THERE has been much furore recently about the National Security Interests in Personal Property (NSIPP) Registry and persons trying to run from or ascribe blame for what is now perceived to be a blunder….. but has there really been a mistake?

Minister Anthony Hylton recently stated in a radio talk show, in essence, that the recent newspaper reports alerted him to the error and that the public search feature was never intended to be available to the general public. However, I do not agree with the essence of that statement. The public search feature should be available to any person, whether they be an individual or a business, and whether they are involved in the business of lending money or not.

The United Nations Commission on International Trade Law (UNCITRAL) recommends in its Legislative Guide on Secured Transactions that “The Law should ensure that… (f) the information provided on the record of the registry is available to the public; (g) [a] search [of the registry] may be made without the need for the searcher to justify the reasons for the search; (h) notices are indexed and can be retrieved by searchers according to the identifier of the grantor; (i) fees for registration and for search, if any, are set at a level no higher than necessary to permit cost recovery; (j) if possible, the registration system is electronic. In particular….. registrants and searchers have immediate access to the registry records by electronic or similar means, including the Internet and electronic data interchange.”

The law itself is certainly consistent with these recommendations and was to that extent praised by the team from the Organization of American States (OAS) which was assisting the Government in the review of the legislation.

The Security Interests in Personal Property (SIPP) Act is novel in the sense that it is a secured-transaction model based on substance not form and is purely electronic. Secured transactions using personal property, however, are not new to Jamaica and neither is the ability of the general public to carry out a public search in relation to such a secured transaction. Prior to SIPP, most forms of security documents were required to be registered in a public registry regardless of who was giving the security, and those documents were accessible by the general public.

If the security was being given by a company, the Companies Act required particulars of the charge, with an actual copy of the charge to be filed on the public register. Any person who knew the name of that company could carry out a search on that public register and get a copy, not only of the particulars of the charge, which included the names and addresses of the debtor company and of the secured creditor and the amount of the indebtedness, but they could also obtain a copy of the actual security document itself with the mere knowledge of the name of the company.

Where the debtor was an individual, the security document would in most cases need to be filed at the Island Records Office. The most common security document then being the Bill of Sale also required the names and addresses of the debtor company and of the secured creditor, the amount of the indebtedness and that a detailed listing of the personal property given as security must be listed in the Bill of Sale, a copy of which must be recorded at the Islands Records Office. Like the Companies Registry, documents filed at the Island Records Office are also available to the general public, who with the knowledge of the name of the person, could request a search and actually obtain a copy of the security document. The Island Records Office, however, for the most part, is still a manual database, and so it is often very difficult to find documents of this nature without additional information such as the folio details or the time of the actual registration.

It is therefore inaccurate to think that this type of information was not previously accessible publicly. It was. In fact, SIPP requires less information to be made available, not more. It does not require the secured creditor to make the actual security document generally available. They are free to do so if they wish but are not required to do so. It does require: (a) the name of the debtor, the debtor’s residential or business address and taxpayer registration number; (b) the name and business or residential address of the secured creditor; (c) the amount of the principal indebtedness or other obligations secured; and (d) the description of the secured property to be included in the notice and made publicly accessible.

All that the NSIPP Registry has done is to make this information more easily accessible to all. This ease of access was a deliberate aim of the secured transaction regime, as it is intended to make it easier for persons to extend credit to others.

So what is our concern? There can be no doubt that in signing a security document the debtor would expect that the secured creditor would do all that is necessary under the law to perfect its security interest, and this has always meant that the information would be accessible to the public.

The concern therefore must simply be that some of this information is now too easy to access, for example, a person’s taxpayer registration number. However, when a search was done, the TRN was not revealed. The birth date? Well, that information is optional anyway. Is it of concern that the amount of the indebtedness can now be easily seen? This, however, was always available publicly, and was felt to be important particularly in light of the requirements under the Stamp Duty Act that the creditor was only secured up to the amount for which the document was stamped to cover. The address of the debtor or the creditor? The name is in fact the critical piece of information and there is flexibility to use either a residential or business address for the debtor or the creditor.

So if the concern is really only that with the Internet, the information is now made too easily accessible, I think we need to tread very carefully, so as to ensure that we do not undermine the very purpose of the system. I am sure that there are several models out there that can be considered so that we ensure that the search feature remains accessible to the general public (and not a select few so that we then have to determine who should be entitled to the information). Perhaps the answer may be to require persons to identify the debtor by both the name and the TRN in order to be able to carry out the search: the argument being that if you are thinking of acquiring something from someone or lending money to someone, you will be able to get from that person both their name and TRN. Alternatively, perhaps there should be differing levels of access to the information: that is, if all you have is the name then all you can find out is whether or not a notice has been filed and its date of expiry. If you have the name and the TRN then you can find out the description of the property charged and if you register in the system so that there is a trail of who has accessed the information, then you can obtain a copy of the actual notice which has been filed.

Let us proceed carefully in this respect and not throw out the baby with the bathwater.

Hilary Reid is a Partner at Myers, Fletcher & Gordon and is a member of the firm’s Commercial Department. Hilary may be contacted via hilary.reid@mfg.com.jm or you can visit the firm’s website at www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.