REFORM OF THE LAW ON PERSONAL PROPERTY SECURITIES IN AUSTRALIA
Presentation by Justice Berna Collier, Federal Court of Australia 
2006 Insolvency Law Workshop, Canberra, 11 August 2006
 “(It) could not be patched or mended: the very foundation was rotten, therefore the entire fabric must be razed to the ground and a new super-structure substituted. Like a blundered calculation on a slate, it was in too much confusion for correction, so he would take a sponge and rub the whole out.”
It would be no surprise to see this comment made about the current state of personal property security law in Australia. In fact, the comment is that of Sir Robert Torrens, made in 1857 in the context of the then framework of real property law in the colony of South Australia.
Of course in relation to real property law in South Australia, and indeed Australia and New Zealand, the position is very different. Historically, the approach taken by governments to developing and enacting laws referable to personal property security has been something of a “poor relation” to that to real property. Notwithstanding the continued recognition of unregistered interests, the system of title by registration conferred by the Torrens legislation offers a structure specifically aimed at simplifying, facilitating dealing, and providing certainty in relation to title to and security interests in land. The system, described as “the greatest legal invention of the age” is in force throughout Australia, and covers most land in Australia over which security is taken. Although evolved through different legislative incarnations across the States and Territories, it is essentially the same system as devised by Sir Robert Torrens and introduced into the South Australian parliament in 1857. 
It is an important point however that traditionally land was the primary source of wealth, and continues to remain so for most individuals in Australia.
In comparison, the laws with respect to security over personal property in Australia have developed in a haphazard fashion, perhaps typified by what has been described as “that famous body of ill-drafted legislation known as the Bills of Sale Acts”.
On 11 April 2006 the Standing Committee of Attorneys-General released an Options Paper entitled “Review of the law on Personal Property Securities”. The accompanying news release issued by the Federal Attorney-General, Philip Ruddock, declared that 
•	a single national personal security register would deliver a simpler, cheaper system of doing business; 
•	it would allow prospective lenders and purchasers involving all personal property to check cheaply and easily on the Internet whether there is an encumbrance in the property;
•	it would help to cut red tape and reduce the cost of loan transactions for business and consumers;
•	existing personal property security arrangements involve around 7.3 million transactions annually, the vast majority of which involve motor vehicles through the Registers of Encumbered Vehicles maintained by each State;
•	existing arrangements are fragmented and involve a large number of incomplete registers, and
•	the initiative represented a contribution towards greater harmonisation of laws and micro-economic reform.
Before the conference has a general discussion concerning implications of the regime for insolvency practitioners, it is useful to consider 
•	the nature of the problem
•	the history of reform proposals
•	proposals of the Options Paper
•	the position in other jurisdictions
•	going forward

What is the problem?
In short, there are three fundamental problems identified by the proposals in the Options Paper. They are:
1.	the problematic nature of taking security over personal property security 
2.	the plethora of types, registration systems, and administrative bodies involving personal property security in Australia at both federal and State levels
3.	the potential of gaps, overlaps and conflicts between differing systems

Taking security
The first point was summarised by Sykes and Walker as “the social evil that resulted from an owner of chattels being able to present to those giving her or him credit a fictitious appearance of prosperity, whereas all her or his property, though still in the person’s possession, might be disposed of or encumbered by secret dispositions.” Choses, whether in action or in possession, are obviously more easily transportable and transferable than realty. Because chattels can also be homogeneous, they can be difficult to distinguish, whether to separate from others of the same kind, prevent transportation or transfer, or put third parties on notice as to ownership. In the sale of goods context, the false appearance of ownership is recognised by the rules applicable to seller or buyer in possession – that is, a seller or buyer in possession of goods after sale who does not have title (because, for example, the seller has sold the goods, or the buyer has not paid for the goods) can nonetheless pass good title in the goods to a third party who takes without notice of the true ownership. 
A good illustration of this issue is retention of title clauses, which are akin to security interests, creatures of common law, do not require registration under any statutory regime  but raise practical problems of identification and ownership in the event of insolvency of the person or entity in possession of goods subject to such clauses. 

