- 29.1 Summary of key changes to the previous law
- 29.2 Security agreements are not available from the PPS Register
- 29.3 Super-priority security interests – PMSIs and security interests perfected by control
- 29.4 Secured parties can perfect to defeat existing security interests of which they have knowledge – knowledge is generally not relevant to priority disputes between security interests
- 29.5 45 day window to register security interests changes to 20 business days
- 29.6 Security interests over ADI accounts
- 29.7 Following collateral upon transfers
- 29.8 Extinguishment rules upon transfers of collateral
- 29.9 Security interests automatically attach to proceeds generated upon disposals of original collateral
- 29.10 Restrictive covenants against the sale of collateral or the grant of further security
- 29.11 Receivables financing
- 29.12 Tacking of further advances is permitted
- 29.13 Conflicts of laws rules
- 29 14 Serial numbered property
- 29.15 15 business day “silent equipment PMSI” risk
- 29.16 Receivers, controllers or secured parties can sell leased or retention of title property if the lease or retention of title transaction is unperfected, or trumped for priority
- 29.17 Circulating security interests (floating charges) attach immediately to after-acquired property without appropriation
Secured parties can rely on perfected security interests to defeat other security interests in any of the following ways:
(a) perfected security interests will defeat unperfected security interests that attach either before or after them1;
(b) PMSIs that arise second and are duly perfected will defeat prior-perfected “normal” security interests that attach to after-acquired PMSI collateral such as all-assets security interests2; and
(c) security interests perfected by control will defeat existing perfected security interests in the same collateral that are not perfected by control3, except transitional security interests4.
Prior to the commencement of the PPSA, knowledge of existing security interests would often prevent subsequently-created security interests from defeating prior unregistered or equitable security interests, even if the subsequent security interest is a powerful interest such as a legal (as opposed to an equitable) interest. The position was similar even for registered charges under the company charges system under Chapter 2K of the Corporations Act 2001 (Cth).
The PPSA (largely) does away with knowledge as a factor in priority disputes between security interests. This will create many opportunities for secured parties to improve their priority position at the expense of other secured parties.
There are some circumstances where knowledge remains relevant to priority disputes under the PPSA. These relate mainly to:
(a) certain interests taken in collateral, rather than PPSA security interests – see the first three priority buckets of the priority waterfall commencing at paragraphs 18.3.7 and 18.3.9 of Chapter 18 (Priority); and
(b) new advances made by secured parties of a buyer of collateral where the purchase does not extinguish security interests granted by the seller – see section 68 and the discussion at paragraphs 18.16.1 to 18.16.26 of Chapter 18 (Priority).
