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16 July 2016

Competing Security Interests and the Personal Property Security Register (PPSR)

FAQs
personal property, security interest

Written by Zachary Gazzard, Solicitor

First major Australian case regarding competing security interests and the Personal Property Security Register (PPSR) confirms that Creditors/Businesses who fail to perfect their security interests are likely to lose their security

Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852

This case involved the lease of excavators and loaders. Queensland Excavation Services Pty Ltd (“QES”) had lent these items of machinery to Maiden Civil (P&E) Pty Ltd (“Maiden”).

QES and Maiden had no written lease agreement, but the equipment had been in Maiden’s possession for over a year and QES periodically invoiced Maiden for the use of the equipment. QES had not perfected a security interest by registration under the PPSA or by any other means.

Maiden had separately granted security over all of its assets to Fast Financial Solutions Pty Ltd (“Fast”) under a general security agreement (“GSA”). Fast perfected its security interest under the GSA by registration under the PPSA. Maiden encountered financial difficulty and Fast appointed receivers under its GSA. QES then cancelled the leases and asserted primary rights to the equipment as owners. Fast’s receivers claimed primary rights to the equipment as sole perfected security interest holder.

It was held the receivers were entitled to possession of the equipment.

Given the PPSR regime is very recent, this is one of the few Australian decisions involving competing security interests and the PPSR to date. Case authorities from New Zealand where the regime has been implemented for a longer time, are likely to be followed in Australia.

A notable case in New Zealand which is a further example of the importance of registration on the PPSR was Waller v New Zealand Bloodstock Limited [2006] 3 NZLR 629.

In that case, New Zealand Bloodstock leased a stallion to Glenmorgan Farm for a three year period. The lease term specified that the title in the stallion remained with New Zealand Bloodstock. This interest created a PPS Lease which is a deemed security interest under the New Zealand regime. New Zealand Bloodstock did not register its interest.

A few years prior, Glenmorgan Farm had granted security over “all its present and future assets” to a creditor, S.H. Lock (NZ) Limited. S.H. Lock registered its security interest in Glenmorgan Farm’s assets. Glenmorgan Farm went on to become insolvent. Despite New Zealand Bloodstock owning the Stallion, as they had not registered their security interest, it lost priority over the Stallion and New Zealand Bloodstock lost their entire investment of $2 million by not registering their security interests.

Another recent Australian case for which a decision is yet to be handed down involves the Receivers of the Forge Group taking action in the NSW Supreme Court and attempting to obtain control of $50 million worth of gas turbines that APR Energy (the owners) leased to the Forge Group. APR Engery failed to secure with a PPSA registered charge. A decision is expected later this year.

How do the changes to the Personal Security Act affect your business?

The recent implementation of the Personal Property Securities Act 2009 (Cth) (“PPS Act“) in Australia brought important changes to the law. It is essential that your new and existing agreements which create security interests are registered following the commencement of the operation of the PPS Act. Under the new regime you need to register new and existing security interests on the Personal Property Security Register (PPSR) within strict timeframes. If you fail to ‘perfect’ your security interest, by registering on the PPSR, your security may not be enforceable or your priority may be lost.

Do you have a Security Interest?

A security interest is an interest in personal property provided for by a transaction that in substance, secures payment or performance of an obligation. Section 12 of the PPS Act defines what a Security Interest is. Common security interests include liens, chattel mortgages, charges and retention of title clauses in contracts (ROT). Other security interests include financing or operational leases of personal property for more a period of more than 12 months or 90 days for motor vehicles or aircraft, hire purchase agreements and consignment agreements.

You should refer to Section 12 of the PPS Act if you are unsure whether your interest is a security interest, registrable under the PPS Act.

http://www.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/s12.html

How do I register and how much does it cost?

There is a national online register, known as the Personal Property Security Register (PPSR). You don’t have to set up an account. You may create registrations in the PPS Register as an account customer or a casual user.

Registration should occur within 20 business days of the signing of any security agreement by your customers. To view prices involved with registration, and to register your security interests, click here.

Can I search a business or individual to whom I am providing credit to find out if other Creditors have security interests registered against that business or individual?

Yes. A comprehensive register of all PPSR registrations can be searched online. To search the PPSR click here.

Where will my security interest Rank as against other Creditors of a business or individual?

