The Personal Property Securities Act 2009 (Cth) (“PPSA”) will have a significant impact on the taking, registration and enforcement of security over almost all kinds of property, except land. The PPSA overturns fundamental property law concepts including the long held concept of legal title. A complex set of rules will now govern the enforceability of security interests. The commencement date for the PPSA is 30 January 2012. This guide briefly explains how the PPSA may affect your business (“you”, “your”) and what you need to be doing now, with our assistance, in order to protect your assets.
How the PPSA may affect you
- Fixed and floating charges – your existing charges (both as chargee and chargor) registered with ASIC will be “migrated” to the PPSA Register (“PPSR”) – a single national internet-based register available 24/7. The concept of fixed and floating charges will be replaced under the PPSA by “security interests over non-circulating assets” and “security interests over circulating assets” respectively.
- Retention of title (“ROT”) – any supply of goods by you under a contract/purchase order that contains a ROT clause will need to be reviewed and may require registration as a purchase money security interest (“PMSI”). Currently, a supplier of goods under ROT may retrieve its goods on the insolvency of the counterparty. Following the PPSA commencement date, unless the ROT supplier registers a PMSI as a security interest on the PPSR, the goods under ROT may become the property of the company in liquidation and amount to a windfall to its creditors.
- Equipment hire – any equipment lease of more than 12 months may require registration in order to protect the interest which you have in the equipment.
- Serial numbered goods – any lease of serial numbered goods (eg dump trucks and other motorised mining equipment with a speed of more than 10kph) of more than 90 days may require registration in order to protect the interest which you have in the goods.
- Inventory and temporary works – currently, as in ROT above, a contractor’s title to inventory and temporary works is assumed and is not under threat. Under the PPSA, your title in any inventory and temporary works located on a principal’s land/property may be at risk of being defeated by creditor’s claims unless registered on the PPSR.
- Joint venture agreements – interests arising under cross charges and some default clauses in joint venture agreements will fall within the PPSA regime and will need to be reviewed. In particular, new cross charges will require specific drafting changes to deal with the changes introduced by the PPSA.
- Other considerations – hire purchase agreements, conditional sale agreements, transfers of accounts receivables, confidentiality obligations (amongst others) will also be affected.
How can we assist?
The PPSA team can assist you by:
- identifying existing security interests and whether these will be the subject of automatic migration or whether new registrations should be made;
- reviewing the terms and conditions of your contracts including standard terms of trade particularly given that ROT interests, whilst currently not registrable, should soon be registered;
- amending your standard contracts to be PPSA compliant by taking into account the new terminology and rules relating to attachment, perfection and priority of security interests as well as the PPSA rules affecting issues such as confidentiality, assignment and negative pledges;
- advising on PPSA and other matters with regard to all new contracts/tenders;
assisting with the registration of security interests on, and searches of, the PPSR; and
- consulting with you as to the risk of not registering a security interest on the PPSR (this is dependent on the credit worthiness of your customers/suppliers and on the cost/benefit of registration).
For further information contact:
Louis van Aardt
Special Counsel
Tel: (08) 9420 7157
Email: lvanaardt@talbotolivier.com.au
Have you recently received a letter regarding an audit of your Software Licences? If so, the letter likely came from the Business Software Alliance (BSA).
The BSA is a non-profit trade association created to advance the goals of the software industry and its hardware partners. The BSA is currently targeting SMEs in Perth (with the other States and Territories of Australia to follow) with between 10 to 150 employees in the architecture, construction, engineering, creative and automobile industries. These industries will be sent a letter with a link to an online questionnaire which will help them to check their software licences.
The BSA Members participating in this campaign are Adobe, Autodesk, Microsoft and Symantec. According to news reports the online compliance check connects to the back-end systems of Adobe, Autodesk, Microsoft and Symantec and the SMEs are able to see their registered and active software licences with those four companies.
The BSA claim that the aim of the compliance check is about education and awareness to ensure compliance and that it is not about prosecution or generating a settlement out of non-compliance. However, as reported by Mr Stephen Withers on ITWire (http://www.itwire.com/it-industry-news/strategy/49921-bsa-licence-check-offers-limited-guarantees-for-participants) Mr Clayton Noble, co-chair of the BSA commented that “damages will not be sought from any business that gets back into compliance…but would not guarantee that information entered on the system would not be used to the detriment of the company involved.”
