Federal Security Interests Research Study and Report 2000

Victoria BC Aug. 2000

Civil Law Section Commercial Law Strategy

Federal Security Interests - Research Study and Report

Prepared by: Fraser Milner Casgrain for the Law Commission of Canada

April 2000

TABLE OF CONTENTS

PART ONE: INTRODUCTION

PART TWO:
FEDERAL STATUTORY PROVISIONS DEALING WITH SECURITY INTERESTS

I. CLASSIFICATION

II. BANKS AND OTHER FINANCIAL INSTITUTIONS

A. Introduction

B. Provisions authorizing the taking or granting of security interests

C. Provisions that purport to create loan guarantee or loan insurance regime

1. Canada Student Loans Act

2. Canada Small Business Financing Act

D. Bank Act security.

1. Summary of section 427

2. Analysis

III. RAILWAYS AND ROLLING STOCKS

A. Statutory Provisions

B. The Current Security Registration Regime

1. Validity, Priority and Enforcement of Security Interests

2. The Registration System

C. Intermodal Transportation and Railway Security

D. International Interests in Mobile Equipment

E. Conclusion

IV. AGRICULTURAL AND AGRI-FOOD ENTERPRISES

A. The Farm Debt Mediation Act

1.  Constitutional Authority

2. Applications by Insolvent Farmers

3. Stay of Proceedings

(a) "Proceedings"

(b). Extension of the Stay of Proceedings

(c)  Preservation of Collateral

4. Financial Review and Mediation

5. Notice Requirement

B. Other Federal Legislaton

1. The Agricultural Marketing Programs Act

2. The Farm Credit Corporation Act

3. The Farm Improvement and Marketing Cooperatives Loans Act

C. Conclusion

V. INTELLECTUAL PROPERTY

A. INTRODUCTION

B. OVERVIEW OF THE CURRENT SYSTEM

1. The Federal IP Legislation

(a) The Copyright Act

(b)  The Trade-Marks Act

(c) The Patent Act

2. The Provincial PPSA Legislation

C. Interplay Between Federal and Provincial Legislation

D. A Single Federal Registry for Security Interests in IP

E. Repealing the Federal Registration Provisions

F. Constitutional Issues

G. Conclusion

VI.  FEDERAL PROPERTY

A. The Federal Real Property Act

B. Assignment of Crown Debt Under The Financial Administration Act

C. Assignment of Payment Bond Debt Due to the Crown under the FAA

D.  Analysis and Conclusion

VII. INDIANS AND LANDS RESERVED TO INDIANS

A. Current Statutory/Regulatory Scheme

B. Constitutional Jurisdiction

C. Problems and Issues With the Current Regime

1. Difficulties in Obtaining Valid Security

2. Security Over Land

3. Security Over Personal Property

4. Provision of Guarantee

5. Garnishment

6. Application of s. 89 of the Indian Act to land

7. Ability of Band Councils to Bind Subsequent Band Councils

D. Attempts to Obtain Valid Security

1. Federal Government to grant exemption under s. 4(2) of the Indian Act

2. Structure of the transaction

3. Allow for seizure by a status Indian

E. First Nations Land Management Act

F. The Impact of the FNLMA on the Indian Act Registration Regime.

G. Intellectual Property in Cultural and Artisan Rights

VIII. NON CONSENSUAL FEDERAL SECURITY INTERESTS

A. Statutory Provisions

B. The Income Tax Act, the Excise Tax Act and the Deemed Statutory Trust

C. Enhanced Garnishment Under the Income Tax Act and the Excise Tax Act

D. Certificates Issued Under s. 223 of the Income Tax Act and s. 316 of the Excise Tax Act

E. Analysis and Conclusion

IX. BANKRUPTCY ISSUES

A. The Impact of the BIA on Priorities

1. Crown Claims and Secured Creditors under the BIA

2.  Landlord's Right of Distraint under the Commercial Tenancies Act

B. Notice Requirements under the PPSA and the BIA

1. Notice Requirements under the PPSA and at Common Law

2. The Notice Requirement under the BIA

C. The Interplay Between the BIA and the Customs Act

D. Conclusion

X. PENSION AND BENEFITS ISSUES

A. Current Statutory/Regulatory Scheme.

B. Garnishment, Attachment or Diversion of Pensions

1. Division of Pension Benefits Between Spouses

2.  Receivership and Bankruptcy

3. Pension Payments and the Bankruptcy and Insolvency Act

C. Canada Pension Plan, Old Age Security

D. Conclusion

II. MISCELLANEOUS

A. The Canada Business Corporations Act

B. The Canada Cooperatives Act

C. The Canada Corporations Act

D.; The Expropriation Act

E. Conclusion.

PART THREE: POLICY AND CONSTITUTIONAL ISSUES

I. OBJECTIVES OF THE CURRENT FEDERAL PERSONAL PROPERTY SECURITY REGIME

A. What are the statutory objectives underlying the above-mentioned provisions?

B. re these objectives fulfilled by the current federal personal property security regime?

C. Should the current federal personal property security regime strive to fulfill other objectives in light of modern commercial practices?

D. Considerations for future reform

II. OPTIONS AVAILABLE TO THE FEDERAL GOVERNMENT

A. Evaluation of the various options

APPENDIX A: Summary of legislative and regulatory provisions relating to Banks and other financial institutions

APPENDIX B: Summary of legislative and regulatory provisions relating to railways and rolling stocks

APPENDIX C: Summary of legislative and regulatory provisions relating to Agricultural and Agri-Food enterprises

APPENDIX D: Summary of legislative and regulatory provisions relating to intellectual property

APPENDIX E: Summary of legislative and regulatory provisions relating o federal property

APPENDIX F: Summary of legislative and regulatory provisions relating to indians and lands reserved to indians

APPENDIX G: Summary of legislative and regulatory provisions relating  to non-consensual federal security interests

APPENDIX H: Summary of legislative and regulatory provisions relating to bankruptcy issues

APPENDIX I: Summary of legislative and regulatory provisions relating to pension and benefits issues

APPENDIX J: Summary of miscellaneous legislative and regulatory provisions

APPENDIX K: Bibliography

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