                                                                                          16

9............ Guide to this Part.............................................................................. 16

Division 2—The Dictionary                                                                                     17

10.......... The Dictionary.................................................................................. 17

11.......... Application of the Acts Interpretation Act 1901................................ 35

Division 3—Concepts relating to security interests and personal property        36

12.......... Meaning of security interest.............................................................. 36

13.......... Meaning of PPS lease....................................................................... 37

14.......... Meaning of purchase money security interest................................... 39

15.......... Meaning of intermediated security and related terms........................ 42

Chapter 2—General rules relating to security interests       44

Part 2.1—Guide to this Chapter                                                                                 44

16.......... Guide to this Chapter........................................................................ 44

Part 2.2—Security interests: general principles                                                 45

17.......... Guide to this Part.............................................................................. 45

18.......... General rules about security agreements and security interests......... 46

19.......... Enforceability of security interests against grantors—attachment...... 46

20.......... Enforceability of security interests against third parties..................... 47

21.......... Perfection—main rule....................................................................... 49

22.......... Perfection—goods possessed by a bailee.......................................... 50

Part 2.3—Possession and control of personal property                                52

23.......... Guide to this Part.............................................................................. 52

24.......... Possession........................................................................................ 53

25.......... Control of an ADI account................................................................ 55

26.......... Control of intermediated securities.................................................... 55

27.......... Control of investment instruments.................................................... 57

28.......... Control of a letter of credit................................................................ 58

29.......... Control of negotiable instruments that are not evidenced by a certificate  59

Part 2.4—Attachment and perfection: specific rules                                     60

Division 1—Introduction                                                                                          60

30.......... Guide to this Part.............................................................................. 60

Division 2—Proceeds and transfer                                                                      62

31.......... Meaning of proceeds........................................................................ 62

32.......... Proceeds—attachment....................................................................... 64

33.......... Proceeds—perfection and temporary perfection................................ 65

34.......... Transferred collateral—temporary perfection after transfer............... 66

Division 3—Collateral returned to grantor or debtor                             68

35.......... Returned collateral—from bailee....................................................... 68

36.......... Returned collateral—negotiable instruments and investment instruments 69

37.......... Returned collateral—following sale or lease..................................... 70

38.......... Returned collateral—accounts and chattel paper................................ 71

Division 4—Relocation of collateral or grantor to Australia etc.      73

39.......... Relocation—main rule....................................................................... 73

40.......... Relocation—intangible property and financial property.................... 75

Part 2.5—Taking personal property free of security interests                 78

41.......... Guide to this Part.............................................................................. 78

42.......... Application of this Part..................................................................... 79

43.......... Taking personal property free of unperfected security interest.......... 79

44.......... Taking personal property free of security interest if serial number incorrect or missing           80

45.......... Taking motor vehicles free of security interest.................................. 81

46.......... Taking personal property free of security interest in ordinary course of business    82

47.......... Taking personal, domestic or household property free of security interest               83

48.......... Taking currency free of security interest........................................... 84

49.......... Taking investment instrument or intermediated security free of security interest in the ordinary course of trading  84

50.......... Taking investment instrument free of security interest...................... 84

51.......... Taking intermediated security free of security interest....................... 85

52.......... Taking personal property free of temporarily perfected security interest  86

53.......... Rights of secured party and transferee on taking personal property free of security interest    86

Part 2.6—Priority between security interests                                                      88

Division 1—Introduction                                                                                          88

54.......... Guide to this Part.............................................................................. 88

Division 2—Priority of security interests generally                                   91

55.......... Default priority rules......................................................................... 91

56.......... How a security interest is continuously perfected............................. 92

57.......... Priority of security interests perfected by control.............................. 92

58.......... Priority of advances.......................................................................... 93

59.......... Priority rules and intervening security interests................................. 93

60.......... Transfer of security interests does not affect priority........................ 94

61.......... Voluntary subordination of security interests.................................... 94

Division 3—Priority of purchase money security interests                    95

62.......... When purchase money security interests take priority over other security interests  95

63.......... Priority between competing purchase money security interests in collateral             96

64.......... Non‑purchase money security interests in accounts.......................... 97

65.......... Possession of goods shipped by a common carrier........................... 98

Division 4—Priority of security interests in transferred collateral 100

66.......... Application of this Division............................................................ 100

67.......... Priority when transferor‑granted interest has been continuously perfected               100

68.......... Priority when there is a break in the perfection of the transferor‑granted interest     101

Division 5—Priority of creditors, and purchasers of negotiable instruments, chattel paper and negotiable documents of title                                                                              103

69.......... Priority of creditor who receives payment of debt........................... 103

70.......... Priority of person who acquires a negotiable instrument or an interest in a negotiable instrument           103

71.......... Priority of person who acquires chattel paper or an interest in chattel paper             104

72.......... Priority of holder of negotiable document of title............................ 105

Division 6—Priority of other interests                                                            106

73.......... Priority between security interests and declared statutory interests. 106

74.......... Execution creditor has priority over unperfected security interest... 108

75.......... Priority of security interests held by ADIs...................................... 109

76.......... Priority of security interests in returned goods................................ 109

77.......... Priority of certain security interests if there is no foreign register... 110

Part 2.7—Transfer of interests in collateral                                                      112

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

79.......... Transfer of collateral despite prohibition in security agreement....... 112

80.......... Rights on transfer of account or chattel paper—rights of transferee and account debtor          113

81.......... Rights on transfer of account or chattel paper—contractual restrictions and prohibitions on transfer       115

Chapter 3—Specific rules for certain security interests     117

Part 3.1—Guide to this Chapter                                                                               117

82.......... Guide to this Chapter...................................................................... 117

Part 3.2—Agricultural interests                                                                                118

83.......... Guide to this Part............................................................................ 118

84.......... Relationship between security interest in crops and interest in land 118

84A....... Attachment of security interests to crops while they are growing and to the products of livestock          119

85.......... Priority of crops.............................................................................. 119

86.......... Priority of livestock......................................................................... 120

Part 3.3—Accessions                                                                                                        121

87.......... Guide to this Part............................................................................ 121

88.......... Continuation of security interests in accessions.............................. 121

89.......... Default rule—interest in accession has priority............................... 122

90.......... Priority interest in whole—before security interest in accession is perfected            122

91.......... Priority interest in whole—security interest in accession attaches after goods become accession             122

92.......... Secured party must not damage goods when removing accession.. 123

93.......... Reimbursement for damage caused in removing accessions........... 123

94.......... Refusal of permission to remove accession..................................... 124

95.......... Secured party must give notice of removal of accession................. 124

96.......... When person with an interest in the whole may retain accession.... 125

97.......... Court order about removal of accession.......................................... 126

Part 3.4—Processed or commingled goods                                                         127

98.......... Guide to this Part............................................................................ 127

99.......... Continuation of security interests in goods that become processed or commingled  127

100........ Perfection of security interest in goods that become processed or commingled applies to product or mass             127

101........ Limit on value of priority of goods that become part of processed or commingled goods        128

102........ Priority where more than one security interest continues in processed or commingled goods  128

103........ Priority of purchase money security interest in processed or commingled goods     128

Part 3.5—Intellectual property                                                                                  130

104........ Guide to this Part............................................................................ 130

105........ Implied references to intellectual property rights............................. 130

106........ Intellectual property licences and transfers of intellectual property.. 131

Chapter 4—Enforcement of security interests                             133

Part 4.1—Guide to this Chapter                                                                               133

107........ Guide to this Chapter...................................................................... 133

Part 4.2—General rules                                                                                                  134

108........ Guide to this Part............................................................................ 134

109........ Application of this Chapter............................................................. 135

110........ Rights and remedies........................................................................ 136

111........ Rights and duties to be exercised honestly and in a commercially reasonable manner              136

112........ Rights and remedies under this Chapter.......................................... 137

113........ Recovering judgment or issuing execution does not extinguish a security interest in collateral                137

114........ Rights and remedies under this Chapter are cumulative.................. 137

115........ Contracting out of enforcement provisions..................................... 138

116........ Application while there is a receiver or another controller of property 140

117........ Obligations secured by interests in personal property and land....... 141

118........ Enforcing security interests in accordance with land law decisions. 142

119........ Relationship with consumer credit legislation................................. 145

120........ Enforcement of security interests in liquid assets—general............. 145

121........ Enforcement of security interests in liquid assets—notice to higher priority parties and grantor              146

Part 4.3—Seizure and disposal or retention of collateral                          149

Division 1—Introduction                                                                                        149

122........ Guide to this Part............................................................................ 149

Division 2—Seizing collateral                                                                              150

123........ Secured party may seize collateral................................................... 150

124........ Secured party who has perfected a security interest in collateral by possession or control       150

125........ Obligation to dispose of or retain collateral..................................... 151

126........ Apparent possession of collateral.................................................... 152

127........ Seizure by higher priority parties—notice....................................... 152

Division 3—Disposing of collateral (including by purchasing collateral)             155

128........ Secured party may dispose of collateral.......................................... 155

129........ Disposal by purchase...................................................................... 156

130........ Notice of disposal of collateral........................................................ 157

131........ Duty of secured party disposing of collateral to obtain market value 158

132........ Secured party to give statement of account...................................... 159

133........ Disposing of collateral free of interests........................................... 161

Division 4—Retaining collateral                                                                         162

134........ Proposal of secured party to retain collateral................................... 162

135........ Notice of retention of collateral....................................................... 162

136........ Retaining collateral free of interests................................................. 163

Division 5—Objection to purchase or retention                                        166

137........ Persons entitled to notice may object to proposal............................ 166

138........ Person making objection may be requested by secured party to prove interest         166

Division 6—Seizure and disposal or retention of crops and livestock 167

138A..... Meaning of take and water source.................................................. 167

138B..... Seizure and disposal or retention of crops....................................... 167

138C..... Seizure and disposal or retention of livestock................................. 168

Part 4.4—Rules applying after enforcement                                                     169

139........ Guide to this Part............................................................................ 169

140........ Distribution of proceeds received by secured party......................... 169

141........ Secured party may take steps to reflect transfer of title.................... 171

142........ Entitled persons may redeem collateral............................................ 172

143........ Entitled persons may reinstate security agreement........................... 172

144........ When certain enforcement notices are not required......................... 173

Chapter 5—Personal Property Securities Register                  174

Part 5.1—Guide to this Chapter                                                                               174

145........ Guide to this Chapter...................................................................... 174

Part 5.2—Establishment of the register                                                                176

146........ Guide to this Part............................................................................ 176

147........ Personal Property Securities Register............................................. 176

148........ What the register contains............................................................... 177

Part 5.3—Registration                                                                                                     178

149........ Guide to this Part............................................................................ 178

150........ Registration—on application........................................................... 178

151........ Registration—belief about security interest..................................... 179

152........ Registration—location of personal property and interested persons outside Australia             182

153........ Financing statements with respect to security interests.................... 182

154........ Financing statements with respect to prescribed property............... 186

155........ Meanings of verification statement and registration event.............. 186

156........ Verification statements—Registrar to give to secured parties.......... 187

157........ Verification statements—secured parties to give notice to grantors. 187

158........ Verification statements—publication as alternative......................... 189

Part 5.4—When a registration is effective                                                          190

159........ Guide to this Part............................................................................ 190

160........ Registration time—general.............................................................. 190

161........ Registration time—security agreements and interests...................... 191

162........ Registration time—transfers............................................................ 191

163........ Effective registration....................................................................... 191

164........ Defects in registration—general rule............................................... 192

165........ Defects in registration—particular defects....................................... 192

166........ Defects in registration—temporary effectiveness............................ 193

167........ Security interest in certain property becomes unperfected............... 194

168........ Maintenance fees............................................................................. 195

Part 5.5—Accessing the register to search for data                                      197

169........ Guide to this Part............................................................................ 197

170........ Search—general.............................................................................. 198

171........ Search—criteria............................................................................... 198

172........ Search—by reference to details of grantor who is an individual..... 199

173........ Search—interference with privacy.................................................. 203

174........ Search—written search results and evidence etc............................. 204

175........ Copies of financing statements and verification statements............. 205

176........ Reports by Registrar....................................................................... 206

Part 5.5A—Conditions on data access                                                                  207

176A..... Guide to this Part............................................................................ 207

176B..... Access to registered data—conditions............................................. 207

176C..... Access to third party data................................................................ 209

Part 5.6—Amendment demands                                                                               212

Division 1—Introduction                                                                                        212

177........ Guide to this Part............................................................................ 212

178........ How amendment demands are given............................................... 212

Division 2—Amendment demands: administrative and judicial process               214

Subdivision A—Administrative process                                                           214

179........ Scope of Subdivision...................................................................... 214

180........ Administrative process—amendment notices.................................. 215

181........ Administrative process—registration amendments......................... 216

Subdivision B—Judicial process                                                                        217

182........ Judicial process for considering amendment demand...................... 217

Part 5.7—Removal of data and correction of registration errors        220

183........ Guide to this Part............................................................................ 220

184........ Removal of data—general grounds................................................. 220

185........ Removal of data—registration ineffective for 7 years or more........ 221

186........ Incorrectly removed data—restoration............................................ 221

187........ Records of removed data................................................................. 222

188........ Correction of registration errors...................................................... 222

Part 5.8—Fees, administrative review and annual reports                      223

189........ Guide to this Part............................................................................ 223

190........ Registration and search fees............................................................ 223

191........ Review of decisions........................................................................ 224

192........ Annual reports................................................................................ 225

Part 5.9—Registrar of Personal Property Securities                                   226

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

194........ Registrar—establishment of office.................................................. 226

195........ Registrar—functions and powers.................................................... 226

195A..... Registrar—investigations................................................................ 227

196........ Registrar—acting appointments...................................................... 228

197........ Registrar—delegation...................................................................... 228

198........ Registrar—resignation.................................................................... 229

199........ Registrar—termination.................................................................... 229

200........ Deputy Registrar—establishment of office..................................... 229

201........ Deputy Registrar—functions and powers....................................... 230

202........ Deputy Registrar—resignation........................................................ 230

203........ Deputy Registrar—termination....................................................... 230

Chapter 6—Judicial proceedings                                                              232

Part 6.1—Guide to this Chapter                                                                               232

204........ Guide to this Chapter...................................................................... 232

Part 6.2—Judicial proceedings generally                                                            233

Division 1—Introduction                                                                                        233

205........ Guide to this Part............................................................................ 233

206........ Scope of this Part............................................................................ 233

Division 2—Conferral of jurisdiction                                                              235

207........ Jurisdiction of courts....................................................................... 235

208........ Cross‑jurisdictional appeals............................................................ 235

209........ Courts to act in aid of each other..................................................... 237

Division 3—Transfers between courts                                                            238

210........ Application of this Division............................................................ 238

211........ Exercise of transfer power.............................................................. 239

212........ Criteria for transfers between courts............................................... 240

213........ Initiating transfers between courts................................................... 241

214........ Documents and procedure............................................................... 241

215........ Conduct of transferred proceedings................................................ 241

216........ Entitlement to practise as barrister or solicitor................................. 242

217........ Limitation on appeals...................................................................... 242

Division 4—Registrar’s role in judicial proceedings                               244

218........ Intervention in judicial proceedings................................................. 244

219........ Initiation of judicial proceedings..................................................... 244

Part 6.3—Civil penalty proceedings                                                                       245

Division 1—Introduction                                                                                        245

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

221........ What is a civil penalty provision?.................................................... 245

Division 2—Obtaining an order for a civil penalty                                  246

222........ Federal Court may order person to pay pecuniary penalty for contravening civil penalty provision         246

223........ Contravening a civil penalty provision is not an offence................. 247

224........ Persons involved in contravening civil penalty provision............... 247

225........ Recovery of a pecuniary penalty..................................................... 247

Division 3—Civil penalty proceedings and criminal proceedings     248

226........ Civil proceedings after criminal proceedings................................... 248

227........ Criminal proceedings during civil proceedings............................... 248

228........ Criminal proceedings after civil proceedings................................... 248

229........ Evidence given in proceedings for penalty not admissible in criminal proceedings  249

Division 4—Enforceable undertakings relating to contraventions of civil penalty provisions 250

230........ Acceptance of undertakings relating to contraventions of civil penalty provisions   250

231........ Enforcement of undertakings.......................................................... 250

Chapter 7—Operation of laws                                                                     251

Part 7.1—Guide to this Chapter                                                                               251

232........ Guide to this Chapter...................................................................... 251

Part 7.2—Australian laws and those of other jurisdictions                      252

233........ Guide to this Part............................................................................ 252

234........ Scope of this Part............................................................................ 252

235........ Meaning of located......................................................................... 253

236........ Commonwealth laws may provide for governing law..................... 254

237........ Express agreement.......................................................................... 255

238........ Governing laws—goods................................................................. 255

239........ Governing laws—intangible property............................................. 257

240........ Governing laws—financial property and rights evidenced by letters of credit          259

241........ Governing laws—proceeds............................................................. 260

Part 7.3—Constitutional operation                                                                         262

Division 1—Introduction                                                                                        262

242........ Guide to this Part............................................................................ 262

Division 2—Constitutional basis                                                                         263

243........ Constitutional basis for this Act...................................................... 263

244........ Meaning of referring State.............................................................. 264

245........ Meaning of referred PPS matters................................................... 268

246........ Non‑referring State operation—overview....................................... 269

247........ Non‑referring State operation—persons......................................... 270

248........ Non‑referring State operation—activities........................................ 270

249........ Non‑referring State operation—interests......................................... 271

250........ Non‑referring State operation—inclusion of data in register........... 272

251........ Personal property taken free of security interest when Act begins to operate           272

252........ Priority between constitutional and non‑constitutional security interests  273

Division 3—Constitutional guarantees                                                            274

252A..... No constitutional preference to one State over another.................... 274

252B..... No unjust acquisition of property.................................................... 274

Part 7.4—Relationship between Australian laws                                           275

Division 1—Introduction                                                                                        275

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

Division 2—Concurrent operation                                                                    276

254........ Concurrent operation—general rule................................................ 276

255........ Concurrent operation—regulations may resolve inconsistency....... 278

Division 3—When other laws prevail                                                              280

256........ When other laws prevail—certain other Commonwealth Acts........ 280

257........ When other laws prevail—security agreements............................... 280

258........ When other laws prevail—personal property, security interests and matters excluded from State amendment referrals........................................................................................................ 281

259........ When other laws prevail—exclusion by referring State law or Territory law           282

Division 4—When this Act prevails                                                                  284

261........ When this Act prevails—registration requirements......................... 284

262........ When this Act prevails—assignment requirements......................... 285

263........ When this Act prevails—formal requirements relating to agreements 286

264........ When this Act prevails—attachment and perfection of security interests  287

Chapter 8—Miscellaneous                                                                                288

Part 8.1—Guide to this Chapter                                                                               288

265........ Guide to this Chapter...................................................................... 288

Part 8.2—Vesting of certain unperfected security interests                     289

266........ Guide to this Part............................................................................ 289

267........ Vesting of unperfected security interests in the grantor upon the grantor’s winding up or bankruptcy etc.              289

267A..... Vesting in grantor of security interest that attaches after winding up etc. 291

268........ Security interests unaffected by section 267.................................... 293

269........ Certain lessors, bailors and consignors entitled to damages............ 295

Part 8.3—Exercise and discharge of rights, duties and obligations    296

270........ Guide to this Part............................................................................ 296

271........ Entitlement to damages for breach of duties or obligations............. 296

272........ Liability for damages....................................................................... 296

273........ Application of Act not affected by secured party having title to collateral                297

Part 8.4—Provision of information by secured parties                              298

274........ Guide to this Part............................................................................ 298

275........ Secured party to provide certain information relating to security interest  298

276........ Obligation to disclose successor in security interest when request made  301

277........ Time for responding to a request..................................................... 301

278........ Application to court for exemption or extension of time to respond to requests       302

279........ Persons may recover costs arising from request............................. 302

280........ Application to court for response to request etc.............................. 304

281........ Application to court in relation to costs charged.............................. 304

282........ Consequences of not complying with court order........................... 306

283........ Estoppels against persons who respond to a request....................... 306

Part 8.5—Notices and timing                                                                                      308

284........ Guide to this Part............................................................................ 308

285........ Application of this Part—notices etc............................................... 308

286........ Notices—writing............................................................................. 308

287........ Notices—registered secured parties................................................ 308

288........ Notices—more than one registered secured party........................... 309

289........ Notices etc. must be given to persons registered as secured parties using identifier 309

290........ Notices—deceased persons............................................................. 310

291........ Notices—Court orders.................................................................... 310

292........ Notices—formal defects.................................................................. 310

293........ Timing—applications for extension of time.................................... 311

294........ Timing—references to time in this Act............................................ 312

Part 8.6—Onus of proof and knowledge                                                             313

295........ Guide to this Part............................................................................ 313

296........ Onus of proof................................................................................. 313

297........ Meaning of constructive knowledge................................................ 314

298........ Actual or constructive knowledge by bodies corporate and other entities 315

299........ Actual or constructive knowledge in relation to certain property transfers               316

300........ Registration of data does not constitute constructive notice............. 317

Part 8.7—Forms and regulations                                                                             318

301........ Guide to this Part............................................................................ 318

302........ Approved forms.............................................................................. 318

303........ Regulations..................................................................................... 319

Chapter 9—Transitional provisions                                                       320

Part 9.1—Guide to this Chapter                                                                               320

304........ Guide to this Chapter...................................................................... 320

Part 9.2—Key concepts                                                                                                  322

305........ Guide to this Part............................................................................ 322

306........ Meaning of migration time and registration commencement time.. 322

307........ Meaning of transitional security agreement................................... 323

308........ Meaning of transitional security interest........................................ 323

Part 9.3—Initial application of this Act                                                                325

309........ Guide to this Part............................................................................ 325

310........ When this Act starts to apply, and in relation to which matters....... 326

311........ Enforceability of transitional security interests against third parties 326

312........ Declared statutory security interests................................................ 327

313........ Enforcement of security interests in intellectual property licences... 327

314........ Enforcement of security interests provided for by security agreements 327

315........ Starting time for registrations.......................................................... 327

316........ Governing laws............................................................................... 328

317........ Constitutional and non‑constitutional interests................................ 328

318........ References to charges and fixed and floating charges..................... 328

Part 9.4—Transitional application of this Act                                                  329

Division 1—Introduction                                                                                        329

319........ Guide to this Part............................................................................ 329

Division 2—Attachment, perfection and priority of transitional security interests        331

320........ Guide to priority rules for transitional security interests.................. 331

321........ Attachment rule............................................................................... 332

322........ Perfection rule................................................................................. 332

322A..... Priority rule—priority between transitional security interest and security interest perfected by control    334

323........ Priority rule—priority otherwise undetermined............................... 334

324........ Priority rule—certain security interests upon insolvency or bankruptcy.. 335

Division 6—Migration of personal property interests                            336

330........ Scope of Division........................................................................... 336

331........ Requirement for Commonwealth officers etc. to provide data......... 336

332........ Meaning of migrated security interest............................................ 336

333........ Registration with respect to migrated data....................................... 337

334........ Incorrectly registered migrated data................................................. 338

335........ No requirement for notice of verification statement......................... 339

Division 7—Preparatory registration relating to transitional security interests             340

336........ Preparatory registration—transitional security interests.................. 340

Division 8—Transitional security interests: registration defects      342

337........ Registration effective despite certain defects................................... 342

337A..... Registration defective if collateral is not covered by transitional security agreement                343

Part 9.5—Charges and fixed and floating charges                                       344

338........ Guide to this Part............................................................................ 344

339........ References to charges and fixed and floating charges..................... 344

340........ Meaning of circulating asset........................................................... 345

341........ Meaning of control and inventory................................................... 346

341A..... Control of an ADI account.............................................................. 348

Part 9.6—Review of operation of Act                                                                   350

342........ Guide to this Part............................................................................ 350

343........ Review of operation of Act............................................................. 350

Endnotes                                                                                                                                  351

Endnote 1—About the endnotes                                                                          351

Endnote 2—Abbreviation key                                                                              353

Endnote 3—Legislation history                                                                           354

Endnote 4—Amendment history                                                                         356

 

An Act relating to personal property securities, and for related purposes

Chapter 1—Introduction

Part 1.1—Preliminary

  

1  Short title

                   This Act may be cited as the Personal Property Securities Act 2009.

2  Commencement

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

3  Guide to this Act

Part 1.2—General application of this Act

  

4  Guide to this Part

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.

          (1A)  This Act applies to a security interest in an intermediated security if:

                     (a)  the intermediary in relation to the intermediated security is located in Australia; or

                     (b)  the grantor is an Australian entity.

Note:          For when a person 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

                     (c)  the security interest is an interest of a transferor under a transfer of intangible property that consists of an account or chattel paper, and:

                              (i)  the transferor 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

                     (e)  the intangible property is created, arises or is provided for by either or both of the following:

                              (i)  a law of the Commonwealth, a State or a Territory;

                             (ii)  the general law (to the extent to which it applies in Australia, 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 Territories

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.

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  Interests 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;

                     (c)  a lien, charge, or any other interest in personal property, that 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 (within the ordinary meaning of the term “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 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, except a transfer of a right to an insurance payment or other payment as indemnity or compensation for loss of, or damage to, collateral (or proceeds of collateral);

                            (vi)  a transfer of an account made solely to facilitate the collection of the account on behalf of the person making the transfer;

                           (vii)  without limiting subparagraph (vi), a transfer of an account, if the transferee’s sole purpose in acquiring the account is to collect it;

                          (viii)  a transfer 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)  a transfer of the beneficial interest in a monetary obligation where, after the transfer, the transferee holds the monetary obligation on trust for the transferor;

                     (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;

                     (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;

Note:       See also subsection (5).

                      (j)  an interest in a fixture;

                    (ja)  a security interest in personal property taken by a pawnbroker, if subsection (6) applies to the security interest;

                    (jb)  an interest that a person has:

                              (i)  as a member of a superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); or

                             (ii)  as a member of an approved deposit fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); or

                            (iii)  as a holder of a retirement savings account (within the meaning of the Retirement Savings Accounts Act 1997); or

                            (iv)  in an account kept under the Small Superannuation Accounts Act 1995 in the name of the person; or

                             (v)  as a holder of a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997);

                    (jc)  a charge created by section 5 of the Loans Redemption and Conversion Act 1921;

                     (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):
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).
2	section 80	a right of set‑off (see paragraph (1)(d)).
3	sections 117 and 118	an interest provided for by the creation or transfer of an interest in land (see subparagraph (1)(f)(i)).
4	paragraph 140(2)(a)	a lien, charge or other interest in personal property of a kind described in paragraph (1)(b) or (c).
5	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).
6	a provision prescribed by regulations made for the purposes of this item	an interest mentioned in subsection (1) (including an interest prescribed by regulations made for the purposes of paragraph (1)(l)) that is prescribed by regulations made for the purposes of this item.

