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SNL1998

CHAPTER P-7.1

PERSONAL PROPERTY SECURITY ACT

Amended:

1999 c22 s19; 2007 cS-13.01 s110; 2019 c8 s25; 2020 c15

CHAPTER P-7.1

AN ACT RESPECTING SECURITY INTERESTS IN PERSONAL PROPERTY

(Assented to December 15, 1998)

Analysis

Short title

PART I

INTERPRETATION AND

APPLICATION

Interpretation

Interpretation

Application of this Act

Application of this Act

Conflict of laws

Conflict of laws: goods to be removed from the jurisdiction

Conflict of laws

8.1

Conflict of laws, validity of security interest in investment property

8.2

Law of jurisdiction

Procedural and substantive issues

PART II

VALIDITY OF SECURITY AGREEMENT AND

RIGHTS OF PARTIES

Effectiveness of security agreement

Enforceability of security interest

Debtor's right to a copy of the security agreement

Attachment required to enforce security interest

13.1

Securities attachment

Security in after-acquired property

Future advances

Application of sale of goods law

Acceleration clauses

Secured party

18.1

Rights of secured party with control of investment property as collateral

Obtaining information

PART III

PERFECTION AND

PRIORITIES

Perfected security interest

20.1

Securities account

20.2

Perfection on attachment

Unperfected security interests

Damages recoverable by lessor or consignor

Grace period for perfection

Continuity of perfection

Perfection by possession

25.1

Perfection by control of collateral

Perfection by registration

Temporary perfection

Perfection where goods held by a bailee

Security interests in proceeds

Perfection and priority with respect to returned, seized or repossessed goods

Priority of buyers and lessees of goods

31.1

Priority re: investment property

Priority of holders

32.1

Rights under Security Transfer Act

Priority of repairer's lien

Alienability of debtor's rights in collateral

Priority of purchase money security interest

Residual general priority rules

36.1

Priority among conflicting security interests

Security interests in fixtures

Security interests in crops

Security interest in accessions

Security interests

Voluntary subordination

Assignments of intangibles

PART IV

REGISTRATION

Personal property registry

Registration of financing statements

Duration, renewal of and amendments to registrations

Registration of transfers and subordinations

Removal of data from the registry

Registration not constructive notice

Registry searches

Fixtures and crops

Compulsory discharge

Transfer of debtor's interest

Recovery of loss

Recovery of loss

Payment of claim for loss

PART V

DEFAULT RIGHTS AND

REMEDIES

Application of

Part V

Determination of rights

Right to collect on intangibles

Right to take possession

Right to dispose of collateral

Surplus or deficiency after disposition

Right to retain collateral

Redemption of collateral agreement

Supervisory powers of the court

Receiverships

PART VI

GENERAL AND

MISCELLANEOUS

Supplementary law

Action for damages

Application to court

Appeal

Service of notice

Conflicts between legislation

Regulations

PART VII

TRANSITIONAL, ETC

Transitional

Transitional application of PPSA

Transitional perfection of prior security interests

75.1

Transition re: Securities Transfer Act

Order of priorities

RSN1990 cC-34 Amdt.

RSN1990 cE-16 Amdt.

RSN1990 cF-2 Amdt.

RSN1990 cI-7 Amdt.

SN1996 cJ-1.1 Amdt.

RSN1990 cR-10 Amdt.

RSN1990 cS-6 Amdt.

RSN1990 cW-2 Amdt.

Acts repealed

Commencement

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

Short title

This Act may be cited as the Personal Property Security Act

1998 cP-7.1 s1

PART I

INTERPRETATION AND APPLICATION

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Interpretation

(1)In this Act

(a)

"accession" means goods that are installed in or affixed to other goods;

(b)

"account" means a monetary obligation not evidenced by chattel paper, a security or an instrument, whether or not the obligation has been earned by performance, but does not include investment property;

(c)

"advance" means the payment of money, the provision of credit or the giving of value and includes liability of the debtor to pay interest, credit costs and other charges payable by the debtor in connection with an advance or the enforcement of a security interest securing the advance;

(c.1)

"broker" means a broker as defined in the Securities Transfer Act

(d)

"building" means a structure, erection, mine or work built, constructed or opened on or in land;

(e)

"building materials" means materials that are incorporated into a building and includes goods attached to a building so that their removal

(

i) would necessarily involve the dislocation or destruction of some other part of the building and cause substantial damage to the building, apart from the loss of value of the building resulting from the removal, or

(ii)

would result in weakening the structure of the building or exposing the building to weather damage or deterioration,

but does not include

(iii)

heating, air conditioning or conveyancing devices, or

(iv)

machinery installed in a building or on land for use in carrying on an activity in the building or on the land;

(e.1)

"certificated security" means a certificated security as defined in the Securities Transfer Act

(f)

"chattel paper" means one or more writings that evidence both a monetary obligation and a security interest in, or a lease of, specific goods or specific goods and accessions;

(f.1)

"clearing house" means an organization through which trades in options or standardized futures are cleared and settled;

(f.2)

"clearing house option" means an option, other than an option on futures, issued by a clearing house to its participants;

(g)

"collateral" means personal property that is subject to a security interest;

(h)

"commercial consignment" means a consignment under which goods are delivered for sale, lease or other disposition to a consignee who, in the ordinary course of the consignee's business deals in goods of that description, by a consignor who,

(

i) in the ordinary course of the consignor's business, deals in goods of that description, and

(ii)

reserves an interest in the goods after they have been delivered,

but does not include an agreement under which goods are delivered

(iii)

to an auctioneer for sale, or

(iv)

to a consignee for sale, lease or other disposition where the consignee is generally known to the creditors of the consignee to be selling or leasing goods of others;

(i)

"consumer goods" means goods that are used or acquired for use primarily for personal, family or household purposes;

(j)

"court" means the Trial Division;

(k)

"creditor" includes an assignee for the benefit of creditors, an executor, an administrator or a committee of a creditor;

(l)

"crops" means crops, whether or not matured, and whether naturally grown or planted, attached to land by roots or forming part of trees or plants attached to land, and includes trees only if they

(

i) are being grown as nursery stock,

(ii)

are being grown for uses other than for the production of lumber and wood products, or

(iii)

are intended to be replanted in another location for the purpose of reforestation;

(m)

"debtor" means

(

i) a person who owes payment or performance of an obligation secured, whether or not that person owns or has rights in the collateral,

(ii)

a person who receives goods from another person under a commercial consignment,

(iii)

a lessee under a lease for a term of more than one year,

(iv)

a transferor of an account or chattel paper,

(

v) a seller under a sale of goods without a change of possession,

(vi)

in sections 18, 25, 27 and 59, subsections 60(15) and 62(8) and 67, the transferee of a debtor's interest in the collateral, and

(vii)

where the person referred to in subparagraph (

i) and the owner of the collateral are not the same person,

(

A) where the word "debtor" is used in a provision dealing with the collateral, an owner of the collateral,

(

B) where the word "debtor" is used in a provision dealing with the obligation, the obligor, and

(

C) where the context permits, both the owner and the obligor;

(n)

"default" means

(

i) the failure to pay or otherwise perform the obligation secured when due, or

(ii)

the occurrence of an event or set of circumstances whereupon, under the terms of the security agreement, the security interest becomes enforceable;

(o)

"document of title" means a writing issued by or addressed to a bailee

(

i) that covers goods in the bailee's possession that are identified or are fungible portions of an identified mass, and

(ii)

in which it is stated that the goods covered by it shall be delivered to a named person, or to the transferee of that person, or to bearer or to the order of a named person;

(o.1)

"entitlement holder" means an entitlement holder as defined in the Securities Transfer Act

(o.2)

"entitlement order" means an entitlement order as defined in the Securities Transfer Act

(p)

"equipment" means goods that are held by a debtor other than as inventory or consumer goods;

(p.1)

"financial asset" means a financial asset as defined in the Securities Transfer Act

(q)

"financing change statement" means the data authorized by the regulations to be entered in the registry to renew, discharge or otherwise amend a financing statement;

(r)

"financing statement" means the data authorized by the regulations to be entered in the registry to effect a registration for the purpose of perfecting a security interest in collateral under this Act and, where the context permits, includes

(

i) a financing change statement, and

(ii)

a security agreement registered under the Assignment of Book Debts Act,

the Bills of Sale Act,

the Conditional Sales Act

or the Registration of Deeds Act

before the commencement of this Act, together with any writing that was registered with the agreement or registered to rectify, amend or renew the agreement;

(s)

"fixture" does not include building materials;

(t)

"future advance" means an advance, whether or not made under to an obligation and includes advances and reasonable costs incurred and expenditures made for the protection, maintenance, preservation or repair of the collateral;

(t.1)

"futures account" means an account maintained by a futures intermediary in which a futures contract is carried for a futures customer;

(t.2)

"futures contract" means a standardized future or an option on futures, other than a clearing house option, that is

(

i) traded on or subject to the rules of a futures exchange recognized or otherwise regulated by the superintendent as defined in the Securities Act

or by a securities regulatory authority of another province or territory of Canada, or

(ii)

traded on a foreign futures exchange and carried on the books of a futures intermediary for a futures customer;

(t.3)

"futures customer" means a person for which a futures intermediary carries a futures contract on its books;

(t.4)

"futures exchange" means an association or organization operated to provide the facilities necessary for the trading of standardized futures or options on futures;

(t.5)

"futures intermediary" means a person that,

(

i) is registered as a dealer permitted to trade in futures contracts, whether as principal or agent, under the securities laws or commodity futures laws of a province or territory of Canada, or

(ii)

is a clearing house recognized or otherwise regulated by the superintendent as defined in the Securities Act

or by a securities regulatory authority of another province or territory of Canada;

(u)

"goods" means tangible personal property, fixtures, crops and the unborn young of animals but does not include a document of title, chattel paper, investment property, an instrument, money, or trees, other than crops, until they are severed or minerals until they are extracted;

(v)

"instrument" means

(

i) a bill of exchange, note or cheque within the meaning of the Bills of Exchange Act

( Canada

(ii)

other writing that evidences a right to payment of money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, and

(iii)

a letter of credit or an advice of credit if the letter or advice states that it shall be surrendered on claiming payment under it,

but does not include,

(iv)

a document of title, chattel paper or investment property, or

(

v) a writing that provides for or creates a mortgage or charge in respect of an interest in land that is specifically identified in the writing;

(w)

"intangible" means personal property that is not goods, a document of title, chattel paper, investment property, an instrument or money;

(x)

"inventory" means goods that are

(

i) held by a person for sale or lease, or that have been leased by that person as lessor,

(ii)

to be furnished or that have been furnished under a contract of service,

(iii)

raw materials or work in progress, or

(iv)

materials used or consumed in a business or profession;

(x.1)

"investment property" means a security, whether certificated or uncertificated, security entitlement, securities account, futures contract or futures account;

(y)

"lease for a term of more than one year" includes

(

i) a lease of goods for an indefinite term including a lease for an indefinite term that is determinable by one or both parties within one year after its execution,

(ii)

a lease of goods initially for a term of one year or less where the lessee, with the consent of the lessor, retains uninterrupted or substantially uninterrupted possession of the leased goods for more than one year after the lessee, with the consent of the lessor, first acquired possession of the goods but the lease does not become a lease for a term of more than one year until the lessee's possession extends beyond one year, and

