Racehorse TALK

This is off the RISA site.

Can someone explain to me how and why of all this?

Industry Announcements
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Important Information for Owners - 19 December 2011
PERSONAL PROPERTY SECURITIES ACT 2009
Introduction

Throughout the second half of 2011, RISA sought professional advice and facilitated an industry working group with the view to gaining clarity as to how the changes to the Personal Property Securities Act 2009 would capture racehorse ownership.

Advice to date has been that the broad wording of the PPSA in its present form could be interpreted so as to extend to arrangements between owners, trainers, agistment properties or any other entities that have care of the owners' horses. Therefore the Australian Racing Board, on behalf of the Industry, has made representations to the Attorney General pointing out that the broad nature of the PPSA may unexpectedly capture such arrangements and this appears to be contrary to the Government's intent. However, pending any decision by Government, it is recommended that these agreements (whether they be written or oral) should also be registered.

The information below is being provided as a broad overview and introduction to the PPSA for racehorse owners. It must be noted that the PPSA registry does not replace the requirement for owners to register the names and ownership of a racehorse with the Registrar of Racehorses (RISA) and the registration of leases, transfers of ownership with the Deputy Registrar (Principal Racing Authority) which are requirements under the Australian Rules of Racing for the purposes of administering the integrity of racing.

RISA's objective is to make all current and new racehorse owners aware of the PPSA legislation but it is recommended that you seek your own advice. Over the coming months, RISA with the Australian Racing Board will continue to seek clarity on how the law will capture racehorse ownership and how it can assist owners in the PPS registration process.
PPSA Overview

The new personal property securities regime (“PPS”) under the Personal Property Securities Act 2009 is currently scheduled to come into effect in Australia on 30 January 2012 and it is extremely important that all racehorse owners immediately become familiar with this new Commonwealth Government legislation that impacts ownership of many assets, including racehorses.

Currently there are more than 70 various Commonwealth, State and Territory Acts that regulate personal property securities. This single Commonwealth Act provides rules for the creation, extinguishment and enforcement of security interests in personal property and for determining priority among competing security interests.

The Act will be supported by a single national online register of personal property security interests called the PPS Register whereby ownership of assets such as racehorses can be recorded. This Register will replace the current numerous State, Territory and Commonwealth electronic and paper registers and existing information on these will be migrated to the PPS Register under the Act's transitional provisions.

Any racing or breeding leasing arrangements between racehorse owners and third parties may be deemed to be “PPS Leases” under this new law. Any owner leasing their horse to another party should register their ownership of the horse on the PPS Register. This is a separate process to lodging the usual racing lease document with RISA or a Principal Racing Authority.

There are transitional provisions for current owners of racehorses from the date of the commencement of the registry. Security interests created prior to this date of commencement are temporarily perfected for 2 years and do not need to be registered immediately.  There is no honeymoon period however on or after 30 January 2012 and so any PPS Lease entered into, an option exercised on or a variation to a pre-existing arrangement from this date must be registered immediately.
What is a “security interest” under the PPS Act?

A security interest is an interest in personal property provided for by a transaction that secures payment or the performance of an obligation (eg a charge over assets to secure a debt is the most common). The form of the transaction and the identity of the person who has title to the property do not affect whether an interest is a security interest.

A PPS Lease is a special type of security interest, because it deems a PPS lease to have arisen in certain cases, including where the goods are in a bailment situation.
What does the PPSA protect?

It protects your ownership of the horse. If you don't register your interest on the PPSA register whilst your horse is in someone else's care, a third party could register an interest over the horse and gain possession of it should the lessee or other carer strike financial trouble. (please refer to the article Personal Property Securities for Racehorse Owners, Lessees and Trainers - Don't Be Generous )
Does every Owner or Member of a Syndicate have to register a security interest over the horse?

Yes. This is because each owner's interest in the horse is not divisible and they have all entered into the security agreement. All owners would be named as the holder of the security interest (NB if they are a partnership under a ABN, then the ABN of the partnership is used and they are not individually identified).

