Curtin Law and Taxation Review Volume II, 2015 The Curtin Law and Taxation Review (CLTR) is a scholarly general law journal which also publishes articles that deal with taxation law. It publishes articles and case notes as well as book reviews in both general law areas and in taxation law. The Review’s scholarly works are directed to academic staff, legal scholars, practitioners, justice professionals and postgraduate researchers who have to deal with different aspects of the law. This volume has been edited at the Curtin Law School, Perth, Western Australia. The Editor-in-Chief for the Review is The Hon Justice James Edelman from the Federal Court of Australia and Professor Dale Pinto from the Curtin Law School is the Associate and Academic Editor. The Review also comprises an International Editorial Board of eminent national and international scholars from the European Union, United States, Australia and Asia which has been ably supported by its Student Editorial Board. Curtin Law and Taxation Review Volume II, 2015 Editor-in-Chief Justice James Edelman Justice of the Federal Court of Australia Associate and Academic Editor Professor Dale Pinto Professor of Taxation Law Curtin University, Australia International Editorial Advisory Board Professor Laurence Boulle, Associate Dean (External Relations) Faculty of Law, Bond University, Gold Coast Professor Ermanno Calzolaio, Dean of Law, University of Macerata, Italy Professor Marc de Vos, University of Ghent, Belgium Professor J Clifton Fleming, Ernest L. Wilkinson Chair and Professor of Law, Brigham Young University Law School, Utah Professor Paul Fairall, Foundation Dean of Law, Curtin University, Perth Professor Judith Freedman, Director of Legal Research, Oxford University Professor Henry Gabriel, Elon Law School, North Carolina Professor Mona Hymel, Arthur W Andrews Professor of Law, James E Rogers College of Law, University of Arizona Professor Michael Lang, University of Vienna Professor Gabriël Moens, Professor of Law, Curtin Law School, Perth Professor Adrian Sawyer, Professor of Taxation, University of Canterbury, Christchurch Dr John Trone, Adjunct Professor of Law, Murdoch University, Perth Professor Richard Vann, Challis Professor of Law, Sydney Law School Student Editors Donovan Castelyn Adrian Hanrahan Žemyna Kuliukas Yung Xing Leong Editorial Coordinator: Victoria Barker Articles ROMANCING THE PPSA: CHALLENGES FOR INSTRUCTORS IN TEACHING AND RECONCILING NEW CONCEPTS WITH TRADITIONAL NORMS * FRANCINA CANTATORE AND IAN STEVENS** Abstract Over the past two years the teaching of Personal Property Law has undergone a major transformation. At this point in time, after the end of the two year transitional period of the Personal Property Securities Act 2009 (Cth) (‘PPSA’) it is clear that the traditional common law principles now need to be examined in the context of a statute based approach. The PPSA has made significant inroads into the way personal property is dealt with in commercial transactions. Not only has the PPSA impacted on various types of security agreements such as mortgages, charges and pledges, but it also reaches into areas such as leases, liens and bailments. Probably the most important effect the PPSA has had on the way property ownership is perceived is the way it has disenfranchised the concept of nemo dat quod non habet, where personal property securities are involved. The dilemma for educators teaching in the area of * BA, LLB(Hons), MA, GDLegPrac, PhD, Assistant Professor, Faculty of Law, Bond University. ** BEcon, JD(Hons), LLM, Senior Teaching Fellow, Faculty of Law, Bond University. The authors wish to thank their research assistant, Marryum Kahloon, for her attention to detail and her invaluable contribution to the final version of this article. 2 Curtin Law and Taxation Review personal property transactions is to make sense of these ground breaking developments in a way students can understand. The challenge is to do so in a way that familiarises students with the traditional common law concepts, while teaching them the ground rules and intricacies of the PPSA as they apply to personal property. This article examines the challenges in teaching new statute-based law in relation to existing common law principles, and proposes a two-step approach: Firstly, it recommends a contextual teaching approach and secondly, it advocates a practice-based or experiential learning approach for educators. I INTRODUCTION The Personal Property Securities Act 2009 (Cth) (‘PPSA’) has made significant inroads into the way personal property is dealt with in commercial transactions. The area of Personal Property Transactions (‘PPT’) is an important area of property law taught in universities. Due to the impact of the PPSA, PPT requires a consideration of this innovative piece of legislation and the impact of a statute regulating personal property securities, in a context