Commercial and Personal Property law


Bob Smith is a builder who has recently won what he hopes will be a lucrative contract.  Bob Smith needs to employ an apprentice to assist him perform the work required under the contract.  For this purpose, Bob Smith needs to borrow $10,000 by way of additional working capital.


In order to borrow the additional working capital, Bob Smith offers a financier, Small Lender Ltd ACN 689 202 739 (‘Small Lender’), security over a bobcat that Bob Smith already owns.  Bob Smith’s bobcat is not subject to any existing security interests.  The bobcat is purpose built for small building projects and has the following specifications:

  • Engine Type: Diesel
  • Horsepower: 55.2 kilowatts (55,200 watts)
  • Tipping Load: 2,440 kg
  • Travel speed: 11.4 km/h
  • Operating Weight: 3,656 kg
  • Vehicle Identification Number (VIN): 6HGCG165


On 31 May 2020, Bob Smith entered into a Loan Agreement with Small Lender.  Under the terms of the Loan Agreement, Small Lender agreed to advance the sum of $10,000 to Bob Smith in exchange for Bob Smith granting a security interest over the bobcat in favour of Small Lender.  The Loan Agreement also provided that Bob Smith is to repay the sum of $10,000 to Small Lender over a five (5) year period together with interest at the rate of 10% per annum.  The Loan Agreement described the bobcat by reference to VIN 6HGCG165514418702.  On that same day, prior to making the advance of the $10,000 to Bob Smith, Small Lender registered a security interest over the bobcat on the Personal Property Securities Register (‘PPSR’) as follows:


Registration details:
Registration Number: 498432109765100
Start Time: 31 May 2020 11:00 am (Canberra time)
End Time: 31 May 2025 10:59am (Canberra time)
Secured Party: Small Lender Ltd ACN 689 202 739
Secured Party’s Address for the giving of notices:
Collateral type: Consumer Property
Collateral Class: Motor vehicle
Vehicle Identification Number (VIN): 6HGCG165514419702.
Description: One (1) bobcat (Engine Type: Diesel, Horsepower: 55.2 kW, Tipping Load: 2,440 kg, Travel speed: 11.4 km/h, Operating Weight: 3,656 kg) as more particularly described in a Loan Agreement between the Secured Party and Bob Smith dated 31 May 2020.
Purchase Money Security Interest: No
Proceeds: Yes – all present and after acquired property
Giving of Notice Identifier: 64836


On 31 July 2020, due to financial difficulties in meeting payments to sub-contractors and desperate to raise some cash, Bob Smith sold the bobcat for $35,000 (which was market value) to Jones & Nephew Pty Ltd who will use the bobcat to dig trenches as part of their construction business.  Jones & Nephew Pty Ltd did not conduct a search of the PPSR before buying the bobcat and were not aware of Small Lender’s interest in the bobcat.


On 21 August 2020, Bob Smith entered bankruptcy.  As part of the Trustee in Bankruptcy’s investigations, the sum of $8,000 is discovered in Bob Smith’s bank account being all that is left from the proceeds of sale of the bobcat.


Your group is required to advise your supervising partner in relation to each of the three (3) questions set out below.




For the purpose of answering the three (3) questions that follow, you should make the following assumptions:

  • Bob Smith has not been allocated an ABN in relation to his building work.
  • The Loan Agreement dated 31 May 2020 between Small Lender and Bob Smith has been properly signed and witnessed.
  • Small Lender lent Bob Smith the amount of $10,000 as further working capital under the Loan Agreement dated 31 May 2020 between Small Lender and Bob Smith. Small Lender is currently owed the amount of $10,232 by Bob Smith being comprised of the original loan of $10,000 and accumulated interest of $232.
  • The amount of $8,000 in Bob Smith’s bank account is wholly derived from the sale of the bobcat.
  • Small Lender has complied with its obligations in relation to a verification statement as imposed by s 157 of the Personal Property Securities Act 2009 (Cth).



  1. Under the Personal Property Securities Act 2009 (Cth), what is the nature of the security interest held by Small Lender?                                                                                                               (14 marks)
  2. Under the Personal Property Securities Act 2009 (Cth), can Small Lender claim an interest in the bobcat sold to Jones & Nephew Pty Ltd?                                                                         (10 marks)
  3. Under the Personal Property Securities Act 2009 (Cth), can Small Lender claim an interest in the $8,000 in Bob Smith’s bank account?  (Only complete Question 3 & no more than 300 words)                                                                                (6 marks)


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