If only 2 of the 10 owners/syndicate members registered as the security interest holder, then the registration is invalid, and despite appearing on the PPS register it is of no effect. This is because the whole of the indivisible asset (being the horse) has been leased, and the registration is misleading.
If a horse is leased to a group of owners including a syndicate, does each Grantor need to be nominated on the register?

Yes. Normally each grantor will need to be nominated on the register. This will depend however on whether they have a collective ABN (eg an ABN registered partnership), in which case only the collective ABN and name will be used.
What happens when a horse is leased and then the lease expires? Do the Owners need to do anything?

The PPS register would need to be changed to show the extinguishment of the lease as a PPS Lease. If the registration had not automatically lapsed by efflux ion of time, the owners would need to go on to the register and remove the registration or authorise the lessee to do so.
How will my privacy be protected when I make a PPS Registration?

The PPS Register will contain limited personal information. A person will be able to search the Register to determine whether personal property is subject to an actual or prospective security interest. Searching the PPS Register for any other reason will be deemed to be unlawful under the Privacy Act 1988.
What should Racehorse Owners do?

You should prepare to register your interests in all the horses that you own, including part shares, from 30 January 2012 with the PPS Register. You should also ensure that any other persons that shares an interest with you in the horse do the same. If 100% of each horse is not validly registered, then your interest may be jeopardised. To register your interest, you can set up an account now in preparation for the start date.

For the purposes of integrity and administration of racing it is still a requirement under the Australian Rules of Racing to register the name of the racehorse and ownership with the Registrar of Racehorses (RISA) and register syndicates, leases and transfers of ownership with the Deputy Registrar (Principal Racing Authority).
How is a PPS registration made?

Any person is able to register personal property on the PPS Register. Generally the person who makes the registration will be the secured party or its agent. People making registrations will need to provide information about the secured party, the person who is or has granted the security interest and the collateral that is or would be the subject of the security interest. The registration will need to describe the property so that it can be readily identified by any other person who searches the PPS Register. A verification statement will be sent upon completion of the registration, showing the registration details.

Users of the PPS Register can choose to transact as a casual user or an account user. When transacting on the PPS Register, there are three payment methods:

   1. pay as you go (PAYG)
   2. pre-pay, and
   3. credit.

If you wish to use the pre-pay or credit payment methods, you must create an account on the PPS Register. If you choose to transact on the PPS Register as an account user, you are able to create your account now and up until 15 January 2012.

If you do not create your account during this period, you will only be able to do so after the PPS Register becomes operational on 30 January 2012. (The PPS Register will not be accessible after 15 January 2012 until it commences operation on 30 January 2012.)

The cost to register a security interest is still to be confirmed but indications are that for a 7 year period the charge will be from $10-$25 and a registration with no end date will be up to $130. Search fees also apply.
Where do I go for further information?

PPSA website: www.ppsr.gov.au for Fact Sheets and tutorials.
Telephone: 1300 007 777
Email: enquiries@ppsr.gov.au
How much time do you have?

The law takes effect 30 January 2012, but you are best to begin preparations immediately, especially for any new Leases for your horse. At present all other racehorse transactions are also captured under the Act (such as owner/trainer, owner/agistment property and owner/pre-training provider etc).

Whilst the Australian Racing Board has sought exemption from the Attorney-General's Department, in the interim it is recommended that you should register all interests as described.
Information Sources

   1. Peter Mills, Principal, Macpherson+Kelley Lawyers, Level 14 324 Queen Street BRISBANE QLD 4000
   2. www.ppsr.gov.au

To receive RISA Updates on the PPSA

If you are interested in being kept informed of any updates that RISA is able to provide regarding security interests in thoroughbred racing and the PPSA please email your details to pps@risa.com.au
Disclaimer

The material on this notice is provided for general information only, and on the understanding that RISA is not providing professional advice on a particular matter.

This notice contains information that is intended to simplify the law for ease of comprehension. In addition, errors or omissions can occur in the preparation of notices. Therefore, before relying on the material, users should independently verify its accuracy, completeness, relevance for their purposes and that it is up-to-date.

Before any action or decision is taken on the basis of any material in this notice the user should obtain appropriate independent professional advice.

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