Sample Law Critical Thinking Paper on The Distinction between Land and Personal Property in The Ppsa

The Distinction between Land and Personal Property in The Ppsa

Introduction

Under the current personal property security act (PPSA), the law clearly outlines the difference between a personal property and land. The main distinction emanates from the fact that for one to accentuate a property to be a personal property, they must have a personal interest in it. The concept of personal interest emanates from the fact that the owner has to provide tangible transactional basis for which they have the interest. On the account of the land, it is a property that is expected to have some capital gains at the end of a given period. This means that land falls under the category of real property. The inception of the personal property security act 2009(PPSA) has culminated into the creation of a platform of an online registration of Personal property security[1]. Under this regime, it is a requirement that those who have the personal interest in the property must register their interest so they can have the first hand claim to the property in accordance with the law[2].

The real meaning of personal security interest is the interest that emanates from the personal property that is expected to be authenticated by a transaction that substantially accentuates performance of an obligation or secures payment. This is with no regard to the type of transaction or the real identity of the person who possesses the title of the property. Additionally, this law includes both the intangible and the tangible property that is owned or possessed by the various types of legal entities.  In this prospect, the property might include the goods, money, hire purchase agreements, motor vehicles, long terms leases and retained titles among others. In the description of the personal property, the law according to PPSA excludes the various dealings that revolve around fixtures, land and buildings and this transcends to the ownership and the sale of buildings attached to the land and the land itself. This paper gives a comprehensive comparison between land and personal property. This analysis takes a look at how the interests in personal property affect the ownership and actions behind this jurisdiction. Land is discussed with regards to acquisition and the advent of capital gains that emanates from it therefore distinguishing it from the personal property.

The Effects of Personal Interest Registration

In the context of the ownership of land, it is a substantial fact the owner is the possessor of the title of the land itself. This gives the owner the right to use and misuse the land and the property in it. Immediately after the inception of the personal property security act (PPSA), one is required to register the interest that they have with any property in the event that it is in the possession of another party[3]. A perfect security interest is attained at the point when the interest is registered. For example in leasing a property,  it is required that the lessor after leasing his property should ensure that they register their interest in such a way that in times of claim, they are easily compensated for the same. Once the interest is registered under the current law, the property becomes a personal property for which the owner has the perfect personal interest in it[4]. Ownership at this point does not matter while the personal interest that connotes the personal property prevails. Taking a retrospective look on this matter, it is of a fundamental importance that the rights of the property owners should be protected. The registration of interest helps in making sure that justice is served as far as the ownership, usage and the transaction of the property is concern.

Analysis of Maiden’s civil case

The difference between land and personal property in terms of personal interest is well explained in the Maiden Civil case. This case is a confirmation that in the event that the owner of a particular property fails to register them after leasing them out, the owner instinctively is not able to rely on ownership title of the property to protect the interest that they have on the goods in question. The owner has the obligation to register the interest failure to which they risk losing the entire portion of the property in question[5]. On a wider perspective the owner of the title is given less choice to decide on their goods. The tile ownership is therefore less dominant when it comes to changing the land into personal property. Once a particular land is leased out, it is the sole discretion of the lessor to make sure that they have the direct perfect interest on the land. This concept is because; the land has now been transformed from a mere gain on the capital through appreciation to transactional gain[6]. It now turns out to be a personal property for which the owner has the interest. In this line of thought a clear distinction is drawn between land and personal property. In the discussion of land, the ultimate gain that one can bank on is the notion of gain on the capital which is the land appreciation. On the account of personal property, it is a factual point that the interest must be noted. In this advent, there has to a transaction that would be used in making sure that the owner registers the interest. The transactional bit of this personal property binds the two parties concern in order to gain a profit and not a capital gain as accentuated by the ownership of land.

In the maiden’s case, there were three parties involved. There was the owner of the machine (Queensland Excavation limited) who leased out the machine to Maiden limited. The third party was the Fast Financial Solutions limited which was gave some loan to Maidens Company under the collateral for which the machine leased to them was listed as one of the collateral. Unfortunately, Queensland Excavations Limited did not take time to register this lease as a personal interest in the PPSA registry[7]. At the point when Maiden went into liquidation, Queensland was actually stopped from claiming their property which they had leased to the Maiden since they had not registered the personal interest. In a retrospective view, Queensland had not turned the whole machine to be a personal property[8]. In transactions like this, the advent of personal property exists and this has the transcending effect of making sure that the registration of the personal interest on the property will prevail and not the ownership of the title. The court therefore ruled that the Queensland had no claim on the property and the liquidated assets would now go to the Fast Financial Company.

