Changes to Personal Property Security Act - Report 2007

APPENDIX

[the section numbering is that found in the British Columbia Personal Property Security Act]

5 (1) Subject to sections 6 to 8, the validity of

(a) a security interest in goods, or

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

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

(1.1) Except as otherwise provided in sections 6 and 7, while the collateral is situated in a jurisdiction, perfection, the effect of perfection or non-perfection, and the priority of a security interest described in subsection (1) is governed by the law of that jurisdiction.

(2) Repealed.

(3) A security interest in goods perfected under the law of the jurisdiction in which the goods are located at the time the security interest attaches, but before the goods are brought into [this jurisdiction] continues perfected in [this jurisdiction] if it is perfected in [this jurisdiction]

(a) not later than 60 days after the goods are brought into [this jurisdiction],

(b) not later than 15 days after the day the secured party has knowledge that the goods have been brought into [this jurisdiction],

(c) before the date that perfection ceases under the law of the jurisdiction in which the goods were located when the security interest attached,

whichever is the earliest, but the security interest is subordinate to the interest of a buyer or lessee of the goods who acquires his or her interest without knowledge of the security interest and before it is perfected in [this jurisdiction] under section24 or 25.

(4) A security interest that is not perfected as provided in subsection(3) may be otherwise perfected in [this jurisdiction] under this Act.

(5) If a security interest referred to in subsection (1) is not perfected under the law of the jurisdiction in which the collateral was located when the security interest attached and before the collateral was brought into [this jurisdiction], it may be perfected under this Act.

6 (1) Subject to section 7,

(a) if the parties to a security agreement that creates a security interest in goods in one jurisdiction understand at the time the security interest attaches that the goods will be kept in another jurisdiction, and

(b) if the goods are removed to the other jurisdiction, for purposes other than transportation through the other jurisdiction, not later than 30days after the security interest attaches,

the validity, perfection and effect of perfection or non-perfection, and the priority of the security interest are governed by the law of the other jurisdiction.

(2) If the goods are removed out of [this jurisdiction], but are later brought into [this jurisdiction], the security interest is deemed to be a security interest to which subsection 5(3) applies if it was perfected under the law of the jurisdiction to which the goods were removed.

7(1) The validity, perfection, the effect of perfection or non-perfection, and the priority of:

(a) a security interest in

(i) an intangible, or

(ii) goods, other than a foreign registered ship, 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

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

is governed by the law of the jurisdiction in which the debtor is located when the security interest attaches.

(2) If the debtor relocates to another jurisdiction, a security interest perfected in accordance with the law applicable as provided in subsection(1) continues 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 has knowledge that the debtor has relocated to another jurisdiction, and

(c) the date that perfection ceases under the previously applicable law.

(3) If the law governing the perfection of a security interest referred to in subsection(1) or (2) does not provide for public registration or recording of the security interest or a notice relating to it and 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 [this jurisdiction], or

(b) an interest in goods, an instrument, a negotiable document of title, money or chattel paper acquired when the collateral was located in [this jurisdiction],

unless it is perfected under this Act before the interest referred to in paragraph(a) or(b) arises.

(4) A security interest referred to in subsection(3) may be perfected under this Act.

(5) The validity, perfection, effect of perfection or non-perfection and priority of a security interest in a foreign registered ship is governed by the law of the jurisdiction where the ship is registered at the time that the security interest attaches.

(6) Despite section 6 and subsection (1) or (2) of this section, the validity, perfection, effect of perfection or non-perfection and priority of a security interest in minerals or hydrocarbons or in an account resulting from the sale of the minerals at the minehead or the hydrocarbons at the wellhead

(a) that is provided for in a security agreement executed before the minerals or hydrocarbons are extracted, and

(b) that attaches to the minerals or hydrocarbons upon extraction or attaches to an account upon sale of the minerals or hydrocarbons,

is governed by the law of the jurisdiction in which the minehead or wellhead is located.

(7) Despite subsection (2) or (3), the validity, perfection, effect of perfection and non-perfection and priority of a security interest in a licence is governed by this Act.

(8)For the purposes of this section, a debtor is located,

(a) if the debtor is an individual, in the jurisdiction where the debtor's principal residence is located,

(b) if the debtor is a partnership, other than a limited partnership, and the partnership agreement governing the partnership states that the agreement is governed by the laws of a province or territory of Canada, in that province or territory;

(c) if the debtor is a corporation, a limited partnership or an organization and is incorporated, continued, amalgamated or otherwise organized under a law of a province or territory of Canada that requires the incorporation, continuance, amalgamation or organization to be disclosed in a public record, in that province or territory;

(d) if the debtor is a corporation incorporated, continued or amalgamated under a law of Canada that requires the incorporation, continuance or amalgamation to be disclosed in a public record, in the jurisdiction where the registered office or head office of the debtor is located,

(i) as set out in the special Act, letters patent, articles or other constating instrument under which the debtor was incorporated, continued or amalgamated, or