             (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 of interests and rights

             (4)  To avoid doubt, the interest provided for by a transfer of an interest or right (see paragraph (1)(f)) is the interest that the transferee has to claim against the transferor.

Water rights

             (5)  In paragraph (1)(i), the reference to a right in relation to the control, use or flow of water includes, but is not limited to, a reference to a right that a person has against another person to receive (or otherwise gain access to) water.

Pawnbroker security interests

             (6)  For the purposes of paragraph (1)(ja), this subsection applies to a security interest taken by a pawnbroker if:

                     (a)  the pawnbroker holds a licence or is otherwise expressly authorised (for example, by registration) by a law of a State or Territory to carry on a pawnbroking business (however described in that law); and

                     (b)  the taking of the security interest is authorised by that licence or authorisation, and is not in contravention of that law of the State or Territory; and

                     (c)  the security interest is taken in the ordinary course of the pawnbroker’s business as a pawnbroker; and

                     (d)  at the time the security interest is taken, the market value of the payment or obligation secured by the security interest is less than or equal to:

                              (i)  $5,000; or

                             (ii)  if a greater amount has been prescribed by regulations made for the purposes of subsection 47(1)—that amount; and

                     (e)  at the time the security interest is taken, the pawnbroker believes, and it is actually the case, that the market value of the personal property is less than or equal to:

                              (i)  $5,000; or

                             (ii)  if a greater amount has been prescribed by regulations made for the purposes of paragraph 47(2)(c)—that amount; and

                      (f)  the personal property is not of a kind that the regulations provide may, or must, be described by serial number in a registration.

Note:          Section 47 deals with taking personal, domestic or household property free of a security interest.

Part 1.3—Definitions

Division 1—Introduction

9  Guide to this Part

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:

                     (c)  an ADI account;

                     (d)  chattel paper;

                     (e)  an intermediated security;

                      (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.

ADI account means an account, within the ordinary meaning of that term, kept by a person (whether alone or jointly with one or more other persons) with an ADI that is payable on demand or at some time in the future (as agreed between the ADI and the person or persons).

Example:    A savings account, or a term deposit, kept with an ADI.

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 section 7.

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);

                     (c)  a corporation sole established under a law of the 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.

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

                     (c)  a day that falls between Christmas Day and New Year’s Day; or

                     (d)  a day on which the Registrar has refused access to the register, or otherwise suspended the operation of the register, 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:

                     (c)  a document of title;

                     (d)  an intermediated security;

                     (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.

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

                     (c)  the consignor and the consignee both deal in goods of that 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.

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 charges).

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.

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, including a description that identifies the class by identifying a larger class of personal property that wholly includes the class.

Example 1:  A description that identifies collateral as “sheep” (a type of livestock) is sufficient to identify collateral that is sheep wool (a product of livestock, which is a class of collateral wholly included in the larger class of “sheep”).

Example 2:  A description that identifies collateral as “fruit” is sufficient to identify collateral that is apples.

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)).

express amendment, of this Act, has the meaning given by section 244.

Family Court means the Family Court of Australia.

Federal Circuit Court means the Federal Circuit Court of Australia.

Federal Court means the Federal Court of Australia.

financial product:

                     (a)  for the purposes of the definition of investment instrument in this section—has the meaning given by the Corporations Act 2001; and

                     (b)  for any other purposes—means any of the following, or an interest in any of the following, other than cash:

                              (i)  shares;

                             (ii)  bonds;

                            (iii)  any other financial instrument;

                            (iv)  any other financial asset.

financial property means any of the following personal property:

                     (a)  chattel paper;

                     (b)  currency;

                     (c)  a document of title;

                     (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

                     (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;

                     (c)  wool;

                     (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 intermediated security.

grantor means:

                     (a)  a person who 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

                     (c)  a lessee under a PPS lease; 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.

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;

                     (c)  an intermediated security.

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;

                     (c)  the rights held by a person who is the registered owner of a 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;

                     (g)  a right under or for the purposes of a law of a foreign country that corresponds to a right mentioned in any of paragraphs (a) to (f).

intellectual property licence means an authority or licence (within the ordinary meaning of that term) to exercise rights comprising intellectual property.

interest, in personal property, includes a right in the personal property.

intermediary has the meaning given by section 15.

intermediated security has the meaning given by section 15.

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

                     (c)  is held by the person as raw materials or as work in progress; or

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

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;

                     (c)  a derivative;

                     (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;

                      (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 intermediated security;

                     (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.

jurisdiction, in which personal property, or an individual, is located, has a meaning affected by subsections 235(6) and (7).

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:

                     (c)  granted by or under a law of the Commonwealth, a State or a Territory; and

                     (d)  declared by that law not to be personal property for the purposes of this Act.

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); and

                     (c)  the products of livestock before they become proceeds (for example, the wool on a sheep’s back before the sheep is shorn).

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.

National Credit Code means Schedule 1 to the National Consumer Credit Protection Act 2009, and includes regulations made under section 329 of that Act for the purposes of that Schedule.

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

                     (c)  a promissory note (within the meaning of section 89 of the Bills of Exchange Act 1909); or

                     (d)  any other writing that evidences a right to payment of currency, if:

                              (i)  the writing is of a kind that, in the ordinary course of business, is transferred by delivery with any necessary endorsement or assignment; or

                             (ii)  the writing satisfies the requirements for negotiability under the law governing negotiable instruments (including, but not limited to, instruments that are negotiable instruments within the meaning of this definition); 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 intermediated security.

new value means value other than value provided to reduce or discharge an earlier debt or liability owed to the person providing the value.

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:

                     (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.

referred PPS matters (short for referred Personal Property Securities matters) has the meaning given by section 245.

referring State has the meaning given by section 244.

register means the Personal Property Securities Register established under section 147.

registered data conditions has the meaning given by section 176B (access to registered data).

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

                    (aa)  section 333 (registration with respect to migrated data); or

                     (b)  section 336 (preparatory registration with respect to transitional security interests).

relevant superior court has the meaning given by section 211.

secured party:

                     (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

                     (c)  in relation to a registration with respect to a security interest—includes a person registered as a secured party in the registration.

securities account has the meaning given by section 15.

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.

take has the meaning given by section 138A.

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).

third party data has the meaning given by section 176C (access to third party data).

third party data conditions has the meaning given by section 176C (access to third party data).

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.

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

                     (c)  in relation to the definition of purchase money security interest—has a meaning affected by section 14.

verification statement has the meaning given by section 155.

water source has the meaning given by section 138A.

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.

Division 3—Concepts relating to security interests and personal property

12  Meaning of security interest

             (1)  A security interest means an interest in 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 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;

                     (c)  a chattel mortgage;

                     (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, 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;

                     (c)  the interest of a lessor or bailor of goods under a PPS lease.

          (3A)  A person who owes payment or performance of an obligation to another person may take a security interest in the other person’s right to require the payment or the performance of the obligation.

             (4)  Without limiting subsection (3A):

                     (a)  an account debtor, in relation to an account or chattel paper, may take a security interest in the account or chattel paper; and

                     (b)  an ADI may take a security interest in an ADI account that is kept with the ADI.

             (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

                     (c)  for a term of up to one year that is automatically renewable, 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:

                              (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

                     (c)  a lease of consumer property as part of a lease of land where 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 for which the bailee provides value.

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 in the collateral, to the extent that the value is applied to acquire those rights;

                     (c)  the interest of a lessor or bailor of goods under a PPS lease;

                     (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 intermediated security, a monetary obligation or a negotiable instrument; or

                     (c)  a security interest in collateral that (at the time the interest attaches to the collateral) the grantor intends to use predominantly for personal, domestic or household purposes.

          (2A)  Despite paragraph (2)(c), a purchase money security interest includes an interest if:

                     (a)  the interest is covered by subsection (1); and

                     (b)  the interest is in collateral that (at the time the interest attaches to the collateral) the grantor intends to use predominantly for personal, domestic or household purposes; and

                     (c)  the collateral is of a kind that is required or permitted by the regulations to be described by serial number.

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).

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

                     (c)  if neither paragraph (a) nor (b) applies—in the following 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.

15  Meaning of intermediated security and related terms

Meaning of intermediated security

             (1)  An intermediated security is the rights of a person in whose name an intermediary maintains a securities account.

Meaning of intermediary

             (2)  An intermediary is:

                     (a)  a person (including a central securities depository) who holds an Australian financial services licence (within the meaning of the Corporations Act 2001) permitting the person, in the course of business or other regular activity, to maintain securities accounts:

                              (i)  on behalf of others; or

                             (ii)  on behalf of others as well as on the person’s own behalf; or

                     (b)  a person who operates a clearing and settlement facility under an Australian CS facility licence (within the meaning of the Corporations Act 2001), other than such a person prescribed by regulations made for the purposes of this paragraph; or

                     (c)  a person (including a central securities depository) who holds a licence issued under the law of a foreign jurisdiction permitting the person, in the course of business or other regular activity, to maintain securities accounts:

                              (i)  on behalf of others; or

                             (ii)  on behalf of others as well as on the person’s own behalf.

             (3)  An intermediary does not include a central bank.

             (4)  An intermediary (including a central securities depository) is an intermediary only while acting in the capacity of an intermediary.

             (5)  A person is not an intermediary for the purposes of paragraph (2)(a) or (c) merely because the person maintains a securities account on behalf of the issuer of the financial products to which the account relates.

             (6)  Without limiting subsection (5), a person is not an intermediary for the purposes of paragraph (2)(a) or (c) merely because the person:

                     (a)  acts as a central securities depository, registrar or transfer agent for an issuer of a financial product; or

                     (b)  records details of interests in financial products in the person’s own books, being interests credited to securities accounts in the names of other persons for whom the person acts as manager or agent or otherwise in a purely administrative capacity.

Meaning of securities account

             (7)  In this Act:

securities account means:

                     (a)  an account to which interests in financial products may be credited or debited; or

                     (b)  in the case of an intermediary mentioned in paragraph 15(2)(b)—a record of holdings and transfers of interests in financial products.

Chapter 2—General rules relating to security interests

Part 2.1—Guide to this Chapter

  

16  Guide to this Chapter

Part 2.2—Security interests: general principles

  

17  Guide to this Part

18  General rules about security agreements and security interests

             (1)  A security agreement is effective according to its terms.

             (2)  A security agreement may provide for security interests in after‑acquired property.

             (3)  A security interest in after‑acquired property attaches without specific appropriation by the grantor.

             (4)  A security agreement may provide for future advances.

             (5)  A security interest is taken to secure reasonable expenses in relation to the enforcement of the security interest, unless the parties agree otherwise.

19  Enforceability of security interests against grantors—attachment

Attachment required for enforceability

             (1)  A security interest is enforceable against a grantor in respect of particular collateral only if the security interest has attached to the collateral.

Attachment rule

             (2)  A security interest attaches to collateral when:

                     (a)  the grantor has rights in the collateral, or the power to transfer rights in the collateral to the secured party; and

                     (b)  either:

                              (i)  value is given for the security interest; or

                             (ii)  the grantor does an act by which the security interest arises.

Time of attachment

             (3)  Subsection (2) does not apply if the parties to a security agreement have agreed that a security interest attaches at a later time, in which case the security interest attaches at the time specified in the agreement.

             (4)  To avoid doubt, a reference in a security agreement to a floating charge is not a reference to an agreement that the security interest created by the floating charge attaches at a time later than provided under subsection (2).

Goods leased, bailed, consigned or sold under a conditional sale agreement.

             (5)  For the purposes of paragraph (2)(a), a grantor has rights in goods that are leased or bailed to the grantor under a PPS lease, consigned to the grantor, or sold to the grantor under a conditional sale agreement (including an agreement to sell subject to retention of title) when the grantor obtains possession of the goods.

             (6)  Subsection (5) does not limit any other rights the grantor may have in the goods.

Note:          A security interest may attach to crops while they are growing, and to the products of livestock, before they become proceeds of the crops or livestock (for example, wool before it is shorn). See subsections 31(4) and (5) (meaning of proceeds) and section 84A (security interests in crops and livestock).

20  Enforceability of security interests against third parties

General rule

             (1)  A security interest is enforceable against a third party in respect of particular collateral only if:

                     (a)  the security interest is attached to the collateral; and

                     (b)  one of the following applies:

                              (i)  the secured party possesses the collateral;

                             (ii)  the secured party has perfected the security interest by control;

                            (iii)  a security agreement that provides for the security interest covers the collateral in accordance with subsection (2).

Note:          For possession and control of collateral, see Part 2.3.

Written security agreements

             (2)  A security agreement covers collateral in accordance with this subsection if:

                     (a)  the security agreement is evidenced by writing that is:

                              (i)  signed by the grantor (see subsection (3)); or

                             (ii)  adopted or accepted by the grantor by an act, or omission, that reasonably appears to be done with the intention of adopting or accepting the writing; and

                     (b)  the writing evidencing the agreement contains:

                              (i)  a description of the particular collateral, subject to subsections (4) and (5); or

                             (ii)  a statement that a security interest is taken in all of the grantor’s present and after‑acquired property; or

                            (iii)  a statement that a security interest is taken in all of the grantor’s present and after‑acquired property except specified items or classes of personal property.

Methods of signing writing

             (3)  Without limiting subparagraph (2)(a)(i), for the purposes of that subparagraph a grantor is taken to sign writing if, with the intention of identifying the grantor and adopting, or accepting, the writing, the person applies:

                     (a)  writing (including a symbol) executed or otherwise adopted by the person; or

                     (b)  writing wholly or partly encrypted, or otherwise processed, by the person.

Note:          For the meaning of writing, see section 10.

Personal property descriptions—consumer property, equipment and inventory

             (4)  If particular personal property is described using the term “consumer property” or “commercial property” in the writing evidencing a security agreement, subparagraph (2)(b)(i) is satisfied only if the personal property is more particularly described, in addition, by reference to item or class.

             (5)  If particular personal property is described using the term “inventory” in the writing evidencing a security agreement, subparagraph (2)(b)(i) is satisfied only while the personal property is held or leased by the grantor as inventory.

Proceeds

             (6)  A security interest in proceeds is enforceable against a third party whether or not the security agreement providing for the security interest contains a description of the proceeds.

Note:          Section 32 deals with whether a security interest in collateral attaches to proceeds of the collateral.

21  Perfection—main rule

             (1)  A security interest in particular collateral is perfected if:

                     (a)  the security interest is temporarily perfected, or otherwise perfected, by force of this Act; or

                     (b)  all of the following apply:

                              (i)  the security interest is attached to the collateral;

                             (ii)  the security interest is enforceable against a third party;

                            (iii)  subsection (2) applies.

             (2)  This subsection applies if:

                     (a)  for any collateral, a registration is effective with respect to the collateral; or

                     (b)  for any collateral, the secured party has possession of the collateral (other than possession as a result of seizure or repossession); or

                     (c)  for the following kinds of collateral, the secured party has control of the collateral:

                              (i)  an ADI account;

                             (ii)  an intermediated security;

                            (iii)  an investment instrument;

                            (iv)  a negotiable instrument that is not evidenced by a certificate;

                             (v)  a right evidenced by a letter of credit that states that the letter of credit must be presented on claiming payment or requiring the performance of an obligation;

                            (vi)  satellites and other space objects.

Note:          For what constitutes possession and control of collateral, see Part 2.3.

             (3)  A security interest may be perfected regardless of the order in which attachment and any step mentioned in subsection (2) occur.

             (4)  A single registration may perfect one or more security interests.

22  Perfection—goods possessed by a bailee

Perfection of security interest

             (1)  A security interest that has attached to goods in the possession of a bailee (other than the grantor or the debtor) is perfected if any of the following applies, regardless of when the security interest attached to the goods:

                     (a)  the security interest is perfected by registration, as provided by section 21;

                     (b)  the security interest is perfected by possession, as provided by section 21, because the bailee possesses the property on behalf of the secured party;

                     (c)  the bailee issues a document of title to the goods in the name of the secured party;

                     (d)  the bailee issues a negotiable document of title to the goods, and the secured party has a perfected security interest in the document.

Temporary perfection while negotiable document of title in transit

             (2)  A security interest in goods in the possession of a bailee (other than the grantor or the debtor) is temporarily perfected for the period:

                     (a)  starting at the time the bailee issues a negotiable document of title to the goods; and

                     (b)  ending at the end of the day the secured party takes possession of the document.

             (3)  The security interest in the goods becomes unperfected at the end of the period mentioned in subsection (2), unless the security interest is perfected otherwise than under subsection (2) before the end of the period.

             (4)  However, subsection (2) does not apply, and is taken never to have applied, unless, before the end of the period of 5 business days after the day of issue of the negotiable document of title:

                     (a)  the secured party takes possession of the document; or

                     (b)  the security interest is perfected otherwise than under that subsection.

Part 2.3—Possession and control of personal property

  

23  Guide to this Part

24  Possession

Possession by one party exclusive of possession by others

             (1)  A secured party cannot have possession of personal property if the property is in the actual or apparent possession of the grantor or debtor, or another person on behalf of the grantor or debtor.

             (2)  A grantor or debtor cannot have possession of personal property if the property is in the actual or apparent possession of the secured party, or another person on behalf of the secured party.

Timing rule for possession of goods transported by common carrier

             (3)  A grantor or debtor to whom goods are transported by a common carrier acquires possession of the goods only when the earlier of the following occurs:

                     (a)  the grantor or debtor, or another person at the request of the grantor or debtor, actually acquires possession of the goods;

                     (b)  the grantor or debtor, or another person at the request of the grantor or debtor, acquires possession of a document of title to the goods.

Possession of certain negotiable instruments

             (4)  A person (the first person) has possession of a negotiable instrument that is not evidenced by an electronic record if, and only if, the first person, or another person on behalf of the first person, takes physical possession of the instrument.

Note:          For possession of investment instruments, see subsection 24(6).

Possession of chattel paper that is evidenced electronically

             (5)  A secured party has possession of chattel paper that is evidenced by an electronic record if, and only if:

                     (a)  a single authoritative copy of the record exists which is unique, identifiable and unalterable (except as set out below); and

                     (b)  the authoritative copy identifies the secured party as the transferee of the record; and

                     (c)  the authoritative copy is communicated to, and maintained by, the secured party or the secured party’s agent; and

                     (d)  copies or revisions of the record that change the transferee of the authoritative copy can be made only with the participation of the secured party; and

                     (e)  each copy of the authoritative copy (or any copy of such a copy) is readily identifiable as a copy that is not the authoritative copy; and

                      (f)  any revision of the authoritative copy is readily identifiable as an authorised or unauthorised copy.

Possession of investment instruments

             (6)  Despite subsections (1) and (2), a person (the possessor) has possession of an investment instrument that is evidenced by a certificate if, and only if:

                     (a)  the certificate specifies the person who is entitled to the investment instrument; and

                     (b)  a transfer of the investment instrument may be registered on books maintained for that purpose by or on behalf of the issuer (or the certificate states that a transfer of the instrument may be so registered); and

                     (c)  any of the following applies:

                              (i)  the possessor has possession of the certificate;

                             (ii)  another person (other than the grantor or the debtor) has possession of the certificate on behalf of the possessor;

                            (iii)  the registered owner (who is not the grantor or debtor) of the investment instrument acknowledges in writing that he, she or it has possession of the investment instrument on behalf of the possessor.

25  Control of an ADI account

                   A secured party has control of an ADI account for the purposes of section 21 (perfection—main rule) if, and only if, the secured party is the ADI.

Note:          Control has an extended meaning in relation to ADIs in sections 341 and 341A (control in relation to fixed and floating charges).

26  Control of intermediated securities

Main rule

             (1)  A person has control of an intermediated security that is credited to or recorded in a securities account if, and only if, this section so provides.

Control by agreement

             (2)  A secured party has control of an intermediated security if:

                     (a)  one of the following conditions is satisfied:

                              (i)  there is an agreement in force between the grantor, the secured party and the intermediary who maintains the securities account;

                             (ii)  there is an agreement in force between the grantor and the intermediary;

                            (iii)  there is an agreement in force between the grantor and the secured party, and notice of the agreement is given to the intermediary; and

                     (b)  the agreement has the effect that:

                              (i)  the intermediary must not comply with instructions given by the grantor in relation to the intermediated security without seeking the consent of the secured party (or a person who has agreed to act on the instructions of the secured party); or

                             (ii)  the intermediary must comply, or must comply in one or more specified circumstances, with instructions (including instructions to debit the account) given by the secured party in relation to the intermediated security without seeking the consent of the grantor (or any person who has agreed to act on the instructions of the grantor).

             (3)  If the intermediary who maintains the securities account is an intermediary because of paragraph 15(2)(b), a reference to the intermediary in subparagraphs (2)(a)(i) to (iii) of this section includes a reference to a person prescribed by regulations made for the purposes of this subsection.

Note 1:       Under paragraph 15(2)(b), a person is an intermediary if the person operates a clearing and settlement facility under an Australian CS facilities licence (within the meaning of the Corporations Act 2001), other than such a person prescribed by regulations made for the purposes of that paragraph.

Note 2:       The regulations may prescribe a person by reference to a class or classes of persons (see subsection 33(3A) of the Acts Interpretation Act 1901).

          (3A)  A secured party has control of an intermediated security if there is an agreement in force under which the secured party (or a person who has agreed to act on the instructions of the secured party) is able to initiate or control the sending of some or all electronic messages or other electronic communications by which the intermediated security could be transferred or otherwise dealt with.

Control by secured party in whose name securities account is maintained

             (4)  A secured party has control of an intermediated security if:

                     (a)  the securities account is maintained in the secured party’s name; or

                     (b)  the securities account is maintained in the name of another person (who is not the grantor or debtor), and that person acknowledges in writing that he, she or it holds the intermediated security on behalf of the secured party.

27  Control of investment instruments

Main rule

             (1)  A person has control of an investment instrument if, and only if, this section so provides.

Control of any investment instrument

             (2)  A person, other than the debtor or grantor, has control of an investment instrument (whether or not the instrument is evidenced by a certificate) if the issuer of the instrument registers the person as the registered owner of the instrument.

Control of investment instruments evidenced by certificates

             (3)  A person (the controller) has control of an investment instrument that is evidenced by a certificate if:

                     (a)  the controller has possession of the instrument; and

                     (b)  the controller (or a person who has agreed to act on the instructions of the controller) is able to:

                              (i)  transfer the instrument to the controller, or to another person; or

                             (ii)  otherwise deal with the instrument.

Control of investment instruments not evidenced by certificates

             (4)  A person has control of an investment instrument that is not evidenced by a certificate if:

                     (a)  there is an agreement in force between the person and the grantor; and

                     (b)  the agreement has the effect that the person (or a person who has agreed to act on the instructions of the first person) is able to initiate or control sending instructions by which the investment instrument could be transferred or otherwise dealt with.

             (5)  A person (the controller) has control of an investment instrument that is not evidenced by a certificate if:

                     (a)  either:

                              (i)  the issuer of the instrument registers another person (who is not the grantor or debtor) as the registered owner of the investment instrument on behalf of the controller; or

                             (ii)  the registered owner (who is not the grantor or debtor) of the investment instrument acknowledges in writing that he, she or it holds the investment instrument on behalf of the controller; and

                     (b)  there is an agreement in force under which the controller (or a person who has agreed to act on the instructions of the controller) is able to initiate or control the sending of some or all electronic messages or other electronic communications by which the investment instrument could be transferred or otherwise dealt with.

             (6)  For the purposes of this section, a person has control of an investment instrument even if the registered owner of the investment instrument (who might be the grantor) retains the right:

                     (a)  to make substitutions for the instrument; or

                     (b)  to originate instructions to the issuer; or

                     (c)  to otherwise deal with the instrument.

28  Control of a letter of credit

                   A secured party does not have control of a right evidenced by a letter of credit, to the extent of any right to payment or performance of an obligation by the issuer or a nominated person, unless the issuer or nominated person has consented to assigning the proceeds of the letter of credit to the secured party.

29  Control of negotiable instruments that are not evidenced by a certificate

             (1)  A secured party has control of a negotiable instrument that is not evidenced by a certificate if, and only if:

                     (a)  the instrument is able to be transferred in accordance with the operating rules of a clearing and settlement facility; and

                     (b)  there is an agreement in force under which the secured party (or a person who has agreed to act on the instructions of the secured party) controls the sending of some or all electronic messages or other electronic communications by which the instrument could be transferred.

             (2)  For the purposes of subsection (1), a secured party has control of a negotiable instrument even if the registered owner (who might be the grantor) retains the right:

                     (a)  to make substitutions for the instrument; or

                     (b)  to originate instructions to the issuer; or

                     (c)  to otherwise deal with the instrument.

Part 2.4—Attachment and perfection: specific rules

Division 1—Introduction

30  Guide to this Part

Division 2—Proceeds and transfer

31  Meaning of proceeds

             (1)  In this Act:

proceeds of collateral to which a security interest is (or is to be) attached means identifiable or traceable personal property of the following types, subject to subsections (2) and (3):

                     (a)  personal property that is derived directly or indirectly from a dealing with the collateral (or proceeds of the collateral);

                     (b)  a right to an insurance payment or other payment as indemnity or compensation for loss of, or damage to, the collateral (or proceeds of the collateral);

                     (c)  a payment made in total or partial discharge or redemption of the collateral (or proceeds of the collateral), if the collateral (or proceeds) consists of any of the following:

                              (i)  chattel paper;

                             (ii)  intangible property;

                            (iii)  an investment instrument;

                            (iv)  an intermediated security;

                             (v)  a negotiable instrument;

                     (d)  if the collateral is intellectual property (or an intellectual property licence)—in addition to any other proceeds, the right of a licensor of the property (whether or not the property is itself a licence) to receive payments under any licence agreement in relation to the collateral;

                     (e)  if the collateral is an investment instrument or intermediated security—any of the following:

                              (i)  rights arising out of the collateral;

                             (ii)  property collected on the collateral;

                            (iii)  property distributed on account of the collateral.

Note:          In section 140 (distribution of proceeds received by secured party) proceeds has its ordinary meaning, so this definition does not apply.

Whether proceeds are traceable

             (2)  Proceeds are traceable whether or not there is a fiduciary relationship between the person who has a security interest in the proceeds, as provided in section 32, and the person who has rights in or has dealt with the proceeds.

Restriction to proceeds in which grantor has a transferable interest

             (3)  However, personal property is proceeds only if:

                     (a)  either:

                              (i)  the grantor has an interest in the proceeds; or

                             (ii)  the grantor has the power to transfer rights in the proceeds to the secured party (or to a person nominated by the secured party); and

                     (b)  the interest in the proceeds does not arise because of the operation of paragraph 140(2)(f).

