Overview

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

A security interest is an interest in personal property provided for by a transaction that secures payment or the performance of an obligation. The form of the transaction and the identity of the person who has title to the property do not affect whether an interest is a security interest.

Personal property includes many different kinds of tangible and intangible property, other than real property. Examples include motor vehicles, household goods, business inventory, intellectual property and company shares. Personal property is known as collateral if it is (or is anticipated to be) the subject of a security interest.

A security interest is enforceable against a grantor when it attaches to collateral. A security interest attaches to collateral when a person gives value for acquiring the security interest (or does something else to acquire it), and in return, the person gains rights in the collateral.

A security interest is enforceable against third parties when it has attached to the collateral and either the secured party has possession or control of the collateral, or a security agreement covers the collateral.

If a security interest in collateral is perfected, it takes priority over another security interest that is unperfected when the security interest comes to be enforced. A security interest is perfected if:

  (a)   it has attached to collateral; and

  (b)   it is enforceable against third parties; and

  (c)   certain extra steps (possession or control of the collateral, or registration on the Register of Personal Property Securities) have been taken to protect the interest.

Certain security interests are also declared to be temporarily perfected, or perfected, under this Act.

The secured party whose security interest has the highest priority is entitled to enforce that interest ahead of secured parties with security interests that have a lower priority.

Between perfected security interests, perfection by control has a higher priority than other forms of perfection. The next level of priority is given (subject to certain rules) to perfected purchase money security interests. If no other way of working out priority between perfected interests is provided, the highest priority is given to the security interest that has been continuously perfected for the longest period.

The Register of Personal Property Securities enables secured parties to give notice of actual or prospective security interests. Notice is given by the recording of data about secured parties, grantors and collateral. The register may be kept electronically, for example in a form that is interactive and accessible over the internet.

Summary

Chapter   1 deals with some preliminary matters, including the general application of the Act (Part   1.2) and its interpretation (Part   1.3).

Chapter   2 sets out general rules relating to security interests. These include the following:

  (a)   general principles relating to security agreements, security interests, attachment and perfection (Part   2.2);

  (b)   interpretation provisions about possession and control (Part   2.3);

  (c)   rules about when attachment and perfection of security interests occurs in particular situations (Part   2.4);

  (d)   the circumstances in which personal property is taken free of a security interest in the property (Part   2.5);

  (e)   how to work out the priority between competing security interests (and in some cases, other sorts of interests) in personal property (Part   2.6);

  (f)   rules about the transfer of interests in collateral (Part   2.7).

Chapter   3 contains specific rules about the following:

  (a)   agricultural interests (Part   3.2);

  (b)   security interests in accessions to personal property and their priority (Part   3.3);

  (c)   security interests in personal property that is processed or commingled and their priority (Part   3.4);

  (d)   intellectual property and intellectual property licences (Part   3.5).

Chapter   4 deals with how to enforce a security interest in personal property. Parties can contract out of some of the provisions of Chapter   4.

Chapter   5 provides for the establishment and maintenance of a register with respect to personal property securities and certain prescribed personal property (the Register of Personal Property Securities).

The Registrar of Personal Property Securities is responsible for maintaining the register. Chapter   5 also deals with how the register can be searched, and how certain non - registered data can be provided through the register (as a portal).

A search by reference to the details of an individual grantor must be made for an authorised purpose set out in the Act. A person who carries out an unauthorised search, or uses data from an unauthorised search, may be liable to pay compensation or a civil penalty (or both).

Chapter   6 deals with the role of the courts in proceedings that relate to security interests in personal property. It confers jurisdiction on courts and provides rules for the transfer of proceedings between courts. It also describes the Registrar's role in judicial proceedings and applies Parts   4 and 6 of the Regulatory Powers Act to enable contraventions of civil penalty provisions to be enforced.

Chapter   7 deals with how this Act interacts with foreign laws, the constitutional operation of this Act and the relationship between this Act and other Australian laws.

Chapter   8 deals with the following:

  (a)   rules about the vesting of certain unperfected interests (Part   8.2);

  (b)   rights to damages and compensation in relation to contraventions of this Act (Part   8.3);

  (c)   requests to secured parties for information, how notices may be given and certain other procedural and administrative matters (Parts   8.4 to 8.7).

Chapter   9 deals with the initial application of this Act.

The Act starts to apply under Part   9.3 at the registration commencement time, which is 1   February 2012 (the first day of the month that is 26 months after this Act was given the Royal Assent), or another time determined by the Minister.

Chapter   9 also deals with references to charges and fixed and floating charges in this Act and in security agreements, and provides for the review of the operation of the Act within 3   years after it starts to apply.

Schedule   1 contains application, saving and transitional provisions relating to amendments of this Act.