- Possible Changes to the Canadian Personal Property Security Acts 2000
- Section 2(1) – Definitions
- Section 2(7) – Inter-jurisdictional Harmonization
- Section 3 – Scope of Application of the PPSA
- Section 4 – Exclusions from the Act
- Sections 5-8 – Conflict of Laws Provisions
- Section 9 – Effectiveness of Security Agreements
- Section 10 – Evidentiary Requirements for Security Agreements
- Section 12 – Attachment of Security Interests
- Section 13 – Security in After-Acquired Collateral
- Section 14 – Future Advances
- Section 17 – Rights and Obligations of Secured Party
- Section 18– Secured Party’s Duty to Provide Information about the Security Agreement
- Section 19 – Perfection of Security Interests
- Section 20 – Subordination of Unperfected Security Interests
- Section 21 - Deemed Damages Recoverable
- Section 24 – Perfection by Possession
- Section 29 – Security Interests in Returned, Seized or Repossessed Goods
- Section 30 – Priority of Buyers and Lessees of Goods and Transferees of Licenses
- Section 31 – Priority of Holders and Purchasers of Money and Documentary Intangibles
- Section 32 – Priority of Repairers’ Liens
- Section 34 – Priority of Purchase Money Security Interests
- Section 35 – Residual Priority Rules
- Section 41 – Effects on Account Debtors of an Assignment of Accounts or Chattel Paper
- All Pages
Section 24 – Perfection by Possession
24(3) For the purposes of subsection (1) a secured party has possession of chattel paper, including electronic chattel paper, if the chattel paper is specifically inscribed with the name of the secured party as purchaser.
1. Proposed new subsection 24(3) would recognize and legitimate the practice of ‘marking’ chattel paper to identify the secured party as the assignee or purchaser of the chattel paper as an alternative to taking physical possession. The proposed change would also allow “electronic chattel paper” to be perfected by possession since inscription is feasible for both tangible and intangible paper whereas physical possession is feasible only for tangible paper.
2. See further the proposed definition of “electronic chattel paper” in section 2 and the proposed amendments to section 31 on priority below.
Section 28 – Effect of Disposition of the Collateral and Security Interests in Proceeds
28(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 free of the security interest; and
(b) extends to the proceeds; . . .
28.(2) A security interest in proceeds is a continuously perfected security interest if the interest in the original collateral is perfected by registration of a financing statement that:
(a) contains a description of the proceeds that would be sufficient to perfect a security interest in original collateral of the same kind;
(b) covers the original collateral, if the proceeds are of a kind that are within the description of the original collateral; or
(c) covers the original collateral, if the proceeds consist of money, cheques or deposit accounts in banks or similar institutions.
28.(3) Where the security interest in the original collateral is perfected but the requirements of subsection (2) have not been met, in a manner other than a manner described in subsection (2), the security interest in the proceeds is a continuously perfected security interest, but becomes unperfected on the expiration of 15 days after the security interest in the original collateral attaches to the proceeds 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.
1. The proposed addition to section 28(1) explicitly confirms what is already understood, i.e. that a security interest continues in collateral disposed of by the debtor unless the secured party authorized the dealing “free of the security interest.” The proposed change does not, and cannot, resolve the fact-dependent question of whether this was the parties’ intention in a particular case.
1. The proposed minor change to section 28(3) is designed to eliminate the suggestion that the subsection does applies only when the security interest in the original collateral is perfected by a method other than registration.