Under the PPS Act, suppliers using retention of title clauses have a purchase money security interest (“PMSI”). A PMSI interest elevates the interest of a secured party to a higher status relative to other interests, such as general or “all assets” charges held by the Bank for example. Unperfected security interests only rank in order of attachment, and a perfected interest will defeat an unperfected security interest. Perfected security interests rank in priority of time.

How should I word my commercial credit terms so that I can register a security interest?

Your terms of trade should include a general security agreement and a retention of title clause.

If you are unsure whether your terms are sufficient or would like assistance with re-wording your commercial credit terms, to ensure that your terms create a recognised security interest which can be registered on the PPSR, Uther Webster & Evans can assist you.

21 October 2013

Buying a property: A ‘How-to’ Guide

FAQs
guide, house, property

Written by Joseph Antoun, Partner

Step 1: Negotiate a Price

For a private treaty sale, once you have found the home you wish to purchase, you can make an offer to the Vendor or their agent. Sometimes you can agree on a conditional offer. For example, you agree to purchase the home as long as the vendor enables you to obtain a property and pest inspection first.

Step 2: Arrange Conveyancing

Conveyancing is the process of legally transferring a property from the vendor to the purchaser. You can arrange this through your solicitor.

Before a vendor can offer a property for sale, they must have a Contract for Sale and have it available for inspection. Your solicitor or conveyancer should review this Contract. They should also conduct final checks on the property and make enquiries with the local authorities.

Step 3: Have the Property Inspected

Once you have found a property to purchase, you should arrange for a property and pest inspection before contracts are exchanged so that you are aware of any potential problems from the start.

You should also check with your council and state government roads and traffic authority regarding zoning issues and future property developments that may affect the property you are wishing to purchase.

Step 4: Exchange Contracts and pay the Deposit

After Uther Webster & Evans have reviewed the Contract for Sale, both you and the vendor sign a copy of the Contract and pass it on to each other. This is called ‘exchange of Contracts’.

If you purchase a home at auction, you will need to exchange Contracts and pay the deposit (usually 10% of the purchase price) at the auction. For a private treaty sale, you are required to pay a holding deposit (usually 1%) to indicate good faith and then pay the deposit when Contracts are exchanged. Even though a holding deposit has been paid, it doesn’t necessarily mean the property will be held exclusively for you.

Step 5: Cooling-Off Period

After the Contracts are exchanged in a private treaty sale, a legal cooling-off period may apply. During the cooling-off period you are able to withdraw from the Contract to purchase the property. The length of the cooling-off period varies from state to state.

Step 6: Settlement

Settlement occurs when you pay the balance of the purchase price and take ownership of the property. Final settlement normally takes place up to 6 weeks after Contracts are exchanged but this period can be negotiated between the parties.

The Certificate of Title (if any) will be handed to your bank (if the property is subject to a mortgage). The vendor’s agent will then provide you with the keys.

 

 

21 October 2013

Criminal Law – Your questions answered

FAQs
Criminal Law, Q&A

Written by Justine Taylor, Senior Associate

Do I have to answer police questions?

This is a concern that many clients have and often this decision is made without having access to legal advice. The general position is that you do not have to answer police questions and in most cases, we would advise against answering police questions without first consulting a lawyer (subject to the offence and some important exceptions).

Having said that, common sense should prevail and in some circumstances where you have been a witness and where you are not under suspicion, it may be common sense to cooperate with police.

Some exceptions to not answering police questions include your obligation to provide police with a name and address. Failure to provide those details may be an offence under the Law Enforcement (Powers and Responsibilities) Act 2002, also known as LEPRA.

We would ordinarily advise against providing police with a recorded interview or a taped video before contacting your solicitor. In some cases you may also want your solicitor to be present with you during the interview.

Can police search my car or my person without a warrant?

Police may generally, without a warrant, stop, search and detain you, and anything in your possession, if they suspect “on reasonable grounds” that you may:

  1. Have in your possession something that has been stolen or unlawfully obtained;
  2. Possess anything that is intended to be used in connection with an offence;
  3. Have a dangerous article in connection with an offence;
  4. Have in your possession anything in contravention of the Drug Misuse and Trafficking Act 1985.