So what should you do if you receive a BSA Compliance Check letter?
Do you need to comply with the request? There is no legal obligation to comply with the request, however, details of companies that do not comply will be passed to the relevant BSA Members and those Members may wish to enforce their rights to audit software kept on the company’s system. These rights are available to the Members under their various licence agreements and end user licence agreements for the relevant software.
If you are concerned about completing the online questionnaire, the BSA recently advised us that the same questionnaire is also available in hard copy format by request to the BSA.
In the first instance we recommend that you carry out a self-audit of the computer software on the computers within your organisation. There are a number of software tools that can automate the process for you or you can carry out the audit manually yourself.
If after carrying out the self-audit, you are concerned or find any discrepancies you should seek advice from a lawyer as to your options. If the self audit does not reveal any discrepancies there may not be any fallback from completing and lodging the questionnaire, however, we would recommend requesting a hard copy to avoid the risk of the BSA members accessing any electronic information you do not want them to have access to.
If you have received a letter from the BSA or require advice regarding software licences and compliance please contact Russell Morley, Senior Lawyer, on 08 9420 7100 or rmorley@talbotolivier.com.au.
The Personal Property Securities Act 2009 (Cth) (PPSA) is expected to come in to operation on 1 February 2012 and will have a significant impact on the taking, registration and enforcement of security interest over almost all kinds of property, except land.
The PPSA establishes a single national law governing security interests in personal property and replaces a number of existing registers, such as the Register of Encumbered Vehicles, to create one online register which allows the public to search for and register security interests in personal property. Existing registered security interests will be ‘migrated’ to the new register.
A security interest is an interest in relation to personal property arising from a transaction that secures payment or the performance of an obligation and without regard to the form of the transaction or the identity of the person who own the property. As the definition of security interest is without regard to the identity of the person who has the title to the property, it may allow for a person to grant a security interest over property even if they don’t own it!
Personal property is any form of property other than land or buildings, or fixtures which form part of the land. It can include tangible property such as cars, boats, machinery, and crops as well as intangible property such as shares, intellectually property (such as a licence) and contract rights. Under the PPSA a security interest must be properly established (often by registration) to be enforceable. If a dispute arises as to the priority of security interests (that is, who ranks ahead of who) registered securities have priority over unregistered securities and registered securities rank in order of time of registration.
A crucial aspect of the PPSA is the effect of retention of title (ROT) clauses. ROT clauses are frequently used in contracts to retain title to goods that are being sold on credit or are otherwise handed over to someone who has not paid for them in full. Prior to the PPSA, ROT clauses were effective and enforceable without registration. Under the PPSA they will need to be registered. If someone provides goods to someone else without receiving full payment, and does not register the ROT as a security interest, they will run the risk that some other party will register a security in respect of those goods. The registered third party could then potentially have the right to take the goods to satisfy their debt first. This may be the case even if there is a written contract with the person who holds the goods and even if there is an ROT clause.
Apart from the far reaching effect on businesses, the PPSA will also impact buyers of valuable goods who will soon be able to check one single register rather than any of the existing registers. When purchasing items such as cars, boats or machinery a search of the register should be done using a serial number, such as a vehicle identification number or a hull identification number. Consumers will also need to be vigilant when purchasing other valuable items such as artwork from private individuals and in these instances should conduct a search by the name of the vendor/grantor and their date of birth as it appears on an official document, such as a driver’s license.
As of 1 October, amendments to the Road Traffic Act will bring WA legislation into line with similar legislation in Victoria and New South Wales. This will see a dramatic increase in monetary fines and disqualification periods for drivers caught driving under the influence of alcohol and or drugs. The amendments will also result in the holders of extraordinary licenses and recently disqualified drivers having to drive with a zero blood alcohol level. This zero blood alcohol level will also apply, on a day to day basis, to other groups of drivers, such as those who drive heavy vehicles, passenger vehicles with 12 seats and above, omnibuses and taxis.
