Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) In this Act:
"proceeds" of collateral to which a security interest is (or is to be) attached means identifiable or traceable personal property of the following types, subject to subsections (2) and (3):
(a) personal property that is derived directly or indirectly from a dealing with the collateral (or proceeds of the collateral);
(b) a right to an insurance payment or other payment as indemnity or compensation for loss of, or damage to, the collateral (or proceeds of the collateral);
(c) a payment made in total or partial discharge or redemption of the collateral (or proceeds of the collateral), if the collateral (or proceeds) consists of any of the following:
(i) chattel paper;
(ii) intangible property;
(iii) an investment instrument;
(iv) an intermediated security;
(v) a negotiable instrument;
(d) if the collateral is intellectual property (or an intellectual property licence)--in addition to any other proceeds, the right of a licensor of the property (whether or not the property is itself a licence) to receive payments under any licence agreement in relation to the collateral;
(e) if the collateral is an investment instrument or intermediated security--any of the following:
(i) rights arising out of the collateral;
(ii) property collected on the collateral;
(iii) property distributed on account of the collateral.
Note: In section 140 (distribution of proceeds received by secured party) proceeds has its ordinary meaning, so this definition does not apply.
Whether proceeds are traceable
(2) Proceeds are traceable whether or not there is a fiduciary relationship between the person who has a security interest in the proceeds, as provided in section 32, and the person who has rights in or has dealt with the proceeds.
Restriction to proceeds in which grantor has a transferable interest
(3) However, personal property is proceeds only if:
(a) either:
(i) the grantor has an interest in the proceeds; or
(ii) the grantor has the power to transfer rights in the proceeds to the secured party (or to a person nominated by the secured party); and
(b) the interest in the proceeds does not arise because of the operation of paragraph 140(2)(f).
Note: Paragraph 140(2)(f) provides for the distribution of an amount or proceeds to the grantor upon the enforcement of a security interest.
Crops and livestock
(4) The proceeds of collateral that is crops include the harvested produce of the crops, if the produce is identifiable or traceable.
(5) The proceeds of collateral that is livestock include products of the livestock (for example, meat or wool), if the products are identifiable or traceable.
(6) However, livestock are not the proceeds of collateral merely because they are the unborn young, or the offspring, of livestock that are collateral.