The police discretion of “suspicion” on “reasonable grounds” is generally broad under Section 21 of the LEPRA. The reasonable suspicion will ordinarily involve less than a belief, but more than a mere possibility. That means there must be some factual basis for the suspicion. For instance, police may assert that the nervous manner of a driver in combination with being located in an area which is a known area for drugs, justifies a “reasonable suspicion”.

What is an arrest?

You have been arrested if you have been advised as to the purpose of an arrest and informed that you have been charged with an offence which will be brought before a Magistrate of the Local Court. An arrest for the purpose of investigating whether or not you have committed and offence or obtaining more evidence, is not legal and police must have reasonable grounds to believe that an offence has or is about to be committed.

When the police decide to arrest you they must inform you of the basis of the arrest and provide certain cautions to you, in particular that you do not have to answer any questions. The reason for the arrest must be made clear unless it is obvious or there is another reason in which the relaying of information has been made impossible.

Once you have been arrested, you may be searched.

Do I have to give police fingerprints, DNA and photographs?

A police officer can take fingerprints and photographs for the purposes of identification of persons over the age of 14. It is common practice on arrest to be fingerprinted, particularly for more serious offences.

Orders for the destruction of fingerprints can be made if you are found not guilty. If you have been found not guilty or your charges dismissed and you are not sure whether your fingerprints, DNA and photographs have been destroyed, we suggest you obtain legal advice.

Any forensic procedure can be carried out with the informed consent of the suspect. Children or mental incapable persons cannot provide consent. The giving of this information to a suspect and the response must, if practicable, be recorded electronically.

If you are an Aboriginal or Torres Strait Islander, the police must notify the Aboriginal Legal Service.

How long can I be detained for?

You can be detained by police for the “investigation period” but this must be a reasonable time, which is usually no more than 4 hours.

Can police use listening device material without a warrant?

Generally, any recording of private conversation without consent is unlawful unless police have a warrant. Usually you will not know if police have a warrant which must contain certain particulars including the prescribed offence for which the warrant is granted, the name of the person who is intended to be recorded, the period (not exceeding 21 days) during which the warrant is enforced, the location of where the device has been installed and any conditions on the warrant.

We recommend contacting a solicitor if you have concerns in relation to a recorded conversation.

16 July 2016

Competing Security Interests and the Personal Property Security Register (PPSR)

admin
FAQs
personal property, security interest
0

Written by Zachary Gazzard, Solicitor

First major Australian case regarding competing security interests and the Personal Property Security Register (PPSR) confirms that Creditors/Businesses who fail to perfect their security interests are likely to lose their security

Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852

This case involved the lease of excavators and loaders. Queensland Excavation Services Pty Ltd (“QES”) had lent these items of machinery to Maiden Civil (P&E) Pty Ltd (“Maiden”).

QES and Maiden had no written lease agreement, but the equipment had been in Maiden’s possession for over a year and QES periodically invoiced Maiden for the use of the equipment. QES had not perfected a security interest by registration under the PPSA or by any other means.

Maiden had separately granted security over all of its assets to Fast Financial Solutions Pty Ltd (“Fast”) under a general security agreement (“GSA”). Fast perfected its security interest under the GSA by registration under the PPSA. Maiden encountered financial difficulty and Fast appointed receivers under its GSA. QES then cancelled the leases and asserted primary rights to the equipment as owners. Fast’s receivers claimed primary rights to the equipment as sole perfected security interest holder.

It was held the receivers were entitled to possession of the equipment.

Given the PPSR regime is very recent, this is one of the few Australian decisions involving competing security interests and the PPSR to date. Case authorities from New Zealand where the regime has been implemented for a longer time, are likely to be followed in Australia.

A notable case in New Zealand which is a further example of the importance of registration on the PPSR was Waller v New Zealand Bloodstock Limited [2006] 3 NZLR 629.

In that case, New Zealand Bloodstock leased a stallion to Glenmorgan Farm for a three year period. The lease term specified that the title in the stallion remained with New Zealand Bloodstock. This interest created a PPS Lease which is a deemed security interest under the New Zealand regime. New Zealand Bloodstock did not register its interest.

A few years prior, Glenmorgan Farm had granted security over “all its present and future assets” to a creditor, S.H. Lock (NZ) Limited. S.H. Lock registered its security interest in Glenmorgan Farm’s assets. Glenmorgan Farm went on to become insolvent. Despite New Zealand Bloodstock owning the Stallion, as they had not registered their security interest, it lost priority over the Stallion and New Zealand Bloodstock lost their entire investment of $2 million by not registering their security interests.