Penalties are changing in order to deter drivers from driving whilst affected by alcohol and drugs. Currently WA’s penalties for drink driving are significantly lower that those in Victoria and New South Wales, having not changed significantly since 1997. As an example of the new penalties, a driver convicted of driving with a blood alcohol limit of 0.15% will now face a minimum fine of $900 and may be disqualified from driving for a minimum of 10 months. A driver found driving whilst impaired by a drug will similarly face a minimum fine of $900 and may also be disqualified for a minimum of 10 months.
Prior to these amendments, a requirement to drive with a zero blood alcohol limit only applied to novice drivers. Following these amendments, the zero blood alcohol limit will also apply to all holders of an extraordinary license and those drivers who have been recently disqualified. Once a person recommences driving, following a period of disqualification for nominated drink and drug driving offences, they can be required to maintain a zero blood alcohol level when driving any vehicle for a further period of three years.
The zero blood alcohol limit will also apply at all times to the drivers of heavy vehicles with a gross combination mass exceeding 22.5 tonnes. Heavy vehicle drivers should note that this new limit will apply to them, not only when they are towing trailers or loads, but also any time when they are driving the prime mover without a trailer or load. Drivers of a passenger vehicle equipped with 12 seats of more (including the drivers seat), whilst carrying passengers, will be required to have a zero blood alcohol limit. This will include the drivers of mini buses used by sporting clubs, people movers in the work place and troop carriers commonly used by tour operators. The zero blood alcohol limit will also apply to drivers carrying passengers for a fee or reward such as taxis and omnibuses, including special charter vehicles and limousines.
The amendments do recognise that in most country areas the local community rely heavily on volunteer emergency service workers. Most of these volunteers are called out on little notice and can not reasonably be expected to completely abstain from consuming alcohol on the odd chance they might be called out to an emergency. As such there will be an exemption for emergency workers who are called out to an emergency incident to operate vehicles which are normally required to be driven with a zero blood alcohol limit. The exemption to the zero blood alcohol limit will apply, but the driver must still not exceed a blood alcohol limit of .05%.
Buying or selling a business with a liquor licence or changing the corporate structure can be a minefield of legalities; and, if not done right it can have major repercussions for the parties; it can become very costly; cause significant delays; or even result in disciplinary action against the licensee. Therefore, it is important to seek the necessary legal advice from an experienced solicitor when dealing with such transactions.
A purchaser should always undertake a thorough due diligence on a business before signing any contract to purchase.
We recently acted for a purchaser who upon inspection of the licensing plan noticed the outdoor area that had been in operation for the past 20 years was not licensed and did not form part of the land being purchased. We have since been able to negotiate a lease for this area from the neighbouring land owner and are in the process of having the area licensed.
In another matter we acted for a client who changed the corporate structure of the licensee Partnership without any legal assistance or approval from the Department of Racing Gaming and Liquor. The client thought that since the Partnership was going from three partners to two and the two partners had already been approved they did not need to obtain approval. However, this is in fact a new entity and required a transfer of the Liquor Licence. We have since lodged an application to transfer the liquor licence and were able to convince the Licensing Authority not to suspend the Licence for some months during the period of the transfer, which was a real risk.
Some of the important legal issues to consider when buying or selling a licensed premises includes the following:
• The appropriate corporate structure
• Contract negotiations
• Terms and conditions of the lease
• Lessor consent
• Painting and repair obligations pursuant to the lease
• Intellectual property, including business name, trade marks and websites
• Payment of stock following settlement
• Continuing employee entitlements
• Stamp duty implications
• Assignment of supply agreements
At Talbot Olivier Lawyers we have extensive experience acting in transactions dealing in all licensed premises and related property matters. If you have any queries in relation to buying or selling licensed premises or property related matters, please contact Jarrod Ryan on 94207189 or 0421 595 815 or by email jryan@talbotolivier.com.au.
Landgate has released a new Caveat in response to community concern arising after Western Australian property owners have fallen victim to fraudulent property transactions.
In the past 12 months, two Perth homeowners have had their properties sold by strangers connected with an international fraud ring based in Nigeria. The homeowners were completely unaware of the transactions until the sales were completed.
Last year, Mr Andrew Mildenhall fell victim to the scam when his Karrinyup investment property was sold without his knowledge. Mr Mildenhall was residing in Cape Town at the time.
