Question 1 (a) Australian laws relating to personal property securities (“PPS”) have been messy for years, based on often incomplete state records which have never been centralised. The major rationales for the reforms are that the previous laws were inflexible, outdated, and prevent product innovation.  Personal property incorporates intellectual property , an important repository of wealth in the 21st century.
This causes a need to incorporatefor flexible and modern laws which encourage consumers and producers to “conveniently … raise finance …on the security of such property” which encourage investment which in turn leads to the creation of wealth. The old PPS laws are majorly derived from 19th century legislation borrowed from the common Law of England. The main modernising legislation is Article 9 the Uniform Commercial Code (UCC) of the United States . As in the USA, there is a need to reduce the costs associated with the Consumer Credit Code.
The UCC is meant to ensure efficiency and cost savings, although the strange habit Americans have of doing things at County level increases filing costs and complexity, whilst the habit of having different registries for boats, cars, mobile homes and all-terrain vehicles in Pennsylvania for example makes the concept of a uniform “certificate of title” for a vehicle ludicrous.  Previous legislation had gaps and contradictions especially on the security interest.  For example, as noted by Craig Wappett,
AJ Smeman Car Sales v Richardsons Pre-run Cars and Kayls Leasing Corporation Proprietary Limited v Fletcher neither the Bills of Sale and Other Instruments Act 1955 (Qld) nor the Hire-Purchase Act 1959 (Qld) would apply to instruments entered into outside of Queensland in respect of goods subsequently brought into Queensland.  The new process of registration is still cumbersome and confusing.  There are mMany disadvantages are associated with filing the instruments to evidence a security interest.
For example, until a security holder signs a security agreement, he/she is precluded from obtaining a registration.  The current PPS laws on PPS pose some difficulties to financiers especially “when taking security over receivables and inventory”.  In most cases because of the PPS requirements applied on PPS, small businesses find it hard to get the required financing, compared to the USA small business can acquire financing since personal property is not regarded as a major security.
Prospective purchasers and lenders involved in personal property need to see, easily and cheaply, whether the involved property had any associated burden.  The PPSA, 2009 is a comprehensive legislation and puts the onus on the party who has a ‘security interest’ in the personal property to put it on notice to all concerned [in]… the personal property, about the charges which are going to be [registered…] by registering them online into the Personal Property Security Register (PPSR).
This will not only secure the interests of the buyer, [but]… any third party …who has already been approached and has partial interest tied up with the property. The new laws are determined not only for movable and immovable properties, but also for tangible and intangible assets, which can be secured as mortgage or as collateral securities by borrowers, whether individuals or corporations. As such, the PPSA also covers the sale and purchase of companies and businesses, especially those which have a credit line history.
This Act will also ensure that the vendor will not be able to sell the business until all dues of the creditors have been settled…. Instant online registration will ensure that lenders and creditors are aware of any change in ownership …. Interests of secured creditors are of special concern in … bankruptcy proceedings as their rights take precedence over the rights of the unsecured creditors…”. (b) Before the Personal Property Securities Act 2009 (Cth) was devised, different registers and law that governed personal property securities were operated independently from each other. 13] The reform carried on PPS allows the PPS (2009) law to be applied differently depending on the transaction being carried.  For example, a transaction carried with the aim of securing a payment is categorized as a security interest. All the transactions even those which are not treated as a security interest will have to be treated the same. As a result, the levels of transparency and certainty on third parties would be improved. The PPS reforms have ensured that there is a national electronic register which will cater for all security interests in personal property.