(iii)

a lease of goods for a term of one year or less where the lease provides that it is renewable for one more terms automatically or at the option of one of the parties or by agreement of the parties where the total terms, including the original term, may exceed one year,

but does not include

(iv)

a lease of goods by a lessor who is not regularly engaged in the business of leasing goods,

(

v) a lease of household furnishings or appliances as part of a lease of land where the goods are incidental to the use and enjoyment of the land, or

(vi)

a lease of goods of a prescribed kind regardless of the length of the term of the lease;

(z)

"minerals" includes oil, gas and hydrocarbons;

(aa)

"money" means a medium of exchange authorized by the Parliament of Canada as part of the currency of Canada

or authorized or adopted by a foreign government as part of its currency;

(bb)

"obligation secured" means, for the purpose of determining the amount payable under a lease that secures payment or performance of an obligation,

(

i) the amount originally contracted to be paid as rent under the lease,

(ii)

another amount payable under the terms of the lease, and

(iii)

the amount, if any, required to be paid by the lessee to obtain full ownership of the collateral,

less an amount paid before the determination;

(bb.1)

"option" means an agreement that provides the holder with the right, but not the obligation, to do one or more of the following on terms or at a price established by or determinable by reference to the agreement at or by a time established by the agreement:

(

i) receive an amount of cash determinable by reference to a specified quantity of the underlying interest of the option,

(ii)

purchase a specified quantity of the underlying interest of the option, and

(iii)

sell a specified quantity of the

underlying interest of the option;

(bb.2)

"option on futures" means an option the underlying interest of which is a standardized future;

(cc)

"pawnbroker" means a person who engages in the business of granting credit to individuals for personal, family or household purposes and who

(

i) takes and perfects security interests in consumer goods by taking possession of them, or

(ii)

purchases consumer goods under agreements or undertakings, express or implied that the goods may be repurchased by sellers;

(dd)

"personal property" means goods, a document of title, chattel paper, investment property, an instrument, money or an intangible;

(ee)

"prior security interest" means an interest created or provided for under a valid agreement or other transaction entered into before the commencement of this Act that is a security interest within the meaning of this Act and to which this Act would have applied where it had been in force when the security agreement or other transaction was entered into;

(ff)

"proceeds" means,

(

i) identifiable or traceable personal property that is derived directly or indirectly from a dealing with collateral or proceeds of collateral and in which the debtor acquires an interest,

(ii)

an insurance or other payment that represents indemnity or compensation for loss of or damage to collateral or proceeds of collateral, or a right to that payment,

(iii)

a payment made in total or partial discharge or redemption of chattel paper, an instrument, an intangible or investment property, and

(iv)

rights arising out of, or property collected on, or distributed on account of, collateral that is investment property;

(gg)

"purchase" means taking by sale, lease, discount, assignment, negotiation, mortgage, pledge, lien, issue, reissue, gift or other consensual transaction creating an interest in property;

(hh)

"purchase money security interest" means

(

i) a security interest taken in collateral, other than investment property, to the extent that it secures all or part of the purchase price of the collateral, other than investment property,

(ii)

a security interest taken in collateral, other than investment property, by a person who gives value for the purpose of enabling the debtor to acquire rights in the collateral, other than investment property, to the extent that the value is applied to acquire the rights,

(iii)

the interest of a lessor of goods under a lease for a term of more than one year, and

(iv)

the interest of a consignor who delivers goods to a consignee under a commercial consignment,

but does not include a transaction of sale by and lease back to the seller, and for the purpose of this definition, "purchase price" and "value" include interest, credit costs and other charges payable for the purchase or loan credit;

(ii)

"receiver" includes a receiver-manager;

(jj)

"registrar" means the Registrar of the Personal Property Registry designated under subsection 43(2);

(kk)

"registry" means the Personal Property registry established under subsection 43(1);

(ll)

"sale of goods without a change of possession" means a sale of goods that is not accompanied by an immediate delivery and an actual, apparent and continued change of possession of the goods sold, but does not include a sale of goods in the ordinary course of business of the seller, and for the purpose of this definition, "sale" includes an assignment, transfer, conveyance, declaration of trust or other agreement or transaction not intended to secure payment or performance of an obligation by which an interest in goods is conferred;

(mm)

"secured party" means

(

i) a person who has a security interest,

(ii)

a person who holds a security interest for the benefit of another person, and

(iii)

the trustee, where a security interest is embodied in a trust indenture;

(mm.1)

"securities account" means a securities account as defined in the Securities Transfer Act

(mm.2)

"securities intermediary" means a securities intermediary as defined in the Securities Transfer Act

(nn)

"security" means a security as defined in the Securities Transfer Act

(oo)

"security agreement" means an agreement that creates or provides for a security interest, and where the context permits, includes

(

i) an agreement that creates or provides for a prior security interest, and

(ii)

a writing that evidences a security agreement;

(oo.1)

"security certificate" means a security certificate as defined in the Securities Transfer Act

(oo.2)

"security entitlement" means a security entitlement as defined in the Securities Transfer Act

(pp)

"security interest" means

(

i) an interest in personal property that secures payment or performance of an obligation, but does not include the interest of a seller who has shipped goods to a buyer under a negotiable bill of lading or its equivalent to the order of the seller or to the order of an agent of the seller, unless the parties have otherwise evidenced an intention to create or provide for a security interest in the goods, and

(ii)

the interest of

(

A) a consignor who delivers goods to a consignee under a commercial consignment,

(

B) a lessor under a lease for a term of more than one year,

(

C) a transferee under a transfer of an account or a transfer of chattel paper, and

(

D) a buyer under a sale of goods without a change of possession

that does not secure payment or performance of an obligation;

(qq)

[Rep. by 2007 cS-13.01 s110]

(rr)

"specific goods" means goods identified and agreed on at the time a security agreement in respect of those goods is made;

(rr.1)

"standardized future" means an agreement traded on a futures exchange under standardized conditions contained in the by-laws, rules or regulations of the futures exchange, and cleared and settled by a clearing house, to do one or more of the following at a price established by or determinable by reference to the agreement and at or by a time established by or determinable by reference to the agreement:

(

i) make or take delivery of the underlying interest of the agreement, or

(ii)

settle the obligation in cash instead of delivery of the underlying interest;

(ss)

"trust indenture" means a deed, indenture or document, however designated, by the terms of which a person issues or guarantees or provides for the issue or guarantee of debt obligations secured by a security interest and in which another person is appointed as trustee for the holders of the debt obligations issued, guaranteed or provided for under it; and

(ss.1)

"uncertificated security" means an uncertificated security as defined in the Securities Transfer Act

; and

(tt)

"value" means any consideration sufficient to support a simple contract and includes an antecedent debt or liability, and "new value" means value other than an antecedent debt or liability.

(2) For the purposes of this Act,

(

a) a secured party has control of a certificated security if the secured party has control in the manner provided under

section 24 of the Securities Transfer Act

(

b) a secured party has control of an uncertificated security if the secured party has control in the manner provided under

section 25 of the Securities Transfer Act

(

c) a secured party has control of a security entitlement if the secured party has control in the manner provided under

section 26 or 27 of the Securities Transfer Act

(

d) a secured party has control of a futures contract if,

(

i) the secured party is the futures intermediary with which the futures contract is carried, or

(ii)

the futures customer, the secured party and the futures intermediary have agreed that the futures intermediary will apply a value distributed on account of the futures contract as directed by the secured party without further consent by the futures customer; and

(

e) a secured party having control of all security entitlements or futures contracts carried in a securities account or futures account has control over the securities account or futures account.

1998 cP-7.1 s2 ; 2007 cS-13.01 s110

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Interpretation

(1) For the purpose of this Act

(

a) a natural person knows or has knowledge when information is acquired by the person under circumstances in which a reasonable person would take cognizance of it;

(

b) a partnership knows or has knowledge when information has come to the attention of one of the general partners or a person having control or management of the partnership business under circumstances in which a reasonable person would take cognizance of it;

(

c) a corporation knows or has knowledge when information, in writing, has been delivered to the corporation's registered office or attorney for service, or when information has come to the attention of

(

i) a managing director or officer of the corporation, or

(ii)

a senior employee of the corporation with responsibility for matters to which the information relates,

under circumstances in which a reasonable person would take cognizance of it;

(

d) the members of an association know or have knowledge when information has come to the attention of

(

i) a managing director or officer of the association,

(ii)

a senior employee of the association with responsibility for matters to which the information relates, or

(iii)

all members,

under circumstances in which a reasonable person would take cognizance of it; and

(

e) a government knows or has knowledge when information has come to the attention of a senior employee of the government with responsibility for matters to which the information relates under circumstances in which a reasonable person would take cognizance of it.

(2) Except as otherwise provided in this Act, the determination as to whether goods are "consumer goods", "inventory" or "equipment" shall be made as of the time the security interest attaches.

(3) 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 29 and the person who has rights in or has dealt with the proceeds.

(4) [Rep. by 2007 cS-13.01 s110]

(5) This Act is to be interpreted and applied, where the context permits, in a manner that promotes the inter-jurisdictional harmony of the law of personal property security in Canada

(6) This Act binds the Crown.

1998 cP-7.1 s3 ; 2007 cS-13.01 s110

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Application of this Act

(1) Subject to

section 5, this Act applies

(

a) to every transaction that in substance creates a security interest, without regard to its form and without regard to the person who has title to the collateral; and

(

b) without limiting the generality of paragraph (a), to a chattel mortgage, conditional sale, fixed charge, floating charge, pledge, trust indenture, trust receipt, an assignment, a consignment, lease, trust or transfer of chattel paper where they secure payment or performance of an obligation,

including a security interest registered in relation to the offshore area as that area is defined in the Hibernia Project Development Act

( Canada

(2) Subject to sections 5 and 56, this Act applies

(

a) to a commercial consignment;

(

b) to a lease for a term of more than one year;

(

c) to a transfer of an account or chattel paper; and

(

d) to a sale of goods without a change of possession,

that do not secure payment or performance of an obligation.

1998 cP-7.1 s4

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Application of this Act

Except as otherwise provided in this Act, this Act does not apply to the following:

(

a) a lien, charge or other interest given by rule of law or statute unless the statute provides that this Act applies;

(

b) the creation or transfer of an interest or claim in or under a policy of insurance except the transfer of a right to money or other value payable under a policy of insurance as indemnity or compensation for loss of or damage to collateral;

(b.1)

a transfer of an interest in a claim in or under a contract of annuity other than a contract of annuity held by a securities intermediary for another person in a securities account;

(

c) the creation or transfer of an interest in present or future wages, salary, pay, commission or other compensation for work or services, the assignment or transfer of which is prohibited by

an Act or rule of law;

(

d) the transfer of an unearned right to payment under a contract to a transferee who is to perform the transferor's obligation under the contract;

(

e) the creation or transfer of an interest in land including a lease;

(

f) the creation or transfer of an interest in a right to payment that arises in connection with an interest in or lease of land other than an interest in a right to payment evidenced by investment property or an instrument;

(

g) a sale of accounts, chattel paper or goods as part of a sale of the business out of which they arose unless the vendor remains in apparent control of the business after the sale;

(

h) a transfer of accounts made solely to facilitate the collection of accounts for the transferor;

(

i) the creation or transfer of a right to damages in tort;

(

j) a mortgage registered under the Canada Shipping Act

( Canada

); and

(

k) a security agreement governed by

an Act of the Parliament of Canada that deals with the rights of the parties to the agreement or the rights of third parties affected by a security interest created by the agreement, including a security agreement governed by

Part VIII of the Bank Act

(Canada).

