PART A (25 marks):

Shark Commercial Bank Ltd [Shark] entered into a written agreement with Motosaurus Ltd, a motor vehicle dealer, to set up a 'floor plan' arrangement to finance the stocking of vehicles in the Motosaurus used car yard. This involved Motosaurus Ltd purchasing vehicles in its own name but Shark would have title to the vehicles transferred to them and in exchange provide 90% of the purchase price to Motosaurus. While Motosaurus would have possession of the vehicles as bailee, Shark finance had a right to take possession of the vehicles at any time without notice. Motosaurus would pay a monthly hire fee to Shark for each car financed by the floor plan, until the vehicle was sold. Once the vehicle was sold Motosaurus would pay the amount owed to Shark on the vehicle and the balance would represent the Motosaurus profit on the transaction. The proceeds would be deposited in the Motosaurus account held with Shark.

In summary, Shark entered into a written agreement with Motosaurus where it would provide finance to enable Motosaurus to purchase vehicles where the arrangement transferred title to Shark but Motosaurus remained in possession as bailee with an obligation to pay a monthly hire fee or rental.

The written agreement between Shark and Motosaurus included the provision:

Motosaurus grants to Shark a security interest in all of its assets including present and after-acquired property of any kind, including all property in which Motosaurus as grantor has rights, whether now or in the future, including but not limited to serial numbered collateral which may come into its possession from time to time.

However Motosaurus was struggling financially. They were reluctant to attempt renegotiation of their arrangement with Shark because it may have meant Shark would repossess their vehicles. So they approached Shonky Ltd to arrange a loan.

The written agreement between Shonky and Motosaurus included the provision:

Motosaurus grants to Shonky a security interest in all of its assets including present and after-acquired property of any kind including all property in which Motosaurus as grantor has rights whether now or in the future, including but not limited to serial numbered collateral which may come into its possession from time to time.

Some of the vehicles purchased by Motosaurus were supplied by Oceania Motor Auctions Ltd who would only supply vehicles on a reservation of title basis (title would not pass unless the vehicle had been paid for). These vehicles were supplied on a different basis to the arrangement with Shark.

The Motosaurus sales agreement with Oceania included the provision:

Motosaurus does not own any vehicles in their possession until all amounts owing to Oceania on any account have been paid for in full. However good title will be passed to consumers where a sale is made for value with no notice of Oceania's interest, in the ordinary course of business, even if title has not passed to Motosaurus.

Shonky registered its security interest on the PPSR on 1 April. Shark, because of an oversight, didn't register its security interests until 5 April. Oceania registered its interest on 10 April.

However Motosaurus continued to struggle financially. Motosaurus entered administration on the 16^thof April.

Motosaurus had bought 20 Toyotas under the Shark arrangement; and 20 Fords from Oceania. Ten Toyotas and ten Fords had been sold to customers prior to administration.

Explain the respective rights of the parties to the existing assets pursuant to thePersonal Property Securities Act including the registration obligations which would ensure those rights.