The register will be used as a notice board of the “registered personal securities” thus not providing conclusive evidence of priority.  The PPS Act has affected securities granted in regard to leases, hire purchase agreements, chattel mortgages, floating and fixed charges, and to consignments of agreements and goods that incorporate title retention among others. Another major feature of the PPS Act reform is perfection to prioritize security interests over other related security interests through control, possession, and registration. 16] For instance, contracts negotiability and assignability of contracts have been changed and made more effective. The concept of security interest has been broadened to the extent of including traditional securities such as mortgages and charges.  which will allow the borrowers to be in a position to get funds. The security interest will include transactions which secure performance and payments of an obligation which are not currently classified as securities such as hire purchase agreements, leases, and retention of title arrangements. 18] Now, some transactions of the under the general legislation that are not recognized as security interests will be available or registered under the PPS register. Furthermore, ASIC will no longer be used to separately register PPS interests in corporate assets. Under the old laws, the buyer or institute had to search the entire database of ASIC to locate the status of an asset and the name of any interest holder. Currently, as registration is mandatory at the time of transfer of ownership and because it is to be done online the information is updated instantly and s available to interested parties. As the classification heads under which the assets are to be registered in the PPSR have been confined to 9, it is easier to put the asset under the appropriate head – or more than one if need be. If the asset falls under more than one head, then it can be registered under all the three heads so that anyone searching it under one head knows its combined liability under the other applicable heads. There is also the option of registering the security interest under the ‘Collateral’ head for assets already pledged or mortgaged.
No buyer of any asset need depend on the certification given by the vendor. (c) Article 9, UCC has been adopted in the modeling of the Australian reforms.  In addition, the New Zealand and the Canadian personal property security legislation have been adopted. The reforms aim at flexibility and uniformity. Article 9 of the UCC applies security interests developed by contract such as chattel trust, chattel mortgages, assignment, pledge, trust deed, consignment intended as security, and title retention among others. 22] The flexibility principles adopted allows security agreement to be held between the security holder and security insurer. These were lacking previously, but there has been a change in the categorization of secured property which is based on the personal property security. The same is reflected in Article 9 which classifies security based on its purpose, not its legal form.  The current reforms have allowed the movement of the secularized assets which are governed by the PPS.  This gives secularized transfers a benefit of legislation.
Under the general law, purchase money security interests (PMSIs) have received very limited recognition. Borrowing a leaf from Article 9), the PPS Act allows the registration of personal property would be necessitated which would determine “priorities between competing security interests in the same collateral. ” Under the general law, the PMSIs is subjected to certain conditions for example under the Abbey NBS v Cann which as has been used as a foundation of elevating the PMSIs. The lack of proper guidelines on PMSIs has prompted for the changes based on article 9.
In Australia, fixtures are defined as structures which are built on land but cannot to be used for productive purposes. Hence all types of structures, buildings and dwellings are fixtures, but crops are not fixtures. Fixtures in Australia are covered under the provisions of the Common Law. Similarly, land is also out of the purview of the PPSA. The USA has enforced in all of its 50 states the Uniform Commercial Code, which it uses for security interest governance through its Article 9, which regulates, creates and enforces the security interests in movable and intangible properties and also ‘Fixtures’.
If Australia’s PPS had been drawn on the basis of either the American UCC or Canadian PPSA, both of which use it for fixtures, then Australian PPSA, 2009 would have also included fixtures as part of the Act for governance purposes. The Americans have also not included immovable property under Article 9 of the UCC for governance of the security interests as these are dealt with by Real Property Laws.
In fact the American system is very ambiguous in security interests, because the interests of the real property owner are settled under Article 3, whereas the security interests of the lender on the same real property pledged as collateral with him are covered by Article 9. Question 2 (a) The major danger associated with internet banking and purchasing is transactions risk. With the increase in fraud cases, it is dangerous to carry out internet banking or purchases for risk of losing finances. The current transactional risk arises from negligence, errors and lapses in security. 30] Lack of modern sophisticated internal controls increases the danger. As a result, transactional errors increase since the interfaces used in internet banking use new platforms which are used to link with legacy systems.  Third party providers of internet banking increase the dangers associated with the transaction risk as the financial institution loses control over the third party. In other words, lack of a seamless process and connection of the systems with third party gateways increase transactional errors.  Information security risks have been regarded as a major risk to internet banking. 33] Supposing that an institution has lax information security processes, it is exposed to fraud, data destruction, data theft, denial of service attacks, viruses, insider attacks and hackers.  The availability of internet from everywhere and lack of regulatory laws associated with negligence, fraud, and hacking make internet purchasing and banking even riskier. Financial institutions are exposed to interest-rate risk and credit risk. For instance, internet banking allows customers to apply for credit from everywhere without verification. 35] This exposes the bank to credit risks and losses since some customers may not have the required collateral. Furthermore, different countries have different jurisdiction applied which makes it hard to apply the laws. Interest rate risks are associated with internet banking especially where large pool of consumers deposit at once and the bank has to carry out exchange rate transactions. This exposes the bank to interest rate risks. If a bank exposes itself or creates deposit brokering on the available finances exposes the bank to price risks.