1998 cP-7.1 s5 ; 2007 cS-13.01 s110

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Conflict of laws

(1) Subject to this Act, the validity, perfection and effect of perfection or non-perfection of

(

a) a security interest in goods; and

(

b) a possessory security interest in a negotiable document of title, chattel paper, an instrument and money,

are governed by the law of the jurisdiction where the collateral is situated when the security interest attaches.

(2) [Rep. by 2007 cS-13.01 s110]

(3) A security interest in goods perfected under the law of the jurisdiction in which the goods are situated at the time the security interest attaches but before the goods are brought into the province continues perfected in the province if it is perfected in the province

(

a) not later than 60 days after the goods are brought into the province;

(

b) not later than 15 days after the secured party has knowledge that the goods have been brought into the province; or

(

c) before perfection ceases under the law of the jurisdiction in which the goods were situated when the security interest attached,

whichever is earliest.

(4) Notwithstanding subsection (3), a security interest in goods referred to in that subsection is subordinate to the interest of a buyer or lessee of the goods who acquires the interest without knowledge of the security interest and before it is perfected in the province under

section 25 or 26.

(5) A security interest that is not perfected in accordance with subsection (3) may be otherwise perfected in the province under this Act.

(6) Where a security interest referred to in subsection (1) is not perfected under the law of the jurisdiction in which the collateral was situated when the security interest attached and before the collateral was brought into the province, it may be perfected under this Act.

1998 cP-7.1 s6 ; 2007 cS-13.01 s110

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Conflict of laws: goods to be removed from the jurisdiction

(1) Subject to

section 8, where the parties to a security agreement that creates a security interest in goods in one jurisdiction understand when the security interest attaches that the goods shall be kept in another jurisdiction, the validity, perfection and effect of perfection or non-perfection of the security interest are determined by the law of the other jurisdiction where the goods are removed to the other jurisdiction, for purposes other than transportation through the other jurisdiction, within 30 days after the security interest attaches.

(2) Where the other jurisdiction referred to in subsection (1) is not the province and the goods are later brought into the province, the security interest in the goods shall be considered to be a security interest to which subsection 6(3) applies if it was perfected under the laws of the jurisdiction to which the goods were removed.

1998 cP-7.1 s7

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Conflict of laws

(1) For the purpose of this

section and

section 8.1, a debtor is located

(

a) at the place of business of the debtor, if he or she has one;

(

b) at the registered office, or the chief place of business, if different from the registered office, of the debtor, if the debtor has more than one place of business; and

(

c) at the principal residence of the debtor, if the debtor has no place of business.

(2) The validity, perfection and effect of perfection or non-perfection of

(

a) a security interest in an intangible;

(

b) a security interest in goods that are of a type that are normally used in more than one jurisdiction, if the goods are equipment or are inventory leased or held for lease by the debtor to others; and

(

c) a non-possessory security interest in a negotiable document of title, chattel paper, an instrument or money,

are governed by the law, including the conflict of law rules, of the jurisdiction where the debtor is located when the security interest attaches.

(3) Where a debtor relocates to another jurisdiction or transfers an interest in the collateral to a person located in another jurisdiction, a security interest perfected in accordance with the law that is applicable under subsection (2) continues perfected in the province if it is perfected in the other jurisdiction

(

a) not later than 60 days after the debtor relocates or transfers an interest in the collateral to a person located in the other jurisdiction;

(

b) not later than 15 days after the secured party has knowledge that the debtor has relocated or transferred an interest in the collateral to a person located in the other jurisdiction; or

(

c) before perfection ceases under the law of the first jurisdiction,

whichever is earliest.

(4) Where the law governing the perfection of a security interest under subsection (2) or (3) does not provide for public registration or recording of the security interest or of a notice relating to it, and where the collateral is not in the possession of the secured party, the security interest is subordinate to

(

a) an interest in an account payable in the province; and

(

b) an interest in goods, a negotiable document of title, chattel paper, an instrument, or money where the interest was acquired when the collateral was situated in the province,

unless the security interest is perfected under this Act before the interest referred to in paragraph (

a) or (

b) arises.

(5) A security interest referred to in subsection (4) may be perfected under this Act.

(6) Notwithstanding

section 7 and subsection (2), the validity, perfection and effect of perfection or non-perfection of a security interest in minerals or in an account resulting from the sale of the minerals at the minehead or wellhead

(

a) that is provided for in a security agreement executed before the minerals are extracted; and

(

b) that attaches to the minerals on extraction or attaches to an account on sale of the minerals, are governed by the law of the jurisdiction in which the minehead or wellhead is located.

1998 cP-7.1 s8 ; 2007 cS-13.01 s110

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Conflict of laws, validity of security interest in investment property

8.1

(1)The validity of a security interest in investment property is governed by the law at the time the security interest attaches

(

a) of the jurisdiction where the certificate is located if the collateral is a certificated security;

(

b) of the issuer's jurisdiction if the collateral is an uncertificated security;

(

c) of the securities intermediary's jurisdiction if the collateral is a security entitlement or a securities account; and

(

d) of the futures intermediary's jurisdiction if the collateral is a futures contract or a futures account.

(2) Except as otherwise provided in subsection (5), perfection, the effect of perfection or nonperfection and the priority of a security interest in investment property is governed by the law of the

(

a) jurisdiction in which the certificate is located if the collateral is a certificated security;

(

b) issuer's jurisdiction if the collateral is an uncertificated security;

(

c) securities intermediary's jurisdiction if the collateral is a security entitlement or a securities account; or

(

d) futures intermediary's jurisdiction if the collateral is a futures contract or a futures account.

(3) For the purposes of this section,

(

a) the location of a debtor is determined by subsection 8(1);

(

b) the issuer's jurisdiction is determined under subsection 45(5) of the Securities Transfer Act

; and

(

c) the securities intermediary's jurisdiction is determined under subsection 46(2) of the Securities Transfer Act

(4) For the purposes of this section, the following rules determine a futures intermediary's jurisdiction:

(

a) if an agreement between the futures intermediary and futures customer governing the futures account expressly provides that a particular jurisdiction is the futures intermediary's jurisdiction the jurisdiction expressly provided for in the agreement

is the futures intermediary's jurisdiction;

(

b) if paragraph (

a) does not apply and an agreement between the futures intermediary and futures customer governing the futures account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the futures intermediary's jurisdiction;

(

c) if neither paragraph (

a) nor (

b) applies and an agreement between the futures intermediary and futures customer governing the futures account expressly provides that the futures account is maintained at an office in a particular jurisdiction, that jurisdiction is the futures intermediary's jurisdiction;

(

d) if none of the preceding paragraphs applies, the futures intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the futures customer's account is located; and

(

e) if none of the preceding paragraphs applies, the futures intermediary's jurisdiction is the jurisdiction in which the chief executive office of the futures intermediary is located.

(5) The law of the jurisdiction in which the debtor is located governs,

(

a) perfection of a security interest in investment property by registration;

(

b) perfection of a security interest in investment property granted by a broker or securities intermediary where the secured party relies on attachment of the security interest as perfection; and

(

c) perfection of a security interest in a futures contract or futures account granted by a futures intermediary where the secured party relies on attachment of the security interest as perfection.

(6) A security interest perfected under the law of the jurisdiction designated in subsection (5) remains perfected until the earliest of,

(a)

60 days after the day the debtor relocates to another jurisdiction;

(b)

15 days after the day the secured party knows the debtor has relocated to another jurisdiction; and

(

c) the day that perfection ceases under the previously applicable law.

(7) A security interest in investment property which is perfected under the law of the issuer's jurisdiction, the securities intermediary's jurisdiction or the futures intermediary's jurisdiction, as applicable, remains perfected until the earliest of,

(a)

60 days after a change of the applicable jurisdiction to another jurisdiction;

(b)

15 days after the day the secured party knows of the change of the applicable jurisdiction to another jurisdiction; and

(

c) the day that perfection ceases under the previously applicable law.

(8) Notwithstanding

section 8, this

section applies to security interests in investment property.

2007 cS-13.01 s110

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Law of jurisdiction

8.2

For the purposes of

section 8.1, a reference to the law of a jurisdiction means the internal law of that jurisdiction excluding the conflict of law rules.

2007 cS-13.01 s110

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Procedural and substantive issues

(1) Notwithstanding sections 6, 7, 8 and 8.1,

(

a) procedural issues that relate to the enforcement of the rights of a secured party against collateral, other than intangibles, are governed by the law of the jurisdiction in which the collateral is located when the rights are exercised;

(

b) procedural issues that relate to the enforcement of the rights of a secured party against intangibles are governed by the law of the forum; and

(

b) substantive issues that relate to the enforcement of the rights of a secured party against collateral are governed by the proper law of the contract between the secured party and the debtor.

(2) For the purpose of sections 6, 7, 8 and 8.1, a security interest is considered to be perfected under the law of a jurisdiction if

(

a) the secured party has complied with the law of that jurisdiction relating to the creation and continuance of a security interest; and

(

b) the security interest has a status under the law of that jurisdiction in relation to the interests of the other secured parties, buyers, creditors of the debtor and a trustee in bankruptcy of the debtor similar to the status of an equivalent security interest created and perfected under this Act.

1998 cP-7.1 s9 ; 2007 cS-13.01 s110

PART II

VALIDITY OF SECURITY AGREEMENT AND RIGHTS OF PARTIES

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Effectiveness of security agreement

Except as otherwise provided in this or another Act, a security agreement is effective according to its terms.

1998 cP-7.1 s10

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Enforceability of security interest

(1)Subject to

section 13.1, a security interest is enforceable against a third party only where

(

a) the collateral is

(

i) not a certificated security and is in the possession of the secured party or another person on the secured party's behalf,

(ii)

a certificated security in registered form and the security certificate has been delivered to the secured party under

section 69 of the Securities Transfer Act

under the debtor's security agreement, or

(iii)

investment property and the secured party has control under subsection 2(2) in accordance with the debtor's security agreement; or

(

b) the debtor has signed a security agreement that contains

(

i) a description of the collateral by item or kind or by reference to one or more of the following:

(A)

"goods",

(B)

"document of title",

(C)

"chattel paper",

(D)

"investment property",

(E)

"instrument",

(F)

"money", or

(G)

"intangible",

(ii)

a description of collateral that is a security entitlement, securities account, or futures account if it describes the collateral by those terms or as an "investment property" or if it describes the underlying financial asset or futures contract,

(iii)

a statement that a security interest is taken in all of the debtor's present and after-acquired personal property, or

(iv)

a statement that a security interest is taken in all of the debtor's present and after-acquired personal property except specified items or kinds of personal property or except one or more of the following:

(A)

"goods",

(B)

"document of title",

(C)

"chattel paper",

(D)

"investment property",

(E)

"instrument",

(F)

"money", or

(G)

"intangible".