Note:       Paragraph 140(2)(f) provides for the distribution of an amount or proceeds to the grantor upon the enforcement of a security interest.

Crops and livestock

             (4)  The proceeds of collateral that is crops include the harvested produce of the crops, if the produce is identifiable or traceable.

             (5)  The proceeds of collateral that is livestock include products of the livestock (for example, meat or wool), if the products are identifiable or traceable.

             (6)  However, livestock are not the proceeds of collateral merely because they are the unborn young, or the offspring, of livestock that are collateral.

32  Proceeds—attachment

Continuation of security interest in collateral, and attachment to proceeds

             (1)  Subject to this Act, if collateral gives rise to proceeds (by being dealt with or otherwise), the security interest:

                     (a)  continues in the collateral, unless:

                              (i)  the secured party expressly or impliedly authorised a disposal giving rise to the proceeds; or

                             (ii)  the secured party expressly or impliedly agreed that a dealing giving rise to the proceeds would extinguish the security interest; and

                     (b)  attaches to the proceeds, unless the security agreement provides otherwise.

Note 1:       The effect of paragraph (a) is to extinguish the security interest in the collateral if the secured party expressly or impliedly authorised the dealing mentioned.

Note 2:       A transferee can also take the collateral free of the security interest because of the operation of another provision of this Act (for example, under Part 2.5).

Enforcement of security interest against collateral and proceeds

             (2)  If the secured party enforces a security interest against both collateral (other than an investment instrument or an intermediated security) and proceeds, the amount secured by the security interest in the collateral and proceeds is limited to the market value of the collateral immediately before the collateral gave rise to the proceeds.

Note:          For the enforceability of a security interest against a third party in relation to proceeds, see also subsection 20(6).

             (3)  However, subsection (2) does not apply if, at the time of the transfer of the collateral, the transferee has actual or constructive knowledge that the transfer was in breach of a security agreement that provides for the security interest in the collateral.

             (4)  To avoid doubt, subsection (2) does not affect any right the secured party may have to recover the amount secured without enforcing the security interest.

Priority of proceeds

             (5)  For the purposes of section 55 (default priority rules), the time of registration or possession in relation to original collateral, or the time of perfection of a security interest in original collateral, is also the time of registration, possession or perfection in relation to the proceeds of the original collateral.

Note:          The effect of subsection (5) is that the security interest in the proceeds has the same default priority as the security interest in the original collateral.

33  Proceeds—perfection and temporary perfection

Perfection by reference to perfection of security interest in original collateral

             (1)  A security interest in proceeds is perfected if the security interest in the original collateral is perfected by a registration that:

                     (a)  describes the proceeds, if the description complies with any regulations made for the purposes of paragraph (d) of item 4 of the table in section 153 (financing statements with respect to security interests); or

                     (b)  covers the original collateral, if the proceeds are of a kind that are within the description of the original collateral; or

                     (c)  covers the original collateral, if the proceeds consist of currency, cheques or an ADI account, or a right to an insurance payment or any other payment as indemnity or compensation for loss or damage to the collateral or proceeds.

Temporary perfection in other situations

             (2)  If a security interest in original collateral is perfected, but a security interest in the proceeds is not perfected under subsection (1), the security interest in the proceeds is temporarily perfected for the period starting at the time the security interest in the original collateral attaches to the proceeds and ending at the end of 5 business days afterwards.

             (3)  However, the security interest in the proceeds under subsection (2) becomes unperfected at the end of the period mentioned in that subsection, unless the security interest in the proceeds is perfected otherwise than under the subsection before the end of the period.

34  Transferred collateral—temporary perfection after transfer

Security interest is temporarily perfected

             (1)  If collateral is transferred, and at the time of the transfer a secured party held a perfected security interest in the collateral, the security interest is temporarily perfected for the period starting at the time of the transfer and ending at the earliest of the following times:

                     (a)  the end of the month that is 24 months after the time of the transfer;

                     (b)  if the security interest was perfected by registration at the time of the transfer—the end time for the registration (as registered at the time of the transfer);

                     (c)  if another security interest attaches to the collateral at or after the time of the transfer, and the other security interest is perfected:

                              (i)  in a case in which the original secured party consented to the transfer—the end of 5 business days after the day of the transfer; or

                             (ii)  in a case in which the original secured party otherwise acquires the actual or constructive knowledge required to perfect the original secured party’s interest by registration (or to re‑perfect the interest by an amendment of a registration)—the end of 5 business days after the day the original secured party acquires the knowledge.

Note:          The knowledge required is the knowledge of the transferee’s (the new grantor’s) details. Unless these are registered, the original secured party’s registration may be ineffective under section 165.

Security interest becomes unperfected

             (2)  However, the security interest becomes unperfected immediately after the earliest time mentioned in subsection (1), unless, at or before that time, the security interest is perfected otherwise than under subsection (1).

Transfer free of security interest

             (3)  This section does not apply in relation to a transfer of collateral if the transferee takes the collateral free of the security interest.

Division 3—Collateral returned to grantor or debtor

35  Returned collateral—from bailee

Security interest is temporarily perfected

             (1)  A security interest in goods that is perfected by possession of the goods or a negotiable document of title to the goods under subsection 22(1) is temporarily perfected for the period covered by subsection (2) of this section if possession of the goods or document is given to the grantor or the debtor at a particular time (the action time) for the purpose of any of the following actions in relation to the goods:

                     (a)  sale;

                     (b)  exchange;

                     (c)  any other action in preparation for sale or exchange, including (but not limited to) the following:

                              (i)  loading;

                             (ii)  unloading;

                            (iii)  storing;

                            (iv)  shipping;

                             (v)  manufacturing;

                            (vi)  processing;

                           (vii)  packaging.

Note:          Subsection 22(1) provides for the perfection of a security interest in goods possessed by a bailee.

             (2)  This subsection covers the period starting at the action time and ending at the end of 5 business days after the day the action time occurs.

Security interest becomes unperfected after 5 business days

             (3)  However, the security interest in the goods or document becomes unperfected at the end of the period covered by subsection (2), unless the security interest is perfected otherwise than under subsection (1) before the end of the period.

36  Returned collateral—negotiable instruments and investment instruments

Security interest is temporarily perfected

             (1)  A security interest in a negotiable instrument or an investment instrument that is perfected by possession or control is temporarily perfected for the period covered by subsection (2) if possession or control of the instrument is given to the grantor or the debtor at a particular time (the action time) for the purpose of any of the following actions in relation to the instrument:

                     (a)  sale;

                     (b)  exchange;

                     (c)  presentation;

                     (d)  collection;

                     (e)  renewal;

                      (f)  registration (other than under this Act) for the purposes of a transfer.

             (2)  This subsection covers the period starting at the action time and ending at the end of 5 business days after the day the action time occurs.

Security interest becomes unperfected after 5 business days

             (3)  However, the security interest in the instrument becomes unperfected at the end of the period covered by subsection (2), unless the security interest in the instrument is perfected otherwise than under subsection (1) before the end of the period.

37  Returned collateral—following sale or lease

Reattachment of security interest

             (1)  If a grantor or debtor sells or leases goods that are subject to a security interest, and the buyer or lessee takes the goods free of the security interest because of the operation of this Act, the security interest reattaches to the goods at a particular time (the repossession time) if, at that time, the goods come into the possession of the grantor or debtor, or of a transferee of chattel paper created by the sale or lease, in any of the following circumstances:

                     (a)  in the case of a sale—the contract of sale is rescinded;

                     (b)  in the case of a lease—the lease expires or is rescinded;

                     (c)  the transferee seizes the goods in the exercise of a right in enforcing a security agreement;

                     (d)  the grantor or debtor repossesses the goods in the exercise of a right in enforcing the contract of sale or the lease;

                     (e)  any other circumstances prescribed by the regulations.

Note:          Section 76 deals with the priority of a security interest that reattaches under this section.

Perfection of security interest

             (2)  The perfection of the security interest, and the time of registration or perfection of the security interest, are to be determined as if the goods had not been sold or leased, if:

                     (a)  the security interest reattaches to the goods under subsection (1); and

                     (b)  the security interest was perfected by registration immediately before the time of the acquisition; and

                     (c)  the registration is effective at the repossession time.

38  Returned collateral—accounts and chattel paper

Deemed goods security interest

             (1)  If a sale or lease of goods creates an account or chattel paper, and the account or chattel paper is transferred to another person, the transferee is taken to have a security interest (the deemed goods security interest) in the goods if, at a particular time (the repossession time) the goods come into the possession of the transferor, or of the transferee, in any of the following circumstances:

                     (a)  in the case of a sale—the contract of sale is rescinded;

                     (b)  in the case of a lease—the lease expires or is rescinded;

                     (c)  the transferee seizes the goods in the exercise of a right in enforcing a security agreement;

                     (d)  the transferor repossesses the goods in the exercise of a right in enforcing the contract of sale or the lease;

                     (e)  any other circumstances prescribed by the regulations.

Note:          Section 76 deals with the priority of a security interest that reattaches under this section.

             (2)  The deemed goods security interest attaches to the goods at the repossession time.

Deemed goods security interest temporarily perfected for 5 business days

             (3)  If the transferee has a security interest in the account or chattel paper that is perfected by possession or registration at the repossession time, the deemed goods security interest is temporarily perfected for the period starting at the possession time and ending at the end of 5 business days after the day the repossession time occurs.

Deemed goods security interest becomes unperfected after 5 business days

             (4)  However, the deemed goods security interest becomes unperfected at the end of the period mentioned in subsection (3), unless the deemed goods security interest is perfected otherwise than under subsection (3) before the end of the period.

Note:          Section 76 deals with the priority of a deemed goods security interest.

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

39  Relocation—main rule

Continuous perfection prior to move to Australia

             (1)  A security interest in collateral that has been located in a jurisdiction (the foreign jurisdiction) outside Australia, and is relocated to Australia, is taken to have been continuously perfected for the period covered by subsection (2) if, immediately before the collateral became located in Australia, and at the time it became so located:

                     (a)  the security interest was effective; and

                     (b)  the security agreement providing for the security interest was enforceable against third parties.

Note:          For when personal property is located in a jurisdiction, see section 235.

             (2)  This subsection covers the period:

                     (a)  starting at whichever of the following times is applicable:

                              (i)  if the law of the foreign jurisdiction provides for the perfection (and the effect of perfection or non‑perfection) of the security interest—when the security interest last became perfected under that law;

                             (ii)  if subparagraph (i) does not apply to the law of the foreign jurisdiction, but that law provides for the public registration or recording of the security interest, or of a notice relating to the security interest—when the security interest, or such a notice, was so registered or recorded (or was last so registered or recorded);

                            (iii)  if neither subparagraph (i) nor (ii) applies to the law of the foreign jurisdiction—when the security interest last became enforceable against third parties under that law; and

                     (b)  ending when the property becomes located in Australia.

          (2A)  However, a security interest in collateral is not taken to have been continuously perfected under subsection (1) if, immediately before the collateral became located in Australia:

                     (a)  in a case in which the law of the foreign jurisdiction provides for the perfection (and effect of perfection or non‑perfection) of the security interest—the security interest was not perfected under that law; or

                     (b)  in a case in which paragraph (a) does not apply to the law of the foreign jurisdiction, but that law provides for the public registration or recording of the security interest, or of a notice relating to the security interest—the security interest, or such a notice, was not so registered or recorded.

Temporary perfection after move to Australia

             (3)  If a security interest in collateral is continuously perfected under subsection (1), the security interest in the collateral is temporarily perfected for the period:

                     (a)  starting at the time the property becomes located in Australia; and

                     (b)  ending at the earlier of the following times:

                              (i)  the end of 56 days after the day the collateral becomes located in Australia;

                             (ii)  the end of 5 business days after the day the secured party has actual knowledge that the collateral has become located in Australia.

             (4)  However, the security interest in the collateral becomes unperfected at the end of the period mentioned in subsection (3), and is taken never to have been temporarily perfected, unless the security interest is perfected otherwise than under subsection (3) before the end of the period.

40  Relocation—intangible property and financial property

Continuous perfection prior to relocation event

             (1)  If the law of a foreign jurisdiction has governed a security interest in intangible property, or financial property, the security interest is taken to have been continuously perfected for the period covered by subsection (2) if:

                     (a)  either of the following events (the relocation event) occurs:

                              (i)  the grantor becomes located in Australia;

                             (ii)  the grantor transfers the collateral to a person who is located in Australia; and

                     (b)  immediately before the relocation event, and at the time of that event:

                              (i)  the security interest was effective; and

                             (ii)  the security agreement providing for the security interest was enforceable against third parties; and

                     (c)  as a result of the occurrence of the relocation event, the perfection (and the effect of perfection or non‑perfection) of the security interest becomes governed by the law of Australia.

Note 1:       For when bodies corporate, bodies politic or individuals are located in a jurisdiction, see section 235.

Note 2:       For when laws of other jurisdictions govern a security interest, see Part 7.2.

             (2)  This subsection covers the period:

                     (a)  starting at whichever of the following times is applicable:

                              (i)  if the law of the foreign jurisdiction provides for the perfection (and the effect of perfection or non‑perfection) of the security interest—when the security interest last became perfected under that law;

                             (ii)  if subparagraph (i) does not apply to the law of the foreign jurisdiction, but that law provides for the public registration or recording of the security interest, or of a notice relating to the security interest—when the security interest, or such a notice, was so registered or recorded (or was last so registered or recorded);

                            (iii)  if neither subparagraph (i) nor (ii) applies to the law of the foreign jurisdiction—when the security interest last became enforceable against third parties under that law; and

                     (b)  ending when the relocation event occurs.

          (2A)  However, a security interest is not taken to have been continuously perfected under subsection (1) if, immediately before the relocation event:

                     (a)  in a case in which the law of the foreign jurisdiction provides for the perfection (and effect of perfection or non‑perfection) of the security interest—the security interest was not perfected under that law; or

                     (b)  in a case in which paragraph (a) does not apply to the law of the foreign jurisdiction, but that law provides for the public registration or recording of the security interest, or of a notice relating to the security interest—the security interest, or such a notice, was not so registered or recorded.

Temporary perfection after relocation event

             (3)  If a security interest in collateral is continuously perfected under subsection (1), the security interest in the collateral is temporarily perfected for the period:

                     (a)  starting at the time of the relocation event; and

                     (b)  ending at the earlier of the following times:

                              (i)  the end of 56 days after the day of the relocation event;

                             (ii)  the end of 5 business days after the day the secured party has actual knowledge of the relocation event.

             (4)  However, the security interest in the collateral becomes unperfected at the end of the period mentioned in subsection (3), and is taken never to have been temporarily perfected, unless the security interest is perfected otherwise than under subsection (3) before the end of the period.

Exceptions

             (5)  This section does not apply to:

                     (a)  intellectual property, an intellectual property licence or an ADI account; or

                     (b)  a negotiable instrument.

Note:          The property mentioned in paragraph (5)(a) is intangible property; negotiable instruments are financial property (see section 10).

Part 2.5—Taking personal property free of security interests

  

41  Guide to this Part

42  Application of this Part

                   This Part:

                     (a)  applies to a security interest:

                              (i)  whether or not the security interest is perfected (except in sections 43 (unperfected interests) and 52 (temporarily perfected interests)); and

                             (ii)  whether the security interest attaches to personal property as original collateral or as proceeds; and

                     (b)  does not apply to the acquisition of an interest in personal property free of a security interest if the interest that is taken is itself a security interest (except in sections 50 (investment instruments) and 51 (intermediated securities)).

Note:       Some acquisitions to which section 50 applies, and all acquisitions to which section 51 applies, consist of the taking of security interests (see subsections 50(3) and 51(1)).

43  Taking personal property free of unperfected security interest

Main rule

             (1)  A buyer or lessee of personal property, for value, takes the personal property free of an unperfected security interest in the property.

Exception

             (2)  Subsection (1) does not apply if the unperfected security interest was created or provided for by a transaction to which the buyer or lessee is a party, unless the personal property concerned is of a kind prescribed by the regulations for the purposes of this subsection.

44  Taking personal property free of security interest if serial number incorrect or missing

Main rule

             (1)  A buyer or lessee of personal property takes the personal property free of a security interest in the property if:

                     (a)  the regulations provide that personal property of that kind may, or must, be described by serial number in a registration; and

                     (b)  searching the register, immediately before the time of the sale or lease, by reference only to the serial number of the property, would not disclose a registration that perfected the security interest.

Exceptions

             (2)  Subsection (1) does not apply if:

                     (a)  the buyer or lessee holds the personal property:

                              (i)  as inventory; or

                             (ii)  on behalf of a person who would hold the collateral as inventory; or

                     (b)  the security interest was created or provided for by a transaction to which the buyer or lessee is a party, unless the personal property concerned is of a kind prescribed by regulations for the purposes of this paragraph.

             (3)  Within the period of 24 months after the registration commencement time, subsection (1) does not apply if the security interest is a transitional security interest, other than:

                     (a)  a migrated security interest in a motor vehicle; or

                     (b)  a migrated security interest in a watercraft within the meaning of the regulations.

45  Taking motor vehicles free of security interest

Incorrect or missing serial number

             (1)  A buyer or lessee, for new value, of a motor vehicle of a kind prescribed by the regulations for the purpose of this section, takes the motor vehicle free of a security interest in the motor vehicle if:

                     (a)  the regulations provide that motor vehicles of that kind may, or must, be described by serial number; and

                     (b)  there is a time during the period between the start of the previous day and the time of the sale or lease by reference to which a search of the register (by reference otherwise only to the serial number of the motor vehicle) would not disclose a registration that perfected the security interest; and

                     (c)  the seller or lessor is:

                              (i)  the person who granted the security interest; or

                             (ii)  if the person who granted the security interest has lost the right to possess the motor vehicle, or is estopped from asserting an interest in the motor vehicle—another person who is in possession of the motor vehicle.

             (2)  Subsection (1) does not apply if:

                     (a)  the secured party is in possession of the motor vehicle immediately before the time of the sale or lease; or

                     (b)  the motor vehicle is bought at a sale held by or on behalf of an execution creditor; or

                     (c)  the buyer or lessee holds the motor vehicle:

                              (i)  as inventory; or

                             (ii)  on behalf of a person who would hold the motor vehicle as inventory; or

                     (d)  the buyer or lessee buys or leases the motor vehicle with actual or constructive knowledge of the security interest.

Taking from prescribed persons

             (3)  A buyer or lessee, for new value, of a motor vehicle of a kind prescribed by the regulations for the purpose of this section takes the motor vehicle free of a security interest in the motor vehicle if:

                     (a)  the regulations provide that motor vehicles of that kind may, or must, be described by serial number; and

                     (b)  the seller or lessor is in a class of persons prescribed by the regulations for the purposes of this subsection.

             (4)  Subsection (3) does not apply if:

                     (a)  the secured party is in possession of the motor vehicle immediately before the time of the sale or lease; or

                     (b)  the motor vehicle is bought at a sale held by or on behalf of an execution creditor; or

                     (c)  the buyer or lessee holds the motor vehicle:

                              (i)  as inventory; or

                             (ii)  on behalf of a person who would hold the motor vehicle as inventory; or

                     (d)  the buyer or lessee buys or leases the motor vehicle with actual or constructive knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest.

46  Taking personal property free of security interest in ordinary course of business

Main rule

             (1)  A buyer or lessee of personal property takes the personal property free of a security interest given by the seller or lessor, or that arises under section 32 (proceeds—attachment), if the personal property was sold or leased in the ordinary course of the seller’s or lessor’s business of selling or leasing personal property of that kind.

Exceptions

             (2)  Subsection (1) does not apply if:

                     (a)  in a case in which personal property of that kind may, or must, be described by serial number—the buyer or lessee holds the personal property:

                              (i)  as inventory; or

                             (ii)  on behalf of a person who would hold the collateral as inventory; or

                     (b)  in any case—the buyer or lessee buys or leases the personal property with actual knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest.

47  Taking personal, domestic or household property free of security interest

Main rule

             (1)  A buyer or lessee of personal property, for new value, that the buyer or lessee intends (at the time of purchase or lease) to use predominantly for personal, domestic or household purposes takes the personal property free of a security interest in the property if the market value (worked out at the time each part of the total new value is given) of the total new value given for the personal property is not more than:

                     (a)  $5,000; or

                     (b)  if a greater amount has been prescribed by regulations for the purposes of this subsection—that amount.

Exceptions

             (2)  Subsection (1) does not apply if:

                     (a)  the personal property is of a kind that the regulations provide may, or must, be described by serial number in a registration; or

                     (b)  the buyer or lessee buys or leases the personal property with actual or constructive knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest; or

                     (c)  at the time the contract or agreement providing for the sale or lease is entered into, the buyer or lessee believes, and it is actually the case, that the market value of the personal property is more than:

                              (i)  $5,000; or

                             (ii)  if a greater amount has been prescribed by regulations for the purposes of this paragraph—that amount.

48  Taking currency free of security interest

                   A holder of currency takes the currency free of a security interest in the currency if the holder acquires the currency with no actual or constructive knowledge of the security interest.

49  Taking investment instrument or intermediated security free of security interest in the ordinary course of trading

                   A person who buys an investment instrument or an intermediated security in the ordinary course of trading on a prescribed financial market (within the meaning of the Corporations Act 2001) takes the instrument or intermediated security free of a security interest in the instrument or intermediated security.

50  Taking investment instrument free of security interest

Main rule

             (1)  A purchaser (see subsection (3)) of an investment instrument, other than a secured party, takes the instrument free of a security interest in the instrument if:

                     (a)  the purchaser gives value for the instrument; and

                     (b)  the purchaser takes possession or control of the instrument.

Exception

             (2)  Subsection (1) does not apply if the purchaser takes the instrument with actual or constructive knowledge that the taking constitutes a breach of the security agreement that provides for the security interest.

             (3)  In this section:

purchaser, in relation to an investment instrument, means a person who takes the instrument by sale, lease, discount, assignment, negotiation, mortgage, pledge, lien, issue, reissue or any other consensual transaction that creates an interest in personal property.

51  Taking intermediated security free of security interest

Main rule

             (1)  A person (the transferee) who takes an interest in an intermediated security takes the interest free of a security interest in the intermediated security if:

                     (a)  the transferee gives value for the interest (unless the interest acquired is itself a security interest); and

                     (b)  the credit of the interest in the financial product in relation to which the intermediated security arises is made in accordance with a consensual transaction.

Exception

             (2)  Subsection (1) does not apply if, at the time the interest is taken, the transferee has actual or constructive knowledge that crediting the interest in the financial product constitutes a breach of a security agreement that provides for a security interest in any intermediated security or financial product.

52  Taking personal property free of temporarily perfected security interest

Main rule

             (1)  A buyer or lessee, for new value, of the proceeds of personal property, or of goods or a negotiable document of title, takes the proceeds, goods or document free of a security interest that is temporarily perfected by force of this Act (other than a transitional security interest perfected by force of section 322) immediately before the time of the sale or lease, if the security interest is not otherwise perfected at that time.

Note:          Section 322 provides for the perfection of transitional security interests.

Exception

             (2)  Subsection (1) does not apply if the buyer or lessee has actual knowledge that the sale or lease constitutes a breach of the security agreement that provides for the security interest at:

                     (a)  the time new value is first given for the sale or lease, if the personal property is bought or leased with the intention of using it predominantly for personal, domestic or household purposes; or

                     (b)  in any other case—the time of sale or of entry into agreement for the lease.

53  Rights of secured party and transferee on taking personal property free of security interest

Scope

             (1)  This section applies if:

                     (a)  a person (the transferee) acquires personal property from another person (the transferor); and

                     (b)  as a result, the transferee takes the personal property, or an accession to the property, free of a secured party’s security interest because of the operation of this Part.

Rights of secured party

             (2)  The rights of the secured party are subrogated, in relation to the property, to the rights (if any) of the transferor and any predecessor of the transferor (including the right to receive any part of the purchase price for the property which has not been paid).

Rights of transferee

             (3)  If a person who is liable to pay the purchase price of personal property makes a payment before receiving notice of a secured party’s right under subsection (2), the payment discharges the obligation of the person to the extent of the payment.

Part 2.6—Priority between security interests

Division 1—Introduction

54  Guide to this Part

Division 2—Priority of security interests generally

55  Default priority rules

             (1)  This section sets out the priority between security interests in the same collateral if this Act provides no other way of determining that priority.

Note:          For other rules about priorities, see the following:

(a)    the remaining provisions of this Part;

(b)    Chapter 3 (agricultural interests, accessions and commingling);

(c)    Part 9.4 (transitional application of this Act).

Priority between unperfected security interests

             (2)  Priority between unperfected security interests in the same collateral is to be determined by the order of attachment of the security interests.

Perfected security interest has priority over unperfected security interest

             (3)  A perfected security interest in collateral has priority over an unperfected security interest in the same collateral.

Priority for perfection in other ways

             (4)  Priority between 2 or more security interests in collateral that are currently perfected is to be determined by the order in which the priority time (see subsection (5)) for each security interest occurs.

             (5)  For the purposes of subsection (4), the priority time for a security interest in collateral is, subject to subsection (6), the earliest of the following times to occur in relation to the security interest:

                     (a)  the registration time for the collateral;

                     (b)  the time the secured party, or another person on behalf of the secured party, first perfects the security interest by taking possession or control of the collateral;

                     (c)  the time the security interest is temporarily perfected, or otherwise perfected, by force of this Act.

             (6)  A time is a priority time for a security interest only if, once the security interest is perfected at or after that time, the security interest remains continuously perfected.

Note:          A security interest in the proceeds of original collateral has the same default priority as the security interest in the original collateral (see subsection 32(5)).

56  How a security interest is continuously perfected

             (1)  For the purposes of this Act, a security interest is continuously perfected after a particular time if the security interest is, after that time, perfected under this Act at all times.

             (2)  A security interest may be continuously perfected after a particular time even if, after that time, it is perfected in 2 or more different ways:

                     (a)  at any particular time; or

                     (b)  at different times.

Examples:  A security interest could be perfected in 2 or more different ways as follows:

(a)    by possession and by a registration;

(b)    by 2 different registrations.

57  Priority of security interests perfected by control

Priority interests

             (1)  A security interest in collateral that is currently perfected by control has priority over a security interest in the same collateral that is currently perfected by another means.

Note:          Only security interests in certain kinds of property can be perfected by control (see paragraph 21(2)(c) and Part 2.3).

             (2)  Priority between 2 or more security interests in collateral that are currently perfected by control is to be determined by the order in which the interests were perfected by control (where the perfection by control has been continuous).

