Newsflash: proposed PPSA amendments to “un-deem” certain PPS leases in future

Last Wednesday 19 March 2014, a bill was introduced into Parliament to amend section 13 of the Personal Property Securities Act 2009 (Cth) to remove the provision that deems leases of serial-numbered goods of more than 90 days to be a ‘PPS lease’. The bill, called the Personal Property Securities Amendment (Deregulatory Measures) Bill 2014 (Cth), and Explanatory Memorandum may be accessed on the Federal Parliament’s website here.

The provision to be removed is s 13(1)(e). Those who are familiar with it will be aware of the questions and uncertainties to which that provision has already given rise. It should be noted however that the change, when enacted, will apply only in respect of transactions entered into after the amendment has been enacted (per ss 2 and 7 of the Bill and the insertions to Schedule 1).

The EM notes that this should simplify the deeming provisions in the PPS Act and minimise the need for small and medium hire businesses to make registrations in respect of leases of a term of less than 12 months. This should reduce the number of transactions gtiving rise to PPS leases and reduce the compliance cost born by small and medium hire businesses.

The EM also notes that the change will bring the Australian PPS Act into alignment with PPS regimes in New Zealand and Canada on this point. Thus to the extent that the activities of Australian enterprises cross over into these jurisdictions, this alignment may have benefits for Australian financiers, businesses and legal practitioners.

For those who wish to read the EM for themselves, the direct link to it is here.

References: (1) Parliament of Australia’s webpage for the Personal Property Securities Amendment (Deregulatory Measures) Billl 2014 (link); (2) Client update of Allens Linklaters entitled “PPSA Amendments for ‘Serial Numbered goods'”, wirtten by Andrew Boxall and Daniel MacPherson (link)

Newsflash: PPSA model clauses for a general security agreement released

In a highly commendable move, last Friday the five international law firms of Allens, Ashurst, Herbert Smith Freehills, King & Wood Mallesons and Norton Rose jointly released “the PPSA model clauses” for a General Security Agreement (GSA), which they had been working on together to prepare. The clauses may be found on the websites of all of those firms. Here is the link to the announcement on Allens’ site (link), and to the model clauses themselves (link).

They note that where different firms take different approaches to some essential elements of GSAs, those differences are not necessarily a matter of right/wrong, better/worse, but can cause confusion and unnecessary negotiation as parties seek to impose their preferred position on others, often based on an imperfect understanding of another firm’s approach. Without guidance, they observe, it may take a long time before the market settles.Their stated objective in jointly publishing the clauses, is to assist the functioning of the market post-PPSA, with a view to helping the market to develop a settled practice. They also believe this is in clients’ interests.

Their joint announcement reads in part as follows –

“A document that was heavily affected by the Personal Property Securities Act 2009 (Cth) (the PPSA) was the traditional fixed and floating charge….The replacement for the fixed and floating charge is now usually called a General Security Agreement (or Deed) (the GSA)…

The PPSA model clauses…represent a distillation of the [five] firms’ thinking on several important issues and are consensus positions. They are not biased towards either grantors’ or secured parties’ interests…The footnotes that accompany the clauses explain the PPSA thinking behind the decisions made in settling the [clauses]. They help understand the intended operation of these provisions. However, they do not constitute advice to any person.

These clauses have been adopted into the firms’ precedent GSAs. The firms have no objection to them being used by any other person in the market if they consider them appropriate for their precedents or a particular transaction….”