It’s an interesting question whether the Personal Property Security Act, in defining ‘security interest’, is creating a new species of property, or whether the term is simply used to describe a range of traditional security and other interests
A comment by Robb J in the NSW Supreme Court decision Photios v Cussen [2015] NSWSC 336 comes down on the ‘traditional’ side.
Photios v Cussen [2015] NSWSC 336
The case concerned the validity of administrators appointed to two companies, Beechworth Land Estates Pty Ltd and Griffith Estates Pty Ltd, when NSW mortgage duty had not been paid on the security agreements under which they were appointed. Validity required that the security interests were enforceable at the time of appointment.
The court found substantially all Beechworth’s property was in Victoria, and the security interest was enforceable over the Victorian property despite failure to pay NSW duty, rendering the appointment valid. All Griffith’s property was in NSW, so its security interest was unenforceable at the time of appointment, but subsequent payment of duty would validate it retroactively and the court might be able to cure the invalidity under s447A of the Corporations Act.
A passing comment by the Court concerned the effect of words granting ‘a security interest’, which is relevant to discussions about whether a ‘security interest’ under the PPSA is a new type of property interest, or simply a term that describes certain kinds of traditional security and other interests. The Court noted that:
- Beechworth had entered into a general security deed which granted ‘a fixed charge over all present and after-acquired property that was not a security interest [sic – but possibly ‘that was not personal property’] under [the PPSA], as well as a security interest over all personal property encompassed by the PPSA’;
- Beechworth’s property consisted of a debt owed to it by a third party, and a mortgage granted by that third party; and
- ‘The effect of the general security deed was to grant … a charge over the debt…’ (emphasis added).
That is, while nothing in the decision turned on the distinction, the Court appeared to proceed on the basis that words of grant of ‘a security interest’ were effective to grant a charge, rather than a new species of property.
Digest of PPSA cases
I have added Photios v Cussen to my digest of reported Australian cases, along with two other new cases:
- Garrett v Commissioner of Taxation [2015] AATA 247, a tax decision where the Deputy President makes some perhaps surprising comments about s8(1)(b) (exclusion of non-consensual security interests), s12 (‘transaction’) and s19 (attachment), and
- Freestone Auto Sales Pty Ltd v Musulin [2015] NSWCA 160, a case about a written-off motor car which illustrates how readily the national PPS Register can provide information that would formerly have been difficult to obtain.
Please go to <a title=”PPSA cases” href=”http://www viagra naturel acheter.stevepemberton.com.au/ppsa-cases/”>PPS cases for a link to the digest.