          (2A)  A perfected security interest (the priority interest) in the proceeds of original collateral has priority over any other security interest in the proceeds, except a security interest in the proceeds as original collateral that is perfected by control, if:

                     (a)  the security interest in the first‑mentioned original collateral was perfected by control when the collateral gave rise to proceeds; and

                     (b)  the priority interest is not perfected by control.

Control priority takes precedence over any other priority rule

             (3)  This section applies despite the application of any other provision of this Part.

58  Priority of advances

                   A security interest provided for by a security agreement has the same priority in respect of all advances (including future advances), and the performance of all obligations, secured by the agreement.

Note:          This section is subject to section 68 (transfer of collateral that is not registered with a serial number).

59  Priority rules and intervening security interests

                   A security interest (the first security interest) has priority over another security interest (the last security interest) if, by the operation of this Act (including this section):

                     (a)  the first security interest has priority over security interests of a particular kind (the intermediate security interests); and

                     (b)  the intermediate security interests have priority over the last security interest.

60  Transfer of security interests does not affect priority

                   If a security interest in collateral is transferred, the transferred interest has the same priority immediately after the transfer as it had immediately before the transfer.

Note:          Division 4 deals with transfer of collateral.

61  Voluntary subordination of security interests

             (1)  A secured party may (in a security agreement or otherwise) subordinate the secured party’s security interest in collateral to any other interest in the collateral.

             (2)  The subordination:

                     (a)  is effective according to its terms between the parties; and

                     (b)  may be enforced by a third party if the third party is the person, or one of a class of persons, for whose benefit the subordination is intended.

Division 3—Priority of purchase money security interests

62  When purchase money security interests take priority over other security interests

Scope

             (1)  This section sets out when a perfected purchase money security interest that is granted by a grantor in collateral or its proceeds has priority over a perfected security interest that is granted by the same grantor in the same collateral, but that is not a purchase money security interest.

Note:          This section is subject to section 57 (perfection by control).

Inventory

             (2)  The purchase money security interest has priority if:

                     (a)  the purchase money security interest is in inventory or its proceeds; and

                     (b)  the purchase money security interest is perfected by registration at the time:

                              (i)  for inventory that is goods—the grantor, or another person at the request of the grantor, obtains possession of the inventory; or

                             (ii)  for any other kind of inventory—the purchase money security interest attaches to the inventory; and

                     (c)  the registration that perfects the purchase money security interest states, in accordance with item 7 of the table in section 153, that the interest is a purchase money security interest.

Note:          This subsection is subject to sections 64 (non‑purchase money security interest in accounts) and 71 (chattel paper).

Personal property other than inventory

             (3)  The purchase money security interest has priority if:

                     (a)  the interest is in personal property, or its proceeds, other than inventory; and

                     (b)  the purchase money security interest is perfected by registration before the end of 15 business days after whichever of the following days applies:

                              (i)  for goods—the day the grantor, or another person at the request of the grantor, obtains possession of the property;

                             (ii)  for any other property—the day the interest attaches to the property; and

                     (c)  the registration that perfects the purchase money security interest states, in accordance with item 7 of the table in section 153, that the interest is a purchase money security interest.

Note:          The period mentioned in paragraph (b) may be extended by a court under section 293.

63  Priority between competing purchase money security interests in collateral

                   A perfected purchase money security interest (the priority interest) that is granted by a grantor in collateral or its proceeds to a seller, lessor or consignor of the collateral has priority over any other perfected purchase money security interest that is granted by the same grantor in the same collateral if the priority interest is perfected:

                     (a)  if the collateral is inventory that is goods—at the time the grantor, or another person at the request of the grantor, obtains possession of the collateral; or

                     (b)  if the collateral is inventory and is not goods—at the time the priority interest attaches to the collateral; or

                     (c)  if the collateral is not inventory, and is goods—before the end of 15 business days after the day the grantor, or another person at the request of the grantor, obtains possession of the collateral; or

                     (d)  if the collateral is not inventory, and is not goods—before the end of 15 business days after the day the priority interest attaches to the collateral.

Note 1:       This section is subject to section 57 (perfection by control).

Note 2:       The periods mentioned in paragraphs (c) and (d) may be extended by a court under section 293.

64  Non‑purchase money security interests in accounts

Non‑purchase money security interest in account as original collateral has priority over purchase money security interest in account as proceeds of inventory

             (1)  Despite subsection 62(2), a non‑purchase money security interest (the priority interest) granted for new value in an account as original collateral and perfected by registration has priority over a perfected purchase money security interest that is granted by the same grantor in the account as proceeds of inventory, if:

                     (a)  the registration time in respect of the priority interest occurs before the earlier of the following times:

                              (i)  the time at which the purchase money security interest is perfected;

                             (ii)  the registration time in respect of the purchase money security interest; or

                     (b)  both of the following conditions are met:

                              (i)  the secured party holding the priority interest gives a notice in accordance with subsection (2) to the secured party holding the purchase money security interest;

                             (ii)  the notice is given at least 15 business days before the earlier of the day on which the registration time for the account occurs and the day the priority interest attaches to the account.

Note 1:       This section is subject to sections 57 (perfection by control) and 71 (chattel paper).

Note 2:       The period mentioned in paragraph (b) may be extended by a court under section 293.

             (2)  A notice is given in accordance with this subsection if:

                     (a)  the notice is in the approved form; or

                     (b)  the notice:

                              (i)  contains a description of the inventory to which the notice relates; and

                             (ii)  sets out the effect of subsection (1).

Perfected purchase money security interest in both proceeds and new value

             (3)  If a person has a purchase money security interest in an account as proceeds of inventory that is subordinate to a non‑purchase money security interest under subsection (1):

                     (a)  the person is taken to have a purchase money security interest in both the proceeds of the inventory and in the new value mentioned in subsection (1); and

                     (b)  the purchase money security interest in the new value is taken to be perfected by the registration that perfected the purchase money security interest in the proceeds; and

                     (c)  the new value is taken to be an account for the purposes of this Act (except for the purposes of this section or paragraph 12(3)(a) (account transferee’s interest taken to be security interest)).

             (4)  However, if the new value mentioned in paragraph (3)(c) would be an account for the purposes of this Act in the absence of that paragraph, the paragraph does not prevent the new value from being an account for the purposes of this section or paragraph 12(3)(a).

65  Possession of goods shipped by a common carrier

                   For the purposes of this Division, if goods are shipped by common carrier to a grantor, or to a person designated by the grantor, the grantor does not obtain possession of the goods until the grantor, or a third party at the request of the grantor, obtains actual possession of the goods or a document of title to the goods, whichever is earlier.

Division 4—Priority of security interests in transferred collateral

66  Application of this Division

             (1)  This Division sets out the priority between 2 security interests (a transferor‑granted interest and a transferee‑granted interest) if:

                     (a)  a grantor transfers collateral (the transferred collateral) to a transferee; and

                     (b)  immediately before the transfer, a security interest (the transferor‑granted interest) is attached to the collateral; and

                     (c)  the transferee grants (whether before or after the transfer) a security interest (the transferee‑granted interest) in the transferred collateral; and

                     (d)  neither the transferor‑granted interest nor the transferee‑granted interest is currently perfected by control.

Note 1:       If either or both of the interests are currently perfected by control under paragraph 21(2)(c), section 57 applies.

Note 2:       If the priority between a transferor‑granted interest and a transferee‑granted interest is not covered by this section, then section 55 applies.

Note 3:       For attachment and perfection in relation to transferred collateral, see section 34.

Note 4:       For a grantor’s rights in relation to transferring collateral, see section 79.

             (2)  This Division does not prevent a secured party from perfecting a security interest in any way in order to have priority over another security interest.

67  Priority when transferor‑granted interest has been continuously perfected

                   The transferor‑granted interest has priority if:

                     (a)  it was perfected immediately before the transfer; and

                     (b)  it has been continuously perfected since the transfer.

68  Priority when there is a break in the perfection of the transferor‑granted interest

             (1)  The transferor‑granted interest in the transferred collateral has priority (except as mentioned in subsection (2)) if:

                     (a)  the transferred collateral is not registered with a serial number (see subsection (4)); and

                     (b)  the interest was perfected by registration immediately before the transfer; and

                     (c)  the interest becomes unperfected; and

Note:       See subsection 34(3) for one situation in which a security interest may become unperfected following a transfer of collateral.

                     (d)  the interest is later re‑perfected; and

                     (e)  a notice is given (whether before or after the interest is re‑perfected as mentioned in paragraph (d)) to all other secured parties who have a registration that describes the transferred collateral; and

                      (f)  the notice is given in accordance with subsection (5); and

                     (g)  the interest has been continuously perfected since it was re‑perfected as mentioned in paragraph (d).

             (2)  However, the transferee‑granted interest has priority if:

                     (a)  subsection (1) applies in relation to the transferor‑granted interest; and

                     (b)  the transferee‑granted interest is perfected immediately before the transferor‑granted security is re‑perfected as mentioned in paragraph (1)(d); and

                     (c)  the transferee acquires the collateral without actual or constructive knowledge that the acquisition constitutes a breach of the security agreement that provides for the transferor‑granted interest; and

                     (d)  the transferee‑granted interest secures performance of an advance made, or an obligation incurred, by the transferee’s secured party before:

                              (i)  the transferor‑granted interest is re‑perfected as mentioned in paragraph (1)(d); and

                             (ii)  the notice is given under paragraph (1)(e);

but only to the extent of the advance or obligation.

             (3)  Subsection (2) applies despite section 58 (priority of advances).

             (4)  For the purposes of this section, the transferred collateral is registered with a serial number at a particular time only if a search of the register by reference to that time and by reference only to the serial number of the collateral is capable of disclosing the registration.

             (5)  A notice is given in accordance with this subsection if:

                     (a)  the notice is in the approved form; or

                     (b)  the notice:

                              (i)  states that the secured party expects to perfect a security interest in the transferred collateral; and

                             (ii)  contains a description of the transferred collateral; and

                            (iii)  sets out the effect of subsections (1) and (2).

Division 5—Priority of creditors, and purchasers of negotiable instruments, chattel paper and negotiable documents of title

69  Priority of creditor who receives payment of debt

             (1)  The interest of a creditor who receives payment of a debt owing by a debtor through a payment covered by subsection (3) has priority over a security interest (whether perfected or unperfected) in:

                     (a)  the funds paid; and

                     (b)  the intangible that was the source of the payment; and

                     (c)  a negotiable instrument used to effect the payment.

Example:    A bank account from which the funds were paid is an example of an intangible that was the source of the payment.

             (2)  Subsection (1) does not apply if, at the time of the payment, the creditor had actual knowledge that the payment was made in breach of the security agreement that provides for the security interest.

             (3)  Payments made by a debtor are covered by this subsection if they are made through the use of:

                     (a)  an electronic funds transfer; or

                     (b)  a debit, transfer order, authorisation, or similar written payment mechanism executed by the debtor when the payment was made; or

                     (c)  a negotiable instrument.

70  Priority of person who acquires a negotiable instrument or an interest in a negotiable instrument

             (1)  This section applies if, by a consensual transaction, a person acquires an interest consisting of:

                     (a)  a negotiable instrument; or

                     (b)  an interest in a negotiable instrument.

             (2)  The interest of the person in the negotiable instrument has priority over a perfected security interest in the negotiable instrument if:

                     (a)  the person gave value for the interest; and

                     (b)  the person:

                              (i)  in the case of a person who acquired the interest in the ordinary course of the person’s business of acquiring interests of that kind—acquired the interest without actual or constructive knowledge that the acquisition constitutes a breach of the security agreement that provides for the security interest; or

                             (ii)  otherwise—acquired the interest without actual or constructive knowledge of the security interest; and

                     (c)  the person took possession or control of the negotiable instrument.

71  Priority of person who acquires chattel paper or an interest in chattel paper

             (1)  This section applies if:

                     (a)  a person acquires an interest consisting of:

                              (i)  chattel paper; or

                             (ii)  an interest in chattel paper; and

                     (b)  the interest is acquired:

                              (i)  by a consensual transaction; and

                             (ii)  in the ordinary course of the person’s business of acquiring interests of that kind; and

                            (iii)  for new value.

Note:          For rights relating to the transfer of chattel paper, see section 80.

             (2)  The interest of the person in the chattel paper has priority over the following security interests in the chattel paper:

                     (a)  if the person took possession of the chattel paper without actual or constructive knowledge of a perfected security interest in the chattel paper—the perfected security interest;

                     (b)  in any case—a security interest that has attached to proceeds of inventory as original collateral.

             (3)  This section applies despite sections 62 and 64.

72  Priority of holder of negotiable document of title

                   The interest of a holder of a negotiable document of title has priority over a perfected security interest in the document of title if:

                     (a)  the holder gave value for the document of title; and

                     (b)  the holder:

                              (i)  in the case of a holder who acquired the document of title in the ordinary course of the holder’s business of acquiring documents of title of that kind—acquired the interest without actual or constructive knowledge that the acquisition constitutes a breach of the security agreement that provides for the security interest; or

                             (ii)  otherwise—acquired the document of title without actual or constructive knowledge of the security interest.

Division 6—Priority of other interests

73  Priority between security interests and declared statutory interests

Interests arising under a law etc. in the ordinary course of business

             (1)  An interest (the priority interest) in collateral has priority over a security interest in the collateral if:

                     (a)  the priority interest arises (by being created, arising or being provided for):

                              (i)  under a law of the Commonwealth, a State or a Territory, unless the person who owns the collateral in which the priority interest is granted agrees to the interest; or

                             (ii)  by operation of the general law; and

                     (b)  the priority interest arises in relation to providing goods or services in the ordinary course of business; and

                     (c)  the person who holds the priority interest provided those goods or services; and

                     (d)  no law of the Commonwealth, a State or a Territory provides for the priority between the priority interest and the security interest; and

Example: A law of the Commonwealth, a State or a Territory to which subsection (2) applies is a law that provides for the priority between the priority interest and the security interest.

                     (e)  the person who holds the priority interest acquired the interest without actual knowledge that the acquisition constitutes a breach of the security agreement that provides for the security interest.

Note:          The priority interest might be an interest to which this Act would otherwise not apply (see subsection 8(2)).

Statutory interests declared by law

             (2)  The priority between an interest in collateral (the statutory interest) that arises, by being created, arising or being provided for, under a law of the Commonwealth, a State or a Territory (the relevant jurisdiction) and a security interest in the same collateral is to be determined in accordance with that law if, and only if:

                     (a)  that law declares that this subsection applies to statutory interests of that kind; and

                     (b)  the statutory interest arises after the declaration comes into effect.

Note:          The statutory interest might be an interest to which this Act would otherwise not apply (see subsection 8(2)).

             (3)  However, for the purposes of subsection (2), as it applies to a law of the Commonwealth:

                     (a)  the Minister may, by an instrument made under subsection (4), make the declaration required by paragraph (2)(a); and

                     (b)  the priority mentioned in subsection (2) may be determined in accordance with that instrument.

             (4)  The Minister may make a legislative instrument containing a declaration, or determining priority, or both, for the purposes of subsection (3).

             (5)  Subsection (2) is subject to subsection (1).

Rights to payment in connection with specifically identified land

             (6)  An interest (the priority interest) in collateral has priority over a security interest in the collateral if the priority interest is an interest of a kind mentioned in subparagraph 8(1)(f)(ii) (certain rights to payment in respect of land).

Interests arising under the general law

             (7)  The priority between an interest in collateral (the general law interest) that arises by operation of the general law and a security interest in the same collateral is to be determined in accordance with an instrument made under subsection (8) if, and only if:

                     (a)  no law of the Commonwealth (other than this Act and that instrument) provides for the priority between the general law interest and the security interest; and

                     (b)  the instrument provides that this subsection applies to general law interests of that kind; and

                     (c)  the general law interest arises after the instrument comes into effect.

             (8)  The Minister may make a legislative instrument for the purposes of subsection (7).

             (9)  Subsection (7) is subject to subsection (1).

Note:          This section does not apply to priorities in relation to interests that arise before the registration commencement time (within the meaning of section 306). Priorities in relation to such interests are unaffected by this Act (see section 312).

74  Execution creditor has priority over unperfected security interest

             (1)  The interest of an execution creditor in collateral has priority over any security interest in the same collateral that is not perfected at the time covered by subsection (4) (even if such a security interest is later perfected).

             (2)  To avoid doubt, an execution creditor does not include a landlord who exercises a right of distress.

             (3)  This section applies despite any other section in this Part.

Time of seizure or execution

             (4)  This subsection covers the following times:

                     (a)  if the collateral is seized by the execution creditor or by another person on behalf of the execution creditor—the time of seizure;

                     (b)  in any other case—the time when:

                              (i)  an order is made by a court in respect of a judgment in relation to the execution creditor; or

                             (ii)  a garnishee order is made in relation to the execution creditor.

75  Priority of security interests held by ADIs

                   To avoid doubt, a perfected security interest, held by an ADI, in an ADI account with the ADI has priority over any other perfected security interest in the ADI account.

Note 1:       A security interest that is held by an ADI in an ADI account is perfected by control (see paragraph 21(2)(c) and section 25).

Note 2:       This provision does not affect any right of set‑off the grantor might have in relation to the account (see paragraph 8(1)(d)).

76  Priority of security interests in returned goods

Security interest held by account transferee

             (1)  A perfected security interest in goods that has reattached to the property under subsection 37(1) has priority over a security interest in the goods that is granted by the operation of subsection 38(1) to a transferee of an account.

Note:          Section 37 deals with security interests that reattach when goods are returned. Section 38 provides for a security interest in an account or chattel paper to arise automatically when goods are returned.

             (2)  A security interest in goods that is granted by the operation of subsection 38(2) to a transferee of chattel paper has priority over the following perfected security interests:

                     (a)  a perfected security interest in the goods that is granted by the operation of subsection 38(2) to a transferee of an account;

                     (b)  if the transferee takes possession of the chattel paper in the ordinary course of business of acquiring chattel paper of that kind and for new value:

                              (i)  a perfected security interest in the goods that has reattached under subsection 37(1); or

                             (ii)  a perfected security interest in the goods as after‑acquired property that attaches when the goods come into the possession of the grantor or transferee in the circumstances mentioned in paragraph 37(1)(d).

Security interest granted by buyer or lessee

             (3)  A security interest (the priority interest) in goods that is granted by a person who acquires an interest in the property has priority over a security interest in the goods that reattaches under section 37, or is granted by the operation of section 38, if:

                     (a)  the priority interest attaches while the goods are in the possession of the person; and

                     (b)  immediately before the repossession time (referred to in paragraph 37(1)(d) or 38(1)(d)), the priority interest is perfected.

77  Priority of certain security interests if there is no foreign register

Scope

             (1)  This section applies to a security interest (the priority interest) in an account, financial property or an intermediated security if the law of the jurisdiction that governs the perfection, and the effect of perfection or non‑perfection, of the priority interest does not provide for the public registration or recording of the priority interest, or a notice relating to the priority interest.

Note:          For when laws of other jurisdictions govern a security interest, see Part 7.2.

Security interests in accounts

             (2)  A priority interest in an account has priority, in proceedings in an Australian court, over another interest in the account (whether or not the other interest is a security interest) if the priority interest is perfected by registration under this Act before the other interest attaches to the account.

Security interests in financial property and intermediated securities

             (3)  A priority interest in personal property that is financial property or an intermediated security has priority, in proceedings in an Australian court, over another interest in the personal property (whether or not the other interest is a security interest) if:

                     (a)  the priority interest is perfected by registration under this Act before the other interest attaches to the personal property; and

                     (b)  when the other interest arises in the personal property:

                              (i)  the personal property is located in Australia; and

                             (ii)  the secured party does not have possession or control of the personal property.

Note:          For when personal property is located in a jurisdiction, see section 235.

Relationship with sections 239 and 240

             (4)  Subsections (2) and (3) apply in proceedings in an Australian court even if the law of another jurisdiction applies in the proceedings in relation to a security interest in an account or financial property under subsection 239(2) or 240(4) or (5).

Part 2.7—Transfer of interests in collateral

  

78  Guide to this Part

79  Transfer of collateral despite prohibition in security agreement

             (1)  If collateral would be able to be transferred (including by sale, by creating a security interest or under proceedings to enforce a judgment) but for a provision in a security agreement prohibiting the transfer or declaring the transfer to be a default, the collateral may be transferred, despite the provision:

                     (a)  by consent between the grantor and the transferee; or

                     (b)  by operation of law.

Note:          See section 32 in relation to security interests in proceeds that arise as a result of a transfer.

             (2)  A transfer mentioned in subsection (1) does not prejudice the rights of the secured party under the security agreement or otherwise, including the right to treat a prohibited transfer as an act of default.

80  Rights on transfer of account or chattel paper—rights of transferee and account debtor

Rights of transferee subject to contractual terms and defences

             (1)  The rights of a transferee of an account or chattel paper (including a secured party or a receiver) are subject to:

                     (a)  the terms of the contract between the account debtor and the transferor, and any equity, defence, remedy or claim arising in relation to the contract (including a defence by way of a right of set‑off); and

                     (b)  any other equity, defence, remedy or claim of the account debtor against the transferor (including a defence by way of a right of set‑off) that accrues before the first time when payment by an account debtor to the transferor no longer discharges the obligation of the account debtor under subsection (8) to the extent of the payment.

             (2)  Subsection (1) does not apply if the account debtor makes an enforceable agreement not to assert defences to claims arising out of the contract.

Effect of modification or substitution of contract on transferee

             (3)  Unless the account debtor has otherwise agreed, a modification of, or substitution for, the contract between the account debtor and the transferor is effective against the transferee (including a secured party or a receiver) if:

                     (a)  the account debtor and the transferor have acted honestly in modifying or substituting the contract; and

                     (b)  the manner in which the modification or the substitution is made is commercially reasonable; and

                     (c)  the modification or substitution does not have a material adverse effect on:

                              (i)  the transferee’s rights under the contract; or

                             (ii)  the transferor’s ability to perform the contract.

Note:          For the meaning of modification, see section 10.

             (4)  Subsection (3) applies:

                     (a)  to the extent that a transferred right to payment arising out of the contract has not been fully earned by performance; and

                     (b)  even if there has been notice of the transfer to the account debtor.

             (5)  If a contract has been modified or substituted in the manner described in subsection (3), the transferee obtains rights that correspond to the rights of the transferor under the contract as modified or substituted.

             (6)  Nothing in subsections (3) to (5) affects the validity of a term in a transfer agreement that provides that a modification or substitution mentioned in subsection (3) is a breach of contract by the transferor.

Payment by account debtor after transfer

             (7)  If an account or chattel paper is transferred, the account debtor may continue to make payments under the contract to the transferor:

                     (a)  until the account debtor receives a notice that:

                              (i)  states that the amount payable or to become payable under the contract has been transferred; and

                             (ii)  states that payment is to be made to the transferee; and

                            (iii)  identifies the contract (whether specifically or by class) under which the amount payable is to become payable; or

                     (b)  after receiving a notice under paragraph (a) (other than a notice from the transferor), if:

                              (i)  the account debtor requests the transferee to provide proof of the transfer; and

                             (ii)  the transferee fails to provide proof before the end of 5 business days after the day of the request.

             (8)  Payment by an account debtor to a transferee in accordance with a notice under paragraph (7)(a) (including in the circumstances described in paragraph (7)(b)) discharges the obligation of the account debtor to the extent of the payment.

81  Rights on transfer of account or chattel paper—contractual restrictions and prohibitions on transfer

Scope

             (1)  This section applies to a term in a contract if:

                     (a)  the contract is between an account debtor and a transferor; and

                     (b)  the term restricts or prohibits transfer of any of the following for currency due or to become due:

                              (i)  the whole of an account that is the proceeds of inventory;

                             (ii)  the whole of an account that arises from granting a right (other than a right granted under a construction contract), or providing services (other than financial 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);

                            (iii)  the whole of an account that is the proceeds of an account mentioned in subparagraph (ii);

                            (iv)  chattel paper.

Statutory restriction on contracts

             (2)  The term in the contract:

                     (a)  is binding on the transferor, but only to the extent of making the transferor liable in damages for breach of contract; and

                     (b)  is unenforceable against third parties.

Chapter 3—Specific rules for certain security interests

Part 3.1—Guide to this Chapter

  

82  Guide to this Chapter

Part 3.2—Agricultural interests

  

83  Guide to this Part

84  Relationship between security interest in crops and interest in land

Effect of security interest in crops on lessor or mortgagee of land

             (1)  A security interest in crops does not prejudicially affect the rights of a lessor or mortgagee of land on which the crops are growing if:

                     (a)  those rights existed at the time the security interest was created; and

                     (b)  the lessor or mortgagee has not consented in writing to the creation of the security interest.

Effect of sale etc. of land on perfected security interest in crops

             (2)  Subject to subsection (1), a perfected security interest in crops is not prejudicially affected by a subsequent sale, lease or mortgage of, or other encumbrance on, the land on which the crops are growing.

84A  Attachment of security interests to crops while they are growing and to the products of livestock

Security interest in crops while they are growing

             (1)  To avoid doubt, a security interest may attach to crops while they are growing.

Security interest in the products of livestock

             (2)  To avoid doubt, a security interest may attach to the products of livestock before they become proceeds (for example, the wool on a sheep’s back before the sheep is shorn).

Note 1:       Livestock includes the products of livestock before they become proceeds (see section 10).

Note 2:       For what are the proceeds of crops and livestock, see subsections 31(4), (5) and (6).

85  Priority of crops

                   A perfected security interest (the priority interest) that is granted by a grantor in crops or the proceeds of crops has priority over any other security interest that is granted by the same grantor in the same crops or proceeds if:

                     (a)  the priority interest is granted for value; and

                     (b)  the priority interest is granted to enable the crops to be produced; and

                     (c)  either:

                              (i)  the security agreement providing for the priority interest is made while the crops are growing; or

                             (ii)  the crops are planted during the period of 6 months after the day the security agreement providing for the priority interest is made.

86  Priority of livestock

                   A perfected security interest (the priority interest) that is granted by a grantor in livestock or the proceeds of livestock has priority over any other security interest (other than a purchase money security interest) that is granted by the same grantor in the same livestock or proceeds if:

                     (a)  the priority interest is granted for value; and

                     (b)  the priority interest is granted to enable the livestock to be fed or developed; and

                     (c)  either:

                              (i)  the livestock are held by the grantor at the time the security agreement providing for the priority interest is made; or

                             (ii)  the livestock are acquired by the grantor during the period of 6 months after the day the security agreement providing for the priority interest is made.

Part 3.3—Accessions

  

87  Guide to this Part

88  Continuation of security interests in accessions

                   A security interest in goods that become an accession to other goods continues in the accession.

Note:          However, a person might take an interest in the accession free of the security interest because of another provision of this Act.

