Any time your commercial transactions involve debt security, there will be issues that must be considered under the province’s Personal Property Security Act (PPSA). You can help smooth the way when taking and enforcing security by consulting Richard McLaren’s The 2022 Annotated Ontario Personal Property Security Act — a complete practitioner’s manual to the Ontario regime, written by an acknowledged expert.
New in this edition
In addition to the legislative and commentary updates, the 2022 edition includes the following new decisions:
- Atlas Brampton Limited Partnership v. Canada Grace Park Ltd., 2021 CarswellOnt 4731 (Ont. C.A.): The Ontario Court of Appeal (“ONCA”) had to determine whether the secured party was permitted to foreclose on pledged shares pursuant to s. 17.1 of the PPSA, and whether Part V of the PPSA permitted the secured party to foreclose on the pledged shares. The ONCA stated that in a majority of cases dealing with pledged shares or other securities, s. 17.1 of the PPSA set out the applicable framework. ONCA determined that although the respondents were secured parties with control over pledged shares, s. 17.1(2) did not entitle them to foreclose on the pledged shares without notice. The ONCA noted that although s. 17.1(2) acts contrary to the debtor-protective elements of Part V of the PPSA, this exception must be construed narrowly as it reduces the statutory protections available to the debtor. The court specified that a notice of intention of foreclosure should ordinarily contain (a) the amount of secured obligation, (b) description of collateral, (c) expression of the clear intention to retain the collateral in satisfaction of the debt, and (d) an indication that the parties who have received the notice have 15 days to object. However, the ONCA indicated that there can be circumstances in which these formal elements may be absent and the contents of the notice of the foreclosure will still be adequate; the debtor must have objective knowledge that the creditor will be foreclosing on the collateral in satisfaction of the debt. It was held that the secured party’s cumulative communications resulted in adequate notice under the PPSA.
- Grant Thornton Limited, as Court-appointed Receiver v. 1902408 Ontario Ltd, 2021 CarswellOnt 2436 (Ont. S.C.J.): The Ontario Superior Court of Justice held that a security interest in a fixture under s. 4(1)(e)(i) of the PPSA is an interest in personal property, not real property. Accordingly, a secured creditor’s claim to realize upon a security interest under the PPSA is governed by the two-year limitation period prescribed by s. 4 of the Limitations Act, 2002, not the longer ten-year limitation period under s. 23(1) of the Real Property Limitations Act. Having failed to bring its claim within two years of the breach of the general security agreement, the secured creditor’s claim to the proceeds of a sale of land on which it held a security interest in fixtures under the PPSA was statute-barred.
- Re Marleau, 2021 CarswellOnt 7435 (Ont. S.C.J.): The Ontario Superior Court of Justice held that when an individual files for bankruptcy, the assets of the bankrupt vest in the Trustee on that date. A stay of proceedings is then commenced pursuant to s. 69.3 of the BIA and as a result, no creditor has any remedy against a debtor which would include a registration of a financing statement in Ontario. The court found that because the unsecured creditor did not register their financing statement under the PPSA until after the date of bankruptcy, their security interest was not perfected and priority over the Trustee could not be realized.
Amended since the 2021 edition and updated in the 2022 edition
- Legislation and Regulations
- Business Corporations Act, R.S.O. 1990, c. B.16
- Commercial Tenancies Act, R.S.O. 1990, c. L.7
- Consumer Protection Act, 2002, S.O. 2002, c. 30
- Highway Traffic Act, R.S.O. 1990, c. H.8
- Securities Act, R.S.O. 1990, c. S.5
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