Another recent Australian case for which a decision is yet to be handed down involves the Receivers of the Forge Group taking action in the NSW Supreme Court and attempting to obtain control of $50 million worth of gas turbines that APR Energy (the owners) leased to the Forge Group. APR Engery failed to secure with a PPSA registered charge. A decision is expected later this year.

How do the changes to the Personal Security Act affect your business?

The recent implementation of the Personal Property Securities Act 2009 (Cth) (“PPS Act“) in Australia brought important changes to the law. It is essential that your new and existing agreements which create security interests are registered following the commencement of the operation of the PPS Act. Under the new regime you need to register new and existing security interests on the Personal Property Security Register (PPSR) within strict timeframes. If you fail to ‘perfect’ your security interest, by registering on the PPSR, your security may not be enforceable or your priority may be lost.

Do you have a Security Interest?

A security interest is an interest in personal property provided for by a transaction that in substance, secures payment or performance of an obligation. Section 12 of the PPS Act defines what a Security Interest is. Common security interests include liens, chattel mortgages, charges and retention of title clauses in contracts (ROT). Other security interests include financing or operational leases of personal property for more a period of more than 12 months or 90 days for motor vehicles or aircraft, hire purchase agreements and consignment agreements.

You should refer to Section 12 of the PPS Act if you are unsure whether your interest is a security interest, registrable under the PPS Act.

http://www.austlii.edu.au/au/legis/cth/consol_act/ppsa2009356/s12.html

How do I register and how much does it cost?

There is a national online register, known as the Personal Property Security Register (PPSR). You don’t have to set up an account. You may create registrations in the PPS Register as an account customer or a casual user.

Registration should occur within 20 business days of the signing of any security agreement by your customers. To view prices involved with registration, and to register your security interests, click here.

Can I search a business or individual to whom I am providing credit to find out if other Creditors have security interests registered against that business or individual?

Yes. A comprehensive register of all PPSR registrations can be searched online. To search the PPSR click here.

Where will my security interest Rank as against other Creditors of a business or individual?

Under the PPS Act, suppliers using retention of title clauses have a purchase money security interest (“PMSI”). A PMSI interest elevates the interest of a secured party to a higher status relative to other interests, such as general or “all assets” charges held by the Bank for example. Unperfected security interests only rank in order of attachment, and a perfected interest will defeat an unperfected security interest. Perfected security interests rank in priority of time.

How should I word my commercial credit terms so that I can register a security interest?

Your terms of trade should include a general security agreement and a retention of title clause.

If you are unsure whether your terms are sufficient or would like assistance with re-wording your commercial credit terms, to ensure that your terms create a recognised security interest which can be registered on the PPSR, Uther Webster & Evans can assist you.

21 October 2013

Buying a property: A ‘How-to’ Guide

admin
FAQs
guide, house, property
0

Written by Joseph Antoun, Partner

Step 1: Negotiate a Price

For a private treaty sale, once you have found the home you wish to purchase, you can make an offer to the Vendor or their agent. Sometimes you can agree on a conditional offer. For example, you agree to purchase the home as long as the vendor enables you to obtain a property and pest inspection first.

Step 2: Arrange Conveyancing

Conveyancing is the process of legally transferring a property from the vendor to the purchaser. You can arrange this through your solicitor.

Before a vendor can offer a property for sale, they must have a Contract for Sale and have it available for inspection. Your solicitor or conveyancer should review this Contract. They should also conduct final checks on the property and make enquiries with the local authorities.

Step 3: Have the Property Inspected

Once you have found a property to purchase, you should arrange for a property and pest inspection before contracts are exchanged so that you are aware of any potential problems from the start.

You should also check with your council and state government roads and traffic authority regarding zoning issues and future property developments that may affect the property you are wishing to purchase.

Step 4: Exchange Contracts and pay the Deposit

After Uther Webster & Evans have reviewed the Contract for Sale, both you and the vendor sign a copy of the Contract and pass it on to each other. This is called ‘exchange of Contracts’.

If you purchase a home at auction, you will need to exchange Contracts and pay the deposit (usually 10% of the purchase price) at the auction. For a private treaty sale, you are required to pay a holding deposit (usually 1%) to indicate good faith and then pay the deposit when Contracts are exchanged. Even though a holding deposit has been paid, it doesn’t necessarily mean the property will be held exclusively for you.

