- 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
A person taking any interest in an intermediated security for value (unless the interest acquired is a security interest) takes free of a security interest if it is a consensual transaction (presumably this means the transaction is not a mistake or a fraud) and they have no actual or constructive knowledge that the transaction breaches the terms of a security agreement that governs a security interest over the intermediated securities1.
This extinguishment rule extinguishes security interests over the intermediated securities granted by anyone, not just the immediate seller.
Section 51 is silent on the point but presumably the extinguishment rule applies both to intermediated securities listed on a prescribed financial market, and unlisted securities.
Notes:
1 PPSA section 51 (link)