that historically has had a strong common law focus. In the past PPT generally involved teaching the principles and application of the Sale of Goods Act, the concept of nemo dat quod non habet (‘nemo dat’), bailment, property torts, retention of title agreements and charges. The introduction of the PPSA has altered that position significantly, and has challenged educators to marry new and unknown concepts with established common law practice, 1 to inform students about changes in personal property securities law. Not only has the PPSA impacted on various types of security agreements such as mortgages, charges, and pledges, but it also 1 For example, the generic concept of a ‘security interest’ described in s 8 is a new and ground breaking aspect of the PPSA. Romancing the PPSA 3 reaches into areas such as leases, liens and bailments.2 Probably the most important effect the PPSA has had on the way property ownership is perceived, is the way it has disenfranchised the concept of nemo dat (meaning ‘you cannot give what you do not have’), in commercial transactions where security interests exist in personal property. 3 The PPSA has effectively changed this long held principle; you can now give what you don’t have and ownership is no longer ‘king’.4 Ownership no longer means that a person will have the strongest property interest, if there is a registered secured party with a higher priority interest under the PPSA.5 As observed by Justice Allan in New Zealand’s High Court: [T]he registration regime introduced by the Act has altered the long-established priority principles grounded in notions of legal title. Irrespective of title, it is paramount that security interests be the subject of registration if priority is to be preserved.6 Relevantly, in one of the first cases decided in Australia in the PPSA arena, Justice Brereton also clarified that parties relying on ownership to recover personal assets can no longer do so and that the concept of nemo dat has been fundamentally altered by the provisions of the PPSA.7 2 See PPSA ss 8(1), 12(1), (2)(i), (3)(c). Also see below, Part II. 3 Bruce Whittaker, ‘Retention of Title Clauses under the Personal Properties Securities Act 2009 (Cth)’ (2010) Journal of Banking and Finance Law and Practice 273, 283–4. 4 Maiden Civil (P&E) Pty Ltd (in rec) v Queensland Excavation Services Pty Ltd (2013) 277 FLR 337 (‘Maiden Civil’). 5 PPSA s 55. 6 Waller v New Zealand Bloodstock Ltd [2005] 2 NZLR 549 (HC), 569 [98]. 7 Maiden Civil (2013) 277 FLR 337, 360–1. 4 Curtin Law and Taxation Review In Australia the PPSA is a relatively new piece of legislation,8 and follows the approach in the Canadian and New Zealand statutes, which preceded Australia. 9 For example, in 2004, owners of transportable buildings in New Zealand had to come to terms with this fundamental change in the law in the leading New Zealand case of Graham v Portacom New Zealand Ltd;10 as did the owner of the stallion Generous in Waller v New Zealand Bloodstock Ltd.11 Both property owners found that mere ownership did not provide protection within the statutory regime. This change alone can be a hard pill to swallow, especially for students, who may have learnt in property law that property is a bundle of rights and the owner generally has the strongest rights or ‘the biggest stick in the bundle’.12 The dilemma for educators is to make sense of these ground breaking developments in a way students can understand. The challenge is to do so in a way that familiarises students with the traditional common law concepts, while teaching them the ground rules and intricacies of the PPSA over the course of a semester. Additionally, statute-based law can be 8 The PPSA was enacted in 2009 and came into operation on 31 January 2012. The transitional provisions under ch 9 ceased to operate on 31 January 2014. 9 Each Canadian Province (except Quebec) has enacted separate legislation. The first was Ontario, with legislation enacted in 1967 and coming into operation in 1976: Personal Property Security Act, RSO 1990, c P-10. Most Canadian legislation is based on the Saskatchewan Model enacted in 1982: Personal Property Security Act, SS 1993, c P-6.2. 10 [2004] 2 NZLR 528. 11 [2004] 2 NZLR 549. 12 The ‘bundle of rights’ concept first accepted in Australia in the case of Minister of State for the Army v Dalziel (1944) 68 CLR 261, 268 (Rich J) and more recently referred to in Yanner v Eaton (1999) 201 CLR 351, 365–6 [17] (Gleeson CJ, Gaudron, Kirby and Hayne JJ). Romancing the PPSA 5 perceived as ‘dry’ by students and could present difficulties in interpretation and application, especially as many students have limited experience with commercial dealings. Jason Harris and Nick Mirzai suggest that the PPSA is a new law that breaks from the previous traditional common law regime thereby it would be ‘erroneous to commence its interpretation by starting with pre-PPSA forms’.