89  Default rule—interest in accession has priority

                   Except as otherwise provided in this Act, a security interest in goods that is attached at the time when the goods become an accession has priority over a claim to the goods as an accession made by a person with an interest in the whole.

90  Priority interest in whole—before security interest in accession is perfected

                   The interest of any of the following persons has priority over a security interest in goods that is attached at the time when the goods become an accession:

                     (a)  a person who acquires for value an interest in the whole after the goods become an accession, but before the security interest in the accession is perfected;

                     (b)  an assignee for value of a person with an interest in the whole at the time when the goods become an accession, but before the security interest in the accession is perfected;

                     (c)  a person with a perfected security interest in the whole who makes an advance under the security agreement relating to the security interest after the goods become an accession, but before the security interest in the accession is perfected, and only to the extent of the advance;

                     (d)  a person with a perfected security interest in the whole who acquires the right to retain the whole in satisfaction of the obligation secured after the goods become an accession, but before the security interest in the accession is perfected.

91  Priority interest in whole—security interest in accession attaches after goods become accession

                   A security interest in goods that attaches after the goods become an accession is subordinate to the interest of:

                     (a)  a person who has an interest in the other goods at the time when the goods become an accession and who:

                              (i)  has not consented to the security interest in the accession; and

                             (ii)  has not disclaimed an interest in the accession; and

                            (iii)  has not entered into an agreement under which another person is entitled to remove the accession; and

                            (iv)  is otherwise entitled to prevent the grantor from removing the accession; or

                     (b)  a person who acquires an interest in the whole after the goods become an accession, but before the security interest in the accession is perfected.

92  Secured party must not damage goods when removing accession

                   A secured party who is entitled to remove an accession under section 123 (seizure of collateral) must remove the accession from the whole in a manner that causes no greater damage to the other goods, or that puts the person in possession of the whole to no greater inconvenience, than is necessarily incidental to the removal of the accession.

93  Reimbursement for damage caused in removing accessions

             (1)  A person, other than the grantor, who has an interest in the other goods at the time the goods become an accession is entitled to reimbursement for any damage to that person’s interest in the other goods caused by the removal of the accession.

             (2)  Any reimbursement payable under subsection (1) does not include reimbursement for a reduction in the value of the property caused by the absence of the accession or by the necessity of the replacement of the accession.

94  Refusal of permission to remove accession

                   A person entitled to reimbursement under section 93 may refuse permission to remove the accession until the secured party has given adequate security for the reimbursement.

95  Secured party must give notice of removal of accession

Notice required to be given by secured party

             (1)  A secured party who is entitled to remove an accession from the whole must give notice of the secured party’s intention to remove the accession to each of the following persons in accordance with subsections (2) and (3):

                     (a)  the grantor;

                     (b)  a secured party with a security interest in the accession that has a higher priority.

             (2)  The secured party must give a notice to a person:

                     (a)  at least 10 business days before the day the accession is removed; or

                     (b)  if the person has given a written notice to the secured party specifying a smaller number of days to apply for the purposes of this section—at least that number of days before the accession is removed.

             (3)  A notice must contain the following:

                     (a)  the name of the secured party giving the notice;

                     (b)  a description of the accession and of the other goods;

                     (c)  a statement of the obligation owed to the secured party, and the value of the accession if the accession were removed from the other goods;

                     (d)  a statement of intention to remove the accession, unless the obligation secured by the security interest in the accession is discharged, or the value of the accession is paid, before the end of the period to which subsection (2) applies.

             (4)  The notice may be given in the approved form.

When notice is not required

             (5)  The secured party is not required to give a notice to a person under subsection (1) if, after the debtor defaults, the person gives written consent to the secured party to remove the accession without receiving a notice.

             (6)  The secured party is not required to give a notice to any person under subsection (1) if:

                     (a)  the secured party believes on reasonable grounds that the accession will decline substantially in value if it is not disposed of immediately after default; or

                     (b)  the cost of expenses for the retention of the accession that are secured against the accession is disproportionately large in relation to its value.

Note:          In addition, a secured party is not required to give a notice in any of the circumstances set out in section 144 (when certain enforcement notices are not required).

             (7)  A person is not entitled to a notice under subsection (1) in relation to an accession to goods only because the person has an interest in another accession to the same goods.

96  When person with an interest in the whole may retain accession

                   A person, other than the grantor, who has an interest in the whole of goods that under this Act is subordinate to a security interest in an accession, may retain the accession if:

                     (a)  the obligation to the secured party with a security interest that has priority over all other security interests in the accession is performed; or

                     (b)  the secured party mentioned in paragraph (a) is paid the value of the accession at the time of payment, if the accession were to be removed from the goods.

97  Court order about removal of accession

                   A court may, on the application of a person entitled to receive a notice under section 95 (notice of removal of an accession), make an order:

                     (a)  postponing the removal of the accession; or

                     (b)  determining the amount payable to the secured party under section 96 for the retention of the accession.

Note:          For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

Part 3.4—Processed or commingled goods

  

98  Guide to this Part

99  Continuation of security interests in goods that become processed or commingled

             (1)  A security interest in goods that subsequently become part of a product or mass continues in the product or mass if the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product or mass.

Note:          A person might take an interest in the product or mass free of the security interest because of the operation of another provision of this Act.

             (2)  Without limiting subsection (1), the identity of goods that are manufactured, processed, assembled or commingled is lost in a product or mass if it is not commercially practical to restore the goods to their original state.

100  Perfection of security interest in goods that become processed or commingled applies to product or mass

                   For the purposes of section 55 (default priority rules), perfection of a security interest in goods that subsequently become part of a product or mass is to be treated as perfection of the security interest in the product or the mass.

101  Limit on value of priority of goods that become part of processed or commingled goods

                   Any priority that a security interest continuing in the product or mass has over another security interest in the product or mass is limited to the value of the goods on the day on which they became part of the product or mass.

102  Priority where more than one security interest continues in processed or commingled goods

             (1)  A perfected security interest continuing in a product or mass has priority over an unperfected security interest continuing in the same product or mass.

             (2)  If more than one perfected security interest continues in the same product or mass, each perfected security interest is entitled to share in the product or mass according to the ratio that the obligation secured by the perfected security interest bears to the sum of the obligations secured by all perfected security interests in the same product or mass.

             (3)  If more than one unperfected security interest continues in the same product or mass, each unperfected security interest is entitled to share in the product or mass according to the ratio that the obligation secured by the unperfected security interest bears to the sum of the obligations secured by all unperfected security interests in the same product or mass.

             (4)  For the purposes of this section, the obligation secured by a security interest does not exceed the value of the goods on the day on which the goods became part of the product or mass.

103  Priority of purchase money security interest in processed or commingled goods

                   Despite section 102, a perfected purchase money security interest in goods that continues in the product or mass has priority over:

                     (a)  a non‑purchase money security interest in the goods that continues in the product or mass; and

                     (b)  a non‑purchase money security interest in the product or mass given by the same grantor.

Part 3.5—Intellectual property

  

104  Guide to this Part

105  Implied references to intellectual property rights

Act applies to intellectual property rights etc.

             (1)  This Act applies to intellectual property rights (including rights exercisable under an intellectual property licence), in relation to goods, in the same way as it applies to the goods, if:

                     (a)  the exercise by a secured party of rights in relation to the goods arising under a security agreement necessarily involves an exercise of the intellectual property rights; and

                     (b)  the payment or obligation secured by the security interest is (in addition) secured by a security interest that is attached to the intellectual property rights.

Description of goods taken to include a description of intellectual property rights

             (2)  For the purposes of this Act, if a registration perfects the security interest in goods mentioned in subsection (1), the following descriptions are taken to include a description of the intellectual property rights concerned, or of an intellectual property licence required to exercise those rights:

                     (a)  a description of the goods in the security agreement;

                     (b)  the registered description of the goods;

                     (c)  a description of the goods included in a notice under this Act.

             (3)  Subsection (2) applies subject to a contrary intention in the security agreement, registration or notice.

106  Intellectual property licences and transfers of intellectual property

             (1)  If:

                     (a)  a security interest is granted in an intellectual property licence; and

                     (b)  the intellectual property in which the licence is granted is later transferred; and

                     (c)  the licensee of the intellectual property licence continues to hold the licence after the transfer;

the security agreement that provides for the security interest binds every successor in title to the licensor of the intellectual property licence to the same extent as the security agreement was binding on the licensor.

             (2)  If:

                     (a)  a security interest is granted in a sub‑licence granted under an intellectual property licence; and

                     (b)  the intellectual property licence under which the sub‑licence is granted is later transferred; and

                     (c)  the licensee of the sub‑licence continues to hold the sub‑licence after the transfer;

the security agreement that provides for the security interest binds every successor in title to the licensor of the sub‑licence to the same extent as the security agreement was binding on the licensor.

Chapter 4—Enforcement of security interests

Part 4.1—Guide to this Chapter

  

107  Guide to this Chapter

Part 4.2—General rules

  

108  Guide to this Part

109  Application of this Chapter

Security interests to which this Chapter does not apply

             (1)  This Chapter does not apply to security interests that are provided for by the following:

                     (a)  a transfer of an account or chattel paper that does not secure payment or performance of an obligation;

                     (b)  a security interest that is incidental to a security interest referred to in paragraph (a);

                     (c)  a PPS lease that does not secure payment or performance of an obligation;

                     (d)  a commercial consignment that does not secure payment or performance of an obligation.

             (2)  This Chapter does not apply to security interests in goods that are located outside Australia.

Note:          For where personal property is located, see section 235.

Security interests in investment instruments or intermediated securities that are perfected by possession or control

             (3)  This Chapter (apart from sections 110, 111, 113 and 140) does not apply in relation to a person who has perfected a security interest in:

                     (a)  an investment instrument by taking possession or control of the instrument; or

                     (b)  an intermediated security by taking control of the intermediated security.

             (4)  To avoid doubt, subsection (3) applies whether the person has perfected the security interest only by possession or control, or by another method as well.

Sections that do not apply to household property

             (5)  The following provisions do not apply in relation to collateral that is used by a grantor predominantly for personal, domestic or household purposes:

                     (a)  sections 117 and 118 (relationship with land laws);

                     (b)  section 120 (enforcement of security interests in liquid assets);

                   (ba)  section 126 (apparent possession of collateral);

                     (c)  paragraphs 128(2)(b) and (c) (disposal of collateral by lease or licence);

                     (d)  section 129 (disposal by purchase);

                     (e)  section 134 (retention of collateral).

110  Rights and remedies

                   This Act does not derogate in any way from the rights and remedies the following parties to a security agreement have, apart from this Act, against each other in relation to a default by the debtor under the security agreement:

                     (a)  the debtor;

                     (b)  the grantor;

                     (c)  a secured party.

111  Rights and duties to be exercised honestly and in a commercially reasonable manner

             (1)  All rights, duties and obligations that arise under this Chapter must be exercised or discharged:

                     (a)  honestly; and

                     (b)  in a commercially reasonable manner.

             (2)  A person does not act dishonestly merely because the person acts with actual knowledge of the interest of some other person.

112  Rights and remedies under this Chapter

             (1)  In exercising rights and remedies provided by this Chapter, a secured party may deal with collateral only to the same extent as the grantor would be entitled to so deal with the collateral.

             (2)  However, subsection (1) does not apply:

                     (a)  if the secured party had title to the collateral immediately before starting to exercise any right or remedy provided by this Part; or

                     (b)  to the extent that it would otherwise prevent the secured party from dealing with the collateral by way of transfer because a transfer by the grantor would be prohibited or declared to be a default under a security agreement.

Note:       See section 79 (transfer of collateral despite prohibition in security agreement).

             (3)  Without limiting subsection (1), under this Chapter a secured party may only seize, purchase or dispose of a licence subject to:

                     (a)  the terms and conditions of the licence; and

                     (b)  any applicable law of the Commonwealth, a State or a Territory.

113  Recovering judgment or issuing execution does not extinguish a security interest in collateral

                   The fact that a secured party has recovered judgment, or issued execution, against a grantor in relation to collateral does not extinguish the security interest in the collateral.

114  Rights and remedies under this Chapter are cumulative

                   The rights and remedies provided by this Chapter are cumulative.

115  Contracting out of enforcement provisions

Collateral not used predominantly for personal, domestic or household purposes

             (1)  The parties to a security agreement that provides for a security interest in collateral that is not used predominantly for personal, domestic or household purposes may contract out of the following provisions in relation to the collateral (to the extent, if any, mentioned):

                     (a)  section 95 (notice of removal of accession), to the extent that it requires the secured party to give a notice to the grantor;

                     (b)  section 96 (when a person with an interest in the whole may retain an accession);

                     (c)  section 117 (obligations secured by interests in personal property and land);

                     (d)  section 118 (enforcing security interests in accordance with land law decisions), to the extent that it allows a secured party to give a notice to the grantor;

                     (e)  section 120 (enforcement of liquid assets);

                      (f)  subsection 121(4) (enforcement of liquid assets—notice to grantor);

                     (g)  section 123 (right to seize collateral);

                     (h)  section 125 (obligation to dispose of or retain collateral);

                      (i)  section 126 (apparent possession);

                      (j)  section 128 (secured party may dispose of collateral);

                     (k)  section 129 (disposal by purchase);

                      (l)  section 130 (notice of disposal), to the extent that it requires the secured party to give a notice to the grantor;

                    (m)  paragraph 132(3)(d) (contents of statement of account after disposal);

                     (n)  subsection 132(4) (statement of account if no disposal);

                     (o)  subsection 134(1) (retention of collateral);

                     (p)  section 135 (notice of retention);

                   (pa)  Division 6 of Part 4.3 (seizure and disposal or retention of crops and livestock), or any particular provision of that Division;

                     (q)  section 142 (redemption of collateral);

                      (r)  section 143 (reinstatement of security agreement).

             (2)  However, if parties to a security agreement contract out of a provision, the provision continues to the extent that it gives rights to, and imposes obligations in relation to, persons who are not parties to the security agreement.

Example:    Parties to a security agreement contract out of the right to seize property under section 123. A secured party who is not a party to the security agreement may seize the property under section 123.

             (3)  Despite subsection (2), if parties to a security agreement contract out of section 142 (redemption of collateral), the provision does not give any person (whether or not the person is a party to the agreement) a right to redeem collateral under section 142.

Contracts between persons other than the grantor

             (5)  A person (including a secured party, but not including the grantor) who is entitled to receive a notice from a secured party under one or more provisions in this Chapter may contract with the secured party out of one or more of those provisions.

             (6)  2 secured parties may contract out of the right of one of the secured parties to receive an amount under subsection 127(6) (payment of enforcing party’s expenses) from the other secured party.

Contracting out in relation to controllers (other than receivers etc.)

             (7)  Subject to subsections (2), (3), (5) and (6), the parties to a security agreement may contract out of the application under subsection 116(2) of any provision of Part 4.3 (seizure and disposal or retention of collateral) in relation to property.

Note:          Subsection 116(2) provides for the application of this Chapter while a person is a controller of the property other than a receiver, or a receiver and manager, of the property within the meaning of the Corporations Act 2001.

116  Application while there is a receiver or another controller of property

             (1)  This Chapter does not apply in relation to property while a person is a controller of the property in either of the following capacities:

                     (a)  receiver;

                     (b)  receiver and manager.

Note:          See Part 5.2 of the Corporations Act 2001 for the powers, functions and duties of receivers, and other controllers, of the property of corporations.

             (2)  This Chapter (except section 131) applies in relation to property while a person is a controller of the property in a capacity other than those mentioned in subsection (1) of this section.

Note 1:       Section 131 requires a secured party disposing of collateral to obtain market value for the collateral. Section 420A of the Corporations Act 2001 similarly requires a controller exercising a power of sale to obtain market value for the property sold.

Note 2:       Subsection 115(7) enables the parties to a security agreement to contract out of the application of Part 4.3 under subsection (2) of this section.

             (3)  Despite subsection (1), if a grantor of a security interest in property is an individual, this Chapter applies in relation to the security interest while a person is a receiver, or a receiver and manager, of the property.

             (4)  In this section, each of the following terms, in relation to property of a corporation, has the same meaning as in the Corporations Act 2001:

                     (a)  controller;

                     (b)  receiver;

                     (c)  receiver and manager.

117  Obligations secured by interests in personal property and land

Scope

             (1)  This section applies if:

                     (a)  the same obligation is secured by:

                              (i)  a security interest in personal property; and

                             (ii)  an interest in land; and

                     (b)  either:

                              (i)  the secured party’s security interest in the personal property has the highest priority; or

                             (ii)  every other secured party with a security interest in the personal property that has a higher priority has agreed in writing to the secured party’s making a decision under this section.

Note 1:       This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

Note 2:       Also, this section does not apply in relation to a security interest in collateral to which consumer credit legislation applies (see section 119).

Note 3:       The interest in land might be an interest to which this Act would otherwise not apply (see subsection 8(2)).

Decision by secured party

             (2)  The secured party may:

                     (a)  make a decision to enforce the security interest in the personal property under this Chapter; or

                     (b)  make a decision to enforce the security interest in the personal property in the same way as the interest in the land may be enforced under the land law.

             (3)  In making a decision under subsection (2), the secured party must act reasonably and only take into account the following matters:

                     (a)  the respective values of the personal property and the land;

                     (b)  whether there is any connection between, and the nature of any connection between, the personal property and the land;

                     (c)  whether the land and the personal property are both located in the same State or Territory;

                     (d)  such other matters as are relevant to the efficient enforcement of the security interest and the interest in the land.

Decision to enforce the security interest under this Chapter

             (4)  Enforcing the security interest in the personal property under this Chapter, in accordance with a decision under paragraph (2)(a), does not limit the secured party’s rights, remedies and duties with respect to the land.

Meaning of land law

             (5)  In this Act:

land law, in relation to an obligation mentioned in paragraph (1)(a), means those provisions of a law of a State or Territory, or of the general law, that relate to the enforcement of the interest in land that secures the obligation.

118  Enforcing security interests in accordance with land law decisions

Scope

             (1)  This section applies if:

                     (a)  a secured party makes a decision (under paragraph 117(2)(b)) to enforce the security interest in the personal property in the same way as the interest in the land may be enforced under the land law; and

                     (b)  unless section 144 applies, the secured party gives a notice in accordance with subsection (2) to the following persons:

                              (i)  the grantor;

                             (ii)  a secured party with a security interest in the personal property that is perfected immediately before the decision under paragraph 117(2)(b) is made;

                            (iii)  any person who, by the time the secured party gives the notice, has notified the secured party in writing that the person claims an interest in the personal property.

             (2)  A notice is given in accordance with this subsection if:

                     (a)  the notice is in the approved form; or

                     (b)  the notice:

                              (i)  contains a description of the personal property to which the notice relates; and

                             (ii)  sets out the effect of this section.

How security interest is to be enforced

             (3)  The secured party may enforce the security interest in the same way, with any necessary modification, as the interest in the land may be enforced under the land law.

             (4)  Subject to this section, and with any necessary modification, law in the same terms as that of the land law applies under this Act for the purposes of the enforcement of the security interest.

Example:    The secured party has the same rights, remedies and duties in relation to the enforcement of the security interest in the personal property as the secured party has in relation to the enforcement of the interest in the land.

Note:          The effect of this subsection is not to adopt the land law as such, but to apply law to the same effect as the land law (with any necessary modification, and subject to this section).

             (5)  The regulations may modify the law that applies by virtue of subsection (4) in order to facilitate its application to the enforcement of security interests in the personal property.

Note:          For the meaning of modification, see section 10.

Additional law that applies

             (6)  Section 140 (distribution of proceeds), section 117 and this section apply to the enforcement of the security interest in the personal property. Otherwise, this Chapter does not apply to the enforcement of the security interest in the personal property.

             (7)  In addition:

                     (a)  the decision of the secured party (the first secured party) under paragraph 117(2)(b) does not limit the rights of any other secured party (the other secured party) who has a security interest in the personal property (whether granted before or after the first secured party’s security interest); and

                     (b)  the other secured party has standing in proceedings taken by (or on behalf of) the first secured party in enforcing the first secured party’s security interest under this section; and

                     (c)  the other secured party may apply to a court for the conduct of a judicially supervised sale for the purposes of enforcing the first secured party’s security interest under this section; and

                     (d)  the court may grant the application.

Note:          For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

Exercise of powers etc. under applied law

             (8)  The Minister may make an agreement with the appropriate Minister of a State or Territory in relation to the exercise or performance of a power, duty or function (not being a power, duty or function involving the exercise of judicial power) by an authority of the State or Territory for the purposes of the law that applies by virtue of subsection (4).

             (9)  If such an agreement is in force, the power, duty or function may or must be exercised or performed accordingly.

           (10)  The Minister may make an agreement with the appropriate Minister of a State or Territory for the variation or revocation of an agreement made under this section in relation to the State.

           (11)  An agreement made under subsection (8) or (10) is not a legislative instrument.

This section does not affect land laws

           (12)  To avoid doubt, nothing in this section is intended to modify a land law, or to affect its operation.

119  Relationship with consumer credit legislation

             (1)  This Chapter, except sections 117 and 118, applies in relation to a security interest in collateral to which the National Credit Code applies.

             (2)  The regulations may provide that a specified provision of this Chapter is taken to have been complied with in specified circumstances if a specified provision of the National Credit Code has been complied with in those circumstances.

120  Enforcement of security interests in liquid assets—general

             (1)  This section applies if:

                     (a)  an obligation (the secured obligation) is secured by a security interest in collateral in the form of one of the following:

                              (i)  an account;

                             (ii)  chattel paper;

                            (iii)  a negotiable instrument; and

                     (b)  one or more persons owe an amount to the grantor on the collateral; and

                     (c)  the debtor defaults on the secured obligation.

Note:          This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

Rights of secured party

             (2)  A secured party may do either or both of the following:

                     (a)  give a written notice to a person mentioned in paragraph (1)(b) that:

                              (i)  sets out the effect of subsection (3); or

                             (ii)  is in the approved form;

                     (b)  seize any proceeds of the collateral to which the secured party is entitled under section 32.

Note:          A secured party might be prevented from taking action under this subsection by a higher priority party (see subsection 121(3)).

             (3)  A person who receives a notice under paragraph (2)(a) must pay, to the secured party, any amount that the person owes to the grantor on the collateral before the end of 5 business days after the later of:

                     (a)  the day the notice is received; or

                     (b)  the day the amount becomes due and payable.

Note:          The period mentioned in this subsection may be extended by a court under section 293.

             (4)  The secured party must apply any amount received under paragraph (2)(b) or subsection (3) towards the secured obligation.

             (5)  If any amount is received under paragraph (2)(b) or subsection (3) in the form of currency, then the amount must be distributed in accordance with section 140.

121  Enforcement of security interests in liquid assets—notice to higher priority parties and grantor

Notice to higher priority parties

             (1)  Unless section 144 applies, a secured party (the enforcing party) who proposes to take action under subsection 120(2) in relation to a security interest in collateral must give a written notice to any other secured party (a higher priority party) with a security interest in the collateral that has a higher priority.

             (2)  The notice must:

                     (a)  contain the name of the secured party giving the notice; and

                     (b)  contain a description of the collateral; and

                     (c)  state that the enforcing party proposes to take action under paragraph 120(2)(a) or (b), as the case requires; and

                     (d)  state the address to which a notice may be given under subsection (3); and

                     (e)  be given to each higher priority party:

                              (i)  at least 10 business days before the day the action is to be taken; or

                             (ii)  if a higher priority party has given a written notice to the enforcing party specifying a shorter period to apply for the purposes of this subsection—before the end of that period.

Note:       The period mentioned in paragraph (e) may be extended by a court under section 293.

             (3)  A higher priority party who is given a notice under subsection (1) may, before any action is taken under subsection 120(2), give a written notice to the enforcing party informing the enforcing party of the higher priority party’s proposal to take action under that subsection. If the higher priority party gives such a notice, the enforcing party is not entitled to take action under that subsection.

Notice to grantor

             (4)  A secured party must give a written notice to the grantor of any action the secured party takes in accordance with subsection 120(2).

             (5)  The notice under subsection (4) must be given:

                     (a)  before the end of 5 business days after the day the action is taken; or

                     (b)  if the grantor has given a written notice to the secured party specifying a shorter period to apply for the purposes of this subsection—before the end of that period.

Note:          The period mentioned in paragraph (a) may be extended by a court under section 293.

Part 4.3—Seizure and disposal or retention of collateral

Division 1—Introduction

122  Guide to this Part

Division 2—Seizing collateral

123  Secured party may seize collateral

             (1)  A secured party may seize collateral, by any method permitted by law, if the debtor is in default under the security agreement.

Note:          For seizure of accessions, see sections 95 to 97.

Seizing intangible property

             (2)  For the purposes of this Act, unless subsection (3) applies, a secured party may seize intangible property only by giving a notice, stating that the giving of the notice constitutes seizure of the property, to the following persons:

                     (a)  the grantor;

                     (b)  if the intangible property is a licence—either:

                              (i)  the licensor; or

                             (ii)  the licensor’s successor.

             (3)  Intangible property may be seized by another method, if so agreed between:

                     (a)  the parties to the security agreement; or

                     (b)  if the intangible property is a licence—the parties to the security agreement together with the licensor or the licensor’s successor.

No perfection by seizure

             (4)  A secured party who seizes collateral under this section does not perfect the secured party’s security interest in the collateral.

124  Secured party who has perfected a security interest in collateral by possession or control

             (1)  This section applies if:

                     (a)  a secured party has perfected a security interest in collateral by possession or control of the collateral; and

                     (b)  the debtor is in default under the security agreement.

             (2)  A secured party may seize the collateral under section 123 by giving a notice to:

                     (a)  the grantor; and

                     (b)  if the collateral is a licence—either:

                              (i)  the licensor; or

                             (ii)  the licensor’s successor.

             (3)  To avoid doubt, this section applies whether the secured party has perfected the security interest only by possession or control, or by another method as well.

125  Obligation to dispose of or retain collateral

             (1)  A secured party who seizes collateral under section 123 must:

                     (a)  dispose of the collateral in accordance with Division 3; or

                     (b)  take action to retain the collateral in accordance with Division 4.

             (2)  Before disposing of or taking action to retain the collateral, the secured party is, subject to the security agreement that covers the collateral, entitled to a reasonable period in which:

                     (a)  to secure, store and value the collateral; and

                     (b)  to determine how to deal with the collateral.

             (3)  The secured party may delay disposing of, or taking action to retain, the whole or part of the collateral beyond the reasonable period mentioned in subsection (2). However, the delay must:

                     (a)  if the security agreement providing for the security interest allows for the delay—be in accordance with the security agreement; or

                     (b)  otherwise—be reasonable in the circumstances.

