Personal Property Securities Reform and Security Interests in Ships

• Author: James Popple
• Position: First Assistant Secretary, Legal Services and Personal Property Securities Division, Australian Attorney-General's Department; Visiting Fellow, Faculty of Engineering and Information Technology, Australian National University. This article has been prepared with assistance from Robert Patch, Alexander Daniel and William Barr, who also work in...
• Pages: 16-21

PERSONAL PROPERTY SECURITIES REFORM

AND SECURITY INTERESTS IN SHIPS

James Popple*

1 Introduction

When a credit provider provides credit to an individual or a business, the debt is often secured by the credit

provider taking a security interest in property, known as collateral, which the borrower owns or has an interest

in. If the collateral is real estate (including fixtures), or an interest in real estate, the security interest is a real

property security. Security interests in other types of property are personal property securities (PPS). Personal

property includes tangible property (such as ships, motor vehicles, goods, livestock and equipment) and

intangible property (such as receivables and intellectual property).

2 Why is Reform Necessary?

There are more than 70 separate Acts that regulate PPS in Australia. Each of the six States, two Territories and

the Commonwealth has its own PPS schemes and registers. This abundance of legislation is due to the fact that

there has not previously been a single, considered approach to PPS law in Australia. Instead, the law has

developed through intermittent legislative and judicial intervention over many years. This intervention has

occurred separately within each jurisdiction, in response to specific needs as they have arisen, and has resulted

in considerable inconsistency in PPS arrangements across Australia.

PPS law in Australia is very complex, and varies according to: the location and nature of the collateral; the

nature of the security interest; and the legal personality of the debtor (for example, whether the debtor is a

corporation or an individual).

At the Commonwealth level there are several PPS registers, which apply consistently regardless of the location

of the collateral, but which treat different collateral differently. For example, there is a register of company

charges, a register of ships and a register of trade marks, all created by Commonwealth legislation.1

There are some types of collateral that can be registered in all States and Territories. Examples include the

various Bills of Sale Acts2 and legislation providing for the registration of securities in motor vehicles. 3

Different State and Territory Acts deal with liens on crops, wool and stock, but they are not consistent in their

registration requirements and in the consequences of registration.

There are also some types of collateral that can be registered in only some States and Territories, sometimes

only on registers established exclusively for one type of collateral.4

As a result of this complexity, PPS law in Australia is unnecessarily uncertain. This uncertainty leads to higher

transaction costs, and might dissuade a potential borrower or lender from entering into a credit transaction

and/or registering it.

* First Assistant Secretary, Legal Services and Personal Property Securities Division, Australian Attorney-General’s Department; Visiting

Fellow, Faculty of Engineering and Information Technology, Australian National University. This article has been prepared with assistance

from Robert Patch, Alexander Daniel and William Barr, who also work in the Legal Services and Personal Property Securities Division of

the Attorney-General’s Department. This article is based on a paper presented to the 34th Annual Conference of the Maritime Law

Association of Australia and New Zealand in Canberra on 28 September 2007.

1 See the Corporations Act 2001 (Cth), the Shipping Registration Act 1981 (Cth) and the Trade Marks Act 1995 (Cth).

2 Bills of Sale Act 1886 (SA); Bills of Sale Act 1898 (NSW); Bills of Sale Act 1899 (WA); Bills of Sale Act 1900 (Tas) and Bills of Sale and

Other Instruments Act 1955 (Qld).

3 Sale of Motor Vehicles Act 1977 (ACT); Registration of Interests in Motor Vehicles and Other Goods Act 1983 (NT); Motor Vehicles

Securities Act 1984 (Tas); Registration of Interests in Goods Act 1986 (NSW); Motor Vehicles and Boat Securities Act 1986 (Qld); Goods

Securities Act 1986 (SA); Chattel Securities Act 1987 (Vic); Chattel Securities Act 1987 (WA).

4 For example, South Australia has the Liens on Fruit Act 1923; Queensland has the Liens on Crops of Sugar Cane Act 1931.

(2008) 22 A&NZ Mar LJ 16