(2) A secured party does not have possession of collateral for the purpose of subparagraph (1)(a)(i), where the collateral is in the apparent possession or control of the debtor or the debtor's agent.

(3) A description is inadequate for the purpose of subparagraph (1)(b)(

i) if it describes the collateral as consumer goods or equipment without further describing the item or kind of collateral, but where the personal property to be excluded from a description of collateral under subparagraph (1)(b)(iv) is the consumer goods of the debtor, the excluded property may be described simply as consumer goods.

(4) A description of collateral as inventory is adequate for the purpose of paragraph (1)(

b) only while it is held by the debtor as inventory.

(5) A security interest in proceeds is enforceable against a third party whether or not the security agreement contains a description of the proceeds.

1998 cP-7.1 s11 ; 2007 cS-13.01 s110 ; 2020 c15 s1

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Debtor's right to a copy of the security agreement

Where a security agreement is in writing, the secured party shall deliver a copy of the security agreement to the debtor within 10 days after its execution and, where the secured party fails to do so after a request by the debtor, the court may, on application by the debtor, order the delivery of the copy to the debtor.

1998 cP-7.1 s12

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Attachment required to enforce security interest

(1)A security interest, including a security interest in the nature of a floating charge, attaches when

(

a) value is given;

(

b) the debtor has rights in the collateral or power to transfer rights in the collateral to a secured party; and

(

c) except for the purpose of enforcing rights as between the parties to the security agreement, the security interest becomes enforceable within the meaning of

section 11.

(2) Notwithstanding subsection (1), where the parties have specifically agreed to postpone the time of attachment, the security interest attaches at the agreed time.

(3) For the purposes of paragraph (1)(

b) and without limiting other rights which the debtor has in the goods, a lessee under a lease for a term of more than one year or a consignee under a commercial consignment has rights in the goods when the lessee or consignee obtains possession of them under the lease or consignment.

(4) For the purposes of paragraph (1)(b), a debtor has no rights in

(

a) crops, until they become growing crops;

(

b) the young of animals, until they are conceived;

(

c) minerals, until they are extracted; and

(

d) trees, other than crops, until they are severed.

(5) The attachment of a security interest in a securities account is also attachment of a security interest in the security entitlements carried in the securities account.

(6) The attachment of a security interest in a futures account is also attachment of a security interest in the futures contracts carried in the futures account.

2007 cS-13.01 s110

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Securities attachment

13.1

(1)A security interest in favour of a securities intermediary attaches to a person's security entitlement if,

(

a) the person buys a financial asset through the securities intermediary in a transaction in which the person is obligated to pay the purchase price to the securities intermediary at the time of the purchase; and

(

b) the securities intermediary credits the financial asset to the buyer's securities account before the buyer pays the securities intermediary.

(2) The security interest described in subsection (1) secures the person's obligation to pay for the financial asset.

(3) A security interest in favour of a person that delivers a certificated security or other financial asset represented by a writing attaches to the security or other financial asset if,

(

a) the security or other financial asset is,

(

i) in the ordinary course of business transferred by delivery with any necessary endorsement or assignment, and

(ii)

delivered under an agreement between persons in the business of dealing with such securities or financial assets; and

(

b) the agreement calls for delivery against payment.

(4) The security interest described in subsection (3) secures the obligation to make payment for the delivery.

2007 cS-13.01 s110

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Security in after-acquired property

(1) Subject to

section 13 and subsection (2), a security agreement that provides for a security interest in after-acquired personal property attaches to that property in accordance with the terms of the agreement without any need for specific appropriation by the debtor.

(2) A security interest does not attach under an after-acquired property clause in a security agreement to after-acquired personal property that is

(

a) crops that become growing crops more than one year after the security agreement has been entered into, except that a security interest in crops that is given in conjunction with a lease, agreement for sale or mortgage of land may attach, where the parties agree, to crops to be grown on the land concerned during the term of the lease, agreement for sale or mortgage; or

(

b) consumer goods, other than an accession, unless the security interest is a purchase money security interest or a security interest in collateral obtained by the debtor as replacement for collateral described in the security agreement.

1998 cP-7.1 s14

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Future advances

(1) A security agreement may secure future advances.

(2) Unless the parties otherwise agree, an obligation owing to a debtor to make future advances is not binding on a secured party if, under subsection 36(5), the security interest does not have priority over a notice of judgment with respect to those future advances.

1998 cP-7.1 s15

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Application of sale of goods law

Where a seller has a purchase money security interest in goods, the law relating to contracts of sale governs the sale and the seller's performance obligations with respect to the goods, including any disclaimer, limitation or modification of those obligations.

1998 cP-7.1 s16

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Acceleration clauses

Where a security agreement provides that a secured party may accelerate payment or performance when the secured party considers that the collateral is in jeopardy or that the secured party is insecure, the security agreement shall be construed to mean that the secured party has the right to do so only if the secured party in good faith believes and has commercially reasonable grounds to believe that the prospect of payment or performance is or is about to be impaired or that the collateral is or is about to be placed in jeopardy.

1998 cP-7.1 s17

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Secured party

(1) In this

section and

section 18.1, "secured party" includes a receiver.

(2) A secured party or the sheriff as defined in the Judgment Enforcement Act

shall use reasonable care in the custody and preservation of collateral in the secured party's possession and, unless otherwise agreed, in the case of chattel paper or an instrument, reasonable care includes taking necessary steps to preserve rights against other persons.

(3) Unless otherwise agreed, where collateral is in the secured party's possession,

(

a) reasonable expenses, including the cost of insurance and payment of taxes or other charges incurred in obtaining and maintaining possession of the collateral and in its preservation are chargeable to the debtor and are secured by the collateral;

(

b) the risk of loss or damage, except if caused by the negligence of the secured party, is on the debtor to the extent of any deficiency in any insurance coverage;

(

c) the secured party may hold as additional security any increase or profits, except money, resulting from the collateral;

(

d) the secured party shall apply any increase or profits in the form of money resulting from the collateral, unless remitted to the debtor, immediately on its receipt in reduction of the obligation secured; and

(

e) the secured party shall keep the collateral identifiable, but fungible collateral may be commingled.

(4) Subject to subsection (2), a secured party may use the collateral

(

a) in the manner and to the extent provided in the security agreement;

(

b) for the purpose of preserving the collateral or its value; or

(

c) in accordance with an order of the court.

1998 cP-7.1 s18 ; 2007 cS-13.01 s110

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Rights of secured party with control of investment property as collateral

18.1

(1)Unless otherwise agreed by the parties and notwithstanding

section 18, a secured party having control under subsection 2(2) of investment property as collateral,

(

a) may hold as additional security proceeds received from the collateral;

(

b) shall either apply money or funds received from the collateral to reduce the secured obligation or remit that money or those funds to the debtor; and

(

c) may create a security interest in the collateral.

(2) Notwithstanding subsection (1) and

section 18, a secured party having control under subsection 2(2) of investment property as collateral may sell, transfer, use or otherwise deal with the collateral in the manner and to the extent provided in the security agreement.

2007 cS-13.01 s110

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Obtaining information

(1) The debtor, a creditor, a sheriff, a person with an interest in personal property of the debtor, or an authorized representative of any of them, may require a secured party, by a demand in writing, to send or make available the information or documentation referred to in subsection (3) to the person making the demand or, where the demand is made by the debtor, to a person at an address specified by the debtor.

(2) A demand under subsection (1) shall contain an address for reply and may be delivered to the secured party

(

a) at the most recent address of the secured party that was registered as part of a financing statement that includes a description of personal property of the debtor; or

(

b) at a more recent address that is the current address of the secured party if known by the person making the demand.

(3) Any or all of the following may be demanded under subsection (1):

(

a) a copy of a security agreement providing for a security interest held by the secured party in the personal property of the debtor;

(

b) a statement in writing of the amount of the indebtedness and of the terms of payment of the indebtedness, as of the date specified in the demand;

(

c) a written approval or correction of an itemized list of personal property attached to the demand indicating which items are collateral as of the date specified in the demand;

(

d) a written approval or correction of the amount of indebtedness and of the terms of payment of the indebtedness, as of the date specified in the demand;

(

e) sufficient information as to the location of the security agreement or a copy of it within the province to enable a person entitled to receive a copy of the security agreement to inspect it within the province.

(4) A person with an interest in personal property of the debtor is entitled to make a demand under subsection (1) only with respect to a security agreement providing for a security interest in the property in which the person has an interest.

(5) The secured party, on the demand of a person entitled to receive a copy of the security agreement referred to in paragraph (3)(a), shall permit the person to inspect the security agreement or a copy of it during normal business hours at the location referred to in paragraph (3)(e).

(6) Where a person makes a demand under subsection (1) for a written approval or correction of an itemized list referred to in paragraph (3)(

c) and the secured party claims a security interest in all of the debtor's present and after-acquired personal property, in all of the debtor's present and after-acquired personal property except specified items or kinds of personal property or in all of a specified kind of the debtor's personal property, the secured party may indicate this instead of approving or correcting the itemized list.

(7) A secured party shall comply with a demand under subsection (1) or (5) within

(a)

25 days after the demand is made, if the secured party is a trustee under a trust indenture; or

(b)

10 days after the demand is made, in the case of any other secured party.

(8) Where, without reasonable excuse, the secured party fails to comply with a demand under subsection (1) or (5) within the time specified in subsection (7) or provides an incomplete or incorrect reply to a demand under subsection (1), the person making the demand, in addition to another remedy provided by this Act, may apply to the court for an order requiring the secured party to comply with the demand.

(9) Where a person receiving a demand under subsection (1) or (5) no longer has an interest in the obligation or property of the debtor that is the subject of the demand, that person shall, within 15 days after receiving the demand, disclose the name and address of the immediate successor in interest and, if known, the latest successor in interest.

(10) Where, without reasonable excuse, the person receiving the demand fails to comply with subsection (9), the person making the demand, in addition to any other remedy provided in this Act, may apply to the court for an order requiring the person receiving the demand to comply.

(11) On an application under subsections (8) or (10), or on a separate application, the court may make an order requiring the secured party or the person receiving the demand to comply with the demand or to disclose the information.

(12) On an application under subsection (8) or (10), or on a separate application, the court may make

(

a) an order that it considers necessary to ensure compliance with the demand; and

(

b) an order that, in the event of non-compliance with an order made on an application under subsection (8), the security interest of the secured party in relation to which the demand was made is unperfected or extinguished and the person making the demand may register a financing change statement discharging any registration related to that security interest.

(13) On an application under subsection (8) or (10), or on an application by the secured party referred to in subsection (8) or by the person receiving a demand referred to in subsection (9), the court, subject to

section 67, may make

(

a) an order exempting the secured party or person receiving the demand in whole or in part from complying with subsection (7) or (9), unless the demand is made by the debtor; or

(

b) an order extending the time for compliance.

