Commentary on Sections Part 2 – Security over Moveable Property Assignation, amendment, restriction or extinction of statutory pledge Section 58 – Amendment of statutory pledge
268.This section provides for the amendment of a statutory pledge by an amendment document.
269.Subsection (1) provides that a statutory pledge may only be amended by an amendment document executed or authenticated by the secured creditor and the provider. This is subject to two exceptions. Firstly, this is subject to section 59(a): as such, the restriction of a pledge to only part of the encumbered property, or its complete discharge, may be effected by means of a written statement by the secured creditor. Secondly, subsection (2) provides that an amendment document that only adds property to the encumbered property need not be executed by the secured creditor (because it is treated much the same as the granting of a pledge under a constitutive document).
270.Added property must be identified in the amendment document (subsection (3)) and this must be done in the usual way whereby items may be identified by reference to a class (subsection (4)). As is the case for the constitutive document for a statutory pledge, added property may be property to be acquired by the provider (subsection (5)).
271.Subsections (6)(a) and (7) have the effect that an amendment document that relates to the addition of property to the encumbered property, or to a variation that increases the extent of the secured obligation where that is determinable from the statutory pledges record, is amended only on registration of the amendment document. For these purposes, “registration” means effective registration (as to which, see section 92 of the Act).
272.Under section 88, an amendment document may only be registered where registration is required in order to effect the change; a document which effects a change off-register could only be registered by means of a correction. However, subsection (6)(b) of section 58 recognises that an amendment document which requires to be registered in order to effect the change may also be making other amendments. For example, an amendment document could remove property A from the pledge and replace it with property B. The removal of property A would not ordinarily need to be registered to take effect, but the addition of property B would. Section 58(6) sets out a default rule which ensures that both changes take effect at the same time, to avoid creating a gap during which the creditor has no security. However, the parties would be free to contract out of this rule if they wished, meaning that the removal of property A could take effect off-register earlier if wanted.
273.Subsection (8) clarifies that the requirement to identify property in an amendment document can be satisfied by cross-referring to another document (see paragraph 9 of these Notes for a discussion of the term “document”).