The ''Personal Property Security Act'' ("PPSA") is the name given to each of the statutes passed by all

common law Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...

provinces, as well as the territories, of Canada that regulate the creation and registration of

security interest In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the '' collateral'') which enables the creditor to have recourse to the property if the debtor defaults in m ...

s in all

personal property Personal property is property that is movable. In common law systems, personal property may also be called chattels or personalty. In civil law (legal system), civil law systems, personal property is often called movable property or movables—a ...

within their respective jurisdictions. It is similar in structure to Article 9 of the

Uniform Commercial Code The Uniform Commercial Code (UCC), first published in 1952, is one of a number of uniform acts that have been established as law with the goal of harmonizing the laws of sales and other commercial transactions across the United States through U ...

in the United States, but there are important differences.Bruce MacDougall, Fixtures and the PPSA: Of the Wooden Horse of Troy, Creditors in the Weeds and Statutory Ambush, 1993 72-4 Canadian Bar Review 496, 1993 CanLIIDocs 149, , retrieved on 2021-01-30John J Chapman, Mistake, Sharp Practice, Equity and the PPSA, 1999 78-1&2 Canadian Bar Review 71, 1999 CanLIIDocs 91, , retrieved on 2021-01-30Alberta Law Reform Institute, Personal Property Security Law, Alberta Law Reform Institute, 2020 CanLIIDocs 3241, , retrieved on 2021-01-30Michael G Bridge et al, Formalism, Functionalism, and Understanding the Law of Secured Transactions, 1999 44-2 McGill Law Journal 567, 1999 CanLIIDocs 45, , retrieved on 2021-01-30

History

The British

Sale of Goods Act 1893 The Sale of Goods Act 1893 ( 56 & 57 Vict. c. 71) was an act of the Parliament of the United Kingdom to regulate contracts in which goods are sold and bought and to define the rights and duties of the parties (where not expressly defined in the ...

was followed closely in Canada in the first half of the twentieth century. In the 1970s it was noticed in Ontario that the law of contract had departed from the 1893 Act. To remedy this shortcoming, the Law Reform Commission proposed a new regime, which was duly enacted by the provincial government as the Uniform Sale of Goods Act.Alberta Law Reform Institute, The Uniform Sale of Goods Act, Alberta Law Reform Institute, 1982 CanLIIDocs 1, , retrieved on 2021-01-30

PPSA regime

The legislation that implemented the PPSA scheme was first introduced in

Ontario Ontario is the southernmost Provinces and territories of Canada, province of Canada. Located in Central Canada, Ontario is the Population of Canada by province and territory, country's most populous province. As of the 2021 Canadian census, it ...

, followed by the remaining provinces and territories (which followed a newer uniform model with notable differences). The Atlantic provinces, together with the

Northwest Territories The Northwest Territories is a federal Provinces and territories of Canada, territory of Canada. At a land area of approximately and a 2021 census population of 41,070, it is the second-largest and the most populous of Provinces and territorie ...

and

Nunavut Nunavut is the largest and northernmost Provinces and territories of Canada#Territories, territory of Canada. It was separated officially from the Northwest Territories on April 1, 1999, via the ''Nunavut Act'' and the Nunavut Land Claims Agr ...

, have fully computerized registries, while the others have varying degrees of electronic and paper registration. The following is a brief outline of how the regime generally works.

Personal property subject to the Act

The scope of the Act is extremely broad, as it is concerned with every transaction which in substance creates a security interest, without regard to its form and without regard to the person who has title to the collateral. There are small differences between the provinces as to how far this extends, but the concept is basically the same. That said, however, there are some items that are specifically excluded: :* liens that arise from rule of law (i.e., liens that are automatically generated by legislation or precedent), unless respective legislation specifies otherwise :* interests in annuities and insurance policies :* interests in land (other than interests arising under a license), including leases :* assignments for the general benefit of creditors :* interests in any compensation for labour or personal services Personal property is classified into the following categories: :* goods (further classified into consumer goods, equipment and inventory) :* instruments :* documents of title :* chattel paper (including leases and conditional sales contracts) :* securities :* money :* intangibles (licenses and any other matter not included above)

Creation of security interests

Security interests are created through attachment, which can be followed on by perfection. Attachment occurs when :* value is given, :* the debtor has rights in the collateral, and :* it is enforceable against third parties. Perfection can occur by possession of the collateral, or by registration. In certain circumstances, possession can be considered to be the superior form of perfection.

Purchase money security interests (PMSIs)

A PMSI is a special type of security interest taken in collateral by a party who gives value for the purpose of enabling the debtor to acquire rights in the collateral. Some examples are:

Creation of "super-priorities"

In specified circumstances, PPSA registrants can obtain "super-priority" status over other secured parties, when the following steps are taken:

The PPSA and land

PPSA security interests can have priority over real property security interests against fixtures, when the secured party registers notice against the land at the local registry or land titles office. Where attachment occurs before the affixation to the land, the interest will have priority, However, where attachment occurs after affixation, the interest is subordinate unless where the debtor otherwise consents. Other intersections can also occur with interests in land. For example, a lender that grants a mortgage over a rental property will also register a PPSA security interest against the rents being generated, in order to attorn the rents in the event the mortgage goes into default.

Priorities of security interests

In the absence of any other special priority rules, the general order of priority is as follows:

Regime under Québec legislation

For moveable property in Québec, secured creditors create their security interests by way of

hypothec Hypothec (; , , from Lat. ''hypotheca'', from Gk. : hypothēkē), sometimes tacit hypothec, is a term used in civil law systems (e.g. the law of most of Continental Europe) to refer to a registered real security of a creditor over real estate ...

through the ''Registre des droits personnels et réels mobiliers'' (RDPRM).

Security interests created under Federal legislation

Federal legislation has also created certain security interests that may take precedence over provincial legislation. They notably include: :* Bank Act security for loans granted by banks :*interests in

patent A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disclosure, enabling discl ...

copyright A copyright is a type of intellectual property that gives its owner the exclusive legal right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, ...

s and

trademark A trademark (also written trade mark or trade-mark) is a form of intellectual property that consists of a word, phrase, symbol, design, or a combination that identifies a Good (economics and accounting), product or Service (economics), service f ...

s :*interests in railway and rolling stock :*federal property :*matters relating to Indians and Indian lands :*deemed trusts under taxation laws :*priorities of claims under

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the deb ...

and

insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-sheet i ...

laws

Conflicts between provincial PPSAs and federal legislation

S. 89(1) of the ''

Indian Act The ''Indian Act'' () is a Canadian Act of Parliament that concerns registered Indians, their bands, and the system of Indian reserves. First passed in 1876 and still in force with amendments, it is the primary document that defines how t ...

'' governs the application of security interests on reserves: Recent jurisprudence has tended to restrict how this provision should be applied. There can also be complex interplay with security interests under

admiralty law Maritime law or admiralty law is a body of law that governs nautical issues and private maritime disputes. Admiralty law consists of both domestic law on maritime activities, and conflict of laws, private international law governing the relations ...

Resources by province

Notable cases

* '' Bank of Montreal v. Innovation Credit Union''

Documents

John R. Sandrelli, Christopher J. Ramsay and Anjili I. Bahadoorsingh,''Remedies under Security Interests in Canada: An Overview'' (2002-09-18)Roderick J.Wood,''The Concept of a Security Interest: The Canadian Experience'' (2011-08-18)

References

{{reflist, 2 Canadian insolvency legislation Canadian business legislation Securities industry in Canada Property law of Canada Personal property law