(14) Where a secured party replies to a demand under subsection (1), the secured party and a successor in interest referred to in subsection (9) are estopped, for the purpose of this Act, as against the person making the demand and any other person who can reasonably be expected to rely on the reply to the extent that the person relied on the reply, from denying

(

a) the accuracy of any of the information referred to in paragraph (3)(b), (

c) or (

d) that is contained in the reply; or

(

b) that the copy of the security agreement referred to in paragraph (3)(

a) that is provided with the reply is a true copy of that security agreement.

(15) A successor in interest referred to in subsection (9) is not estopped under subsection (14) where

(

a) the person making the demand knows the identity and address of the successor in interest; or

(

b) before the demand, a financing change statement has been registered under

section 46 disclosing the successor in interest as the secured party.

(16) The person to whom a demand is made under this

section may require payment in advance of a fee in the amount prescribed for each demand, but the debtor is entitled to a reply without charge once every 6 months.

(17) A secured party who receives a demand that purports to be made by a person entitled to make the demand under subsection (1) may act as if the person is entitled to make the demand unless the secured party knows that the person is not entitled to make it.

1998 cP-7.1 s19

PART III

PERFECTION AND PRIORITIES

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Perfected security interest

A security interest is perfected when

(

a) it has attached; and

(

b) all steps required for perfection under this Act have been completed,

regardless of the order of occurrence.

1998 cP-7.1 s20

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Securities account

20.1

(1)Perfection of a security interest in a securities account also perfects a security interest in the security entitlements carried in the securities account.

(2) Perfection of a security interest in a futures account also perfects a security interest in the futures contracts carried in the futures account.

2007 cS-13.01 s110

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Perfection on attachment

20.2

(1)A security interest arising in the delivery of a financial asset under subsection 13.1(3) is perfected when it attaches.

(2) A security interest in investment property created by a broker or securities intermediary is perfected when it attaches.

(3) A security interest in a futures contract or a futures account created by a futures intermediary is perfected when it attaches.

2007 cS-13.01 s110

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Unperfected security interests

(1) An unperfected security interest in collateral is not effective against

(

a) a trustee in bankruptcy if the security interest is unperfected at the time of the bankruptcy; or

(

b) a liquidator appointed under the Winding-up Act

( Canada

) if the security interest is unperfected when the winding-up order is made.

(2) An unperfected security interest in collateral is subordinate to the interest of a transferee of the collateral if the transferee

(

a) acquires the interest under a transaction that is not a security agreement;

(

b) gives value; and

(

c) acquires the interest without knowledge of the security interest and before the security interest is perfected.

(3) For the purpose of subsection (2), a purchaser of an instrument or a security or a holder of a negotiable document of title who acquires it under a transaction entered into in the ordinary course of the transferor's business has knowledge only if the purchaser or holder acquires the interest with knowledge that the transaction violates the terms of the security agreement creating or providing for the security interest.

1998 cP-7.1 s21

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Damages recoverable by lessor or consignor

Where the interest of a lessor under a lease for a term of more than one year or of a consignor under a commercial consignment is not effective against a person under paragraph 21(1)(

a) or (b), the lessor or consignor is considered to have suffered damages, as against the lessee or consignee in an amount equal to

(

a) the value of the leased or consigned goods at the time of the bankruptcy, winding-up order or seizure; and

(

b) the amount of the loss, other than that referred to in paragraph (a), resulting from the termination of the lease or consignment.

1998 cP-7.1 s22

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Grace period for perfection

(1) A purchase money security interest in collateral, other than an intangible, has priority over the interests of persons referred to in subsection 21(1) if it is perfected not later than 15 days after the debtor, or another person at the request of the debtor, obtains possession of the collateral, whichever is earlier.

(2) Where goods are shipped by common carrier to a debtor or to a person designated by the debtor, the debtor does not have possession of the goods for the purpose of subsection (1) until the debtor, or another person at the request of the debtor, has obtained actual possession of the goods or a document of title to the goods, whichever is earlier.

(3) A purchase money security interest in an intangible has priority over the interests of persons referred to in subsection 21(1) if it is perfected not later than 15 days after it attaches.

(4) A security interest in goods referred to in clause (pp)(ii)(

D) of the definition "security interest" in

section 2 has priority over the interests of persons referred to in subsection 21(1) if it is perfected not later than 30 days after the sale of the goods.

1998 cP-7.1 s23

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Continuity of perfection

(1) Where a security interest is originally perfected under this Act and is again perfected in some other way under this Act without an intermediate period when it is unperfected, the security interest is considered to be perfected continuously for the purpose of this Act.

(2) A transferee of a security interest has the same priority in relation to perfection of the security interest as the transferor had at the time of the transfer.

1998 cP-7.1 s24

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Perfection by possession

(1) Subject to

section 20, possession of the collateral by the secured party, or on the secured party's behalf by another person, perfects a security interest in

(

a) goods;

(

b) a negotiable document of title;

(

c) chattel paper;

(d)

[Rep. by 2007 cS-13.01 s110]

(

e) an instrument; and

(

f) money.

(2) A secured party does not have possession of collateral for the purpose of subsection (1) if

(

a) the collateral is in the actual or apparent possession or control of the debtor or the debtor's agent; or

(

b) possession is the result of seizure or repossession.

(3) Subject to

section 20, a secured party may perfect a security interest in a certificated security by taking delivery of the certificated security under

section 69 of the Securities Transfer Act

(4) Subject to

section 20, a security interest in a certificated security in registered form is perfected by delivery when delivery of the certificated security occurs under

section 69 of the Securities Transfer Act

and remains perfected by delivery until the debtor obtains possession of the security certificate.

1998 cP-7.1 s25 ; 2007 cS-13.01 s110

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Perfection by control of collateral

25.1

(1)Subject to

section 20, a security interest in investment property may be perfected by control of the collateral under subsection 2(2).

(2) Subject to

section 20, a security interest in investment property is perfected by control under subsection 2(2) from the time the secured party obtains control and remains perfected by control until,

(

a) the secured party does not have control; and

(

b) one of the following occurs:

(

i) if the collateral is a certificated security, the debtor has or acquires possession of the security certificate,

(ii)

if the collateral is an uncertificated security, the issuer has registered or registers the debtor as the registered owner, or

(iii)

if the collateral is a security entitlement, the debtor is or becomes the entitlement holder.

2007 cS-13.01 s110

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Perfection by registration

Subject to

section 20, registration of a financing statement perfects a security interest in collateral.

1998 cP-7.1 s26

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Temporary perfection

(1)Where a security interest in an instrument or a security is perfected under

section 25 and the secured party delivers the instrument or certificated security to the debtor for the purpose of

(

a) ultimate sale or exchange;

(

b) presentation, collection or renewal; or

(

c) registration of a transfer,

the security interest remains perfected notwithstanding

section 10 for the first 15 days after the collateral comes under the control of the debtor.

(2) Where a security interest in a negotiable document of title or in goods held by a bailee that are not covered by a negotiable document of title is perfected by possession under

section 25 and the secured party makes the document of title or goods available to the debtor for the purpose of

(

a) ultimate sale or exchange;

(

b) loading, unloading, storing, shipping or trans-shipping; or

(

c) manufacturing, processing, packaging or other dealing with goods in a manner preliminary to their sale or exchange,

the security interest remains perfected, notwithstanding

section 11, for the first 15 days after the collateral comes under the control of the debtor.

(3) On the expiry of the 15 day period referred to in subsection (1) or (2), a security interest referred to in those subsections is subject to the other provisions of this Act relating to the perfection of a security interest.

1998 cP-7.1 s27 ; 2007 cS-13.01 s110

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Perfection where goods held by a bailee

(1) Subject to

section 20, a security interest in goods in the possession of a bailee is perfected by

(

a) possession of the goods by the bailee on the secured party's behalf under

section 25;

(

b) registration of a financing statement relating to the goods under

section 26;

(

c) the issue by the bailee of a document of title to the goods in the name of the secured party;

(

d) the deposit by a secured party to whom a non-negotiable receipt has been transferred of the transfer with the warehouser who issued the receipt in accordance with

section 21 of the Warehouse Receipts Act

; or

(

e) perfection of a security interest in a negotiable document of title to the goods if the bailee has issued one.

(2) The issue of a negotiable document of title covering goods does not preclude any other security interest in the goods from arising during the period that the negotiable document of title is outstanding.

(3) A perfected security interest in a negotiable document of title covering goods takes priority over a security interest in the goods that is otherwise perfected after the goods become covered by the negotiable document of title.

1998 cP-7.1 s28

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Security interests in proceeds

(1) Subject to this Act, where collateral is dealt with or otherwise gives rise to proceeds, the security interest

(

a) continues in the collateral unless the secured party expressly or impliedly authorizes the dealing; and

(

b) extends to the proceeds.

(2) Where a secured party enforces a security interest against both the collateral and the proceeds, the amount secured by the security interest in the collateral and the proceeds is limited to the market value of the collateral at the date of the dealing.

(2.1) The limitation of the amount secured by a security interest as provided in subsection (1) does not apply where the collateral is investment property.

(3) A security interest in proceeds is a continuously perfected security interest where the interest in the original collateral is perfected by registration of a financing statement under

section 26 that

(

a) includes a description of the proceeds that would be sufficient to perfect a security interest in original collateral of the same kind;

(

b) includes a description of the original collateral, where the proceeds are of a kind that are within the description of the original collateral; or

(

c) includes a description of the original collateral, where the proceeds consist of money, cheques or deposit accounts in a bank, credit union or similar financial institution.

(4) Where the security interest in the original collateral is perfected other than in a manner referred to in subsection (3), the security interest in the proceeds is a continuously perfected security interest for the first 15 days after the security interest in the original collateral attaches to the proceeds but becomes unperfected on the expiry of that period, unless the security interest in the proceeds is otherwise perfected by any of the methods and under the circumstances specified in this Act for original collateral of the same kind.

1998 cP-7.1 s29 ; 2007 cS-13.01 s110

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Perfection and priority with respect to returned, seized or repossessed goods

(1) Where a debtor sells or leases goods that are subject to a security interest under circumstances in which the buyer or lessee takes free of the security interest under paragraph 29(1)(

a) or

section 31, the security interest reattaches to the goods if

(

a) the goods are returned to, seized or repossessed by the debtor or a transferee of chattel paper created by the sale or lease; and

(

b) the obligation secured remains unpaid or unperformed.

(2) Where a security interest reattaches under subsection (1), the perfection of the security interest and the time of registration or perfection shall be determined as if the goods had not been sold or leased if

(

a) the security interest was perfected by registration under

section 26 when the goods were sold or leased; and

(

b) the registration is effective when the goods are returned, seized or repossessed.

(3) Where a sale or lease of goods creates an account or chattel paper that is transferred to a secured party, and the goods are returned to, seized or repossessed by the debtor or the transferee of the chattel paper, the transferee of the account or chattel paper has a security interest in the goods that attaches when the goods are returned, seized or repossessed.

(4) A security interest in goods arising under subsection (3) is perfected if the security interest in the account or chattel paper was perfected when the goods were returned, seized or repossessed, but becomes unperfected on the expiry of 15 days after the return, seizure or repossession, unless the transferee registers a financing statement relating to the security interest or takes possession of the goods by seizure, repossession or otherwise, before the expiry of that 15 day period.

(5) A security interest in goods that a transferee of an account has under subsection (3) is subordinate to a perfected security interest that reattaches under subsection (1) and to a security interest of a transferee of chattel paper that arises under subsection (3).