Expansion in securitization or loan sales through internet banking exposes the financial institution to fraudsters.  Security risks could emerge from the exposing the network being used for to malicious software and virus which may be used to render the system redundant. In the process, the customer loses money and confidentiality. (b) Who are liable for losses due to unauthorized transactions? Unauthorized transactions are those which take place without without the consent and knowledge of the user. Frauds are not a one sided affair. The victim is often responsible because of his lax attitude.
In most cases, unauthorized transactions result from fraud especially from electronic transfers which include the use of credit cards and consumer electronic transactions. The owner of a card may be held liable for any of the unauthorized transition if the owner contributed to the loss.  Upon proof on balance of probability that the card holder contributed to the loss, he/she is held liable. For example, if a an electronic card owner has the PIN of the card written on it, or discloses the PIN or makes it available to a third party, then he/she is liable for the losses resulting from unauthorized transactions.
Or. when the account owner delays unreasonably to notify the institution of the unauthorized transaction, he/she is held liable for the unauthorized transactions.  . ASIC has regulated to protect an account holder from some unauthorized transactions. ASIC states that: No account holder liability in respect of fraudulent or negligent conduct of account institutions’ employees or agents; forged, faulty, expired or cancelled access method; losses occurring prior to receipt of access method; or incorrect double ebit transactions` All these activities happen without the knowledge of the card or account holders thus the exemption. If the user access method results to the unauthorized transactions before the user were issued with a code or device to have access, then the user cannot be held liable for the losses. ASIC mandates that the financial institution must establish the mode in which a card was issued. Nonetheless, if the code of the device was made available through the users email or mail, no proof of transactions could be made on this mode of delivery.
If the card or account holder notifies the card institution that the card or device has been stolen, lost, security related to the card codes have been breached, and then the card holder is exempted from any liability. An account holder cannot be held liabilityis not liable if that the card holder he/she was not a party to the loss.  Lastly, if the transactions were carried and incorrectly debited by the financial institution, then the account or card holder cannot beis not liable for the unauthorized transactionsm. 42] BIBLIOGRAPHY Aidan Drinkwater, The rise and fall of purchase money security interests at general law and under Article 9 regimes, (2010) 21 JBFLP 5 ASIC , Electronic Funds Transfer Code of Conduct, As revised by ASIC EFT Working Group (2008) Campbell, Christian, Legal Aspects of Doing Business in North America  III (Lulu. com, 2009) Craig Wappett, ‘Personal Property Securities’ (Chapter 19) in: Mallesons Stephen Jacques (ed) Australian Finance Law (5th ed, 2003) pp. 473–508(36p).