126  Apparent possession of collateral

             (1)  If:

                     (a)  collateral cannot be readily moved from a grantor’s premises; or

                     (b)  adequate storage facilities are not readily available for collateral;

a secured party may seize the collateral under section 123 by taking apparent possession of the collateral.

Note:          This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

             (2)  A secured party who takes apparent possession of collateral may dispose of the collateral under section 128 on the grantor’s premises. However, the secured party must not cause the grantor any greater cost or inconvenience than is necessarily incidental to the disposal.

             (3)  To avoid doubt, a secured party who takes apparent possession of collateral in accordance with this section does not perfect the secured party’s security interest in the collateral.

127  Seizure by higher priority parties—notice

Scope

             (1)  This section applies if, at any time while collateral is seized by a secured party (the enforcing party) (whether under section 123 or otherwise) for the purposes of enforcement, another secured party (the higher priority party) has a security interest in the collateral that has a higher priority under this Act.

Notice requiring enforcing party to give possession of collateral to higher priority party

             (2)  The higher priority party may give a written notice to the enforcing party, requiring the enforcing party to give the higher priority party possession of the seized collateral.

Note:          If a person has a perfected security interest in the collateral that ranks higher than that of the secured party, and the person does not give a notice under this section, the person retains a security interest in the collateral.

             (3)  However, the higher priority party must not give a notice to the enforcing party under subsection (2) unless the higher priority party would be entitled to seize the collateral (in the higher priority party’s own right) in accordance with section 123, had the enforcing party not first seized the collateral.

             (4)  An enforcing party who is given a notice under subsection (2) must comply with the notice before the end of the following period:

                     (a)  the period of 5 business days after the day the notice is received;

                     (b)  such further period as is reasonable in the circumstances.

Note:          The period may also be extended by a court under section 293.

             (5)  A higher priority party who is given possession of collateral under this section is taken to have complied with the requirements of subsection 123(2) (notice of seizure) in relation to the seizure of the collateral.

Payment of enforcing party’s expenses

             (6)  A higher priority party who is given possession of collateral under this section must, subject to subsections (7) and (8), pay the enforcing party the amount of any reasonable expenses paid or incurred by the enforcing party, in relation to the enforcement of the security interest in the collateral.

Note:          2 secured parties can contract out of this provision (see subsection 115(6)).

             (7)  A higher priority party must pay an amount of expenses under subsection (6) only to the extent that, before the higher priority party disposes of the collateral and any proceeds of the collateral sufficient to meet the expenses, the enforcing party gives the higher priority party evidence showing that the enforcing party incurred the amount.

             (8)  The amount payable under subsection (6) is the lesser of the following amounts:

                     (a)  the amount mentioned in the subsection;

                     (b)  the amount of any proceeds from the higher priority party’s disposal of the collateral.

             (9)  A higher priority party must pay an amount of expenses under subsection (6) before the end of 20 business days after the later of the following days:

                     (a)  the day the higher priority party disposes of the collateral;

                     (b)  the day the enforcing party gives the higher priority party evidence showing that the enforcing party incurred the amount.

Note:          The period may be extended by a court under section 293.

           (10)  The amount under subsection (6) is a debt due to the enforcing party.

           (11)  The enforcing party may apply to a court to recover the amount of the debt, and the court may grant the application.

Note:          For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

Division 3—Disposing of collateral (including by purchasing collateral)

128  Secured party may dispose of collateral

             (1)  A secured party may dispose of collateral if the secured party has seized the collateral in the exercise of a right to seize the collateral on default by the debtor (whether under section 123 or otherwise).

Note 1:       A secured party may dispose of collateral by purchasing the collateral (see section 129).

Note 2:       The person who takes the collateral as a result of the disposal does so free of certain security interests (see section 133).

Note 3:       The secured party may act as agent for the grantor in transferring title (see section 141).

Method of disposal

             (2)  A secured party may dispose of collateral under this section:

                     (a)  by private or public sale (including auction or closed tender); or

                     (b)  by lease, if the security agreement so provides; or

                     (c)  if the collateral is intellectual property—by licence.

Note 1:       A different rule applies in relation to disposal by purchase (see subsection 129(3)).

Note 2:       Paragraph (2)(b) does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

             (3)  For the purposes of this Act, if collateral is disposed of by lease or licence, the disposal occurs at the time the lease or licence is entered into.

             (4)  The power to dispose of collateral by a lease or licence must be exercised in accordance with the terms and conditions of the security agreement.

             (5)  A secured party may, under subsection (1), dispose of the whole or part of the collateral.

Note:          The secured party must apply any proceeds etc. of a disposal under this section in accordance with section 140.

Disposal of licences

             (6)  The power to dispose of a licence must be exercised subject to:

                     (a)  the terms and conditions of the licence; and

                     (b)  any applicable law of the Commonwealth, a State or a Territory.

129  Disposal by purchase

             (1)  A secured party may, under subsection 128(1), dispose of collateral by purchasing the collateral.

Note:          This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

             (2)  However, the secured party may dispose of the collateral by purchasing it only if:

                     (a)  the secured party gives a notice under section 130 stating that the secured party proposes to purchase the collateral; and

                     (b)  no notice of objection is given to the secured party in accordance with subsection 137(2).

             (3)  Despite subsection 128(2) and section 131, a secured party may purchase collateral only:

                     (a)  by public sale (including auction or closed tender); and

                     (b)  by paying at least the market value at the time of the purchase.

Note:          Section 296 deals with the onus of proving matters under this subsection.

130  Notice of disposal of collateral

             (1)  Unless subsection (5) of this section or section 144 applies, a secured party who proposes to dispose of collateral on default by the debtor (whether or not under section 128) must give a notice, in accordance with this section, to:

                     (a)  the grantor; and

                     (b)  any other secured party with a security interest in the collateral that has a higher priority.

             (2)  A notice must:

                     (a)  contain the name of the secured party giving the notice; and

                     (b)  contain a description of the collateral; and

                     (c)  state that the secured party proposes to dispose of the collateral, unless an obligation is performed, or an amount is paid, to satisfy the obligation secured by the security interest in the collateral, on or before the day specified in accordance with subsection (3); and

                     (d)  state that the notice is given for the purposes of this Act; and

                     (e)  if the secured party is proposing to dispose of the collateral by purchase:

                              (i)  contain details of rights of objection under Division 5; and

                             (ii)  contain the address to which a notice of objection may be given under section 137; and

                      (f)  contain any other matter required by the regulations for the purposes of this subsection.

Note:          The period under paragraph (c) may be extended by a court under section 293.

             (3)  For the purposes of paragraph (2)(c), the day specified in a notice given to a person:

                     (a)  must be at least 10 business days after the day the notice is given; or

                     (b)  if the person has given a written notice to the secured party specifying a shorter period to apply for the purposes of this section—before the end of that period.

             (4)  The notice may be given in the approved form.

When notice is not required

             (5)  The secured party is not required to give a notice to any person under subsection (1) if:

                     (a)  the secured party believes on reasonable grounds that the secured party was induced to enter into the relevant security agreement by fraud on the part of the debtor or the grantor; or

                     (b)  the secured party believes on reasonable grounds that the collateral might perish before the end of 10 business days after the day the collateral is seized; or

                     (c)  the secured party believes on reasonable grounds that there will be a material decline in the value of the collateral if it is not disposed of immediately after the day the collateral is seized; or

                     (d)  the secured party believes on reasonable grounds that the expense of preserving the collateral is disproportionately large in relation to its value; or

                     (e)  the collateral is foreign currency; or

                      (f)  the collateral is to be disposed of in accordance with the operating rules of a clearing and settlement facility.

131  Duty of secured party disposing of collateral to obtain market value

                   A secured party who disposes of collateral under section 128 (other than by purchasing the collateral) owes a duty, to any other person with a security interest in the collateral, and to the grantor, immediately before the disposal, to exercise all reasonable care:

                     (a)  if the collateral has a market value at the time of disposal—to obtain at least that market value; or

                     (b)  otherwise—to obtain the best price that is reasonably obtainable at the time of disposal, having regard to the circumstances existing at that time.

Note:          A different rule applies in relation to disposal by purchase (see subsection 129(3)).

132  Secured party to give statement of account

Statement of account following disposal

             (1)  Unless section 144 applies, a secured party must, on request by any other person with a security interest in the collateral, or the grantor, give the person (or grantor) a written statement of account, if the first‑mentioned secured party disposes of collateral under section 128 (including by purchasing the collateral in accordance with section 129).

             (2)  A statement of account under subsection (1) must be given to a person before the end of:

                     (a)  the period of 20 business days after the day the person requests the statement; or

                     (b)  such further period as is reasonable in the circumstances.

Note:          The period may also be extended by a court under section 293.

             (3)  A statement of account under subsection (1) must show:

                     (a)  in the case of a disposal by a lease or licence—the total amount received, and expected to be received, during the period:

                              (i)  starting when the secured party seized the collateral; and

                             (ii)  ending at the end of the lease or licence; and

                     (b)  in any other case—the total amount received from the disposal of the collateral (or in the case of disposal by purchase, paid by the secured party) during the period:

                              (i)  starting when the secured party seized the collateral; and

                             (ii)  ending at the time of the disposal of the collateral; and

                     (c)  in any case—the amount of expenses relating to the disposal; and

                     (d)  any amounts paid to other secured parties; and

                     (e)  the balance owing by the secured party to the grantor, or by the debtor to the secured party, as the case may be.

Statement of account if no disposal

             (4)  A secured party who has not disposed of collateral before the end of 6 months after the day the collateral is seized must, in accordance with subsections (5) and (6), give a written statement of account for each period of 6 months after seizing the collateral, until the collateral is disposed of.

             (5)  The statement of account for a 6 month period must be given to any other person with a security interest in the collateral, or the grantor, if the other person (or the grantor) requests the statement for that period.

             (6)  A statement of account under subsection (4) must be given to a person before the end of:

                     (a)  the period of 20 business days after the day the person requests the statement; or

                     (b)  such further period as is reasonable in the circumstances.

Note:          The period may also be extended by a court under section 293.

             (7)  A statement of account under subsection (4) must:

                     (a)  state that the secured party has not disposed of the collateral; and

                     (b)  show the total amount received in relation to the collateral during the period:

                              (i)  starting when the secured party seized the collateral; and

                             (ii)  ending at the time the statement is given; and

                     (c)  show the amount of expenses relating to the retention of the collateral before the disposal.

133  Disposing of collateral free of interests

             (1)  If collateral has been disposed of under section 128 (including by a secured party purchasing the collateral), a person takes the collateral as a result of the disposal free of all of the following interests in the collateral:

                     (a)  the interest of the grantor;

                     (b)  the security interest of the secured party who disposed of the collateral;

                     (c)  all security interests in the collateral that have a lower priority than the security interest of that secured party.

Note:          If a person has a perfected security interest in the collateral that ranks higher than that of the secured party, the person retains a security interest in the collateral.

             (2)  Subsection (1) applies in relation to a disposal of collateral (other than a disposal by a secured party purchasing the collateral) even if the requirements of this Chapter have not been complied with.

Division 4—Retaining collateral

134  Proposal of secured party to retain collateral

             (1)  A secured party may retain collateral if the secured party has seized the collateral in the exercise of a right to seize the collateral on default by the debtor (whether under section 123 or otherwise).

Note 1:       This section does not apply in relation to collateral that is used predominantly for personal, domestic or household purposes (see subsection 109(5)).

Note 2:       The secured party may act as agent for the grantor in transferring title (see section 141).

             (2)  However, the secured party may retain the collateral only if:

                     (a)  the secured party gives a notice under section 135 to retain the collateral; and

                     (b)  no notice of objection is given to the secured party in accordance with subsection 137(2).

135  Notice of retention of collateral

             (1)  A secured party (the retaining party) who proposes to retain collateral under section 134 must (unless section 144 applies) give a notice of the proposal, in accordance with this section, to:

                     (a)  the grantor; and

                     (b)  if the security interest of the retaining party is not a purchase money security interest—a secured party who, at the time the retaining party gives the notice, has a registration that describes the collateral; and

                     (c)  if the security interest of the retaining party is a purchase money security interest—a secured party over whom (or which) the retaining party has priority under section 62 or 63, but only if, at the time the retaining party gives the notice, the secured party has a registration that describes the collateral.

             (2)  The secured party must give a notice to a person:

                     (a)  at least 10 business days before the day the first steps are taken to retain the collateral; or

                     (b)  if the person has given a written notice to the secured party specifying a shorter period to apply for the purposes of this section—before the end of that period.

Note:          The period mentioned in paragraph (a) may be extended by a court under section 293.

             (3)  A notice must:

                     (a)  contain the name of the secured party giving the notice; and

                     (b)  contain a description of the collateral; and

                     (c)  state that the secured party proposes to retain the collateral, unless an obligation is performed, or an amount is paid, as mentioned in paragraph (d), on or before a specified day (being a day that is at least 10 business days after the day the notice is given); and

                     (d)  state the obligation to be performed, or the amount of the payment required, before the day specified in accordance with paragraph (c), to satisfy the obligation secured by the security interest in the collateral; and

                     (e)  contain details of rights of objection under Division 5; and

                      (f)  contain the address to which a notice of objection may be given under section 137; and

                     (g)  contain any other matter required by the regulations for the purposes of this subsection.

             (4)  The notice must be given in the approved form.

136  Retaining collateral free of interests

Retaining collateral free of interests if notices have been given in accordance with section 135

             (1)  If:

                     (a)  a secured party gives one or more notices in accordance with section 135 to retain collateral; and

                     (b)  no notice of objection is given to the secured party in accordance with subsection 137(2);

then, at the end of the day specified in accordance with paragraph 135(3)(c), the secured party is entitled to take steps to have title to the collateral pass to the secured party.

             (2)  At the time the title to the collateral passes to the secured party, the secured party takes the collateral free of all of the following interests in the collateral:

                     (a)  the interest of the grantor;

                     (b)  the security interest of the secured party to whom title passes;

                     (c)  all security interests that have a lower priority than the security interest of that secured party.

Acquiring collateral that has been retained free of interests if notices have not been given in accordance with section 135

             (3)  A person takes collateral free of the interests referred to in subsection (2) if:

                     (a)  a secured party is required to give one or more notices in relation to the collateral in accordance with section 135; and

                     (b)  the secured party has not done so; and

                     (c)  the person acquires the collateral from the secured party for new value; and

                     (d)  the person has no actual knowledge that the requirements of section 135 have not been complied with.

             (4)  Subsection (3) applies in relation to a security interest referred to in paragraph (2)(c) whether or not a registration with respect to the security interest is effective.

Extinguishment of obligation owed to the secured party

             (5)  If a secured party (the retaining secured party) takes collateral under this section free of the interests referred to in subsection (2):

                     (a)  the debt or other obligation secured by the security interest held by the retaining secured party is extinguished; but

                     (b)  paragraph (2)(c) does not have the effect that a debt or other obligation secured by another security interest in the collateral is extinguished, if the other security interest has a lower priority than the security interest of the retaining secured party.

Division 5—Objection to purchase or retention

137  Persons entitled to notice may object to proposal

             (1)  This section applies if:

                     (a)  a person is entitled to a notice under section 130 or 135; and

                     (b)  a secured party gives the person one of the following notices:

                              (i)  a notice under section 130 that the secured party proposes to purchase collateral;

                             (ii)  a notice under section 135 that the secured party proposes to retain collateral.

             (2)  Before the end of the day specified in accordance with subsection 130(3) or 135(3), the person may give the secured party a notice (the notice of objection) objecting to the purchase or retention.

Note:          The secured party may request the person to provide proof of the person’s interest under section 138.

             (3)  The secured party must sell or lease the collateral in accordance with section 128 if the secured party is given a notice of objection in accordance with subsection (2).

138  Person making objection may be requested by secured party to prove interest

             (1)  A secured party who, in accordance with subsection 137(2), is given a notice of objection by a person (other than the grantor) may request the person to provide proof of that person’s interest.

             (2)  The notice of objection is taken not to have been given by the person in accordance with subsection 137(2) if the person does not provide proof of the person’s interest before the end of 10 business days after the day the secured party’s request is made.

Note:          The period may be extended by a court under section 293.

Division 6—Seizure and disposal or retention of crops and livestock

138A  Meaning of take and water source

                   In this Act:

take fish includes:

                     (a)  catch or kill fish; and

                     (b)  gather or collect fish; and

                     (c)  remove fish from any rock or other matter.

Note:          Livestock includes fish (see section 10).

water source means:

                     (a)  a river, lake, creek or pond, tidal waters or any other land that is submerged by water (whether permanently or intermittently or whether naturally or artificially); or

                     (b)  any part of such a river, lake, creek or pond, tidal waters or submerged land.

138B  Seizure and disposal or retention of crops

             (1)  Without limiting section 123 (secured party may seize collateral), for the purposes of seizing collateral under that section that is crops, or the proceeds of crops, the secured party may:

                     (a)  take possession of the crops or the proceeds; or

                     (b)  cut, gather or harvest the crops or the proceeds.

             (2)  The secured party may dispose of, or retain, collateral that is crops, or the proceeds of crops, after they have been taken, cut, gathered or harvested, subject to Divisions 2, 3, 4 and 5 (seizure, disposal or retention of collateral and objections).

             (3)  For the purposes of exercising a power under subsection (1) or (2), or performing any related function under Division 2, 3 or 4, the secured party may enter the land on which, or the water source in which, the crops are, or were, growing.

             (4)  However, the secured party may exercise the power to enter land or a water source under subsection (3) for a purpose mentioned in subsection (1) or (2) only to the same extent as the grantor would be entitled to enter the land or water source for the same purpose.

138C  Seizure and disposal or retention of livestock

             (1)  Without limiting section 123 (secured party may seize collateral), for the purposes of seizing collateral under that section that is livestock, or the proceeds of livestock, the secured party may:

                     (a)  take possession of the livestock or proceeds wherever it is located; or

                     (b)  slaughter the livestock wherever it is located; or

                     (c)  take livestock that is fish; or

                     (d)  extract products from livestock (for example, by shearing sheep to extract wool).

Note:       A security interest may attach to a livestock product (for example, the wool of a sheep) as original collateral as mentioned in subsection 84A(2), or as proceeds.

             (2)  The secured party may dispose of, or retain, collateral that is livestock, or the proceeds of livestock, after it has been taken, slaughtered or extracted, subject to Divisions 2, 3, 4 and 5 (seizure, disposal or retention of collateral and objections).

             (3)  For the purposes of exercising a power under subsection (1) or (2), or performing any related function under Division 2, 3 or 4, the secured party may enter the land on which, or the water source in which, the livestock or proceeds is located.

Part 4.4—Rules applying after enforcement

  

139  Guide to this Part

140  Distribution of proceeds received by secured party

Scope

             (1)  This section applies if any amount, personal property or proceeds (within the ordinary meaning of that term) of collateral is received by or on behalf of a secured party as a result of enforcing a security interest in collateral (whether or not under section 120 or 128).

          (1A)  This section does not prevent the operation of another law of the Commonwealth, or a law of a State or Territory, to the extent that the law requires the amount, personal property or proceeds to be applied towards one or more obligations to persons that do not hold security interests (or any other interests) in the collateral before being applied towards any (or all) of the obligations mentioned in subsection (2).

Example:    This section does not prevent the operation of section 561 of the Corporations Act 2001, which gives priority to the satisfaction of certain unsecured obligations over the claims of a secured party holding a circulating security interest in a debtor’s property.

Order of application

             (2)  The amount, personal property or proceeds must be applied in the following order:

                     (a)  obligations to persons holding interests (other than security interests) in the collateral that have a higher priority (whether under this Act or otherwise) than the interest of the secured party;

Note:       The interests referred to in this paragraph might be interests to which this Act would otherwise not apply (see subsection 8(2)).

                     (b)  reasonable expenses incurred in relation to the enforcement of security interests against the collateral, to the extent that the expenses are secured by the security interests;

Note:       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)).

                     (c)  obligations to persons holding security interests in the collateral that have a higher priority (whether under this Act or otherwise) than the interest of the secured party;

                     (d)  obligations to the secured party that are secured by the security interest in the collateral;

                     (e)  obligations to persons holding interests or security interests in the collateral that have a lower priority (whether under this Act or otherwise) than the interest of the secured party;

                      (f)  to the grantor.

Note:          Sections 102 and 103 affect the operation of this section in relation to commingled property.

             (3)  An amount, personal property or proceeds must be applied against interests to which paragraph (2)(a), (c) or (e) applies in the order of their priority (whether under this Act or otherwise).

             (4)  This section applies in relation to a security interest in collateral even if a person takes the collateral free of the security interest under section 133.

             (5)  An amount paid, or personal property or proceeds applied, in accordance with subsection (2) discharges an obligation secured by an interest in the collateral to the extent of the amount paid or the value of the proceeds or property applied.

             (6)  To avoid doubt, any amount paid by the higher priority party to an enforcing party in accordance with section 127 is, for the purposes of this section, an expense incurred by the higher priority party in relation to the enforcement of the security interest in the collateral.

             (7)  A secured party is not liable to an action, suit or proceeding in relation to an application of proceeds in accordance with this section if:

                     (a)  the secured party applied the proceeds honestly; and

                     (b)  the secured party applied the proceeds in a commercially reasonable manner.

141  Secured party may take steps to reflect transfer of title

                   A secured party who is entitled to dispose of, or retain, collateral under section 128 or 134 may take any steps necessary to reflect the transfer of title resulting from the disposal or retention that the person whose title to the collateral is extinguished because of the disposal or retention could take to reflect a transfer of title to the collateral.

142  Entitled persons may redeem collateral

             (1)  At any time before a secured party disposes of collateral under section 128, any other person with a security interest in the collateral, or the grantor, may redeem the collateral:

                     (a)  by paying the amounts required to discharge the obligations, or by performing the obligations, secured by security interests in the collateral; and

                     (b)  by paying the amount of any expenses in relation to the enforcement of the security interest, the payment of which is secured by the security interest.

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)).

             (2)  However, a person must not redeem collateral under subsection (1) if the person agrees in writing after the default not to do so.

             (3)  The grantor’s right to redeem the collateral has priority over any other person’s right to redeem the collateral.

143  Entitled persons may reinstate security agreement

             (1)  At any time before a secured party disposes of or retains collateral (whether or not under this Chapter), a person may reinstate the security agreement by:

                     (a)  paying the following amounts:

                              (i)  amounts in arrears (disregarding amounts in arrears as a result of an acceleration clause in the security agreement);

                             (ii)  the amount of any expenses, in relation to the enforcement of the security interest, the payment of which is secured by the security interest; and

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)).

                     (b)  remedying any other default as a result of which the secured party proposes to dispose of, or retain, the collateral.

             (2)  A security agreement may be reinstated only once during the period in which the security agreement is in force.

144  When certain enforcement notices are not required

                   A secured party is not required to give a notice to a person under section 95, 118, 121, 130, 132 or 135, if:

                     (a)  after having made reasonable attempts, the secured party has failed to locate the person; or

                     (b)  for the grantor—after the debtor defaults, the grantor waives in writing the grantor’s right to receive the notice; or

                     (c)  for a person other than the grantor—the person (at any time) waives in writing the person’s right to receive the notice; or

                     (d)  in any case—on an ex parte application in relation to the person, a court is satisfied that a notice is not required for any other reason.

Note:          For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

Chapter 5—Personal Property Securities Register

Part 5.1—Guide to this Chapter

  

145  Guide to this Chapter

Part 5.2—Establishment of the register

  

146  Guide to this Part

147  Personal Property Securities Register

             (1)  The Registrar must establish and maintain a register to be known as the Personal Property Securities Register.

             (2)  Data in the register is the property of the Commonwealth.

             (3)  The Registrar may keep the register in any form that he or she considers appropriate.

             (4)  The Registrar must ensure that the register is operational at all times, except:

                     (a)  while access is refused, or its operation is suspended, under subsection (5); or

                     (b)  in other circumstances prescribed by the regulations.

             (5)  If the Registrar considers that it is not practical to provide access to the register, the Registrar may:

                     (a)  refuse access to the register; or

                     (b)  otherwise suspend the operation of the register, in whole or in part.

             (6)  If the Registrar refuses access to the register, or otherwise suspends the operation of the register in whole or in part, under subsection (5), the Registrar must publish a notice giving details of the refusal or other suspension of operation (including the period of refusal or suspension):

                     (a)  in a way prescribed by the regulations; or

                     (b)  if regulations are not made for the purposes of paragraph (a)—in the Gazette.

Note:          The office of the Registrar of Personal Property Securities is established under Part 5.9.

148  What the register contains

                   The register is to contain the following data:

                     (a)  data in registered financing statements (as amended by any registered financing change statements) with respect to security interests;

                     (b)  data (if any) prescribed by regulations made for the purposes of this paragraph in relation to registrations, or possible registrations;

                     (c)  data in registered financing statements (as amended by any registered financing change statements) with respect to personal property, being personal property that is prescribed by regulations made for the purposes of this paragraph.

Note 1:       If personal property is prescribed by regulations for the purposes of paragraph (c), this Act might not otherwise apply to interests in that property (see subsection 8(2)).

Note 2:       Access to non‑registered data held by third parties may be provided to persons accessing the register (see Part 5.5A).

Part 5.3—Registration

  

149  Guide to this Part

150  Registration—on application

             (1)  A person may apply to the Registrar to register a financing statement with respect to:

                     (a)  a security interest; or

                     (b)  personal property prescribed by regulations made for the purposes of paragraph 148(c).

             (2)  A person may apply to the Registrar to register a financing change statement to amend a registered financing statement.

             (3)  The Registrar must register the financing statement or financing change statement in accordance with the application, but only if:

                     (a)  the application is in the approved form; and

                     (b)  the fee (if any) determined under section 190 has been paid; and

                     (c)  the Registrar is not satisfied that the application is:

                              (i)  frivolous, vexatious or offensive, or contrary to the public interest; or

                             (ii)  made in contravention of section 151 (belief about security interest); and

                     (d)  the registration would not be prohibited by the regulations.

Note 1:       Section 161 authorises the description of collateral by a registration before or after a security agreement is made covering the collateral, or a security interest has attached to the collateral.

Note 2:       The Registrar must give a verification statement to each secured party after the registration of a financing statement or a financing change statement (see section 156).

Note 3:       Application may be made to the Administrative Appeals Tribunal for review of certain decisions of the Registrar about registration (see section 191).

Note 4:       The requirement to pay a fee is satisfied if an arrangement for its payment has been approved under subsection 190(4).

151  Registration—belief about security interest

Requirements for collateral to secure obligation etc.

             (1)  A person must not apply to register a financing statement, or a financing change statement, that describes collateral, unless the person believes on reasonable grounds that the person described in the statement as the secured party is, or will become, a secured party in relation to the collateral (otherwise than by virtue of the registration itself).

