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As the clock strikes midnight tonight (Eastern time), the ‘transitional period’ of 24 months grace for PPS registrations will expire. There have been 7.7 million registrations as at end of 2013, but the feeling is that, now that the crunch time has arrived, many suppliers, lessors, consignors and others, particularly smaller businesses and artisans, will have ‘missed the boat’ in relation to interests which amount to PPSA security interests and need protection. In terms of judicial activity, to date it has been sparse, with the Maiden Civil case [2013] NSWSC 852 (see note in (2013) 13 Ins LB 278 (D. Brown)) representing the only case so far with any in-depth treatment of issues under the Act itself, with other judgments being confined largely to registration time extensions under the Corporations Act.
Now that the transitional period has expired, there is an expectation of more dispute and litigation, at least in cases where it is worth the candle to argue about priorities and effectiveness of registration. We should see some more detailed guidance emerging, as has happened in New Zealand, particularly in the insolvency context which seems to be the front line for PPSA disputes. Secondly, the fuzzy arguments about transitional security interests will become history; a search of the register should from now on disclose a more accurate picture of the whole story in relation to the debtor’s security interests (or at least those which have been registered, and with clearer and more drastic consequences if they have not).
Lastly, whilst today marks one key milestone, the next is the date for completion of the Attorney-General’s review of the PPSA. Under the Act, this review must be completed by this time next year. It does seem a little soon to be reviewing the operation of the Act, and whilst the Government will receive submissions containing gripes (some justified, but many arising, in our view, through misunderstanding of the intent and limitations of the Act and Register), the full tilt of the legislation will only be felt after today’s date, so one hopes that if the review has to be completed by this time next year, at least it won’t be the final opportunity to amend the legislation in light of issues that arise thereafter. It would be a shame if the review was to be the last word for many years, given that many small businesses still haven’t woken up to the existence and impact of the legislation. Nevertheless, with millions of registrations and an efficient, informative and responsive AFSA operation, achievements to date in what, we must remind ourselves, is the only National online register of its kind anywhere in the world, have been an impressive base from which to build.