Despite the fraud, Mr Mildenhall is unable to have the transaction reversed and must now commence action to seek compensation from the state government. The law protects the rights of the third party who purchases the property in these situations.
It appears that another couple have fallen victim to the same scam between February and April this year, their property being sold unbeknownst to them whilst they were overseas.
Police believe that both incidents may be linked, stemming from a sophisticated international fraud ring operating out of Nigeria.
In response to community concerns, Landgate are now offering a new Improper Dealings Caveat for property owners. The Caveat will stop the registration of any document which would ordinarily need to be signed by the land owner including transfers of land, mortgages and leases.
The Caveat can be prepared and lodged with Landgate by the owner of a property or by a solicitor acting on their behalf.
In the case of multiple owners, all owners must sign and lodge the Caveat together or jointly instruct a solicitor to lodge the Caveat on their behalf. If one owner does not agree, then the Caveat cannot be lodged.
To withdraw the Caveat, all owners must attend the Landgate office in Midland and provide 100 points of identification.
Clearly, the recent scams illustrate a need for tighter regulation of the property settlement and real estate industries to ensure more rigorous identification checks during sale transactions. Measures to ensure that agents are actually dealing with the legitimate owner of a property prior to selling a property have become imperative.
Absent tighter regulation, the Improper Dealings Caveat may provide peace of mind for land owners, especially those who are planning on being away from their property for a long period of time.
Mothers and fathers are seeking confirmation as to the biological paternity of their children, especially where it comes to the determination of child support obligations in separated families.
Confirmation of paternity can become an issue where parents have had extra marital relationships or in cases where a child is born following a short or casual relationship.
In some cases, failure to identify and pursue child support payments from a possible father may result in the reduction of a single mother’s Centrelink entitlements.
Where child support matters come before the Family Court, the Court has power to Order a possible father to undertake parentage testing. The Court can also make findings as a result of a father’s failure to comply with a request to undertake testing.
In the absence of paternity testing a man who is named as the father on the birth certificate, is married to the mother or in certain cases a man who has been living with the mother prior to the birth will be presumed to be the father of the child.
For those wishing to seek some clarification as to the parentage of a child, paternity testing is available. Currently, Australian DNA testing facilities offer two types of paternity testing : “self-help” testing and “legally admissible” testing.
Self-help testing may satisfy curiosity but is not considered to be conclusive evidence in a Family Court situation.
Legally admissible testing can be used as evidence in the Family Court when seeking a declaration in relation to the paternity of a child. DNA testing facilities suggest that legally admissible testing can predict with 100% reliability if someone is not the father of a child and with 99% accuracy that someone is the father of a child.
Arrangements can also be made to ensure samples are not tampered with.
In the event that a person is found not to be the biological father of a child, this does not preclude them from seeking Family Court Orders in relation to that child but can avoid a situation where they are ‘left holding the baby’.
After practising in property law for many years one of the biggest surprises we come across on a weekly basis is buyers of property that do not undertake a thorough inspection of the property before signing the offer and acceptance. This is usually because buyers concentrate on the bigger ticket aspects such as the number of bedrooms and bathrooms or the layout of the house.
A common anecdote is that a person will buy a $10,000 car and before buying it, will test drive it, check everything works from the indicators to the windscreen wipers or have it RAC inspected. However, when buying a house, despite it costing many multiples of a car, people will be lax in carrying out a thorough inspection.
A common solution to this is to have a building inspection provision in the offer and acceptance together with warranties regarding electrical gas and plumbing fixtures and fittings being in good working order.
The issue that commonly arises in our settlements practice is that building inspection provisions generally only apply to structural or significant defects. They will not cover maintenance aspects or repairs that are not structural such as ceilings falling away from the ceiling beams, holes in walls or carpets (which, when the home is open for inspection are hidden by a picture or rug) or leaks in wet areas caused by broken tiles or grout. This may cause significant damage over time and be expensive to repair.
The discovery of these items after the signing of the offer and acceptance and in the lead up to settlement often causes mistrust between the buyer and the seller.
A thorough inspection prior to signing the offer and acceptance will alleviate the mistrust and allow a buyer to negotiate with the seller to fix any aspects that they are not satisfied with prior to settlement.