Civil penalty:

                     (a)  for an individual—50 penalty units;

                     (b)  for a body corporate—250 penalty units.

Note:          See Part 6.3 (Civil penalty proceedings).

Example 1:    A person applies to register a financing statement that describes collateral as “all present and after‑acquired property” of the grantor described in the statement. It is sufficient to comply with this subsection if the applicant believes on reasonable grounds that the secured party described in the statement will take a security interest in a particular class of items of personal property held (or later acquired) by the grantor (see paragraph (b) of the definition of description in section 10).

Example 2:    A person applies to register a financing statement that describes collateral as “fruit”. It is sufficient to comply with this subsection if the applicant believes on reasonable grounds that the secured party described in the statement will take a security interest in apples (see paragraph (b) of the definition of description in section 10).

             (2)  If a financing statement, or a financing change statement, that describes collateral has been registered on the application of a person, the person must, within the period covered by subsection (3), apply to register a financing change statement to amend the registration to end its effect with respect to the collateral, if:

                     (a)  the person described in the statement as the secured party has never, since the statement was registered, been a secured party in relation to the collateral (other than by virtue of the registration itself); and

                     (b)  there are no reasonable grounds (or there are no longer any reasonable grounds) for the belief mentioned in subsection (1).

Civil penalty:

                     (a)  for an individual—50 penalty units;

                     (b)  for a body corporate—250 penalty units.

Note:          See Part 6.3 (Civil penalty proceedings).

             (3)  The period covered by this subsection is as soon as practicable, or 5 business days, whichever is earlier, after:

                     (a)  if there never have been, since the statement was registered, reasonable grounds for the belief mentioned in subsection (1)—the day of the registration time, or the amendment time, for the financing statement or financing change statement; or

                     (b)  if there are no longer any reasonable grounds for that belief—the day when there stopped being reasonable grounds for the belief.

Note:          The period of 5 business days may be extended by a court under section 293.

             (4)  A person who wishes to establish that there were reasonable grounds for the belief mentioned in subsection (1) (at any particular time) bears an evidential burden in relation to the matter.

Note:          For evidential burden, see section 10.

Damages for contravention of requirements

             (5)  For the purposes of section 271 (but without limiting that section):

                     (a)  compliance with subsection (1) or (2) is taken to be an obligation imposed on a person who applies, or is required to apply, for the registration of a financing statement or a financing change statement; and

                     (b)  any person with an interest in personal property described in the financing statement or financing change statement is taken to be a person to whom that obligation is owed; and

                     (c)  a contravention of subsection (1) or (2) is taken to be a failure to discharge that obligation.

Note:          Section 271 gives a right to recover damages for any loss or damage in relation to such a failure.

Registration unaffected by contravention

             (6)  However, if a person applies for a registration of a financing statement or a financing change statement in contravention of subsection (1), and the statement is registered accordingly, the contravention does not affect the validity or effectiveness of the registration.

Registrations with respect to security interests only

             (7)  This section only applies in relation to a registration with respect to a security interest.

152  Registration—location of personal property and interested persons outside Australia

                   A financing statement, or a financing change statement, may be registered whether or not:

                     (a)  the personal property to which the statement relates is located in Australia; or

                     (b)  any person who owns or has rights in that property is located in Australia.

Note 1:       For when personal property is located in Australia, see section 235. For when bodies corporate, bodies politic or individuals are located in Australia, see section 235.

Note 2:       For security interests in personal property outside Australia, see section 6.

153  Financing statements with respect to security interests

             (1)  A financing statement with respect to a security interest (including such a financing statement as amended by the registration of a financing change statement) consists of data that complies with the following table:

 

Financing statements with respect to security interests
Item	Data about:	Details of data
1	The secured party	The details prescribed by the regulations, in relation to each secured party, of: (a) the secured party; or (b) a person nominated by the secured party who has authority to act on behalf of the secured party.
2	The grantor	Whichever of the following is applicable: (a) if the collateral is consumer property, and is required by the regulations to be described by serial number—no grantor’s details; (b) if the collateral is consumer property, and is not required by the regulations to be described by serial number—the grantor’s name and date of birth, as evidenced in accordance with the regulations, and no other details; (c) in any other case—the grantor’s details as prescribed by the regulations.
3	Giving of notices	The following: (a) an address (including an email address or fax number) for the giving of notices to the secured party (or secured parties) relating to the registration; (b) details of any identifier provided for the giving of notices to the secured party (or secured parties). Note:       For identifiers, see section 289.
4	The collateral and proceeds	A collateral description in accordance with all of the following rules: (a) the collateral must be described as one of the following: (i) consumer property; (ii) commercial property; (b) the collateral may or must be described by serial number, if allowed or required by the regulations; (c) the collateral must belong to a single class of collateral prescribed by the regulations; (d) any description of proceeds must comply with the regulations. Note:       2 or more types of collateral that belong to different classes prescribed by the regulations must be described in separate registrations. However, 2 or more registrations can be effected through a single application.
5	The end time for registration	For all the collateral described in the statement, the following data: (a) for collateral other than consumer property or property described by a serial number: (i) no stated end time; or (ii) an end time for the registration no later than the time (the default time) that is the end of the day 25 years after the registration time; or (iii) if the registration is amended to include or change (but not omit) an end time—an amended end time for the registration no later than the time (the default time) that is the end of the day 25 years after the amendment time for that amendment; (b) for consumer property, or property described by a serial number: (i) an end time for the registration no later than the time (the default time) that is the end of the day 7 years after the registration time; or (ii) if the registration is amended to change the end time—an amended end time for the registration no later than the time (the default time) that is the end of the day 7 years after the amendment time for that amendment.
6	Subordination	An indication of whether the security interest is (or is to be) subordinated to any other security interest. However, this indication need not be included.
7	Security interest	An indication of whether the security interest is, or is to be, a purchase money security interest (to any extent) if the security interest is in respect of a class of collateral prescribed by the regulations for the purposes of this item.
8	Any matter prescribed by the regulations	Details of the matter prescribed by the regulations, whether or not the matter also comes under any of the other items in this table.

             (2)  If a person applies to register a financing statement (or a financing change statement) that would otherwise result in the statement of an end time in a financing statement not complying with item 5 of the table in subsection (1), the financing statement is taken to provide for the relevant default time mentioned in that item as the stated end time.

             (3)  A statement of end time does not comply with item 5 of the table in subsection (1) if it states an end time earlier than the registration time or amendment time in relation to the financing statement or financing change statement that provided for that end time.

154  Financing statements with respect to prescribed property

                   A financing statement with respect to personal property prescribed by regulations made for the purposes of paragraph 148(c) (including such a financing statement as amended by the registration of a financing change statement) consists of data that complies with the following table:

 

Financing statements with respect to prescribed property
Item	Data about:	Details of data
1	The person who owns or has an interest in the property	Details of the person, as prescribed by the regulations.
2	The property	Details relating to the property in accordance with the following rules: (a) the property must be of a single class, described in the registration; (b) a statement must be included of the reason why the property is registered.
3	Any matter prescribed by the regulations	Details of the matter prescribed by the regulations, whether or not the matter also comes under any of the other items in this table.

155  Meanings of verification statement and registration event

                   In this Act:

verification statement means a written statement in the approved form:

                     (a)  verifying the registration of a financing statement or a financing change statement (each of which is a registration event) with respect to a security interest, other than a financing change statement registered under section 185 (removal of old data) or 186 (incorrectly removed data); and

                     (b)  including other data (if any), including third party data (see section 176C), approved by the Registrar for that form in relation to the registration event, a secured party, a grantor, or collateral.

156  Verification statements—Registrar to give to secured parties

             (1)  The Registrar must ensure that a verification statement in relation to a registration event is given to the following persons:

                     (a)  a person registered as a secured party in the registration immediately before the time of the registration event;

                     (b)  a person registered as a secured party in the registration immediately after the time of the registration event.

Note:          This section does not apply in relation to a registration event if the Registrar publishes a verification statement in relation to the event under section 158.

             (2)  If a registration event involves the amendment of a registration to change an address (including an email address or a fax number) for the giving of notices to a secured party, the Registrar must ensure that the verification statement is given to the secured party at both the previously registered address and the address as changed.

             (3)  If a registration event involves the amendment of a registration to omit a secured party, the Registrar must ensure that the verification statement in relation to the event is given to the secured party at the previously registered address for the secured party.

157  Verification statements—secured parties to give notice to grantors

Requirement to provide verification statement

             (1)  A person (the statement holder) who is, under section 156, given a verification statement in relation to a registration event concerning a registration, must ensure that a notice of the statement, in the approved form, is given to the following persons as soon as reasonably practicable after the time of the registration event:

                     (a)  a person registered as a grantor in the registration immediately before the time of the registration event;

                     (b)  a person registered as a grantor in the registration immediately after the time of the registration event.

Note:          This section does not apply in relation to a registration event if the Registrar publishes a verification statement in relation to the event under section 158.

             (2)  Without limiting subsection (1), the approved form for notice of a verification statement:

                     (a)  may authorise specified data in the verification statement not to be included in the notice; but

                     (b)  must otherwise require the data in the verification statement to be included in the notice.

Exception—waiver by interested person of right to receive notice

             (3)  However, this section does not apply in relation to a person mentioned in paragraph (1)(a) or (b) if:

                     (a)  the collateral to which the registration event relates is (immediately before or after the event) described in the registration as commercial property; and

                     (b)  the person has, in writing, waived the right under this section to receive a notice in relation to registration events to which paragraph (a) applies.

Contravention of requirement

             (4)  If the statement holder contravenes a requirement under subsection (1) to ensure that a notice is given to an individual, the contravention constitutes an act or practice involving interference with the privacy of the individual for the purposes of section 13 of the Privacy Act 1988.

Note 1:       These acts or practices may be the subject of complaints under section 36 of that Act.

Note 2:       If a statement holder fails to discharge an obligation under this section, an action for damages may be available under section 271.

158  Verification statements—publication as alternative

             (1)  The Registrar may publish, in a way prescribed by the regulations, a single verification statement in relation to a number of registration events if:

                     (b)  the events affect a number of persons registered as secured parties (whether before or after the events); and

                     (b)  the Registrar considers that it would be inconvenient for verification statements to be given to each registered (or formerly registered) secured party.

             (2)  Sections 156 and 157 do not apply in relation to a registration event if the Registrar publishes a verification statement in relation to the event under this section.

Part 5.4—When a registration is effective

  

159  Guide to this Part

160  Registration time—general

             (1)  A description of collateral starts to be registered in a registration with respect to a security interest, in relation to a particular secured party, at the moment (the registration time) when the description becomes available for search in the register in relation to that secured party.

Note 1:       A written search result is evidence of a registration and of the registration time (see section 174).

Note 2:       A registration may stop being effective even if it is available for search in the register (for example, because of a defect—see section 164).

Note 3:       If 2 or more registrations describe the same collateral in relation to the same secured party, there may be different registration times for the collateral in relation to each of the registrations.

             (2)  The amendment time for an amendment to a registration is the moment when the amended registration becomes available for search in the register.

161  Registration time—security agreements and interests

                   Personal property may be described in a registration with respect to a security interest before or after:

                     (a)  a security agreement is made covering the property; or

                     (b)  a security interest attaches to the property.

162  Registration time—transfers

                   A financing statement, or a financing change statement, may be registered to reflect the transfer of a security interest, or of collateral, before or after the transfer.

163  Effective registration

             (1)  A registration with respect to a security interest that describes particular collateral, in relation to a secured party, is effective with respect to that collateral from the registration time for the description of the collateral until the earliest of the following times:

                     (a)  the end time (if any) registered for the collateral;

                     (b)  if the registration is amended to omit the collateral description—the amendment time;

                     (c)  the time when the description of the collateral in the registration stops being available for search in the register (by reference to that time) in respect of the secured party.

Note:          For the registration time for collateral, see section 160.

             (2)  This section is subject to sections 164, 165 and 166 (defects in registration).

164  Defects in registration—general rule

             (1)  A registration with respect to a security interest that describes particular collateral is ineffective because of a defect in the register if, and only if, there exists:

                     (a)  a seriously misleading defect in any data relating to the registration, other than a defect of a kind prescribed by the regulations; or

                     (b)  a defect mentioned in section 165.

             (2)  In order to establish that a defect is seriously misleading, it is not necessary to prove that any person was actually misled by it.

             (3)  A registration that describes particular collateral is not ineffective only because the registration is ineffective with respect to other collateral described in the registration.

165  Defects in registration—particular defects

                   For the purposes of paragraph 164(1)(b), a defect in a registration that describes particular collateral exists at a particular time if any of the following circumstances exist:

                     (a)  in a case in which the collateral is required by the regulations to be described by serial number in the register—no search of the register by reference to that time, and by reference only to the serial number of the collateral, is capable of disclosing the registration;

                     (b)  in a case in which the collateral is not required by the regulations to be described by serial number in the register—no search of the register by reference to that time, and by reference only to the grantor’s details (required to be included in the registered financing statement under section 153), is capable of disclosing the registration;

                     (c)  if the registered financing statement (as amended, if at all) indicates that a security interest in the collateral is a purchase money security interest (to any extent)—the security interest is not a purchase money security interest (to any extent) in the collateral;

                     (d)  in any case—circumstances in relation to the data related to the registration that are prescribed by the regulations.

166  Defects in registration—temporary effectiveness

Scope

             (1)  This section applies if:

                     (a)  one of the following defects in a registration that describes particular collateral arises at a particular time (the defect time):

                              (i)  a defect mentioned in paragraph 165(a) or (d);

                             (ii)  a defect mentioned in paragraph 165(b), other than a defect resulting from a change of the grantor in relation to the collateral; and

                     (b)  the defect does not arise only because of an irregularity, omission or error in a financing statement or a financing change statement.

Example:    A defect mentioned in paragraph 165(a) may occur if there is a change in the serial number under which collateral is required to be described in the register. For example, a patent may be required to be described by serial number (a Patent Application Number or a Patent Number). The Patent Application Number may be changed to a Patent Number when the patent is registered on the patents register.

Note:          A change of the grantor may occur if the collateral described in the registration is transferred. In this case, the secured party’s security interest may be temporarily perfected for a certain period (see section 34).

Registration is temporarily unaffected by the defect

             (2)  Despite sections 164 and 165, the defect does not make the registration ineffective for the period starting at the defect time and ending at the earliest of the following times:

                     (a)  the end time for the registration (as registered immediately before the defect time);

                     (b)  the end of the month that is 60 months after the defect time;

                     (c)  the end of 5 business days after the day the secured party acquires actual or constructive knowledge of the defect.

Note:       The period mentioned in paragraph (c) may be extended by a court under section 293.

Registration becomes ineffective

             (3)  However, the registration becomes ineffective with respect to the collateral under sections 164 and 165 because of the defect immediately after the earliest time mentioned in subsection (2), unless, at or before that time, the registration is amended to correct the defect.

167  Security interest in certain property becomes unperfected

Scope

             (1)  This section applies in relation to a registration with respect to a security interest if:

                     (a)  collateral described in the registration is:

                              (i)  used, or intended to be used, predominantly for personal, domestic or household purposes; or

                             (ii)  registered with a serial number (see subsection (3)); and

                     (b)  a security interest in the collateral that was perfected by the registration becomes unperfected at a particular time (the unperfection time); and

                     (c)  the end time for the registration is a time more than 5 business days after the day the unperfection time occurs.

Requirement to end effective registration

             (2)  The secured party must, before the end of 5 business days after the day the unperfection time occurs, apply to register a financing change statement under section 150 amending the registration to end its effect.

Note 1:       The period may be extended by a court under section 293.

Note 2:       If the secured party fails to discharge the obligation under this section, an action for damages may be available under section 271.

When collateral is registered with a serial number

             (3)  For the purposes of this section, collateral is registered with a serial number at a particular time only if a search of the register by reference to that time and by reference only to the serial number of the collateral is capable of disclosing the registration.

168  Maintenance fees

             (1)  The Registrar may give a secured party in respect of a registration with respect to a security interest a written notice requiring the secured party to pay the fee (determined under section 190) stated in the notice within 28 days after the notice is given in order to maintain the effectiveness of the registration.

             (2)  If the fee is not paid within 28 days after the notice is given, the Registrar may register a financing change statement amending the registration to end its effect.

Note 1:       The Registrar must give a verification statement to each secured party after the registration of a financing change statement (see section 156).

Note 2:       Application may be made to the Administrative Appeals Tribunal for review of certain decisions of the Registrar about registration (see section 191).

Note 3:       The requirement to pay a fee is satisfied if an arrangement for its payment has been approved under subsection 190(4).

Part 5.5—Accessing the register to search for data

  

169  Guide to this Part

170  Search—general

             (1)  A person may apply to the Registrar for access to the register to search for data in relation to a security interest or personal property (or both).

             (2)  The Registrar must:

                     (a)  give the person access to the register to search for the data, in accordance with the application; and

                     (b)  if, in the application, the person requests a written search result in relation to the data—ensure that the person is able to obtain a written search result in relation to the data, in the appropriate form under section 174.

             (3)  However, the Registrar may give the person access to the register to search for the data only if:

                     (a)  the search is authorised under sections 171 and 172; and

                     (b)  the application is in the approved form; and

                     (c)  the person pays the fee determined under section 190; and

                     (d)  access to the data is not prohibited by the regulations.

Note 1:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision under this section to refuse to give a person access to the register to search for data (see section 191).

Note 2:       The requirement to pay a fee is satisfied if an arrangement for its payment has been approved under subsection 190(4).

171  Search—criteria

             (1)  A person may access the register to search for data by reference to the following criteria:

                     (a)  a grantor’s details (as required to be included, if at all, in a registered financing statement under section 153);

                     (b)  a serial number by which collateral may (or must) be described in the register;

                     (c)  the time of the search;

                     (d)  an earlier nominated time, but only with the consent of the Registrar;

                   (da)  a unique identifier allocated by the Registrar to a registered financing statement;

                     (e)  any other criteria prescribed by the regulations.

Note:       If a registration is no longer effective, details of the registration can still be found by searching the register by reference to an earlier time when the registration was still effective (see paragraph (d)). However, data removed from the register may not be available for search by reference to an earlier time (see Part 5.7).

             (2)  The Registrar must ensure that the way in which the results of a search are worked out in response to an application for the search is determined in accordance with any regulations made for the purposes of this subsection.

172  Search—by reference to details of grantor who is an individual

Scope

             (1)  This section applies if a person proposes to access the register to search for data by reference to the details of a grantor (other than that person) who is an individual.

Individual grantor details—permitted searches

             (2)  The following table sets out which persons (searchers) may access the register to search for data, and for what purpose:

 

Individual grantor details—permitted searches
Item	Searchers	Purpose
1	A person (the first person), or another person with the first person’s consent	To disclose any registration in which the first person is registered as a grantor or a secured party.
2	A secured party in relation to a registration	A purpose that relates to a security interest attached to collateral described in the registration.
3	A grantor in relation to a registration	A purpose that relates to a security interest attached to the collateral described in the registration.
4	A person	To disclose any registration in which the person is registered as a secured party.
5	A person	To disclose whether collateral to which a security interest is attached is described in a registration.
6	A person	To disclose whether or not personal property is described in a registration, if: (a) the property is to be purchased or dealt with by the person; or (b) the person has an interest in the property.
7	A person	To establish whether to provide credit to, or obtain a guarantee or an indemnity from, a person named in the search application or a person with an interest in the personal property described in the application.
8	A person	To establish whether to provide credit to, or obtain a personal guarantee or an indemnity from an associate (within the meaning of section 11 or subsection 12(2) of the Corporations Act 2001) of a body corporate named in the search application or of a body corporate with an interest in the personal property described in the application.
9	A person	To establish whether to invest in, with, or through, a person named in the search application.
10	A person	To establish whether to invest in, with, or through, an associate (within the meaning of section 11 or subsection 12(2) of the Corporations Act 2001) of a body corporate named in the search application or of a body corporate with an interest in the personal property described in the application.
11	The Registrar	A purpose that relates to the administration of this Act.
12	A person who has taken control of the property of an individual who is insolvent under administration, within the meaning of the Corporations Act 2001	A purpose that relates to the searcher’s control of the property.
13	An Official Receiver in Bankruptcy within the meaning of the Bankruptcy Act 1966	A purpose that relates to the exercise of a power, or the performance of a function, of that Official Receiver in Bankruptcy.
14	The legal personal representative of an individual (including a deceased individual)	A purpose that relates to the exercise of a power, or the performance of a function, as legal personal representative.
15	A government entity within the meaning of the A New Tax System (Australian Business Number) Act 1999	A purpose that relates to the exercise of a power, or the performance of a function, of that entity, unless the purpose is covered by another purpose listed in this table.
16	A government entity within the meaning of the A New Tax System (Australian Business Number) Act 1999	A purpose that relates to the maintenance of the law, including the prevention, detection, investigation or prosecution of contraventions of laws (whether the penalty for contravention is criminal or civil).
17	The holder of a lien or charge, or a creditor	A purpose that relates to the enforcement of the lien or charge, or the creditor’s rights, as the case may be.
18	A bailiff, or sheriff, of a court of the Commonwealth, a State or a Territory	A purpose that relates to the enforcement of a court order or warrant.
19	A person	To advise another person in connection with any of the purposes referred to in this table.

Search otherwise than for authorised purpose

             (3)  A searcher mentioned in an item in the table in subsection (2) must not, otherwise than for the purpose specified in the item:

                     (a)  access the register to search for data; or

                     (b)  use data obtained as a result of accessing the register, unless the searcher has also obtained the data lawfully from another source.

Civil penalty:

                     (a)  for an individual—50 penalty units;

                     (b)  for a body corporate—250 penalty units.

Note:          See Part 6.3 (Civil penalty proceedings).

             (4)  A person who wishes to establish that a searcher mentioned in an item in the table in subsection (2) did an action mentioned in paragraph (3)(a) or (b) for the purpose specified in the item bears an evidential burden in relation to the matter.

Note:          For evidential burden, see section 10.

             (5)  For the purposes of section 195A (Registrar—investigations), the Registrar may do either or both of the following:

                     (a)  investigate a suspected contravention of subsection (3);

                     (b)  decline to investigate, or to investigate further, a suspected contravention of subsection (3).

Recovery of damages for contravention

             (6)  For the purposes of section 271:

                     (a)  compliance with subsection (3) is taken to be an obligation imposed on a person who accesses the register to search for data, or uses data obtained as a result of accessing the register to search for data; and

                     (b)  the obligation is taken to be owed to the grantor by reference to whose details the search is undertaken; and

                     (c)  a contravention of subsection (3) is taken to be a failure to discharge that obligation.

Note:          Section 271 gives a right to recover damages for any loss or damage in relation to such a failure.

173  Search—interference with privacy

Scope

             (1)  This section applies if:

                     (a)  a person obtains access to the register and searches the register for data (whether or not the access is obtained as a result of an application under section 170); and

                     (b)  as a result of the search, the person obtains personal information about an individual within the meaning of that Act.

Unauthorised search or use of personal information is an interference with privacy

             (2)  If the search, or the use of the personal information, is unauthorised under subsection (3) or (4), the search or use constitutes an act or practice involving interference with the privacy of the individual for the purposes of section 13 of the Privacy Act 1988.

Note:          These acts or practices may be the subject of complaints under section 36 of that Act.

             (3)  The search is unauthorised if:

                     (a)  the search is not authorised under section 171; or

                     (b)  the search is prohibited under subsection 172(3); or

                     (c)  access to the data for a search of that kind is prohibited by regulations made for the purposes of paragraph 170(3)(d).

             (4)  The use of the personal information is unauthorised (unless the data has been obtained lawfully from another source) if:

                     (a)  the search is not authorised under section 171; or

                     (b)  the use of the personal information is prohibited under subsection 172(3); or

                     (c)  access to the data for a search of that kind is prohibited by regulations made for the purposes of paragraph 170(3)(d).

174  Search—written search results and evidence etc.

Search result as evidence

             (1)  A written search result in the appropriate form (see subsection (3)) is admissible as evidence in a court or tribunal and is, in the absence of evidence to the contrary, proof of the matters stated in the search result.

             (2)  Without limiting subsection (1), the matters that may be stated in a search result include the following:

                     (a)  the registered description of collateral at a particular time;

                     (b)  the time of the registration of a financing statement, any financing change statement and the end time for a registration;

                     (c)  the chronological order of any of the events mentioned in paragraph (b), in relation to one or more registrations.

Appropriate form of search result

             (3)  A search result is in the appropriate form if:

                     (a)  it purports to be issued by the Registrar in the approved form; or

                     (b)  it purports to be issued by one of the following:

                              (i)  an officer or agency of the Commonwealth authorised by the Registrar;

                             (ii)  an officer or agency of a State or Territory authorised by the Registrar; or

                     (c)  it purports to be:

                              (i)  issued by a person prescribed by the regulations; and

                             (ii)  if the Registrar approves a form for the purposes of this subparagraph—in the approved form.

             (4)  The Registrar may include, or may authorise to be included, in a search result, any data, including third party data (see section 176C), determined by the Registrar in relation to a secured party, a grantor or personal property.

Evidence of transient electronic communications etc.

             (5)  If a search result is covered by paragraph (b) of the definition of writing in section 10, evidence of the search result may be given by the production of a recording of the search result mentioned in that paragraph.

Instruments of approval

             (6)  The Registrar may, by written instrument, authorise an officer or agency for the purposes of subparagraph (3)(b)(i) or (ii).

             (7)  The Registrar may, by legislative instrument, determine data for the purposes of subsection (4).

175  Copies of financing statements and verification statements

                   On application by a person in the approved form, accompanied by the fee (if any) determined under section 190, the Registrar may give the person:

                     (a)  a copy of any registered financing statement (as amended by any registered financing change statement) in relation to which the person is registered as a secured party; or

                     (b)  a copy of a verification statement that relates to such a registered financing statement.

Note 1:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision under this section to refuse to give a person a copy of a registered financing statement or verification statement (see section 191).

Note 2:       The requirement to pay a fee is satisfied if an arrangement for its payment has been approved under subsection 190(4).

176  Reports by Registrar

Reports about particular persons

             (1)  On application by a person in the approved form, accompanied by the fee (if any) determined under section 190, the Registrar may give the person a report of matters determined under subsection (3) relating to registered data in relation to the person.

Note 1:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision under this section to refuse to give a person a report (see section 191).

Note 2:       The requirement to pay a fee is satisfied if an arrangement for its payment has been approved under subsection 190(4).

             (2)  The Registrar may, at the Registrar’s initiative, give a person a report of matters relating to registered data in relation to the person (whether or not the matters are determined under subsection (3)).