(6) A security interest in goods that a transferee of chattel paper has under subsection (3) has priority over

(

a) a security interest in goods that reattaches under subsection (1); and

(

b) a security interest in goods as after-acquired property that attaches on the return, seizure or repossession of the goods,

if the transferee of the chattel paper would have priority under subsection 32(6) as to the chattel paper over an interest in the chattel paper claimed by the holder of the security interest in the goods.

(7) A security interest in goods given by a buyer or lessee of the goods referred to in subsection (1) that attaches while the goods are in the possession of the buyer, lessee or debtor and that is perfected when the goods are returned, seized or repossessed has priority over a security interest in the goods arising under this section.

1998 cP-7.1 s30

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Priority of buyers and lessees of goods

(1) In this

section

(a)

"buyer of goods" includes a person who obtains vested rights in goods under a contract to which the person is a party, as a consequence of the goods becoming a fixture or accession to property in which the person has an interest;

(b)

"ordinary course of business of the seller" includes the supply of goods in the ordinary course of business as part of a contract for services and materials; and

(c)

"seller" includes a person who supplies goods that become a fixture or accession under a contract with a buyer or under a contract with a person who is party to a contract with a buyer.

(2) A buyer or lessee of goods sold or leased in the ordinary course of business of the seller or lessor takes free of any perfected or unperfected security interest given by the seller or lessor or arising under

section 29 or 30, whether or not the buyer or lessee knows of it, unless the buyer or lessee also knows that the sale or lease constitutes a breach of the security agreement under which the security interest was created.

(3) A buyer or lessee of goods that are acquired as consumer goods takes free of a perfected or unperfected security interest in the goods if the buyer or lessee

(

a) gave value for the interest acquired; and

(

b) bought or leased the goods without knowledge of the security interest.

(4) Subsection (3) does not apply to a security interest in

(

a) a fixture; or

(

b) goods if the purchase price of the goods exceeds $1,000 or where the market value of the goods, in the case of a lease, exceeds $1,000.

(5) A buyer or lessee of goods who buys or leases the goods during any of the 15 day periods referred to in subsection 27(1) or (2), 29(4), 30(4) or

section 52 takes free of the security interest referred to in those provisions if the buyer or lessee

(

a) gave value for the interest acquired; and

(

b) bought or leased the goods without knowledge of the security interest and

(

i) in the case within subsection 27(1) or (2), 29(4) or 30(4), before the security interest was perfected by possession under

section 25 or by registration under

section 26, or

(ii)

in a case within

section 52, before the registration of the security interest was amended in accordance with that

section or the secured party took possession of the collateral.

(6) A buyer or lessee of goods takes free of a security interest in the goods perfected by registration under

section 26 if

(

a) the buyer or lessee bought or leased the goods without knowledge of the security interest; and

(

b) the goods were not described by serial number in the registration relating to the security interest.

(7) Subsection (6) applies only to goods that are equipment and that are of a kind that are prescribed as serial numbered goods.

(8) A sale or lease under subsection (2), (3), (5) or (6) may be

(

a) for cash;

(

b) by exchange for other property; or

(

c) on credit,

and includes the delivery of goods or a document of title under a pre-existing contract for sale but does not include a transfer as security for, or in total or partial satisfaction of, a money debt or past liability.

1998 cP-7.1 s31

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Priority re: investment property

31.1

(1)A purchaser of a security, other than a secured party, who

(

a) gives value;

(

b) does not know that the transaction constitutes a breach of a security agreement granting a security interest in the security to a secured party that does not have control of the security; and

(

c) obtains control of the security,

acquires the security free from the security interest.

(2) A purchaser referred to in subsection (1) is not required to determine whether a security interest has been granted in the security or whether the transaction constitutes a breach of a security agreement.

(3) An action based on a security agreement creating a security interest in a financial asset, however framed, may not be brought against a person who acquires a security entitlement under

section 96 of the Securities Transfer Act

for value and did not know that there has been a breach of the security agreement.

(4) A person who acquires a security entitlement under

section 96 of the Securities Transfer Act

is not required to determine whether a security interest has been granted in a financial asset or whether there has been a breach of the security agreement.

(5) If an action based on a security agreement creating a security interest in a financial asset could not be brought against an entitlement holder under subsection (3), it may not be asserted against a person who purchases a security entitlement, or an interest in it, from the entitlement holder.

2007 cS-13.01 s110

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Priority of holders

(1) A holder of money has priority over a security interest in it perfected by registration under

section 26 or temporarily perfected under subsection 29(4) if the holder

(

a) acquires the money without knowledge that it is subject to a security interest; or

(

b) is a holder for value, whether or not that person acquired the money without knowledge that it is subject to a security interest.

(2) A creditor who receives an instrument drawn or made by a debtor and delivered in payment of a debt owing to the creditor by that debtor has priority over a security interest in the instrument whether or not the creditor has knowledge of the security interest in the instrument at the time of delivery.

(3) A purchaser of an instrument has priority over a security interest in the instrument or security perfected by registration under

section 26 or temporarily perfected under subsection 27(1) or 29(4) if the purchaser

(

a) gave value for the instrument or security;

(

b) acquired the instrument without knowledge that it is subject to a security interest; and

(

c) took possession of the instrument.

(4) A holder to whom a negotiable document of title is negotiated has priority over a security interest in the document of title that is perfected by registration under

section 26 or temporarily perfected under subsection 27(2) or 29(4) if the holder

(

a) gave value for the document of title; and

(

b) acquired the document of title without knowledge that it is subject to a security interest.

(5) For the purpose of subsections (3) and (4), a purchaser of an instrument or a holder of a negotiable document of title who acquires it under a transaction entered into in the ordinary course of the transferor's business has knowledge only if the purchaser acquires the interest with knowledge that the transaction violates the terms of the security agreement creating or providing for the security interest.

(6) A purchaser of a chattel paper who takes possession of it in the purchaser's ordinary course of business and for new value has priority over a security interest in the chattel paper that

(

a) was perfected by registration under

section 26, if the purchaser does not have knowledge at the time of taking possession that the chattel paper is subject to a security interest; or

(

b) has attached to proceeds of inventory under

section 29, whatever the extent of the purchaser's knowledge.

1998 cP-7.1 s32 ; 2007 cS-13.01 s110

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Rights under Security Transfer Act

32.1

(1)This Act does not limit the rights that a protected purchaser of a security has under the Securities Transfer Act

(2) The interest of a protected purchaser of a security under the Securities Transfer Act

takes priority over an earlier security interest, even if perfected, to the extent provided in that Act.

(3) This Act does not limit the rights of or impose liability on a person to the extent that the person is protected against the assertion of a claim under the Securities Transfer Act

2007 cS-13.01 s110

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Priority of repairer's lien

A lien on goods that arises as a result of the provision in the course of business, of materials or services, in respect of the goods, has priority over a perfected or unperfected security interest in the goods unless the lien arises under

an Act that provides that it is not to have priority.

1998 cP-7.1 s33

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Alienability of debtor's rights in collateral

(1) In this section, "transfer" includes a sale, the creation of a security interest or a transfer under judgment enforcement proceedings.

(2) The rights of a debtor in collateral may be transferred consensually or by operation of law notwithstanding a provision in the security agreement prohibiting transfer or declaring a transfer to be a default, but a transfer by the debtor does not prejudice the rights of the secured party under the agreement or otherwise, including the right to treat a prohibited transfer as

an act of default.

1998 cP-7.1 s34

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Priority of purchase money security interest

(1) Subject to

section 29, a purchase money security interest in

(

a) collateral or its proceeds, other than intangibles or inventory, that is perfected not later than 15 days after the debtor, or another person at the request of the debtor, obtains possession of the collateral, whichever is earlier; or

(

b) an intangible or its proceeds that is perfected not later than 15 days after the security interest in the intangible attaches,

has priority over another security interest in the same collateral given by the same debtor.

(2) Subject to

section 29, a purchase money security interest in inventory or its proceeds has priority over another security interest in the same collateral given by the same debtor where

(

a) the purchase money security interest in the inventory is perfected when the debtor, or another person at the request of the debtor, obtains possession of the collateral, whichever is earlier;

(

b) the secured party gives a notice to another secured party who has registered, before the registration of the financing statement relating to the purchase money security interest in the inventory, a financing statement where the collateral description in the financing statement includes the same item or kind of collateral or includes accounts;

(

c) the notice referred to in paragraph (

b) states that the person giving the notice expects to acquire a purchase money security interest in inventory of the debtor, and describes the inventory by item or kind; and

(

d) the notice is given before the debtor, or another person at the request of the debtor, obtains possession of the collateral, whichever is earlier.

(3) A notice under subsection (2) may be given in accordance with

section 70 or by registered mail addressed to the address of the person to be notified that was registered as part of the financing statement referred to in paragraph (2)(b).

(4) A purchase money security interest in goods, or subject to

section 29, in their proceeds, taken by a seller, lessor or consignor of the collateral, that is perfected

(

a) in the case of inventory, when a debtor, or another person at the request of the debtor, obtains possession of the collateral, whichever is earlier; and

(

b) in the case of collateral other than inventory, not later than 15 days after a debtor, or another person at the request of a debtor, obtains possession of the collateral, whichever is earlier,

has priority over another purchase money security interest in the same collateral given by the same debtor.

(5) A purchase money security interest in collateral as original collateral has priority over a purchase money security interest in the same collateral as proceeds, if it is perfected

(

a) in the case of inventory, when a debtor, or another party at the request of a debtor, obtains possession of the collateral, whichever is earlier; and

(

b) in the case of collateral other than inventory, not later than 15 days after a debtor, or another person at the request of a debtor, obtains possession of the collateral, whichever is earlier.

(6) Where goods are shipped by common carrier to a debtor or to a person designated by a debtor, the debtor does not have possession of the goods for the purpose of this

section until the debtor, or another person at the request of the debtor, has obtained actual possession of the goods or a document of title to the goods, whichever is earlier.

(7) A purchase money security interest in an item of collateral does not extend to or continue in the proceeds of the item after the obligation to pay the purchase price of the item or repay the value given for the purpose of enabling the debtor to acquire rights in it has been discharged.

(8) A perfected security interest in crops or their proceeds given for value to enable a debtor to produce the crops and given while the crops are growing crops or during a period of 6 months immediately before the time the crops become growing crops, has priority over another security interest in the same collateral given by the same debtor.

(9) A perfected security interest in fowl, cattle, horses, sheep, swine or fish or their proceeds given for value to enable the debtor to acquire food, drugs or hormones to be fed to or placed in the animals or fish has priority over another security interest in the same collateral or its proceeds given by the same debtor other than a perfected purchase money security interest.

1998 cP-7.1 s35

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Residual general priority rules

(1) Where this Act provides no other method for determining priority between competing security interests in the same collateral, the following priority rules apply:

(

a) priority between perfected security interests is determined by the order of the occurrence of the following:

(

i) the registration of a financing statement under

section 26 without regard to the time of attachment of the security interest,

(ii)

possession of the collateral under

section 25 without regard to the time of attachment of the security interest, or

(iii)

perfection under sections 6, 8, 27, 30 or 75,

whichever is the earliest;

(

b) a perfected security interest has priority over an unperfected security interest; and

(

c) priority between unperfected security interests is determined by the order of attachment of the security interests.

