MLL215 Study Guide - Final Guide: Consignee, Unsecured Creditor, Consignor
2 Jun 2018
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PERFECTION
a. “euit iteests ust e perfected to e efoeale agaist TPs.
b. Determines priority between competing security interests.
c. Must give notice to the world:
i. Possession;
ii. Registration;
iii. Control agreement.
CONSEQUENCES
E.g. A subsequent purchaser or lessee of collateral may take free of an unperfected
security interest (s. 43, PPSA).
A perfected security interest may take priority over an earlier but unperfected
security interest (s. 55(3), PPSA).
PPSR
PPSR = collateral register:
Can register security interest.
Can conduct a search for registered property.
CARRAFA, GOUNTZOS & LOFTHOUSE (AS LIQ OF RELUX COMMERCIAL PTY LTD (IN LIQ) V
DOKA FORMWORK PTY LTD [2014] VSC 570:
Failure by lessor register its security in leased equipment over $1m.
“eurity iterest holders a siply esure they register their iterests as
soo as possile after they are grated.
Priority Rules
Section 55, PPSA:
1. Perfected interest: first in time – where there are two or more competing
perfected security interests, priority will be given to the interest that was
perfected first in time (s 55(4), PPSA).
Registration time;
The times that SP first took possession or control.
2. Unperfected interests: order of attachment – priority given to security
interests in accordance with the order of attachment. (s 55(2), PPSA).
3. Perfected versus unperfected interests: perfected takes priority.
- Special priority rules
o Purchase Money Security Interests (s. 62, PPSA).
▪ Acceded Goods;
▪ Commingled Goods.
PMSI
Definition - a PMSI is (s. 14 (1),PPSA):
(a) Seller PMSI: A seuit iteest take i ollateal, to the etet that it
seues all o pat of the puhase pie;
(b) Lender PMSI: A seuit iteest take ito ollateal a peso ho gies
value for the purpose of enabling the grantor to acquire rights in the
ollateal, to the etet that the alue is applied to auie those ights.
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Ceates super-priority s. 6, PPSA).
(a) The pioit gie to a PM“I is a eeptio to the PP“A fist-in-tie ule.
In a priority contest with an earlier registered or perfected non-PMSI security
interest it will take priority.
Seller PMSI - goods sold on retention of title.
Lender PMSI - goods sold on credit with the seller/lender taking a security interest in
the goods.
PMSI only applies if the credit extended is used for the purpose of acquiring
the collateral in which the PMSI is taken.
Non-PMSI:
SP lends $1000 to G i ehage fo a seuit iteest i Gs Iphoe X.
“P leds $ to G i ehage fo possessio of Gs Iphoe X.
PMSI:
Lender PMSI – SP lends $1000 to G specifically to buy an Iphone X. G has to
pay the loan back over a 10 month period in monthly installments of $100. SP
obtains a PMSI over the Iphone X.
Seller PMSI – SP sells an Iphone X to G for $1000 as part of a retention of title
contract on credit terms. G has to pay monthly installments of $100 for 10
months. SP obtains a PMSI over the Iphone X.
Formalities:
1. PMSI must be registered in a financing statement;
2. The financing statement must disclose that the security interest is PMSI.
The financing statement may be registered any time up to 15 business days after
delivery.
PROCEEDS FROM COLLATERAL
Poeeds s , PP“A – identifiable or traceable personal property of various types:
Personal property that is derived directly or indirectly from a dealing with the
collateral.
The grantor must have an interest in the proceeds or the power to transfer
rights in the proceeds to SP.
The security interest in the proceeds has the same default priority as the security
interest in the original collateral (s. 32, PPSA).
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000)
Romalpa clause said that B would hold the proceeds for goods sold to
customers made with supplies provided by S on trust for S.
I the eet that the ue uses the goods i soe aufatuig poess,
then the buyer shall hold such part of the proceeds of such manufacturing
poess as elates to the goods i tust fo the selle.
Held: the trust created by the Romalpa clause did not constitute an
unregistered charge and was not rendered void against the liquidator.
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Document Summary
Perfection: e(cid:272)u(cid:396)it(cid:455) i(cid:374)te(cid:396)ests (cid:373)ust (cid:271)e (cid:862)perfected(cid:863) to (cid:271)e e(cid:374)fo(cid:396)(cid:272)ea(cid:271)le agai(cid:374)st tps, determines priority between competing security interests, must give notice to the world, possession, registration, control agreement. A subsequent purchaser or lessee of collateral may take free of an unperfected security interest (s. 43, ppsa). A perfected security interest may take priority over an earlier but unperfected security interest (s. 55(3), ppsa). Can conduct a search for registered property. Carrafa, gountzos & lofthouse (as liq of relux commercial pty ltd (in liq) v. Failure by lessor register its security in leased equipment over m. (cid:862) e(cid:272)urity i(cid:374)terest holders (cid:272)a(cid:374) si(cid:373)ply e(cid:374)sure they register their i(cid:374)terests as soo(cid:374) as possi(cid:271)le after they are gra(cid:374)ted(cid:863). Perfected interest: first in time where there are two or more competing perfected security interests, priority will be given to the interest that was perfected first in time (s 55(4), ppsa). The times that sp first took possession or control.