             (3)  The Registrar may, by legislative instrument, determine matters that may be the subject of reports under this section.

Reports for the purposes of the administration of this Act

             (4)  For the purposes of the administration of this Act, the Registrar may prepare a report of any matter relating to registered data.

Part 5.5A—Conditions on data access

  

176A  Guide to this Part

176B  Access to registered data—conditions

Scope

             (1)  This section applies if a person applies for:

                     (a)  the registration of a financing statement or a financing change statement (under section 150); or

                     (b)  access to the register to search for data (under section 170); or

                     (c)  a copy of a registered financing statement or verification statement (under section 175).

Registered data conditions

             (2)  The person may be required to comply with conditions (registered data conditions) in relation to registered data received as a result of the application, as part of the approved form for the application.

Note:          For approved forms, see section 302.

             (3)  Registered data conditions includes, but is not limited to, conditions relating to the use of registered data.

             (4)  The person’s compliance with the registered data conditions may be required whether or not:

                     (a)  the application relates to personal property that is the subject of registered data; or

                     (b)  in the case of an application for access to the register to search for data—the person is applying for access to the register to search for registered data; or

                     (c)  in the case of an application for a copy of a registered financing statement—the applicant also applies for a copy of a verification statement in relation to the financing statement.

Recovery of damages for contravention

             (5)  For the purposes of section 271:

                     (a)  compliance with the registered data conditions as required under subsection (2) of this section is taken to be an obligation imposed on the person by this Act; and

                     (b)  the obligation is taken to be owed to the Commonwealth; and

                     (c)  a contravention of a registered data condition is taken to be a failure to discharge that obligation.

Note:          Section 271 gives a right to recover damages for any loss or damage relating to such a failure.

             (6)  If the person (the applicant) applies on behalf of another person (the principal):

                     (a)  both the applicant and the principal may be required, by the approved form for the application, to comply with the registered data conditions; and

                     (b)  an obligation is taken to be imposed under subsection (5) on both the applicant and the principal, in each of their personal capacities, to comply with the registered data conditions.

176C  Access to third party data

Agreement with third parties

             (1)  The Registrar may make an arrangement with a person (the third party) prescribed by regulations made for the purposes of this section to enable:

                     (a)  data (third party data) held by the third party with respect to personal property to be included in verification statements; and

                     (b)  access to the register to be given to applicants under section 170 (search—general) to search for third party data; and

                     (c)  third party data to be included in search results under section 174; and

                     (d)  applications for registration under section 150, for access to the register under section 170 or for copies of registered financing statements or verification statements under section 175 to be subject to conditions (third party data conditions) relating to third party data obtained as a result of such applications.

Example:    An arrangement between the Registrar and a third party to enable third party data relating to motor vehicles to be included in verification statements and search results.

             (2)  Third party data does not include personal information, within the meaning of the Privacy Act 1988, about an individual.

             (3)  Third party data conditions includes, but is not limited to, conditions relating to the use of the third party data.

Use of third party data

             (4)  A person may be required to comply with third party data conditions, as part of the approved form for application, if the person applies:

                     (a)  for the registration of a financing statement or a financing change statement (under section 150); or

                     (b)  for access to the register to search for data (under section 170); or

                     (c)  for a copy of a registered financing statement or verification statement (under section 175).

Note:          For approved forms, see section 302.

             (5)  A person’s compliance with third party data conditions may be required whether or not:

                     (a)  the application relates to personal property that is the subject of the third party data; or

                     (b)  in the case of an application for access to the register to search for data—the person is applying for access to the register to search for the third party data; or

                     (c)  in the case of an application for a copy of a registered financing statement—the applicant also applies for a copy of a verification statement in relation to the financing statement.

Recovery of damages for contravention

             (6)  For the purposes of section 271:

                     (a)  compliance with the third party data conditions as required under subsection (4) of this section is taken to be an obligation imposed on the person by this Act; and

                     (b)  the obligation is taken to be owed to the third party; and

                     (c)  a contravention of one of the third party data conditions is taken to be a failure to discharge that obligation.

Note:          Section 271 gives a right to recover damages for any loss or damage relating to such a failure.

             (7)  If a person (the applicant) makes an application mentioned in subsection (4) on behalf of another person (the principal):

                     (a)  both the applicant and the principal may be required, by the approved form for the application, to comply with the third party data conditions; and

                     (b)  an obligation is taken to be imposed under subsection (6) on both the applicant and the principal, in each of their personal capacities, to comply with the third party data conditions.

Part 5.6—Amendment demands

Division 1—Introduction

177  Guide to this Part

178  How amendment demands are given

             (1)  A person with an interest (including a security interest) in collateral described in a registration with respect to a security interest may give a demand (an amendment demand), in writing, to the secured party for a financing change statement to be registered to amend the registration as authorised by the following table:

Note:          If the secured party does not comply with the amendment demand, the demand may be enforced under Subdivision A (administrative process) or Subdivision B (judicial process) of Division 2.

 

Authorised amendments
Item	When amendment is authorised	What amendment is authorised
1	No collateral described in the registration secures any obligation (including a payment) owed by a debtor to the secured party.	Amendment to end effective registration (including an amendment to remove the registration).
2	The particular collateral in which the person has an interest does not secure any obligation (including a payment) owed by a debtor to the secured party.	Amendment to omit the collateral.

             (2)  Data removed from the register because of an amendment in compliance with the amendment demand must not be made available for search in the register by reference to any time before (or after) the time of removal, if the Registrar so decides for the purposes of this subsection.

Note 1:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision that the removed data is not to be made available for search in the register (see section 191).

Note 2:       Incorrectly removed data may be restored under section 186.

             (3)  A secured party must not require payment for compliance with an amendment demand in relation to collateral that:

                     (a)  at the time the security interest attached to the collateral, the grantor intended to use predominantly for personal, domestic or household purposes; or

                     (b)  the grantor is using predominantly for personal, domestic or household purposes.

Division 2—Amendment demands: administrative and judicial process

Subdivision A—Administrative process

179  Scope of Subdivision

             (1)  This Subdivision applies if:

                     (a)  a secured party is given an amendment demand; and

                     (b)  an application has not been made to register a financing change statement in compliance with the demand before the end of 5 business days after the day the demand is given to the secured party; and

                     (c)  there are no proceedings currently before a court (including a court of appeal), in relation to an application under section 182, that relate to the amendment demanded.

             (2)  This Subdivision stops applying if:

                     (a)  a financing change statement is registered in accordance with the amendment demand; or

                     (b)  proceedings come before a court (including a court of appeal), in relation to an application under section 182, that relate to the amendment demanded.

No application to security trust instruments

             (3)  This Division does not apply in relation to a security interest if the security agreement providing for the interest is an instrument or other document:

                     (a)  by which a person issues or guarantees, or provides for the issue or guarantee of, an obligation secured by a security interest; and

                     (b)  in which another person is appointed as trustee for the person to whom the obligation secured by the security interest is owed.

180  Administrative process—amendment notices

Amendment notice given by Registrar

             (1)  The Registrar may give the secured party a notice (an amendment notice), in accordance with subsection (5), of the amendment demanded.

At the initiative of the Registrar

             (2)  An amendment notice may be given at the initiative of the Registrar, if the Registrar suspects on reasonable grounds that the amendment demanded is authorised under section 178.

In response to a statement by the person who gave the amendment demand

             (3)  The person who gave the amendment demand to the secured party may give a statement in the approved form to the Registrar:

                     (a)  stating the amendment demanded; and

                     (b)  including anything else prescribed by the regulations.

Note:          The provision of false or misleading information in the statement may be an offence against Part 7.4 of the Criminal Code.

             (4)  An amendment notice must be given in response to a statement under subsection (3) as soon as practicable after the statement is given (unless an amendment notice has already been given at the initiative of the Registrar).

Amendment notices

             (5)  An amendment notice is given in accordance with this subsection if:

                     (a)  the notice is in the approved form; or

                     (b)  the notice:

                              (i)  states the amendment demanded; and

                             (ii)  invites the secured party to submit a response to the amendment demand in writing to the Registrar before the end of 5 business days after the day the notice is given (or an extended period approved by the Registrar); and

                            (iii)  sets out the effect of section 181 (amendment of registration); and

                            (iv)  if a statement is given under subsection (3)—includes a copy of the statement.

Note:          The provision of false or misleading information in any response to the invitation may be an offence against Part 7.4 of the Criminal Code.

181  Administrative process—registration amendments

             (1)  If an amendment notice is given to a secured party under section 180, after the end of the period covered by subsection (3), the Registrar must (at his or her initiative) register a financing change statement amending the registration (including an amendment to remove the registration) in accordance with the amendment demand, unless the Registrar suspects on reasonable grounds that the amendment is not authorised under section 178.

             (2)  However, the Registrar may register such a financing change statement before the end of the period covered by subsection (3) if:

                     (a)  the secured party has responded to the invitation in the amendment notice; and

                     (b)  the Registrar has no reason to believe that the secured party intends to give a further response.

             (3)  The period covered by this subsection is:

                     (a)  5 business days after the day the amendment notice is given to the secured party; or

                     (b)  a longer period approved by the Registrar (in relation to the particular amendment demand, or to a class of amendment demands) after the amendment notice is given to the secured party.

             (4)  In making a decision about whether to register a financing change statement amending the registration in accordance with the amendment demand, the Registrar must consider:

                     (a)  the response (if any) of the secured party to the invitation in the amendment notice; and

                     (b)  any other relevant information.

             (5)  Data removed from the register because of an amendment under this section must not be made available for search in the register by reference to any time before (or after) the time of removal, if the Registrar so decides for the purposes of this subsection.

Note 1:       The provision of false or misleading information in any response to the invitation may be an offence against Part 7.4 of the Criminal Code.

Note 2:       The Registrar must give a verification statement to each secured party after the registration of a financing change statement (see section 156).

Note 3:       Application may be made to the Administrative Appeals Tribunal for review of certain decisions of the Registrar about registration (see section 191).

Note 4:       This section stops applying if proceedings come before a court under section 182 in relation to the amendment demanded (see subsection 179(2)).

Note 5:       Incorrectly removed data may be restored under section 186.

Subdivision B—Judicial process

182  Judicial process for considering amendment demand

             (1)  The following persons may apply to a court for an order in relation to an amendment demand:

                     (a)  the secured party;

                     (b)  the person who gave the amendment demand.

             (2)  The person who gave the amendment demand cannot make an application under this section before the end of 5 business days after the day the demand is given to the secured party.

Note:          The period may be extended by a court under section 293.

             (3)  A person with an interest (including a security interest) in the collateral described in the registration has the right to appear before the court on an application under this section.

Note 1:       The Registrar also has the power to intervene in the proceeding (see section 218).

Note 2:       For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

             (4)  On an application under this section, a court may make the following orders:

                     (a)  if the court considers the amendment demanded to be authorised under section 178—an order requiring the Registrar to register a financing change statement amending the registration (including an amendment to remove the registration);

                     (b)  if the court does not consider the amendment demanded to be so authorised—one or more of the following orders:

                              (i)  an order restraining the Registrar from registering a financing change statement amending the registration at the Registrar’s initiative (under section 181);

                             (ii)  an order restraining the person who gave the amendment demand from making such further amendment demands as the court specifies;

                            (iii)  an order restraining the Registrar from giving the secured party amendment notices under section 180 in relation to such further amendment demands as the court specifies;

                     (c)  any other order that the court thinks fit.

             (5)  The Registrar must comply with a court order to register a financing change statement as soon as reasonably practicable after receiving the order.

Note:          The Registrar must give a verification statement to each secured party after the registration of a financing change statement (see section 156).

             (6)  Data removed from the register because of an amendment under this section must not be made available for search in the register by reference to any time before (or after) the time of removal, if the Registrar so decides.

Note:          Incorrectly removed data may be restored under section 186.

Part 5.7—Removal of data and correction of registration errors

  

183  Guide to this Part

184  Removal of data—general grounds

             (1)  The Registrar may (at his or her initiative) register a financing change statement to remove data (including an entire registration) from the register if the Registrar is satisfied that:

                     (a)  the application to register the data was frivolous or vexatious, the data is offensive, or the retention of the data in the register is contrary to the public interest; or

                     (b)  the registration of the data is prohibited by regulations made for the purposes of paragraph 150(3)(d); or

                     (c)  the removal of the data is required or permitted by the regulations made for the purposes of this paragraph; or

                     (d)  the application to register the data was not made in the approved form; or

                     (e)  the removal is required urgently:

                              (i)  in the public interest; or

                             (ii)  for reasons prescribed by regulations made for the purposes of this subparagraph.

Note 1:       The Registrar must give a verification statement to each secured party after the data is removed (see section 156).

Note 2:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision to remove data from the register under paragraph (a), (b) or (c) (see section 191).

             (2)  Data removed from the register under this section must not be made available for search in the register by reference to any time before (or after) the time of removal:

                     (a)  in relation to data removed under paragraph (1)(a), (b) or (c)—if the Registrar so decides for the purposes of this paragraph; and

                     (b)  in relation to data removed under paragraph (1)(d)—if the Registrar so decides for the purposes of this paragraph;

                     (c)  in relation to data removed under paragraph (1)(e)—in all cases.

Note:          Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision under paragraph (a) (see section 191).

             (3)  If subsection (2) applies in relation to data removed from the register, this Act otherwise applies as if the data is not, and never has been, included in the register.

Note:          Incorrectly removed data may be restored under section 186.

185  Removal of data—registration ineffective for 7 years or more

                   The Registrar may (at his or her initiative) register a financing change statement to remove data (including an entire registration) with respect to a security interest from the register to reflect the fact that the registration has been ineffective under section 163 for 7 years or more.

186  Incorrectly removed data—restoration

             (1)  The Registrar may (at his or her initiative) register a financing change statement to restore data to the register (including an entire registration) if it appears to the Registrar that the data was incorrectly removed from the register under this Act.

             (2)  If data is restored to the register under subsection (1), for the purposes of this Act the data is taken never to have been removed from the register.

187  Records of removed data

                   The removal of data from the register under this Act does not prevent the Registrar from keeping a record of the removed data in whatever form the Registrar considers appropriate.

188  Correction of registration errors

             (1)  The Registrar may (at his or her initiative) register a financing change statement to amend a registration to correct an error or omission made by the Registrar.

             (2)  If a registration is corrected under subsection (1), this Act applies as if the error or omission had never been made.

Note 1:       The Registrar must give a verification statement to each secured party after the registration of a financing change statement (see section 156).

Note 2:       Application may be made to the Administrative Appeals Tribunal for review of the Registrar’s decision to register a financing change statement (see section 191).

Part 5.8—Fees, administrative review and annual reports

  

189  Guide to this Part

190  Registration and search fees

Determination of fees and arrangements

             (1)  The Minister may, by legislative instrument, determine fees for the purposes of this Act.

             (2)  The Minister may, by a legislative instrument made under subsection (1), determine the kinds of arrangements for the payment of fees under the instrument that may be approved under subsection (4).

             (3)  If this Act requires the payment of a determined fee for a particular purpose, without limiting subsection (6), that requirement is satisfied if an arrangement for its payment has been approved under subsection (4).

Approval of arrangements

             (4)  The Registrar may approve an arrangement (of a kind determined under subsection (2)) in relation to the payment of fees by a person for the purposes of this section on application by the person in the approved form, accompanied by the fee (if any) determined under subsection (1).

Miscellaneous

             (5)  The fees determined under subsection (1) must not be such as to amount to taxation.

             (6)  The amount of a fee, except a fee to maintain a registration (determined for the purposes of section 168), is a debt due to the Commonwealth, and may be recovered by the Commonwealth by application to a court.

Note 1:       If a fee to maintain a registration is not paid within 28 days, the Registrar may end the effective registration of the collateral (see section 168).

Note 2:       For which courts have jurisdiction, and for transfers between courts, see Part 6.2.

191  Review of decisions

                   An application may be made to the Administrative Appeals Tribunal for review of the following decisions made by the Registrar:

                     (a)  a decision to refuse to register a financing statement, under subsection 150(1);

                     (b)  a decision to refuse to register a financing change statement, under subsection 150(2);

                     (c)  a decision to register a financing change statement to amend the register to end the effect of a registration, under subsection 150(2);

                     (d)  a decision to refuse to give a person access to the register to search for data, under section 170;

                     (e)  a decision to refuse to give a person a copy of a registered financing statement in relation to which the person is registered as a secured party, or of a verification statement, under section 175;

                      (f)  a decision to refuse to give a person a report relating to registered data in relation to the person, under subsection 176(1);

                     (g)  a decision to register a financing change statement in accordance with an amendment demand, under subsection 181(1);

                     (h)  a decision to refuse to register a financing change statement in accordance with an amendment demand, under subsection 181(1);

                      (i)  a decision to register a financing change statement to remove data from the register, under paragraph 184(1)(a), (b) or (c);

                      (j)  a decision that data removed from the register is not to be made available for search in the register, under subsection 178(2) or 181(5) or paragraph 184(2)(a);

                     (k)  a decision to register a financing change statement to restore incorrectly removed data to the register, under section 186;

                      (l)  a decision to register a financing change statement to amend a registration to correct an error or omission made by the Registrar, under section 188;

                    (m)  a decision to register a financing change statement to remove migrated data from the register, under subsection 334(2).

192  Annual reports

             (1)  The Registrar must, as soon as practicable after the end of each financial year, prepare and give to the Minister, for presentation to the Parliament, a report on the operation of this Act during that financial year.

Note:          See also section 34C of the Acts Interpretation Act 1901, which contains extra rules about annual reports.

             (2)  The Registrar must include in the report:

                     (a)  details of each occasion on which access to the register was refused, or the operation of the register was otherwise suspended, during the financial year under subsection 147(5); and

                     (b)  any information necessary to demonstrate that fees determined under subsection 190(1) do not amount to taxation.

Part 5.9—Registrar of Personal Property Securities

  

193  Guide to this Part

194  Registrar—establishment of office

             (1)  There is to be a Registrar of Personal Property Securities.

             (2)  The Registrar is to be:

                     (a)  engaged under the Public Service Act 1999; and

                     (b)  appointed as Registrar of Personal Property Securities by the Minister by written instrument.

             (3)  The office of the Registrar of Personal Property Securities is not a public office for the purposes of the Remuneration Tribunal Act 1973.

195  Registrar—functions and powers

             (1)  The Registrar has the functions given under this Act or any other Act.

             (2)  The Registrar has power to do all things necessary or convenient to be done for or in connection with the performance of his or her functions.

195A  Registrar—investigations

             (1)  The Registrar may conduct an investigation into any matter for the purpose of performing his or her functions.

             (2)  If the Registrar believes on reasonable grounds that a person has information that is relevant to an investigation under subsection (1), the Registrar may, by written notice given to the person, require the person to give any such information to the Registrar, within the period and in the way specified in the notice.

             (3)  The period specified in a notice under subsection (2) must be at least 14 days after the notice is given.

             (4)  A person contravenes this subsection if:

                     (a)  the person has been given a notice under subsection (2); and

                     (b)  the person fails to comply with the notice.

Civil penalty:

                     (a)  for an individual—50 penalty units;

                     (b)  for a body corporate—250 penalty units.

Note:          See Part 6.3 (Civil penalty proceedings).

             (5)  A notice under subsection (2) of this section must set out the effect of the following provisions:

                     (a)  subsection (4) of this section;

                     (b)  section 137.1 of the Criminal Code (giving false or misleading information).

             (6)  Despite subsection (2), the Registrar cannot give a notice under that subsection to:

                     (a)  the Commonwealth, a State or a Territory; or

                     (b)  an officer or agency of the Commonwealth, a State or a Territory.

196  Registrar—acting appointments

             (1)  The Minister may, by written instrument, appoint a person engaged under the Public Service Act 1999 to act as the Registrar:

                     (a)  during a vacancy in the office of Registrar (whether or not an appointment has previously been made to the office); or

                     (b)  during any period, or during all periods, when the Registrar:

                              (i)  is absent from duty or from Australia; or

                             (ii)  is, for any reason, unable to perform the duties of the office.

             (2)  Anything done by, or in relation to, a person purporting to act under an appointment is not invalid merely because:

                     (a)  the occasion for the appointment had not arisen; or

                     (b)  there was a defect or irregularity in connection with the appointment; or

                     (c)  the appointment had ceased to have effect; or

                     (d)  the occasion to act had not arisen or had ceased.

Note:          For general provisions about appointments, see also sections 20 and 33A of the Acts Interpretation Act 1901.

197  Registrar—delegation

             (1)  The Registrar may, by written instrument, delegate all or any of his or her functions or powers to:

                     (a)  a person engaged under the Public Service Act 1999; or

                     (b)  another person determined by the Registrar, by written instrument, for the purposes of this section.

Note:          The Registrar may determine a particular person or a class of persons under paragraph (b), and may apply the determination in relation to particular matters or classes of matters (see subsection 33(3A) of the Acts Interpretation Act 1901).

             (2)  A delegate must, if required by the instrument of delegation, perform a delegated function, or exercise a delegated power, under the direction or supervision of:

                     (a)  the Registrar; or

                     (b)  a Deputy Registrar; or

                     (c)  a person engaged under the Public Service Act 1999.

Note:          For further provisions relating to delegations, see sections 34AA and 34AB of the Acts Interpretation Act 1901.

198  Registrar—resignation

             (1)  The Registrar may resign by writing signed by him or her and given to the Minister.

             (2)  The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.

199  Registrar—termination

             (1)  The Minister may terminate the appointment of the Registrar by written instrument.

             (2)  The appointment of the Registrar is terminated if the Registrar stops being engaged under the Public Service Act 1999 for any reason.

200  Deputy Registrar—establishment of office

             (1)  There is to be at least one Deputy Registrar of Personal Property Securities (a Deputy Registrar).

             (2)  A Deputy Registrar is to be:

                     (a)  engaged under the Public Service Act 1999; and

                     (b)  appointed as a Deputy Registrar of Personal Property Securities by the Minister by written instrument.

             (3)  The office of Deputy Registrar of Personal Property Securities is not a public office for the purposes of the Remuneration Tribunal Act 1973.

201  Deputy Registrar—functions and powers

             (1)  Subject to any direction by the Registrar, a Deputy Registrar has all the functions and powers of the Registrar, except the powers of delegation under section 197.

             (2)  A function or power of the Registrar, when performed or exercised by a Deputy Registrar, is taken to have been performed or exercised by the Registrar.

             (3)  The performance of a function, or the exercise of a power, of the Registrar by a Deputy Registrar does not prevent the performance of the function, or the exercise of the power, by the Registrar.

             (4)  If the performance (or exercise) of a function or power by the Registrar is dependent on the opinion, belief or state of mind of the Registrar in relation to a matter, that function or power may be performed (or exercised) by a Deputy Registrar on his or her opinion, belief or state of mind in relation to that matter.

             (5)  If the operation of a provision of this Act or another Act is dependent on the opinion, belief or state of mind of the Registrar in relation to a matter, that provision may operate on the opinion, belief or state of mind of a Deputy Registrar in relation to that matter.

202  Deputy Registrar—resignation

             (1)  A Deputy Registrar may resign by writing signed by him or her and given to the Minister.

             (2)  The resignation takes effect on the day it is received by the Minister or, if a later day is specified in the resignation, on that later day.

203  Deputy Registrar—termination

             (1)  The Minister may terminate the appointment of a Deputy Registrar by written instrument.

             (2)  The appointment of a Deputy Registrar is terminated if the Deputy Registrar stops being engaged under the Public Service Act 1999 for any reason.

Chapter 6—Judicial proceedings

Part 6.1—Guide to this Chapter

  

204  Guide to this Chapter

Part 6.2—Judicial proceedings generally

Division 1—Introduction

205  Guide to this Part

206  Scope of this Part

             (1)  This Part deals with the jurisdiction of a court with respect to a matter (a PPS matter):

                     (a)  arising under a provision of this Act authorising an application to be made to a court; or

                     (b)  otherwise arising in relation to this Act, other than a matter in respect of which the Federal Court or the Federal Circuit Court has jurisdiction under the Administrative Decisions (Judicial Review) Act 1977; or

                     (c)  otherwise arising in relation to a security agreement or a security interest.

             (2)  This Part operates to the exclusion of:

                     (a)  the Jurisdiction of Courts (Cross‑vesting) Act 1987; and

                     (b)  section 39B of the Judiciary Act 1903.

             (3)  This Part does not limit the operation of the provisions of the Judiciary Act 1903 other than section 39B.

             (4)  Without limiting subsection (3), this Part does not limit the operation of subsection 39(2) of the Judiciary Act 1903 in relation to matters arising under this Act.

             (5)  Nothing in this Part affects any other jurisdiction of any court.

             (6)  This Part does not apply to matters arising under Part 6.3 (civil penalty proceedings).

Division 2—Conferral of jurisdiction

207  Jurisdiction of courts

                   Jurisdiction is conferred on a court mentioned in an item in the following table with respect to a PPS matter, subject to the limits on the court’s jurisdiction (if any) specified in the item:

 

Jurisdiction of courts
Item	Court on which jurisdiction is conferred	Limits of jurisdiction
1	The Federal Court	No specified limits.
2	The Federal Circuit Court	The court does not have jurisdiction to award an amount for loss or damage that exceeds: (a) $750,000; or (b) if another amount is prescribed by the regulations—that other amount.
3	A superior court, or lower court, of a State or Territory	The court’s general jurisdictional limits, including (but not limited to) limits as to locality and subject matter, to the extent that the Constitution permits.
4	The Family Court	No specified limits.

208  Cross‑jurisdictional appeals

                   The following table has effect:

 

Cross‑jurisdictional appeals
Item	Unless expressly provided by a law of the Commonwealth, a State or a Territory, an appeal with respect to a PPS matter does not lie from a decision of ...	to any of the following courts:
1	the Federal Court	(a) the Federal Circuit Court; (b) a court of a State; (c) a court of a Territory; (d) the Family Court.
2	the Federal Circuit Court	(a) a court of a State; (b) a court of a Territory.
3	a court of a State (other than a State Family Court)	(a) the Federal Court; (b) the Federal Circuit Court; (c) a court of another State; (d) a court of a Territory; (e) the Family Court; (f) a State Family Court of the same State.
4	a court of the Australian Capital Territory	(a) the Federal Court; (b) the Federal Circuit Court; (c) a court of a State; (d) a court of another Territory; (e) the Family Court.
5	a court of the Northern Territory	(a) the Federal Court; (b) the Federal Circuit Court; (c) a court of a State; (d) a court of another Territory; (e) the Family Court.
6	a court of an external Territory	(a) the Federal Circuit Court; (b) a court of a State; (c) a court of another Territory (whether internal or external); (d) the Family Court.
7	the Family Court