(2) For the purpose of subsection (1), a continuously perfected security interest shall be treated at all times as if perfected by the method by which it was originally perfected.

(3) For the purpose of subsection (1) and subject to

section 29, the time of registration, possession or perfection of a security interest in original collateral is also the time of registration, possession or perfection of a security interest in its proceeds.

(4) A security interest in goods that are equipment and are of a kind that are prescribed as serial numbered goods is not registered or perfected by registration for the purpose of subsection (1), (7) or (8) or 35(1) unless a financing statement relating to the security interest that includes a description of the goods by serial number is registered.

(5) Subject to subsection (6), the priority which a security interest has under subsection (1) applies to all advances, including future advances.

(6) A perfected security interest that would otherwise have priority over a notice of judgment registered under the Judgment Enforcement Act

has that priority only to the extent of

(

a) advances made before the secured party acquires knowledge of the notice of judgment within the meaning of

section 47 of the Judgment Enforcement Act;

(

b) advances made under an obligation owing to a person other than the debtor entered into by the secured party before acquiring the knowledge referred to in paragraph (a); and

(

c) reasonable costs incurred and expenditures made by the secured party for the protection, preservation or repair of the collateral.

(7) Where a registration lapses as a result of a failure to renew it or where a registration is discharged without authorization or in error, and the secured party re-registers in accordance with the regulation within 30 days after the lapse or discharge, the lapse or discharge does not affect the priority ranking of the security interest to which the lapsed or discharged registration relates as against a competing perfected security interest that immediately before the lapse or discharge had a subordinate priority ranking, except to the extent that the competing security interest secures advances made or contracted for after the lapse or discharge and before the re-registration.

(8) Where a debtor transfers an interest in collateral that, at the time of the transfer, is subject to a perfected security interest, that security interest has priority over any other security interest granted by the transferee before the transfer except to the extent that the security interest granted by the transferee secures advances made or contracted for

(

a) after the expiry of 15 days from when the secured party who holds the security interest in the transferred collateral has knowledge of the information required to register a financing change statement in accordance with

section 52 disclosing the transferee as the new debtor; and

(

b) before the secured party referred to in paragraph (

a) takes possession of the collateral or registers a financing change statement in accordance with

section 52 disclosing the transferee as the new debtor.

(9) Subsection (8) does not apply if the transferee acquires the debtor's interest free of the security interest granted by the debtor.

1998 cP-7.1 s36

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Priority among conflicting security interests

36.1

(1)The rules in this

section govern priority among conflicting security interests in the same investment property.

(2) A security interest of a secured party having control of investment property under subsection 2(2) has priority over a security interest of a secured party that does not have control of the investment property.

(3) A security interest in a certificated security in registered form which is perfected by taking delivery under subsection 25(3) and not by control under

section 25.1 has priority over a conflicting security interest perfected by a method other than control.

(4) Conflicting security interests of secured parties each of which has control under subsection 2(2) rank according to priority in time of,

(

a) if the collateral is a security, obtaining control;

(

b) if the collateral is a security entitlement carried in a securities account,

(

i) the secured party's becoming the person for which the securities account is maintained, if the secured party obtained control under paragraph 26(1)(

a) of the Securities Transfer Act

(ii)

the securities intermediary's agreement to comply with the secured party's entitlement orders with respect to security entitlements carried or to be carried in the securities account, if the secured party obtained control under paragraph 26(1)(

b) of the Securities Transfer Act,

(iii)

if the secured party obtained control through another person under paragraph 26(1)(

c) of the Securities Transfer Act

, when the other person obtained control; or

(

c) if the collateral is a futures contract carried with a futures intermediary, the satisfaction of the requirement for control specified in subparagraph 2(2)(d)(ii) with respect to futures contracts carried or to be carried with the futures intermediary.

(5) Notwithstanding subsection (4), a security interest held by a securities intermediary in a security entitlement or a securities account maintained with the securities intermediary has priority over a conflicting security interest held by another secured party.

(6) Notwithstanding subsection (4), a security interest held by a futures intermediary in a futures contract or a futures account maintained with the futures intermediary has priority over a conflicting security interest held by another secured party.

(7) Conflicting security interests granted by a broker, securities intermediary or futures intermediary which are perfected without control under subsection 2(2) rank equally.

(8) In all other cases, priority among conflicting security interests in investment property is governed by

section 36.

2007 cS-13.01 s110

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Security interests in fixtures

(1) In this

section "secured party" includes a receiver.

(2) Except as provided in

section 31 and subsections (3), (4) and (9), a security interest in goods that attaches before or when the goods become fixtures has priority with respect to the goods over a claim to the goods made by a person with an interest in the land.

(3) A security interest referred to in subsection (2) is subordinate to the interest of a person who acquires for value an interest in the land after the goods become fixtures, including an assignee for value of the interest of a person with an interest in the land at the time the goods become fixtures, if the interest is acquired without fraud and before notice of the security interest is registered in accordance with

section 50.

(4) A security interest referred to in subsection (2) is subordinate to the interest of a person with a registered mortgage of the land who, after the goods become fixtures,

(

a) makes an advance under the mortgage, but only with respect to that advance; or

(

b) obtains

(

i) an order for sale,

(ii)

an order approving a power of sale,

(iii)

an order for foreclosure, or

(iv)

an order for foreclosure and sale

without fraud and before notice of the security interest in the fixtures is registered in accordance with

section 50.

(5) Where a notice of a security interest in fixtures has not been registered in accordance with

section 50 when a search is made of the records of the Registry of Deeds by or on behalf of a person with a registered mortgage of the land, an advance under the mortgage made on the same day that the search was made is considered to have been made before registration of a notice under

section 50, notwithstanding that the notice was registered on the same day that the search was made.

(6) The priority under this

section of a person with an interest in the land referred to in subsection (3) or of a person with a registered mortgage of the land referred to in subsection (4) is not affected by priority rights in the land under the Registration of Deeds Act, 2009

(7) A security interest in goods that attaches after the goods become fixtures is subordinate to the interest of a person who has an interest in the land when the goods become fixtures and who

(

a) has not consented to the security interest;

(

b) has not disclaimed an interest in the goods or fixtures;

(

c) has not entered into an agreement entitling the person to remove the goods; or

(

d) is not otherwise precluded from preventing the debtor from removing the goods.

(8) A security interest in goods that attaches after the goods become fixtures is subordinate to the interest of a person who acquires an interest in the land after the goods become fixtures if the interest is acquired without fraud and before notice of the security interest is registered in accordance with

section 50.

(9) A security interest in goods that attaches before, when or after the goods become fixtures is subordinate to the interest of a creditor of the debtor who registers a notice of judgment under the Judgment Enforcement Act

before the perfection or registration of the security interest under this Act.

(10) The interest of a creditor of the debtor referred to in subsection (9) does not take priority over a purchase money security interest in goods that become fixtures if the security interest was perfected or registered not later than 15 days after the day that the debtor, or another person at the request of the debtor, obtained possession of the goods.

(11) A secured party who has the right, under this Act, to remove goods from land shall exercise the right of removal in a manner that causes no unnecessary damage or injury to the land and to other property situated on it or that puts the occupier of the land to any greater inconvenience than is necessarily incidental to the removal of the goods.

(12) A person, other than the debtor, who has an interest in the land when the goods subject to the security interest are affixed to the land is entitled to reimbursement for any damage to the interest of the person in the land caused during the removal of the goods, but is not entitled to reimbursement for diminution in the value of the land caused by the absence of the goods removed or by the necessity to replace them.

(13) A person entitled to reimbursement under subsection (12) may refuse permission to remove the goods until the secured party has given adequate security for reimbursement.

(14) The secured party may apply to the court for one or more of the following orders:

(

a) an order determining the person entitled to reimbursement under this section;

(

b) an order determining the amount and kind of security to be provided by the secured party;

(

c) an order specifying the depository for the security;

(

d) an order authorizing the removal of the goods without the provision of security for reimbursement under subsection (13).

(15) Where the interest of a person with an interest in the land is subordinate to a security interest in the goods under this section, the person with an interest in the land may, before the goods have been removed from the land by the secured party, retain the goods on payment to the secured party of the lesser of the following:

(

a) the amount secured by the security interest in the goods that has priority over the interest of the person with the interest in the land; and

(

b) the market value of the goods were the goods to be removed from the land.

(16) A secured party who has a right to remove goods from land shall give to each person who appears by the records of the Registry of Deeds to have an interest in the land, a notice of the intention of the secured party to remove the goods.

(17) A notice under subsection (16) shall contain

(

a) the name and address of the secured party;

(

b) a description of the goods to be removed;

(

c) the amount required to satisfy the obligation secured by the security interest;

(

d) the market value of the goods;

(

e) a description of the land to which the goods are affixed; and

(

f) a statement of intention to remove the goods unless the amount referred to in subsection (15) is paid on or before a specified date that is not less than 15 days after the notice is given under with subsection (16).

(18) A notice under subsection (16) shall be given at least 15 days before removal of the goods and may be given in accordance with

section 70 or by registered mail addressed to the address of the person to be notified as it appears in the records of the Registry of Deeds.

(19) A person entitled to receive a notice under subsection (16) may apply to the court for an order postponing removal of the goods from the land.

1998 cP-7.1 s37 ; 2019 c8 s25

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Security interests in crops

(1) In this

section "secured party" includes a receiver.

(2) Except as provided in subsections (3), (4), (5) and (7), a security interest in crops has priority with respect to the crops over a claim to the crops made by a person with an interest in the land.

(3) A security interest in crops is subordinate to the interest of a person who acquires for value an interest in the land while the crops are growing crops, including an assignee for value of the interest of a person with an interest in the land while the crops are growing crops, if the interest is acquired without fraud and before notice of the security interest in the crops is registered in accordance with

section 50.

(4) A security interest in crops is subordinate to the interest of a person with a registered mortgage of the land who, after the crops become growing crops,

(

a) makes an advance under the mortgage, but only with respect to that advance; or

(

b) obtains an order for sale or foreclosure,

without fraud and before notice of the security interest in the crops is registered in accordance with

section 50.

(5) Where a notice of a security interest in crops has not been registered in accordance with

section 50 when a search is made of the records of the Registry of Deeds by or on behalf of a person with a registered mortgage of the land, an advance under the mortgage made on the same day that the search was made is considered to have been made before registration of a notice under

section 50, notwithstanding that the notice was registered on the same day that the search was made.

(6) The priority under this

section of a person with an interest in the land referred to in subsection (4) is not affected by priority rights in the land under the Registration of Deeds Act

, 2009.

(7) A security interest in growing crops is subordinate to the interest of a creditor of the debtor who registers a notice of judgment under the Judgment Enforcement Act

before the perfection or registration of the security interest under this Act.

(8) The interest of a creditor of the debtor referred to in subsection (7) does not take priority over a purchase money security interest in the crops or a security interest in the crops referred to in subsection 35(8) if the security interest was perfected or registered not later than 15 days from the day after the security interest in the crops attaches.