Registration Systems
Secondly, the plethora of statutes dealing with security over personal property reflects the multitude of forms of personal property (in contrast with real property which is much more limited). So, for example, it is possible to take a statutory security interest in property as diverse as ostriches, alpacas and llamas, self-propelled wheelchairs capable of travelling at a speed of more than 10 kilometres an hour, sugar cane, and fish.
As noted earlier, the development of statutes applicable to personal property security was haphazard. The Options Paper identifies in Attachment D a list of seventy-one personal property security Acts in force in Australia as at 1 March 2006, some of which have fairly general application, but many of which are specific. It is worth listing them:

Commonwealth	Corporations Act 2001 Chapter 2K
Designs Act 2003
Patents Act 1990
Plant Breeders Rights Act 1994
Shipping Registration Act 1981
Trade Marks Act 1995	
Australian Capital Territory	Consumer Credit Code Part 5
Cooperatives Act 2002 s 270 and Schedule 3
Instruments Act 1933
Mercantile Law Act 1962
Sale of Goods Act 1954 s 29(2)
Sale of Motor Vehicles Act 1977	
New South Wales	Consumer Credit Code Part 5
Cooperatives Act 1992 s 278 and Schedule 3
Factors (Mercantile Agents) Act 1923
Registration of Interests in Goods Act 1986
Sale of Goods Act 1923 s 28(2)
Security Interests in Goods Act 2005
Warehousemen’s Liens Act 1935	
Northern Territory	Consumer Credit Code Part 5
Cooperatives Act s 264 and Schedule 3
Instruments Act
Registrations of Interests in Motor Vehicles and Other Goods Act
Sale of Goods Act s 28(2)
Warehousemen’s Liens Act
Workmen’s Liens Act	
Queensland	Bills of Sale and Other Instruments Act 1955
Consumer Credit Code Part 5
Cooperatives Act 1997 s 262 and Schedule 3
Credit (Rural Finance) Act 1996
Factors Act 1892
Financial Intermediaries Act 1996 s 97C
Goods Act 1896 s 27(2)
Hire-Purchase Act 1959
Liens on Crops of Sugar Cane Act 1931
Motor Vehicles and Boats Securities Act 1986	
South Australia	Bills of Sale Act 1886
Consumer Credit Code Part 5
Cooperatives Act 1997 s 264
Goods Securities Act 1986
Liens on Fruit Act 1923
Mercantile Law Act 1936
Sale of Goods Act 1895 s 19
Second-hand Dealers and Pawnbrokers Act 1996
Stock Mortgages and Wool Liens Act 1924
Warehouse Liens Act 1990
Worker’s Liens Act 1893	
Tasmania	Bills of Sale Act 1900
Consumer Credit Code Part 5
Cooperatives Act 1997 s 271 and Schedule 4
Factors Act 1891
Motor Vehicles Securities Act 1984
Sale of Goods Act 1896 s 30(2)
Stock, Wool and Crops Mortgages Act 1930	
Victoria	Chattel Securities Act 1987
Consumer Credit Code Part 5
Disposal of Uncollected Goods Act 1961
Goods Act 1958 s 31
Hire Purchase Act 1959
Instruments Act 1958 Parts VII and VIII
Motor Car Traders Act 1986
Property Law Act 1958 s 134
Second-Hand Dealers and Pawnbrokers Act 1989
Warehousemen’s Liens Act 1958	
Western Australia	Bills of Sale Act 1899
Chattel Securities Act 1987
Consumer Credit Code Part 5
Factors Act 1842 (UK)
Factors Act Amendment Act 1878
Hire-Purchase Act 1959
Sale of Goods Act 1895 s 19	

As also pointed out in the Options Paper, and of further interest, is the fact that these statutes are administered by twenty-four entities across Australia, namely:
Commonwealth	ASIC
IP Australia
Australian Maritime Safety Authority	
Australian Capital Territory	ACT Office of Fair Trading
Department of Justice and Community Safety	
New South Wales	NSW Office of Fair Trading
Attorney-General’s Department
Lands Department
NSW Office of Fair Trading / Commerce Department	
Northern Territory	Consumer and Business Affairs
Department of Justice
NSW Office of Fair Trading	
Queensland	Office of Fair Trading
Treasury Department	
South Australia	Commissioner for Consumer Affairs
Office of Consumer and Business Affairs
Department of Transport
Attorney-General’s Department	
Tasmania	Department of Justice
Department of Consumer Affairs and Business
Department of Infrastructure, Energy and Resources	
Victoria	Consumer Affairs Victoria / Department of Roads and Ports
Consumer Affairs Victoria
Department of Justice	
Western Australia	Department of Consumer and Employment Protection
Department of the Attorney-General	