The section 8 of PPSA

In the postulations of section 8 the statutory liens have been excluded. This is done unless the individual who owns the property is deemed to have a property for which a security interest is given by the registrar. Under such circumstances, the General Law would also exclude the liens created by law which are deemed to exclude under the section 8 subsection c. as connoted earlier, the operator inclined to have relied upon the statute in order to assert the precedential priority.  the In the postulations of PPSA, it is clear that the purchase of various personal household or personal property such as land, buildings among other goods is deemed to be free from any security interest. In section 8 the fixtures such as the crops are not included since they deemed to be part and parcel of the construct of the land and that is what constitutes the value of the land at the prevailing rates. A closer scrutiny of this clause reveals that land as owned by a person is deemed not to have a security interest if it is purely for domestic use. In this prospect, it is expected to have the provisions for which it is expected to have only the capital gains and not any transactional gain. In the event that land is used for profit and has been leased out to a third party, it no longer possesses the high magnitude in terms of ownership title but it gives the security interest way for which the transactions occurring due to the exchange generates the interest.  

Registration Systems in Australia

In the current context of the law, there are two distinct systems that have been used for registration. One of them is the land registration. In the land registration, the ownership of the title is required and the person who possesses the land title is deemed to be granted the whole context of registration for which at time of registration, his or her name should actually appear at the document of registration. This description I believe is quite justifiable owing the nature of the land that have been postulated and the regions where the same is located. The second form of registration is the notion of the registration of the personal property security assets. In this type of registration, the person registering the security interest is deemed to back the registration with a substantial traction document making him or her to have a security interest over the property. In this case, there is no need for the inception of the Title to connote the ownership. The different registration systems help to distinguish between the personal property and the land. And the difference here emanates from the connotation that one requires the ownership rights and the other requires the advent of security interest.  In the transactions involving land, it is usually based upon the appreciation in value of the property that counts. From the analysis of the PPSA, transfers of land can take two forms. One of them is through leasing out the land. At this point the initial owner of the land would receive payments in form of rental payments[9]. In the event of such transactions occurring, the transcending effect is that an interest is created where the initial owner has the obligation of registering the security interest to the PPSA registry[10]. From all indications, this move will not only help the initial owner retrieve back his land but also try to protect it from the other persons who might want to unscrupulously gain interest in the same property. In this set of discussion, clear diverse distinction is drawn from the onset on the creation of the security interest and the notion of providing evidence of the ownership of the land in question.

On the account of getting the raw formation of every aspect of the completion of the sale, the owner has the no say on the title but on the security for which they have registered in this set. The streamlining is seen be done in this sector of law where it would be very difficult for one to register two types of interest on the same property even if there are two sets of transactions to be brought on board. Giving this statement a second thought and referring to the Maiden’s case, the fact that the loaner was the first to register the security interest, the other party who is the sole owner of this machine would not be allowed to register the interest because this would be tantamount to the conflict of interest. In this case, the judge would have judged this connotation differently were it that the Queensland could have registered their security. Correspondingly, the with this information about the security interest in the registry, Maiden would not have secured the loan since upon the trial of registering the security interest they would have been told that the machine indeed does not belong to Maiden company and hence they would have removed it from the list of collateral.

From the above explanations, it is clear that the inception of the PPSA is to create high level of information sharing and bring on board the advent of clear distinction of the treatment of land and the personal property which is deemed to have security interest. The second portion of the transfer of land is through clear cut payment of the value of the land by monetary means to the seller by the buyer[11]. In this scenario, it is expected that no security interest to be registered. Therefore it is only proper that the land title ownership would prevail[12]. This decision is deemed to be quite just and understandable since from the two parties, the only transaction that occurs is the exchange of value for cash. And therefore there are no profits that are recorded in this stance. For these reasons, the land is perceived as a personal property for which is deemed not for business but for domestic purpose. Additionally, it implies that that the land that is bought for resale does not fall under the category of personal property but a security interest. Land can therefore be transformed from personal property to security interest through commercialization.

The commercialization of the land has varied steps for which it is deemed successful to understand the whole context of difference between personal property and land. On a wider perspective it is evident that the owner of the title is given less choice to decide on their goods. The tile ownership is therefore less dominant when it comes to changing the land into personal property. Once a particular land is leased out, it is the sole discretion of the lessor to make sure that they have the direct perfect interest on the land. This concept is because; the land has now been transformed from a mere gain on the capital through appreciation to transactional gain. It now turns out to be a personal property for which the owner has the interest. In this line of thought a clear distinction is drawn between land and personal property[13]. In the discussion of land, the ultimate gain that one can bank on is the notion of gain on the capital which is the land appreciation. On the account of personal property, it is a factual point that the interest must be noted. In this advent, there has to a transaction that would be used in making sure that the owner registers the interest. The transactional bit of this personal property binds the two parties concern in order to gain a profit and not a capital gain as accentuated by the ownership of land.