(9) Subsections 37(11) to (19) apply with the necessary changes to the seizure and removal of growing crops from land.

1998 cP-7.1 s38 ; 2019 c8 s25

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Security interest in accessions

(1) In this

section

(a)

"other goods" means goods to which an accession is installed or affixed;

(b)

"secured party" includes a receiver; and

(c)

"the whole" means an accession and the goods to which the accession is installed or affixed.

(2) Except as provided in

section 31 and subsections (3) and (4), a security interest in goods that attaches before or when the goods become an accession has priority with respect to the goods over a claim to the goods as an accession made by a person with an interest in the whole.

(3) A security interest referred to in subsection (2) is subordinate to the interest of a person who, after the goods become an accession, acquires for value an interest in the whole, including an assignee of the interest of a person with an interest in the whole if the assignee acquires the interest for value and after the goods become an accession and before a financing statement in relation to the security interest is registered.

(4) A security interest referred to in subsection (2) is subordinate to the interest of a person with a security interest taken and perfected in the whole who

(

a) makes an advance under a security agreement after the goods become an accession, but only with respect to that advance; or

(

b) acquires the right to retain the whole in satisfaction of the obligation secured,

without knowledge of the security interest in the accession and before it is perfected.

(5) A security interest in goods that attaches after the goods become an accession is subordinate to the interest of a person who has an interest in the other goods when the goods become an accession and who

(

a) has not consented to the security interest;

(

b) has not disclaimed an interest in the goods or accessions;

(

c) has not entered into an agreement entitling the person to remove the accession; or

(

d) is not otherwise precluded from preventing the debtor from removing the accession.

(6) A security interest in goods that attaches after the goods become an accession is subordinate to the interest of a person who acquires an interest in the whole after the goods become an accession, if the interest is acquired without knowledge and before the security interest in the accession is perfected.

(7) A secured party who has the right, under this Act, to remove an accession from the whole shall exercise the right of removal in a manner that causes no unnecessary damage or injury to the other goods or that puts the person in possession of the whole to any greater inconvenience that is necessarily incidental to the removal of the accession.

(8) A person, other than the debtor, who has an interest in the whole when the goods subject to the security interest become an accession is entitled to reimbursement for any damages to the interest of that person in the whole caused during the removal of the accession, but is not entitled to reimbursement for diminution in the value of the whole caused by the absence of the accession or by the necessity to replace it.

(9) A person entitled to reimbursement under subsection (8) may refuse permission to remove the accession until the secured party has given adequate security for the reimbursement.

(10) The secured party may apply to the court for one or more of the following orders:

(

a) an order determining the person entitled to reimbursement under this section;

(

b) an order determining the amount and kind of security to be provided by the secured party;

(

c) an order specifying the depository for the security;

(

d) an order authorizing the removal of the accession without the provision of security for reimbursement under subsection (9).

(11) Where the interest of a person with an interest in the whole is subordinate to a security interest in the accession under this section, the person with an interest in the whole may, before the accession has been removed from the whole by the secured party, retain the accession on payment to the secured party of the lesser of the following:

(

a) the amount secured by the security interest entitled to priority; and

(

b) the market value of the accession were the accession to be removed from the other goods.

(12) The secured party who has a right to remove the accession from the whole shall give a notice of the secured party's intention to remove the accession to each person

(

a) who is known by the secured party to have an interest in the other goods or in the whole; and

(

b) who has registered a financing statement that includes the name of the debtor and a description of the other goods, or that includes the serial number of the other goods if the other goods are of a kind that are prescribed as serial numbered goods.

(13) A notice under subsection (12) shall contain

(

a) the name and address of the secured party;

(

b) a description of the goods to be removed;

(

c) the amount required to satisfy the obligations secured by the security interest;

(

d) the market value of the accession;

(

e) a description of the other goods; and

(

f) a statement of intention to remove the accession unless the amount referred to in subsection (11) is paid on or before a specified date that is not less than 15 days after the notice is given in accordance with subsection (12).

(14) A notice under subsection (12) shall be given at least 15 days before removal of the accession and may be given in accordance with

section 70 or by registered mail addressed to the address of the person to be notified that was registered as part of the financing statement referred to in subsection (12).

(15) A person entitled to receive a notice under subsection (12) may apply to the court for an order postponing removal of the accession.

1998 cP-7.1 s39

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Security interests

(1) A perfected security interest in goods that subsequently become part of a product or mass continues in the product or mass if the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product.

(2) Subject to subsections (4) and (6), where more than one perfected security interest continues in the same product or mass under subsection (1), and each was a security interest in separate goods, the security interests are entitled to share in the product or mass according to the ratio that the obligation secured by each security interest bears to the sum of the obligations secured by all security interests.

(3) For the purpose of

section 36, perfection of a security interest in goods that subsequently become part of a product or mass is also perfection of the security interest in the product or mass.

(4) For the purpose of subsection (2), the obligation secured by a security interest that continues in the product or mass under subsection (1) is limited to the market value of the goods when the goods become part of the product or mass.

(5) Any priority that a perfected security interest that continues in the product or mass under subsection (1) has over an interest in the product or mass is limited to the market value of the goods when the goods became part of the product or mass.

(6) A perfected purchase money security interest in goods that continues in the product or mass under subsection (1) has priority over a non-purchase money security interest

(

a) in the goods that continues in the product or mass under subsection (1); and

(

b) in the product or mass, other than as inventory, given by the same debtor.

(7) A perfected purchase money security interest in goods that continues in the product or mass under subsection (1) has priority over any non-purchase money security interest in the product or mass as inventory given by the same debtor where

(

a) the secured party with the purchase money security interest gives a notice to any secured party with a non-purchase money security interest in the product or mass who has registered, before the identity of the goods is lost in the product or mass, a financing statement that includes a description of the product or mass;

(

b) the notice referred to in paragraph (

a) states that the person giving the notice has acquired or expects to acquire a purchase money security interest in goods supplied to the debtor as inventory; and

(

c) the notice is given before the identity of the goods is lost in the product or mass.

(8) A notice under subsection (7) may be given in accordance with

section 70 or by registered mail addressed to the address of the person to be notified that was registered as part of the financing statement referred to in paragraph (7)(a).

(9) This

section does not apply to a security interest in an accession to which

section 39 applies.

1998 cP-7.1 s40

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Voluntary subordination

(1) A secured party may subordinate, in a security agreement or otherwise, the secured party's security interest to any other interest.

(2) A subordination is effective according to its terms between the parties and may be enforced by a third party if the third party is the person or one of the class of persons for whose benefit the subordination was intended.

1998 cP-7.1 s41

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Assignments of intangibles

(1) In this

section

(a)

"account debtor" means a person who is obligated under an intangible or chattel paper; and

(b)

"assignee" includes a secured party and a receiver.

(2) Unless the account debtor on an intangible or chattel paper has made an enforceable agreement not to assert defenses or claims arising out of a contract, the rights of an assignee of the intangible or chattel paper are subject to

(

a) the terms of the contract between the account debtor and the assignor and a defense or claim arising from the contract or a closely connected contract; and

(

b) another defense or claim of the account debtor against the assignor that accrues before the account debtor acquires knowledge of the assignment.

(3) A modification of or substitution for a contract made in good faith and in accordance with reasonable commercial standards and without material adverse effect on the assignee's rights under the contract or the assignor's ability to perform the contract is effective against the assignee unless the account debtor has otherwise agreed.

(4) Subsection (3) applies

(

a) to the extent that an assigned right to payment arising out of the contract has not been earned by performance; and

(

b) notwithstanding that notice of the assignment has been given to the account debtor.

(5) Where the contract has been substituted or modified in the manner referred to in subsection (3), the assignee obtains rights corresponding to those of the assignor under the modified or substituted contract.

(6) Nothing in subsections (3) to

(5) affects the validity of a term in an assignment agreement that provides that a modification or substitution referred to in those subsections is a breach of contract by the assignor.

(7) Where collateral which is either an intangible or chattel paper is assigned, the account debtor may make payments to the assignor

(

a) before the account debtor receives notice of the assignment in accordance with subsection (8); or

(

b) after the account debtor receives notice of the assignment if the account debtor requests the assignee to furnish proof of the assignment and the assignee fails to furnish proof within 15 days after the request.

(8) A notice of an assignment under subsection (7) shall

(

a) state that the amount payable or to become payable under the contract has been assigned and that payment is to be made to the assignee; and

(

b) identify the contract under which the amount payable is to become payable.

(9) Payment by an account debtor to an assignee after the account debtor receives notice of the assignment in accordance with subsection (8) discharges the obligation of the account debtor to the extent of the payment.

(10) A term in a contract between a debtor on an account or chattel paper and an assignor that prohibits or restricts assignment of the whole of the account or chattel paper for money due or to become due is binding on the assignor only to the extent that the assignor may be liable in damages for breach of the term, but is unenforceable against third parties.

1998 cP-7.1 s42

PART IV

REGISTRATION

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Personal property registry

(1) There shall be an electronic registry known as the Personal Property Registry for the purpose of registrations under this Act and another Act that provides for registration in the registry.

(2) An employee of the department shall be designated as registrar.

(3) The registrar may designate one or more persons by name or position as deputy registrars.

(4) The registrar shall supervise and administer the operation of the registry and shall have the powers and duties that are set out in this Act or the regulations or another Act that provides for registration in the registry or the regulations under that Act.

(5) A deputy registrar has the same powers and duties as the registrar, subject to the direction and supervision of the registrar.

(6) The registrar and deputy registrars may designate one or more persons to act on their behalf.

(7) When it is not practical, in the opinion of the registrar, to provide one or more registry services, the registrar may refuse access to the registry or otherwise suspend one or more of its services.

1998 cP-7.1 s43

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Registration of financing statements

(1) A person may register a financing statement in the registry at an office of the registry in accordance with the regulations.

(2) (3) A person who has entered into an agreement with the registrar under subsection (2) may register a financing statement in the registry in accordance with the agreement and the regulations.

(4) Registration of a financing statement is effective from the time that a registration number, date and time is assigned to the registration in the registry.

(5) A financing statement may be registered before or after a security agreement is made or a security interest attaches.

(6) A registration may relate to one or more than one security agreement.

(7) The validity of the registration of a financing statement is not affected by any defect, irregularity, omission or error in the financing statement unless the defect, irregularity, omission or error is seriously misleading.

(8) Subject to subsection (10), a registration is invalid if there is a seriously misleading defect, irregularity, omission or error in

(

a) the name of any of the debtors required to be included in the financing statement other than a debtor who does not own or have rights in the collateral; or

(

b) the serial number of the collateral if the collateral is consumer goods of a kind that are prescribed by regulation as serial numbered goods.

(9) In order to establish that a defect, irregularity, omission or error is seriously misleading, it is not necessary to prove that anyone was actually misled by it.

(10) Failure to include a description of any item or kind of collateral in a financing statement does not affect the validity of the registration with respect to the description of other collateral included in the financing statement.

(11) The secured party or person named as secured party in a financing statement shall give to each person named as debtor in the statement, within 30 days after it is registered, a verification statement in accordance with the regulations, except where that person has waived in writing the right to receive it.

1998 cP-7.1 s44

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Duration, renewal of and amendments to regist