The PPSA: The Continued Relevance of Conventional Legal Principles in Determining the Existence of a Security Interest

Abstract

The Personal Property Security Act 1999 (the “PPSA”) implemented a number of key changes in New Zealand’s law of personal property securities. One change was the introduction of an extensive definition of “security interest” that focuses upon the substance of the transaction rather than its form. Despite this, both the distinction between ownership and security, and some conventional rules that assist in determining whether a party is seeking to enforce their ownership of personal property or enforce a security over that property remain relevant. This is the important message of the Court of Appeal in JS Brooksbank & Co (Australasia) Ltd v EXFTX Ltd (in rec & liq) [009] NZCA 122. Focusing upon transactions involving the sale of goods, this article illustrates how notions of ownership and conventional contractual principles remain relevant in determining whether the transaction has created a security interest. The article also illustrates how conventional legal principles remain relevant in determining an associated issue, whether a debtor has “rights in” personal property so as to enable the “attachment” of a security interest to that property.