For buyers of investment properties, we also recommend that they take advantage of their rights under the offer and acceptance in ensuring that a detailed property condition report is obtained at settlement. The provision of such a report will allow a buyer to seek recourse against the Seller if the seller has breached a warranty and will provide a reference point in relation to any claims by a tenant as to whether something was damaged before or after settlement.
As of 1 August the Western Australia government has changed the law in relation to the possession of cannabis, cannabis smoking implements and the retail sale of cannabis paraphernalia. This follows the government’s outlawing of cannabinoids contained in synthetic cannabis products such as Kronic and K2 in June this year.
Under the new laws, people apprehended for the possession of small amounts of cannabis or cannabis smoking implements may be dealt with by a Cannabis Intervention Requirement (CIR). A CIR will not apply to persons convicted of an offence relating to cultivating a cannabis plant, cannabis resin or any other cannabis derivative (such as hash oil), or who have a prior cannabis related conviction. Once a CIR has been received, a person is required to attend a one-on-one session with a trained drug and alcohol counsellor. Successful completion of this sessions means the receiver will not receive a criminal conviction via the courts.
To be eligible for a CIR you must be over 14 years of age and not have possession of more than 10 grams of cannabis.
Commercial retailers have again been targeted by these new anti drug laws. It is now illegal for a retailer to sell cannabis smoking paraphernalia or to display the paraphernalia for sale in a shop or outlet. The penalty is a fine of up to $10,000. Much like when the synthetic cannabis products were outlawed, it is up to the retailer to dispose of the now illegal goods.
These new laws come at a time when retailers are beginning to again restock synthetic cannabis products. These products do not contain the specific cannabinoids which were outlawed by the government in June. In changing the chemical composition of the synthetic cannabis products, the manufacturers have managed to skirt around the ban on some cannabinoids allowing retails to resume selling the new variations of the synthetic cannabis.
It will be interesting to see whether the government makes any further changes to the law with respect to synthetic cannabis products.
On Friday 17 June 2011, the Western Australia government was the first state in Australia to make possession of synthetic cannabis products illegal. Despite strong public campaigning and associated media hype, there still appears to be some confusion as to whether the possession of these types of products is prohibited.
The State government inserted into the Poisons Act, seven cannabinoids, found in various brands of synthetic cannabis such as Kronic, Voodoo, Kalma and Kaos. The amendment to the law in WA makes the possession of specified cannabinoids, in any product, a criminal offence in this State. It does not matter where the product was purchased from.
Cannabinoids are the active ingredients in synthetic cannabis. These cannabinoids are chemicals which are usually sprayed onto various herbs and spices, which are then packaged and sold commercially.
In this state, the Misuse of Drugs Act is the primary legislation criminalising the possession of specified prohibited drugs. The Misuse of Drugs Act gives the police authority to criminally charge people in possession of substances specified in the Poisons Act.
This means that if a person is found in possession of any product containing the cannabinoids specified in the Poisons Act, they may be criminally charged. The penalties for simple possession of cannabinoids include a fine of up to $2,000 or 2 years imprisonment or both.
Leading up to the ban, the Chamber of Minerals and Energy and the Australian Medical Association (WA) were two of the leading agencies pushing to have synthetic cannabis made illegal. Random drug testing on some Western Australian mining sites has reportedly found that hit rates for synthetic cannabis was between 10 – 30%. This was of major concern to the mining industry, as the psychoactive effects of synthetic cannabis is reported as being very similar to THC, the active ingredient in cannabis.
In response the CME wrote to the Health Minister requesting that synthetic cannabis be added to the Poisons Act. The AMA had also expressed concerns about mine site workers operating heavy machinery whilst under the influence of these synthetic products.
Mr Robbie Swan of the Eros Association, a group representing suppliers of synthetic cannabis, has been reported in the media as saying that it is likely that these types of products will still be available on line. Further, he has said that there could be legal avenues supporting the sale and transportation of synthetic cannabis from the eastern states, where it was legal.
Never-the-less, as the new amendment stands in the State of Western Australia, anyone who possesses a product containing synthetic cannabis is liable to be prosecuted, fined and/or imprisoned.