It is a challenge to actually locate registries where security interests can be registered, and identify the relevant procedures. The State-based Registries of Encumbered Vehicles (“REVS”) are quickly identifiable, as, because of extensive use, they each have informative internet sites and in, for example, New South Wales on-line searching is available. Finding personal property securities registries other than REVS registries can however be an interesting exercise, as most of the registries require manual lodgement and search, and are not electronic. So, by way of example:
•	A number of personal property security interests in New South Wales are registered in the General Register of Deeds held by the Department of Lands.  Since 2 November 1992 indexes to the General Register of Deeds have been maintained electronically. Public computer terminals at the Department of Lands can be used to search the following indexes:
•	Vendor/Purchaser
•	Bills of Sale
•	Causes, Writs & Orders
•	Stock Mortgages
•	Wool Liens
•	Crop Liens
•	Resumptions
•	Unregistered Deposited Deeds
•	In Queensland, The Bills of Sale and Other Instruments Act 1955 (Qld) provides for a general system of registration of security interests on goods (except motor vehicles & certain boats). The Queensland Office of Fair Trading maintains a Bills of Sale Register. Searches can only be conducted at Office of Fair Trading offices.  Bills of Sale are registered by completing an Application to Register an Interest – Form 1. These forms can be lodged with the OFT by mail or in person.
•	In Victoria, the Land Registry is a Business Unit of Land Victoria.  The Registrar General’s Office is located within the Land Registry and has registries for Crop Liens, Wool Liens and Stock Mortgages registered under the Instruments Act 1958 (Vic). They are all manual databases.
•	In South Australia the Stock Mortgages Registry and the Bills of Sales Registry are found in the General Registry Office in South Australia, which is itself a section of the South Australian Lands Titles Office.
•	In Tasmania the Commissioner of Consumer Affairs and Trading (Department of Justice) keeps a register of Bills of Sale. The register is not electronic. To register a Bill of Sale the original bill of sale contract is attached to the registration form.
•	The Registrar-General’s Office in the ACT is a cost centre within the Department of Justice and Community Safety. It delivers registration and access services for the ACT community, including instruments required to be registered under the Instruments Act 1933 (ACT) such as bills of sale, liens on crops, liens on wool and stock mortgages.
•	The Western Australian Department of Consumer and Employment Protection is responsible for maintaining the Bills of Sale Register.  Only security interests in livestock and crops are registered. Documents are lodged manually with the office and the register can be searched manually by visiting the office.
•	The Northern Territory Lands Titles Office (a section of the Department of Justice) is responsible for the registries for personal property securities pursuant to the Instruments Act (NT). There are a number of separate registers:  Bills of Sale Register, Stock Mortgages Register and a General Register. The database is electronic although paper copies must be lodged to register an interest.
It is interesting to note that there are also at present six national registers providing for registration of security interests in relation to:
•	ships: mortgages over a ship or a share in a ship that is registered under the Shipping Registration Act 1981 (Cth) may be registered with the Australian Shipping Registration Office, with priority accorded in the order that the mortgage is registered
•	patents: mortgages and other interests in a patent must be registered in the Register of Patents. A security which is not registered is valid, however a document evidencing the security is not admissible in any proceedings in proof of the title to a patent or to an interest in a patent unless directed by a court, or the proceedings are for rectification of the register, or to enforce equities. As the Options Paper notes, in practice courts have exercised the power to admit unregistered instruments. Between 2003 and 2006, thirty-three requests to register a mortgage have been received by the Registry. 
