PPSA statutory review – preliminary report
August 20, 2014
In August 2014 the Federal Government released its preliminary report on the operation of the Personal Property Securities Act (the “PPSA”). This report will be followed in January 2015 with a final report on what changes, if any, should be made to the PPSA.
Rationale of PPSA: The basis of the PPSA is that ownership of a business asset in the possession of another is no longer sufficient to protect the owner’s rights to that asset. An ownership interest in personal property – that is, property other than land – can now become subordinated to the interests of a third party or even lost entirely. This applies mainly in credit transactions involving a business or a consumer.
The government’s report notes that this radical change to the traditional law is the fundamental source of many business and consumer concerns with the PPSA.
Briefly, those concerns include:
In conclusion, given the breadth of the PPSA’s criticisms it is difficult to know what final recommendations the statute’s reviewers will ultimately make. There is pressure to amend the PPSA to make it briefer and easier to understand, but this would be a lengthy and costly process in itself. And amending legislation can be complex in its own right.
We suggest that to deal with the many issues identified by the review so far, the laws should eventually be adjusted in some way so as to be seen to address the many criticisms, but that wholesale changes should be avoided. Amending legislation should be followed shortly thereafter by a revised, “slimmed-down” consolidation of a PPSA “Mark II”. The new consolidation should be made widely available not just on-line but in compact hard-copy, so that PPSA “booklets” could be taken into factories and onto worksites in a form that business people (and lawyers) can more readily work with.
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