Personal Property Securities (Corporations and Other Amendments) Act 2010 (96 of 2010)

Schedule 2   Personal Property Securities Act 2009

Part 1   Specific amendments

121   Divisions 1 to 5 of Part 9.4

Repeal the Divisions, substitute:

Division 1 - Introduction

319 Guide to this Part

This Part deals with the transitional application of this Act.

This Part applies to transitional security interests, which are security interests provided for by security agreements (transitional security agreements) in force immediately before the registration commencement time. A transitional security interest may arise before, at or after the registration commencement time.

The registration commencement time is 1 February 2012 (the first day of the month that is 26 months after this Act was given the Royal Assent), or an earlier time determined by the Minister.

Division 2 is about the attachment, perfection and priority of transitional security interests. Transitional security interests are declared to be perfected until the end of the month that is 24 months after the registration commencement time, or until they are earlier perfected by other means (for example, by registration).

Division 6 is about the migration of data about personal property from Commonwealth, State and Territory registers onto the Personal Property Securities Register. The Registrar may register migrated data about transitional security interests with effect from the registration commencement time. Such transitional security interests are known as migrated security interests.

Migrated security interests are perfected under Division 2 from immediately before the registration commencement time.

Division 7 provides for preparatory registration with respect to transitional security interests in anticipation of the commencement of the Personal Property Securities Register. Other data may also be registered under this Division before the registration commencement time.

Transitional security interests that are registered in this way are perfected under Division 2 from immediately before the registration commencement time.

Division 8 provides rules for dealing with defective registrations with respect to transitional security interests. For example, omissions arising from the migration of data onto the Personal Property Securities Register will not automatically render the registration of the data ineffective.

Division 2 - Attachment, perfection and priority of transitional security interests

320 Guide to priority rules for transitional security interests

(1) The following table is a guide to how this Act applies to the determination of priorities involving transitional security interests:

(2) Other priorities involving transitional security interests are dealt with under this Division as follows:

(a) for the priority between 2 perfected transitional security interests, see section 323;

(b) for the priority between 2 unperfected transitional security interests, see section 323;

(c) for the priority between 2 security interests, one or both of which is a transitional security interest, if the priority comes to be determined after the end of the month that is 24 months after the registration commencement time in circumstances involving insolvency or bankruptcy, see section 324.

(3) In this section, a reference to a perfected transitional security interest is taken to be a reference to a transitional security interest that has been continuously perfected, at the time the priority comes to be determined, since immediately before the registration commencement time.

321 Attachment rule

For the purposes of subparagraph 21(1)(b)(i) and section 55, a transitional security interest in collateral is taken to have attached to the collateral immediately before the registration commencement time, whether the security interest arises before, at or after the registration commencement time.

Note 1: Subparagraph 21(1)(b)(i) provides that unless a security interest in collateral is perfected by force of this Act, the security interest must have attached to the collateral in order to be perfected.

Note 2: Section 55 provides for the default rules for determining priority between security interests in the same collateral. In some cases, these rules depend on when a security interest attaches. For example, the priority between 2 unperfected security interests is generally determined by their order of attachment (see subsection 55(2)).

However, 2 unperfected transitional security interests have the priority they would have had between themselves if this Act had not been enacted (see section 323).

Note 3: See section 320 for a general summary of priority rules as they affect transitional security interests.

322 Perfection rule

Main rule

(1) A transitional security interest in collateral is perfected from immediately before the registration commencement time, whether the security interest arises before, at or after the registration commencement time (including a transitional security interest that arises after the end of the month that is 24 months after the registration commencement time).

Note 1: As a result of this subsection, the priority time for a transitional security interest under subsection 55(4) will be immediately before the registration commencement time, as long as the security interest remains continuously perfected.

Note 2: See section 320 for a general summary of priority rules as they affect transitional security interests.

(2) However, the transitional security interest stops being perfected under subsection (1) at the earliest of the following times:

(a) when the security interest is perfected by registration under Division 6 (migration of personal property interests);

(b) when the security interest is perfected by preparatory registration under Division 7;

(c) when a registration under Division 6 or 7 is amended so that the registration perfects the security interest;

(d) when the security interest is otherwise perfected by registration, or is perfected by possession or control;

(e) when the security interest is otherwise perfected (but not temporarily perfected) by this Act, other than under this section;

(f) the end of the month that is 24 months after the registration commencement time.

Note: In the case of a transitional security interest in collateral that does not arise until after the end of the month that is 24 months after the registration commencement time, this section has the same effect as for other transitional security interests. In particular:

(a) if a financing statement describing the collateral is registered before the end of that month, by the operation of sections 21, 55, 321 and this section, the security interest is continuously perfected from the registration time for the collateral until the registration stops being effective; and

(b) if the security interest is not perfected (otherwise than under this section) at the end of the month that is 24 months after the registration commencement time, the security interest will become unperfected at that time.

Exception

(3) Subsections (1) and (2) do not apply to a transitional security interest in collateral if the interest is of a class prescribed by regulations made for the purposes of this subsection.

323 Priority rule - priority otherwise undetermined

If the priority between 2 transitional security interests is not otherwise able to be determined under this Act, they have the priority between themselves that they would have had under the law that applied to such priority immediately before the registration commencement time, and as if this Act had not been enacted.

Note: The priority between the following transitional security interests is not otherwise able to be determined under this Act:

(a) 2 unperfected transitional security interests (because of section 321, the order of attachment between these interests cannot be determined for the purposes of subsection 55(2));

(b) 2 transitional security interests that have been continuously perfected since immediately before the registration commencement time (because of sections 321 and 322, the order of the priority times for these interests cannot be determined for the purposes of subsection 55(4)).

324 Priority rule - certain security interests upon insolvency or bankruptcy

(1) The priority between 2 security interests in the same collateral is to be determined under this Act, as if section 322 had not been enacted, if:

(a) the priority between the security interests comes to be determined after the end of the month that is 24 months after the registration commencement time; and

(b) either (or each) of the interests is a transitional security interest that has not been perfected, apart from under section 322; and

(c) the grantor or secured party in relation to either (or each) of the security interests is insolvent or bankrupt.

(2) Subsection (1) is in addition to, and does not derogate from, any other provision of this Division.