•	designs: an interest in a design may be registered in the Register of Designs at the request of the registered owner of a registered design or an assignee of an interest in a design.  As is the case with patents, a document or instrument in respect of which an entry has not been made in the Register is not admissible in evidence in a court as proof of title to an interest in a design except in relation to an application for rectification of the register or as directed by a court. According to information provided by IP Australia, 248 mortgages were recorded between 1 January 1988 and 30 June 2004 under the previous legislation (Designs Act 1906 Cth) and fifteen mortgages recorded under the Designs Act 2003 (Cth) between 1 July 2004 and 30 June 2006.
•	trade marks: a person who claims to have an interest in a registered trade mark which is not an assignment or transmission may, together with the registered owner of the trade mark, apply to the Registrar to have the particulars of the claim recorded on the Register of Trade Marks. The application must be in an approved form and filed in accordance with the regulations, however the fact that a record has been made in the Register that a person claims an interest in respect of a registered trade mark is not proof or evidence that the person has that right or interest.
•	plant breeders’ rights (“PBRs”): assignments or transmission of PBRs (including by way of mortgage) must be registered under section 21 Plant Breeders Rights Act 1994 (Cth). During 2005, 58 assignments were recorded.
•	company charges: registration of and priorities in relation to company charges fall within the scope of Chapter 2K Corporations Act 2001 (Cth). An unregistered charge over the property of a company is not void, however it is at risk of postponement to registered charges and a charge not registered within 45 days of creation or more than six months before the commencement of the winding up or administration will be void as against a liquidator, administrator or administrator or a deed of company arrangement. This is an busy registry – during the last financial year:
o	120,000 company charges were registered
o	50,000 charge-related documents were registered (for example, proof of payment of stamp duty, discharge documentation)
o	40,000 search requests in relation to charges were made.

Potential of gaps, overlaps and conflicts between differing systems
This issue can be best be described by a simple hypothetical example.
A corporation seeks to borrow from a financial institution in New South Wales. The financial institution is prepared to advance funds, provided that the corporation can provide security for the loan. The corporation owns property, physically located in New South Wales, Queensland and Victoria, including:
•	Stock in trade in retail outlets
•	Book debts
•	Real estate, which, following a corporate acquisition several years ago, includes rural properties with cattle and sheep, and some sugar cane on a property near Innisfail in North Queensland
•	Plant and equipment
•	Vehicles
•	A number of patents
First, if any of the chattels are subject to retention of title clauses in favour of third parties, any security (registered or otherwise) taken by the financial institution over the chattels may be of no value –  Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588.
Second, a superficial analysis reveals that a number of security interests are potentially registrable. Relevant statutes include: 
•	Under the Corporations Act 2001 (Cth) the financial institution could take and register a floating charge over the stock in trade and the book debts 
•	Similarly under the Corporations Act 2001 (Cth) a fixed charge over the plant and equipment, vehicles and patents could be created and registered
•	Security interests in the stock in trade and the book debts could be registered in Queensland under the Bills of Sale and Other Instruments Act 1955 (Qld)  
•	The financial institution could take mortgages over the real estate under the Land Title Act 1994 (Qld), Real Property Act 1900 (NSW), and the Transfer of Land Act 1958 (Vic)
•	Security could be taken over the cattle and the sheep, and the unshorn wool of the sheep, under the Security Interests in Goods Act 2005 (NSW), the Bills of Sale and Other Instruments Act 1955 (Qld), and the Instruments Act 1958 (Vic)
•	A lien over the unharvested sugar cane could be offered under the Liens on Crops of Sugar Cane Act 1931 (Qld) 
•	It would be possible to take a registered security interest over the plant and equipment in New South Wales under the Security Interests in Goods Act 2005 (NSW) and in Queensland under the Bills of Sale and Other Instruments Act 1955 (Qld)
•	The vehicles could be the subject of security interests under the REVS legislation in each State: Registration of Interests in Goods Act 1986 (NSW), Motor Vehicles and Boats Securities Act 1986 (Qld), Chattel Securities Act 1987 (Vic)
•	Mortgages over the patents could be taken under the Patents Act 1990 (Cth).
