The Personal Property Securities Act 2009 (Cth) (PPSA) and the Personal Property Securities Register (PPSR) is applicable to the securities made for Line of Credit from the Trust Bank. As per Section 12 of the PPSA, Trust Bank has the security interest in the personal property which has secured the payment of a debt in the case because the Line of Credit is secured against all present and future assets of Grinsen. Accordingly, the present and future personal property of Grinsen may be considered as collateral in the Line of Credit loans that are taken by Grinsen.
As per the PPSA, Section 19(2), collateral will be attached to the property of the granter (Grinsen in this case), if he has rights in the collateral and has accepted money from Trust Bank. In the present situation, the rights that Grinsen has are in their existing machinery or other such personal property that they have not yet sold. In this case, Hardwicks has already bought one of the older machineries, therefore, Grinsen does not have any right in it and that machinery cannot be collateral in the Line of Credit to Trust Bank.
Section 21 of the PPSA provides that in order for the collateral to be enforceable against third parties by the secured party (Trust Bank), it must be either registered in the PPSR or be in possession or control of the secured party. In this case, Trust Bank does not have possession or control over the collateral, but the collateral is registered in the PPSR. This may mean that the machinery sold to Hardwicks may be successfully claimed by Trust Bank. The registration of the security with the PPSR amounts to perfection of the security under Section 21 of the PPSA. This affects the priority of the security interest with respect to other securities.
Perfection of the secured interest also has implications for the secured party in time of bankruptcy of the grantor. In case of bankruptcy, the perfected secured interest will be protected. This means that in the present situation Trust Bank is in a strong position with respect to the present personal property of Grinsen’s. In the present case Grinsen has been unable to make the loan payments to Trust Bank, and this can be a ground for the bank to exercise their interest as secured party under the PPSA.
a perfected security interest will take a priority over an unperfected security interest. In this case, the interests of Trust Bank and Haiwhen Pty Ltd alone have been registered under the PPSR. Trust Bank has interest over all present and future personal properties of Grinsen, whereas Haiwhen has interest over a robotic machine. The robotic machine is only leased by Grinsen and does not belong to Grinsen, therefore, this is not a personal property subject to Trust Bank interest as per Section 19(2). Moreover, as Haiwhen are lessors who have registered their lease on the PPSR, Haiwhen is a secured party under the PPSA and has security interest in the collateral. Haiwhen has specific rights in this case, which are related to protection in case of bankruptcy or insolvency of Grinsens. Under the PPSA, lessors have a PMSI super priority, which relates to the registered security interest (the robotic machine), which will take priority over other security interests and which will not be made available to the trustee in bankruptcy or a liquidator in case of Grinsen’s bankruptcy.
As the analysis above suggests, both Trust Bank and Haiwhen are protected by the PPSA and PPSR due to their having registered their interests in the PPSR. Trust Bank can start proceedings for seizing the collateral as per the Section 123 of the PPSA. Similarly, Haiwhen can also commence seizure proceedings under Section 123. Trust Bank can also exercise power of sale under Section 128 of the PPSA after giving due notice to Grinsen. Notice is important for starting the sale proceedings. Grinsen’s interest can be protected to an extent by Section 131 of the PPSA, which puts a duty on secured party exercising power of sale to obtain market value, the proceeds of which after paying off the debts will be given to Grinsen.
With respect to Williams Machinery, the transfer of the machinery has not been accompanied by a written document by the assignor, in this case, Grinsen. A tweet would not amount to a written document for the purpose of Section 25(6) of the Judicature Act because tweets are only of a short duration. Judicature Act would be applicable because it applies to equitable as well as legal choses in action. Therefore, as per this, the interest of Williams Machinery is not protected because the assignment of the machinery for sale was not accompanied by a written document.
To conclude this section, the interests of Trust Bank to the personal property of Grinsens as well as the interests of Haiwhen Pty Ltd are protected as these are perfected interests under the PPSA. This would also have the result of compromising the interest of Hardwicks to the purchased machinery as Trust Bank may be able to challenge this interest. Similarly, Williams Machinery may not be able to retain the machinery that is subject to the interest of Trust Bank as secured interest.
The essential features of the PPSR website that are useful to Grinsens in this present situation are include the key concepts that are explained in the website. These concepts include the retention of leasing and title, as this impacts their relationship with Haiwhen. Another important concept is that of enforcement of security interests as this will provide Grinsens with an insight on the steps that may be taken by Trust Bank and Haiwhen. The link to floating charges will also be useful because Trust Bank’s present and future personal assets were subjected to the interest. The link on PPSR and priorities is also useful because there are two secured parties with perfected securities in this case.
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