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Personal Property Securities Reform coming to Australia; possible implications for personal property regimes across the Pacific


Personal Property Securities (PPS) law is a relatively new area of law. The first national PPS law in our region was in New Zealand in 1999, while other nations followed; with Marshall Islands in 2007, Solomon Islands and Vanuatu in 2008, Australia in 2009, Tonga in 2011, and Fiji in 2017. Other jurisdictions in the region have passed similar laws.

Due to its recency, the operation and enforcement of PPS law has been bumpy. In Australia and New Zealand, case law has been ongoing to clarify issues. Meanwhile, some Pacific Island nations have faced protracted roll outs, with one Pacific jurisdiction for example taking more than two years to come into effect, while Vanuatu’s laws required several amendments from the outset. In Australia, the PPS growing pains were analysed through a 2014 review and a final report in 2015, called the Whittaker Review.

In September 2023, the Australian Government finally confirmed that it supports a majority of the recommendations – demonstrating that delay is not something only associated with the Island jurisdictions! Legislative reform is likely to commence this year, and these reforms have far reaching implications for the operation of Australian PPS law. It also sends signals to legislators elsewhere on how they may wish to update their own PPS laws.

A small refresher on PPS

The idea behind PPS laws was to simplify the way in which parties could enter transactions for loans and create a method of legally “perfecting” security interests over movable property by way of registration. PPS law replaced disparate systems of creating and enforcing a security interest such as bills of sales, hire purchase agreements and corporate mortgages. In Australia, roughly 70 statutes and 40 registers were replaced by the Australian Personal Property Securities Act 2009 (Australian Act)! Meaning, that a lender could simply register a notice of their security interest on a digital register and this could be enforced against individuals and companies. If you need a refresher on key concepts, here are some easy-to-read explainers on how PPS regimes work in Fiji and Solomon Islands.

The Accepted Reforms

The Whittaker Review 2015 found that the Australian Act was too complex and attempted to impose foreign concepts not built for an Australian market which eventuated in ongoing non-compliance issues. Unfortunately, in some circumstances, the Australian Act’s lack of clarity increased the cost of creating and enforcing security interests. When the rules were unclear the Australian Personal Property Securities Registrar was unable to clarify and often erred on the conservative side directing parties to the court room to solve issues.

Conversely, in some cases the Australian Act was too strict which led to many cases where simple errors or typos invalidated security interests. See here for further information of how simple mistakes could void the perfection of a security interest.

The Whittaker Review proposed 394 recommendations of which the Australian Government has accepted 345. In order to pass these recommendations, several legislative amendments will be required to the Australian Act. For more information on the findings of the Whittaker Review you can read here and here.

The Australian Government has published an exposure draft of the Personal Property Securities Amendment (Framework Reform) Bill 2023, that sets out many of the proposed accepted reforms. Amongst these reforms include:

Relevance to Businesses in the Pacific

These changes become relevant for businesses across the Pacific for two primary reasons. First, personal property law is still an emerging area of law so potential reform may well also take place in Pacific jurisdictions, with many legislators being influenced by statutory reform in Australia and New Zealand. Secondly, where Pacific businesses are engaged in lending, borrowing or security transactions with assets located in Australia – you’ll want to know about these changes as they are likely to affect your business.

For businesses engaged with Australian securities, some immediate steps will be required to ensure compliance with the reforms. Such as, conducting a review of your financing documentation and implementing changes as necessary and updating your policies in light of the amendments.

As these changes are implemented in Australia, it is also likely to cause a ripple effect with similar reforms heading across the Pacific, given many PPS laws in other jurisdictions suffer from similar deficiencies as in Australia namely, a resource challenged regulator, complicated and inconsistent terminology, and strict rules on the invalidity caused by defects in registration. It’s important to stay across potential future reforms as they can also affect business practices.

The Pacific Legal Network has more than 21 locations between Singapore and American Samoa. We have a talented and engaging Banking and Finance Team in many locations, some of whom appear below. Please contact us for any enquiries or more information.


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