Further, depending on the nature of the security interest taken by the financial institution over the goods, it is at risk of defeat by a rival creditor who may have taken a security interest under another regime. An example of this occurred in Australian Central Credit Union v Commonwealth Bank of Australia  where the credit union loaned money on the security of a bill of sale over a car owned by a corporation. The credit union caused its interest in the vehicle to be registered in the REVS register under the Goods Securities Act 1986 (SA). Subsequently, the corporation gave a floating charge over its assets, which included the car, to the bank. The charge was registered pursuant to the Companies (SA) Code. When the corporation defaulted in the loan to the bank, the bank took possession of the corporation’s assets pursuant to its powers under the charge. At first instance the court held that the interest registered under the Goods Securities Act 1986 (SA) prevailed over the company charge, however this decision was reversed on appeal. Although the Goods Securities Act 1986 (SA) was chattel specific, the Full Court took the view that the charge took priority because, inter alia,
•	A company is under a  legal obligation to register charges on the register
•	A reasonable business person who takes a security interest under the REVS legislation should expect a chargee to register their charge over assets of the company under the relevant companies legislation.
The view of the Court can be summarised where their Honours said:
“It would be going a long way to hold that a person who relies upon the Companies (SA) Code register, which relates to all charges over assets of a company, is to lose his priority because he has not searched a register which is concerned not with charges over assets of a particular company but with security interests over all chattels, irrespective of ownership, of particular type or types.”
In the view of the court, the fact that the interest of the credit union was registered first under the Goods Securities Act 1986 (SA) neither provided notice to the registered chargee, nor accorded it priority. 
It is interesting that the Full Court in Australian Central Credit Union was not persuaded by the fact that the South Australian Goods Securities Act was chattel-specific, compared with the general application of the companies legislation. 
It is also interesting to speculate whether there would be additional constitutional implications should the same facts present to a court (namely the prevalence of Commonwealth over State law in specific circumstances). 
However, even as between Commonwealth registers the rules are not consistent. As one writer notes:
“the Patents Act and the Trade Marks Act both contain provisions which resolve priorities between competing securities in certain circumstances; the Copyright Act and Designs Act do not contain such provisions. Hence priorities between competing interests in a copyright or a design owned by a corporation will be resolved in accordance with the Corporations Law principles: priorities in a patent or trade mark will be resolved in accordance with the intellectual property legislation if its terms apply to the particular conflict and, if not, in accordance with the Corporations Law principles.”
The potential competition between different securities registration systems adds unwanted complexity to an already confusing legal area.

History of attempted reform in Australia
A serious, national approach to reform of personal property laws in Australia has been a long time coming, although to be fair the issue has been considered a number of times at government level. As is noted in the Options Paper itself, papers on this topic have been produced by:
•	the Molomby Committee, an ad hoc committee of the Law Council of Australia produced for the Attorney-General of Victoria, in 1972
•	the Victorian Law Reform Commission and the Queensland Law Reform Commission in 1992
•	the New South Wales Law Reform Commission and the Australian Law Reform Commission
•	the Business Law Division of the Commonwealth Attorney-General’s Department
The developments in the early 1990s resulted from a concerted effort by Attorneys-General of the Commonwealth and the States to stimulate debate on the issue and endeavour to reach agreement. The only report produced on this work however was an interim report of the Australian Law Reform Commission in 1993. The work was to some extent “kept alive” through the engagement of bodies including the Banking and Financial Services Law Association and the Law Council of Australia, and in particular the work of individuals such as the late Professor David Allan of Bond University and Craig Wappett.
The ALRC report recognised that, under current laws, the legal consequences of particular types of financing and security arrangements depend on the legal form that an arrangement takes, rather than the economic or commercial function that it performs. Accordingly, the principal recommendations of the report were:
•	a functional approach towards security interests should be adopted, rather than the current form-based approach. The recommendation was that 
“an interest in personal property should be a security interest, and therefore subject to the proposed regime, if, because of an arrangement between the parties that has the same effect as the provision of financial accommodation, one of the parties has a right to take possession of or otherwise deal with the property if there is default in repayment of the amount of the accommodation or in the obligation to be performed.”
•	The definition of security interest should extend to cases where what is secured is the performance of an obligation. It should not matter to whom the accommodation is provided, or by whom the obligation must be performed. It should be made clear that the location of title to the property and the legal form of the arrangement are not conclusive of the question whether an interest is a security interest.