Step 5: Cooling-Off Period

After the Contracts are exchanged in a private treaty sale, a legal cooling-off period may apply. During the cooling-off period you are able to withdraw from the Contract to purchase the property. The length of the cooling-off period varies from state to state.

Step 6: Settlement

Settlement occurs when you pay the balance of the purchase price and take ownership of the property. Final settlement normally takes place up to 6 weeks after Contracts are exchanged but this period can be negotiated between the parties.

The Certificate of Title (if any) will be handed to your bank (if the property is subject to a mortgage). The vendor’s agent will then provide you with the keys.

 

 

21 October 2013

Criminal Law – Your questions answered

admin
FAQs
Criminal Law, Q&A
0

Written by Justine Taylor, Senior Associate

Do I have to answer police questions?

This is a concern that many clients have and often this decision is made without having access to legal advice. The general position is that you do not have to answer police questions and in most cases, we would advise against answering police questions without first consulting a lawyer (subject to the offence and some important exceptions).

Having said that, common sense should prevail and in some circumstances where you have been a witness and where you are not under suspicion, it may be common sense to cooperate with police.

Some exceptions to not answering police questions include your obligation to provide police with a name and address. Failure to provide those details may be an offence under the Law Enforcement (Powers and Responsibilities) Act 2002, also known as LEPRA.

We would ordinarily advise against providing police with a recorded interview or a taped video before contacting your solicitor. In some cases you may also want your solicitor to be present with you during the interview.

Can police search my car or my person without a warrant?

Police may generally, without a warrant, stop, search and detain you, and anything in your possession, if they suspect “on reasonable grounds” that you may:

  1. Have in your possession something that has been stolen or unlawfully obtained;
  2. Possess anything that is intended to be used in connection with an offence;
  3. Have a dangerous article in connection with an offence;
  4. Have in your possession anything in contravention of the Drug Misuse and Trafficking Act 1985.

The police discretion of “suspicion” on “reasonable grounds” is generally broad under Section 21 of the LEPRA. The reasonable suspicion will ordinarily involve less than a belief, but more than a mere possibility. That means there must be some factual basis for the suspicion. For instance, police may assert that the nervous manner of a driver in combination with being located in an area which is a known area for drugs, justifies a “reasonable suspicion”.

What is an arrest?

You have been arrested if you have been advised as to the purpose of an arrest and informed that you have been charged with an offence which will be brought before a Magistrate of the Local Court. An arrest for the purpose of investigating whether or not you have committed and offence or obtaining more evidence, is not legal and police must have reasonable grounds to believe that an offence has or is about to be committed.

When the police decide to arrest you they must inform you of the basis of the arrest and provide certain cautions to you, in particular that you do not have to answer any questions. The reason for the arrest must be made clear unless it is obvious or there is another reason in which the relaying of information has been made impossible.

Once you have been arrested, you may be searched.

Do I have to give police fingerprints, DNA and photographs?

A police officer can take fingerprints and photographs for the purposes of identification of persons over the age of 14. It is common practice on arrest to be fingerprinted, particularly for more serious offences.

Orders for the destruction of fingerprints can be made if you are found not guilty. If you have been found not guilty or your charges dismissed and you are not sure whether your fingerprints, DNA and photographs have been destroyed, we suggest you obtain legal advice.

Any forensic procedure can be carried out with the informed consent of the suspect. Children or mental incapable persons cannot provide consent. The giving of this information to a suspect and the response must, if practicable, be recorded electronically.

If you are an Aboriginal or Torres Strait Islander, the police must notify the Aboriginal Legal Service.

How long can I be detained for?

You can be detained by police for the “investigation period” but this must be a reasonable time, which is usually no more than 4 hours.

Can police use listening device material without a warrant?

Generally, any recording of private conversation without consent is unlawful unless police have a warrant. Usually you will not know if police have a warrant which must contain certain particulars including the prescribed offence for which the warrant is granted, the name of the person who is intended to be recorded, the period (not exceeding 21 days) during which the warrant is enforced, the location of where the device has been installed and any conditions on the warrant.

We recommend contacting a solicitor if you have concerns in relation to a recorded conversation.