Cseti, Del, Understanding Personal Property Securities Law (CCH Australia Limited, 2010) CCH, Australian Corporations & Securities Legislation 2011: Corporations Act 2001, ASIC Act 2001, related regulations (CCH Australia Limited, 2011) Clark, Eugene, Cho, George, Hoyle, Arthur, Cyber Law in Australia (Kluwer Law International, 2010) Elisabeth Wentworth, Essential Banking Law and Practice, Banking and Financial Services Ombudsman Ltd Ganesh Ramakrishnan, Risk Management for Internet Banking (n. ) http://kuainasi. ciens. ucv. ve/cisa/articles/v6-01p48-50. pdf Gup, Benton E, Banking and Financial Institutions: A Guide for Directors, Investors, and Borrowers (John Wiley & Sons, 2011) James Popple, Personal Property Securities Reform, LexisNexis Professional Development (n. d) http://cs. anu. edu. au/~James. Popple/publications/papers/clc17/clc17. pdf Law Reform Commission New South Wales, Discussion Paper 28 (1992)- Personal Property Securities http://www. lawlink. nsw. gov. au/lrc. nsf/pages/DP28CHP3
Michael Linehan, David Walker and Philip Vickery, Personal Property Securities reform in Australia, Insight Corporate & Commercial (2010) http://www. holdingredlich. com. au/assets/docs/Insight%20-20Corporate%20Commercial%20-%20March%202010. pdf PPSA, Personal Property Securities Reform Information (2012) http://www. nab. com. au/wps/wcm/connect/nab/nab/home/Business_Solutions/8/28/ Richard Glenn, Review of the law on Personal Property Securities:Discussion Paper Possesory Security Interests (2007) http://www. ag. gov. au/Documents/Personal+Properties+Security+Paper. df Sandra Henderson-Kelly, Australian Personal Property Securities Reform and Secured Finance In The Aviation Industry, ALAANZ 28th Annual Conference (2009) Tomasic, Roman, Bottomley, Stephen, McQueen, Rob, Corporations Law in Australia (Federation Press, 2nd ed, 2002) Tony Krone and Holly Johnson, Internet purchasing: perceptions and experiences of Australian households, Trends & Issues in Crime and Criminal Justice (2007) 330 ———————–  Craig Wappett, ‘Personal Property Securities’ (Chapter 19) in: Mallesons Stephen Jacques (ed) Australian Finance Law (5th ed, 2003) pp. 473–508. 2] Craig Wappett   Ibid  Law Reform Commission New South Wales, Discussion Paper 28 (1992) – Personal Property Securities < http://www. lawlink. nsw. gov. au/lrc. nsf/pages/DP28CHP3>  See for example the Report On The Uniform Commercial Code Modernization Act of 2001 Prepared by The Article 9 Task Force of The Business Law Section of The Pennsylvania Bar Association http://www. pabar. org/public/sections/corpco/pubs/pa9report. pdf  Law Reform Commission New South Wales, Discussion Paper 28 (1992) – Personal Property Securities  Craig Wappett  Craig Wappett   Craig Wappett 10] Ibid  Berna Collier, Reform of the Law on Personal Property Securities in Australia,2006 Insolvency Law Workshop, Canberra (2006).  Ibid 49  Michael Linehan, David Walker and Philip Vickery, Personal Property Securities reform in Australia, Insight Corporate & Commercial (2010) < http://www. holdingredlich. com. au/assets/docs/Insight%20-%20Corporate%20Commercial%20-%20March%202010. pdf  Law Reform Commission New South Wales, Discussion Paper 28 (1992) – Personal Property Securities  Berna Collier, Reform of the Law on Personal Property Securities in Australia (2006). 16] Michael Linehan, Personal Property Securities reform in Australia, Insight Corporate & Commercial (2010)  PPSA, Personal Property Securities Reform Information (2012) < http://www. nab. com. au/wps/wcm/connect/nab/nab/home/Business_Solutions/8/28/ >.  PPSA  CCH, Australian Corporations & Securities Legislation 2011: Corporations Act 2001, ASIC Act 2001, related regulations (CCH Australia Limited, 2011) 153  Cseti, above n1, 59 21] Law Reform Commission New South Wales, Discussion Paper 28 (1992) – Personal Property Securities  Sandra Henderson-Kelly, Australian Personal Property Securities Reform and Secured Finance In The Aviation Industry, ALAANZ 28th Annual Conference (2009)  Craig Wappett  Ibid  Aidan Drinkwater, The rise and fall of purchase money security interests at general law and under Article 9 regimes, (2010) 21 JBFLP 5  Ibid  Ibid   1 AC 56 cited in Christian Campbell, Legal Aspects of Doing Business in North America  III (Lulu. com, 2009) AC-19
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