•	A possessory interest should take priority over non-possessory interests other than those registered earlier in time. Priorities between competing non-possessory security interests should be determined according to the following rules:
o	A registered security interest prevails over an unregistered one
o	A security interest registered earlier in time prevails over one registered later
o	An unregistered but registrable security interest for which value is given earlier in time, prevails over an unregistered security interest for which value is given later in time.
•	A purchaser in good faith who buys goods in the ordinary course of business from a dealer would be protected against all securities, whether or not registered, and whether or not the purchaser takes with notice. 
•	The Australian Register of Company Charges should be used as the basis for a single national system of registration for personal property securities

The Options Paper
The paper itself is in the nature of a “testing of the water.” It seeks input to ascertain whether there is sufficient in-principle support to progress reform, and whether interested persons would support development of law reform proposals. It also seeks comment on two issues:
1. whether the law on personal property securities should be changed so that registration is not based on the form of collateral, but instead on whether the substance of the transaction is to take security over personal property, and
2. what would be the key design features of system for registering personal property securities, and for maintaining and searching the register.
Key drivers for reform are identified throughout the paper, and include:
•	economic inefficiencies inherent in the current system, including the variations in the ability to register a security over property across jurisdictions
•	It is important that property, both real and personal, is not, in the words of Lord Browne-Wilkinson, “economically sterile.” The flow of funds to businesses should not be impeded because it is not possible to register security interests over business property
•	The fact that security cannot be registered in respect of newer types of property potentially stifles innovation, as developers of new types of property may have difficulty attracting capital because of the inability to offer registrable security over the property. The paper itself notes that this means that such businesses “are at a competitive disadvantage and face a higher cost of capital than those engaged in other activities where securities may be registered.”
•	uncertainty for consumers in acquiring goods which may be the subject of a security interest
•	additional compliance costs on parties to securities transactions, and on everyone who deals in personal property arising from the fragmented nature of the existing regime (including, depending on the nature of the property, the necessity to search multiple registers)
•	the fact that the current regime is out of date, and does not reflect the movement of Australian economic and employment activity over the twentieth century from agriculture and mining to services
•	increasing movement of personal property among the States and Territories and into and out of Australia, justifying a national focus to personal property security

How does it work in other jurisdictions?
The concept of a uniform personal property security regime and register is not new. Three international examples which have been advanced as possible models for Australia are:
•	Article 9 Uniform Commercial Code (“UCC”) of the United States, which was enacted in almost all States in 1968, and has been the subject of subsequent revisions including a major revision effective in most States on 1 July 2001.
•	The Personal Property Securities Acts of each province and Territory of Canada,  which are based on Article 9 UCC.
•	The Personal Properties Securities Register regime established by the Personal Property Securities Act 1999 (NZ), which has been operational since 1 May 2002.
Interestingly, despite proposals by the UK Law Commission, there has been little movement in the UK towards establishing a similar regime.
Many aspects of Article 9 were reflected in the proposals of Australian law reform commissions already mentioned in this paper. So, for example, under the UCC, the “substance over form” approach has been taken, and a “security interest” defined as an interest in personal property or fixtures which secures payment or performance of an obligation (Article 1 – 201 (37)). A valid security interest for the purposes of Article 9 UCC is created where 
•	a creditor extends credit, 
•	a security agreement is authorised by the debtor which indicates the types or describes the items of property being used as security (“collateral”), and 
•	a financing statement is filed with the relevant state agency where the debtor is located (which, in the case of a debtor which is a corporate, LLC or limited partnership, is its jurisdiction of organisation). 
As a general rule, conflicting security interests in the same property rank according to priority in time of filing or perfection (Article 9-312 (5)(a)) and so long as conflicting security interests are unperfected, the first to attach has priority (Article 9-312 (5)(a)).
Closer to home, the New Zealand system is an electronic system offering a centralised, electronic register. Like Canadian and US legislation, it creates a “substance over form” approach to the notion of a security interest. The Act is clearly based on the Saskatchewan Personal Property Securities Act 1993.
