- 17.1 What is perfection?
- 17.2 Consequences of non-perfection
- 17.3 Methods of perfection
- 17.4 Perfection by registration
- 17.5 Perfection by possession
- 17.6 Perfection by control
- 17.7 Temporary perfection
- 17.8 Perfection of security interests against proceeds
- 17.9 Perfection of PMSIs
- 17.10 Transfers of collateral and perfection
- 17.11 Relocations of collateral to Australia and perfection
- 17.12 Perfection matters not covered
For present purposes, perfection by registration is most commonly conducted online, by lodging a financing statement for a security interest online at www.ppsr.gov. au1.
The practicalities of registration are discussed in Chapter 22 (Registration and the PPS Register).
Registration against original collateral
A financing statement must describe the collateral covered by a security interest by selecting one of nine (9) classes of original collateral, listed immediately below:
1 Agriculture2, which includes:
(i) crops, which in turn includes unharvested products such as wheat in the field, fruit on the tree, trees themselves (to the extent the trees are personal property and do not form part of the land on which they grow) and aquaculture products like fish;
(ii) livestock, including progeny, and the products of livestock such as wool on the sheep’s back, and presumably milk from cows;
2 Aircraft, which in term includes:
(i) airframes;
(ii) helicopters; and
(iii) engines of aircraft
3 All present and after-acquired property (All-PAAP), which is all property of a grantor
4 All present and after-acquired property (All-PAAP), except certain excluded items or classes of collateral
5 Financial property, which includes:
(i) chattel paper;
(ii) currency;
(iii) documents of title;
(iv) investment instruments, which in turn includes:
unlisted shares, and units in a share
debentures
bonds
derivatives
foreign exchange contracts
options that are assignable
managed investment scheme units
financial products traded on financial markets, such as warrants; and
(v) intermediated securities3
6 intangible property, which in turn includes all personal property except:
(i) financial property;
(ii) goods; and
(iii) intermediated securities.
This means that intangible property includes:
(iv) intellectual property;
(v) ADI accounts;
(vi) accounts (receivables); and
(vii) other “general intangible” property;
7 Motor vehicles, which is a broad term and will include:
cars
trucks
caravans
trailers
mining yellow goods
go-carts and the like - anything that has wheels, moves mainly on land (but not on rails or a fixed path) and either
-
-
- at speeds (whether propelled by its own motor, or towed) over 10km/h, or
- has a motor sized over 200W4
-
8 Other goods; and
9 Watercraft
Registration against proceeds
Given that security interests automatically attach to proceeds generated when original collateral is disposed and must also be perfected against proceeds, secured parties should always cast their minds to proceeds when registering against original collateral.
A wide registration against original collateral that also covers the classes of personal property into which the proceeds fall, such as all present and after-acquired property, will automatically perfect a security interest against all proceeds generated from the original collateral5.
Alternatively, if the registration against original collateral is limited to certain items or classes of collateral, secured parties can still register against all proceeds generated from the original collateral. To register against all proceeds, secured parties would nominate proceeds in a financing statement, and register against all present and after- acquired property in the form of proceeds of the original collateral6.
Secured parties can also register against specific items or specific classes of collateral as proceeds. See paragraph 17.8.2 below for details of how to register against specific items or classes of proceeds.
If a registration does not cover proceeds, then the secured party will have five (5) business days (temporary perfection) from the time that proceeds are generated from original collateral to register or otherwise perfect against the proceeds to preserve the priority time they enjoyed against the original collateral7. If secured parties do not perfect against proceeds within five (5) business days, then they lose their original priority time, but would gain a new priority time if and when they perfect against the proceeds.
Perfection is automatic against proceeds that take the form of money deposited into an ADI account, cash itself (currency), cheques or an insurance payment payable upon damage to the collateral8. There is no need to take extra steps to perfect against these forms of proceeds provided that a registration covered and adequately perfected the security interest in the original collateral.
Notes:
1 The PPS Register is discussed in more detail in Chapter 22 (Registration and the PPS Register).
2 PPS Regulation 1.6, definition of agriculture
3 PPS Regulations, Schedule 1, Part 2, paragraph 2.1
4 PPS Regulations, regulation 1.7
5 PPSA, section 33(1)(b)
6 PPSA section 153; PPS Regulations, Schedule 1, Part 2, paragraph 2.4
7 PPSA, section 33(2)
8 PPSA, section 33(1)(c)