The comparison of Australian PPSA to that of Canada, New Zealand and the United States

PPSA illustrates upon Article 9 of the Uniform Commercial Code (UCC) in the USA as well as editions of constitutional Article 9 in New Zealand and in that nation’s regional Personal possessions Security Acts. on the other hand, the real momentum for Australian elected officials to press on with the innovative law was the efficacy fashioned by the New Zealand private Properties Securities Act of 1999 (NZ), that took effect in the year 2002[14].Hence, our country has now joined the Canada United States, and New Zealand with a all-inclusive system for distinguishing, registering, and implementing security interests over private property. The New Zealand PPSA founded a single modus operandi for the mustering of security interests in personal possessions and fashioned a centralized computerized register.

The fresh Zealand private Property Securities schedule is a computerized register accessible to the community every single day, which gives online search, registration and preservation of financing records. It is a catalog that persons can confirm at any point in time to see their position Vis a Vis their individual property what merchandise are protected and to what supplies another supplier can probably obtain a superior right. Recording a security on the New Zealand private Properties Security database costs only $3. Together the Australian PPS Register  (PPSR) and Australian PPSA , are obtainable as of January, 2012, are anticipated to imitate those of New Zealand and, consequently, as highlighted by the Australian lawyer office, to complement Australian set of laws with New Zealand’s to benefit and assist trans-Tasman dealing opportunities[15].

Certainly, New Zealand and Australia are even inculcating a single PPSR as fraction of a wider trans-Tasman “synchronization program” that owes to be accomplished by 2014[16]. The growth of a single register will allow any dealing or person carrying out business in both New Zealand and Australia to register only once in lieu of trans-Tasman operation. The leading predicament facing the efficiency of the PPSA is malfunction to register; a solitary trans-Tasman PPSR will make possible that learning curvature. The decree has performed well in Australians and New Zealand determined to trail suit partly since New Zealand accounted that the restructuring codified in its new PPSA[17] “culminated in to increased conviction and assurance to the parties in marketable transactions where individual property is utilized as a security attention and simplicity where competing safekeeping interest is a subject”. The New Zealand Attorney General supported the Australians to complement their private property security regulations with those of United States so that productions will be working under analogous guidelines and operating modus operands.

Likewise, such harmonization of securities laws amongst Australia, the United States and Canada will benefit any commerce conducting deals within this international background. Businesses that spotlight on credit administration, financiers who manage in industries where commodities and services are produced without passing complete ownership such as retail, telecommunications, and IT equipment suppliers, transport farmers, software developers and manufacturing, all will advantage from the new regulation as the centralized listing regime begins over the next 24 months of changeover[18]. A private property security administration with contemptible, effortless online access will allow doing trade in Australia a smoother progression. The major case for the original PPSA is the objective of facilitating “more contemptible, easier, simpler, faster, and safer” deals. As stated above, it integrates some of the organizing thoughts of Article-9 of the standardized Commercial Code; distinctively, the Australian PPSA assembles allow for practical treatment of secured operations (“uniformity”)[19] and rational allowance for resourceful design of such contracts (“flexibility”).

The new commandment replaces the pandemonium  of past protected transactions commandments by providing for restructured, simplified, predominantly uniform, and much convenient to apply rules for the establishment, enforcement, and precedence position of contextual security interests. The Australian PPSA instigated and the PPSR obtainable first in October 2011. The intermediary issues discussed, that have happened attest to the reasons as to why the Australian administration took until the last instance January, 2012 to “go live” with the chronicle. The Australian administration will have had to modify the projected Act if it had not commenced by February, 2012. But that improbability has been substituted with an embrace of the new authenticity by attorneys, monetary organizations, and worldwide businesses.

Recommendation

 The recommendation is that the Australian administration should spend time and attempt in improving self-help principles and tutorials for small enterprises, both Australian and globally, such that support from legal guidance is not indispensable for individuals and small units. Since the world financial system is based on recognition secured business deals keeps the viable world going a fundamental understanding of the extent of the newly amended object 9 of the UCC[20] is elementary for any company administrative in the United States. The latest the New Zealand PPSA and Australian PPSA can assist international productions understand the stipulations and extent of Article 9 of the UCC[21]. Conversely, marked differences amongst the dissimilar security regulation governments in the New Zealand, United States, Australia and Canada, continue to fashion confusion and indecision, specifically those fractions of the commandments that transacts with fixtures, retaining of title and intellectual property issues.