“Security interest” is defined as follows
(1) In this Act, unless the context otherwise requires, the term “security interest”
(a) means an interest in personal property created or provided for by a transaction that in substance secures payment or performance of an obligation, without regard to
(i) The form of the transaction; and
(ii) The identity of the person who has title to the collateral; and
(b) includes an interest created or provided for by a transfer of an account receivable or chattel paper, a lease for a term of more than 1 year, and a commercial consignment (whether or not the transfer, lease, or consignment secures payment or performance of an obligation)
(2) A person who is obligated under an account receivable may take a security interest in the account receivable under which that person is obligated
 (3) Without limiting subsection (1), and to avoid doubt, this Act applies to a fixed charge, floating charge, chattel mortgage, conditional sale agreement (including an agreement to sell subject to retention of title), hire purchase agreement, pledge, security trust deed, trust receipt, consignment, lease, an assignment, or a flawed asset arrangement, that secures payment or performance of an obligation
The website of the Personal Property Securities Register, which can be found at www.ppsr.govt.nz, makes interesting reading. Key aspects of the New Zealand system include:
•	it is cheap. Creating a financing statement on the register costs $3.00, renewing it costs $5.00, and amending or discharging it is free. Financing statement registration number searches allow for up to 10 financing statements to be searched at one time.
•	everything is electronic. Lodgement of financing statements is electronic; there is no manual lodgement. To conduct a search, users are required to first create a “secured party group” on the system, which may be one or more secured parties. To do this is free. 
•	registration determines priority.
•	the regime has replaced four personal property securities registers, namely the Motor Vehicle Securities Register, the company charges register held in the Companies Office, the industrial and provident societies charges register held at the Companies Office, and the twelve chattels registers held at the High Courts.
Interestingly, transitional arrangements included that 
•	those four replaced registers closed for registrations in April 2002 but remained available for searching for six months, and 
•	to retain the priority date of existing security interests, secured parties were required to re-register notice of their interests on the new register within six months of the register becoming operational. There was no automatic transfer of data between replaced registers and the new register.
From available statistics the regime appears to be a successful initiative. In the last financial year:
•	there were 577,282 personal property security interest registrations, which was 11% higher than forecast, and
•	2,430,492 electronic searches, which was 66% higher than forecast.
The New Zealand experience is particularly interesting, not only in view of similar financial and cultural approaches to credit, and also in view of the practical issue that major financial institutions, which would frequently be creditors and thus have a major interest in the creation of a new regime in Australia, are already operating under the New Zealand regime. To date there have been relatively few cases involving disputes in New Zealand involving the legislation, although recent decisions indicate that litigation requiring interpretation of the Act may be on the rise.

Going forward
Discussion of the proposed reforms has taken place at high level, both at the Standing Committee of Attorneys-General and the Council of Australian Governments. Consultation by the Attorney-General’s Department continues, including at this conference. The approach taken by the financial services industry, consumers, the legal and accounting professions, and industry groups, will be of particular interest. While the New Zealand example is interesting, it should not be forgotten that New Zealand is not a federation, without the federal constitutional implications for enactment of legislation of this nature which are inevitable in the Australian context. One possible approach is similar to the Consumer Credit Code and, in the personal property security area, the US Uniform Commercial Code and Canadian provincial statutes, namely uniform State-based legislation. While the adoption of a uniform approach to registration of security interests in the United States and Canada has led the world, a “code” implemented by all States approach always runs the risk that not all participating jurisdictions will enact the legislation at the same time, or in the same way (or even that all will participate). Other obvious inconveniences of the “code” approach are that failure to file in the correct jurisdiction may result in a loss of the security, conflict of laws issues will arise in relation to, for example, the place of registration of the security interest, and there is always the risk that different jurisdictions will interpret the code differently. However, it should also be acknowledged that this approach seems to have worked well in the United States over four decades.
It is interesting to note that the personal property security regimes in place in the United States and Canada are not, if the pun can be excused, “perfect”. They remain the subject of continuing reform, as indicated by the revision in 2001 of the Uniform Commercial Code and have been the subject of an extensive body of law arising from interpretation of particular provisions,  which will in itself sound warning bells for Australian legislators. The Australian proposals in respect of reforming the laws in this country are however to be applauded, as an initiative to bring this area of law into the twenty-first century in this country.