LexisNexis Practical Guidance®
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Overview — Default and enforcement


Enforcement under the PPS Act

Chapter 4 of the Personal Property Securities Act 2009 (Cth) (PPS Act) contains rights and remedies of enforcement of security interests on the default under a security agreement. This means security agreements do not need to include these remedies as parties to the agreement can instead rely on the Ch 4 enforcement provisions in the PPS Act.

It is useful to note that the Ch 4 enforcement provisions complement other rights and remedies available. Such additional rights may be contained in statute law, common law or equity. There are some security interests to which Ch 4 does not apply: s 109 of the PPS Act. For example, Ch 4 does not apply to interests in goods that are located outside Australia.

Generally, under Ch 4, on the default of a grantor under a security agreement, the secured party can commence enforcement action, and the first step in enforcement is for the secured party to seize the collateral. If a secured party has a security interest that is subordinate to another security interest in the collateral, the secured party with the higher priority security interest is entitled to seize the collateral from the subordinate secured party. Having seized and obtained possession of the collateral, the secured party may either dispose of or retain the collateral. This guidance note overviews each of these matters, and is designed to be a good starting point for legal practitioners who need to consider matters relating to enforcement under the PPS Act.

See Enforcement under the PPS Act.

Rules that apply after enforcement under the PPS Act

Part 4.4 of the PPS Act contains rules about steps to be taken after a security interest in collateral has been enforced. These rules deal with:

  • the order of distribution of personal property or its proceeds;
  • the transfer of title to collateral; and
  • the redemption of collateral or the reinstatement of security agreements before disposal and when certain enforcement notices are not required.

This guidance note overviews each of these rules, and is designed to be a good starting point for legal practitioners who need to consider matters relating to enforcement under the PPS Act.

See Rules that apply after enforcement under the PPS Act.

Enforcement of a security interest under the PPS Act that secured a Code-regulated loan

The National Consumer Credit Protection Act 2009 (Cth) (NCCP Act) includes the National Credit Code (the Code) as Sch 1 to the NCCP Act.

When a security interest under the PPS Act secures a credit contract governed by the Code, the enforcement of the security interest is also governed by the provisions of that Code.

This guidance note outlines the specific provisions of the Code relating to mortgages over goods. It also considers how reg 4.1 of the Personal Property Securities Regulations 2010 (Cth) reconciles the notice provisions of the PPS Act with those of the Code by waiving compliance with some of the PPS Act provisions, provided the equivalent Code provisions are satisfied.

See Enforcement of a security interest under the PPS Act that secured a Code-regulated loan.

Considerations when enforcing a security that is not a first security

This guidance note is designed to provide a list of considerations to help legal practitioners, as a starting point, to provide advice on matters relating enforcing a security that is not a first security. These considerations include whether there is sufficient equity, the requirement of consent, and distribution of proceeds.

This guidance note also includes commentary on lessons regarding enforcing a security that is not a first security from selected leading case law, including Zanzoul v Westpac Banking Corporation (1995) 6 BPR 97,549; [1996] ANZ ConvR 368; (1995) NSW ConvR 55-749; BC9504830 regarding possession and Bofinger v Kingsway Group Ltd (2009) 239 CLR 269 at 301; 260 ALR 71; [2009] HCA 44; BC200909276 regarding guarantors and subrogation.

See Considerations when enforcing a security that is not a first security.