Conclusion

In conclusion, the inception of the personal property security act 2009(PPSA) has culminated into the creation of a platform of an online registration of Personal property security. Under this regime, it is a requirement that those who have the personal interest in the property must register their interest so they can have the first hand claim to the property in accordance with the law[22]. The real meaning of personal security interest is the interest that emanates from the personal property that is expected to be authenticated by a transaction that substantially accentuates performance of an obligation or secures payment. This is with no regard to the type of transaction or the real identity of the person who possesses the title of the property. Additionally, this law includes both the intangible and the tangible property that is owned or possessed by the various types of legal entities[23]. In this prospect, the property might include the goods, money, hire purchase agreements, motor vehicles, long terms leases and retained titles among others. In the description of the personal property, the law according to PPSA excludes the various dealings that revolve around fixtures, land and buildings and this transcends to the ownership and the sale of buildings attached to the land and the land itself. This paper gives a comprehensive comparison between land and personal property. This analysis takes a look at how the interests in personal property affect the ownership and act it. Land is discussed with regards to acquisition and the advent of capital gains that emanates from it therefore distinguishing it from the personal property.

Bibliography

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[1] Spigelman, Justice James. “The intolerable wrestle: Developments in statutory interpretation’(2010).” Australian Law Journal 84: Pp. 822.

[2] Whittaker, B., Dealings in Collateral under the Personal Property Securities Act 2009 (Cth)—In Search of a “Harmonious Whole”’(2013). Journal of Banking and Finance Law and Practice, 24, p.203.

[3] Whittaker, B., Dealings in Collateral under the Personal Property Securities Act 2009 (Cth)—In Search of a “Harmonious Whole”’(2013). Journal of Banking and Finance Law and Practice, 24, p.203.

[4] ZiegeL, J. “Floating Charges and the OPPSA: A Basic Misunderstanding”(1994).” Can. Bus. LJ 23: 470.

[5] Hegarty, Peter, Nicholas Newton, and Rob Lawson. “The Maiden Civil Case.” (2013): Pg.6.

[6] McCracken, S., When is a “Buyer” a “Buyer”? Solving Riddles When New Legislation Confronts Established Concepts’ in Shelley Griffiths, Sheelagh McCracken and Ann Wardrop, Exploring Tensions in Finance Law: Trans-Tasman Insights (Brookers, 2014).(2014). Adelaide Law Review, 35, p.91.

[7] Loxton, D., New Bottle for Old Wine? The Characterisation of PPSA Security Interests’(2012). Journal of Banking and Finance Law and Practice, 23, p.163.

[8] In the matter of Maiden Civil (P&E) Pty Limited et al, 2013 N.S.W.S.C. 852 (2013),pg.145

[9] McCracken, Sheelagh. “Getting to grips with the reforms to personal property securities law.” Commercial Law Quarterly: The Journal of the Commercial Law Association of Australia 25, no. 3 (2011): Pg.3.

[10] In the matter of Maiden Civil (P&E) Pty Limited et al, 2013 N.S.W.S.C. 852 (2013), pg.29

[11] Gedye, M., 2013. Hoary Chestnut Resurrected: The Meaning of Ordinary Course of Business in Secured Transactions Law, A. Melb. UL Rev., 37, p.1.

[12] Loxton, D., New Bottle for Old Wine? The Characterisation of PPSA Security Interests’(2012). Journal of Banking and Finance Law and Practice, 23, p.163.

[13] McCracken, S., 2014. The personal property security interest: Identifying some essential attributes. Law in Context, 30, p.146.

[14] Grenon, Aline. “Canadian Bijuralism at a Crossroad: The Impact of Section 8.1 of the Interpretation Act on Judicial Interpretation of Federal Legislation.” Osgoode Hall LJ 51 (2013): 501.

[15] Rabobank New Zealand Ltd v. McAnulty, 2010 N.Z.H.C. 1534 (2010).

[16] Brown, David, and Monika Gajic. “Security Briefing: Liens and the PPSA.” Insolvency Law Bulletin August 14 (2012). Pg.154

[17] ORIX New Zealand Ltd v. Milne, 2007 N.Z.L.R.3 637 (2007).

[18] Wappett, C. J. “The Personal Property Securities Act: Securities law isn’t what it used to be.” (2011). Pg. 192

[19] Aitken, Lee. “Forget everything your mother told you about property law: the’functional’approach to personal property security.” Law Society Journal: the official journal of the Law Society of New South Wales 49, no. 1 (2011): Pg.56.

[20] Grenon, Aline. “Canadian Bijuralism at a Crossroad: The Impact of Section 8.1 of the Interpretation Act on Judicial Interpretation of Federal Legislation.” Osgoode Hall LJ 51 (2013): 501.

[21] Uniform Commercial Code

[22] Bozzi, Claudio. “PERSONAL PROPERTY SECURITIES ACT.” Australian Commercial Law (2015): Pg.203.

[23] Brown, David, and Monika Gajic. “Security Briefing: Liens and the PPSA.” Insolvency Law Bulletin August 14 (2012). Pg.154