- 21.1 The Extinguishment Rules – Introduction
- 21.2 Table Summarising the Extinguishment Rules by Class of Collateral
- 21.3 The Extinguishment Rules - Commentary
- 21.4 Buyer or lessee of personal property subject to unperfected security interests – section 43
- 21.5 Sales or leases of serial-numbered property – motor vehicles, watercraft, aircraft/engines and intellectual property (patents, trade marks, designs and plant breeder’s rights) – section 44
- 21.6 Private sales or leases of motor vehicles – sections 45(1) - (2)
- 21.7 Buying motor vehicles from licensed dealers – sections 45(3) - (4)
- 21.8 Buying or leasing from a seller/lessor in the ordinary course of business – section 46
- 21.9 Low value (below $5,000) consumer property (except serial numbered property) – section 47
- 21.10 Currency – section 48
- 21.11 Prescribed financial markets – investment instruments and intermediated securities – section 49
- 21.12 Investment instruments – section 50
- 21.13 Intermediated securities – section 51
- 21.14 Temporarily perfected security interests – section 52
- 21.15 Returned goods following sale or lease
- 21.16 Subrogation by extinguished secured parties to rights in relation to collateral sold or leased
The holder of currency takes free of a security interest over the currency unless they have actual or constructive knowledge of the existence of a security interest over the currency1.
Currency neatly bears that the object of the extinguishment rules is largely to keep the economy ticking over – currency simply must be freely exchangeable.
The extinguishment rules under the PPSA are completely silent about title to currency. Section 48 is simply expressed to apply to security interests over currency. The question that may occasionally arise is whether the extinguishment rule in section 48 washes-clean title to stolen or otherwise non-owned currency. Rather, does it merely extinguish security interests in favour of buyers or lessees in otherwise valid transfer transactions. See the discussion above at paragraphs 21.1.12 to 21.1.40
Realistically, currency can be fungible and hard to trace, and extremely easily dissipated. Security interests would be very easily lost over currency if it is spent and the secured party cannot identify and trace the proceeds.