(ii) as set out in the debtor's by-laws, if subclause (i) does not apply;

(e) if the debtor is a registered organization that is organized under the law of a U.S. State, in that U.S. State;

(f) if the debtor is a registered organization that is organized under the law of the United States of America,

(i) in the U.S. State that the law of the United States of America designates, if the law designates a U.S. State of location,

(ii) in the U.S. State that the registered organization designates, if the law of the United States of America authorizes the registered organization to designate its U.S. State of location, or

(iii) in the District of Columbia in the United States of America, if subclause (i) or (ii) does not apply;

(g) if the debtor is one or more trustees acting for a trust,

(i) if the trust instrument governing the trust states that the instrument is governed by the laws of a province or territory of Canada, in that province or territory, or

(ii) in the jurisdiction in which the administration of the trust by the trustees is principally carried out, if subclause (i) does not apply;

(h) if none of clauses (a) to (g) apply, in the jurisdiction where the chief executive office of the debtor is located.

(9)In subsection (8),

"registered organization" means an organization organized under a law of a U.S. State or of the United States of America that requires the organization of the organization to be disclosed in a public record;

"U.S. State" means a State of the United States of America, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States of America.

(10)For the purposes of this section, a debtor continues to be located in the jurisdiction specified in subsection (8) despite,

(a) in the case of a debtor who is an individual, the death or incapacity of the individual; and

(b) in the case of any other debtor, the suspension, revocation, forfeiture or lapse of the debtor's status in its jurisdiction of incorporation, continuation, amalgamation or organization, or the dissolution, winding-up or cancellation of the debtor.

7.1 [this provision will be enacted and proclaimed along with the Securities Transfer Act]

7.2(1)In this section,

"prior law" means the Personal Property Security Act, as it reads immediately before this provision comes into force, including the applicable law as determined under that Act;

"prior security interest" means a security interest described in subsection 7 (2) of prior law that arises under a prior security agreement.

(2)For the purposes of this section, but subject to subsection (3), a “prior security agreement” is security agreement entered into before this section comes into force.

(3)If a security agreement described in subsection (2) is amended, renewed or extended by agreement entered into on or after the day this provision comes into force, subject to subsection (4), the security agreement as amended, renewed or extended is a prior security agreement,

(4)If the security agreement as amended, renewed or extended includes additional collateral that was not previously described in the agreement, it is not a prior security agreement with respect to the additional collateral.

(5)For the purpose of ascertaining the location of the debtor in order to determine the law governing the validity of a prior security interest, subsection 7(1) of prior law continue to apply and subsections 7 (8), (9) and (10) do not apply.

(6)Subject to subsections (7) and (8), subsections 7 (8), (9) and (10) apply for the purpose of ascertaining the location of the debtor in order to determine the law governing the perfection of a security interest described in subsection 7 (1), whether attachment occurs before, on or after the day this provision comes into force.

(7)A prior security interest that is a perfected security interest under prior law immediately before the day this provision comes into force continues perfected until the beginning of the earlier of:

(a) The day perfection ceases under prior law, and

(b) The fifth anniversary of the day this provision comes into force.

(8)If a prior security interest referred to in subsection (7) is perfected in accordance with the applicable law as determined under this Act, on or after the day this provision comes into force but before the earlier of the days referred to in paragraphs (a) and (b) of subsection (7), the security interest shall be deemed to be continuously perfected from the day of its perfection under prior law.

(9)Subject to subsections (10), (11) and (12), subsections 7 (8), (9) and (10) apply for the purpose of ascertaining the location of the debtor in order to determine the law governing the effect of perfection or non-perfection, and the priority, of a security interest referred to in subsection 7 (1), whether attachment occurs before, on or after the day this provision comes into force.

(10)For the purpose of ascertaining the location of the debtor in order to determine the law governing the effect of perfection or of non-perfection, and the priority, of a prior security interest in relation to an interest, other than a security interest in the same collateral arising before this provision comes into force, prior law continues to apply and subsections 7 (8), (9) and (10) do not apply, regardless of whether the prior security interest is perfected, on or after this provision comes into force, in accordance with the applicable law as determined under this Act.

(11)For the purpose of ascertaining the location of the debtor in order to determine the law governing the priority of a prior security interest in relation to any other prior security interest in the same collateral, subject to subsection 12, prior law continues to apply and subsections 7 (8), (9) and (10) do not apply.

(12)If a prior security interest is not a perfected security interest under prior law immediately before the day this provision comes into force but is subsequently perfected in accordance with the applicable law as determined under this Act, subsections 7 (8), (9) and (10) apply for the purpose of ascertaining the location of the debtor in order to determine the law governing the priority of the prior security interest in relation to any other security interest in the same collateral.

7.3(1)In this section,

"prior law" means the Personal Property Security Act, as it reads immediately before the day this provision comes into force, including the applicable law as determined under that Personal Property Security Act;

"prior security interest" means a security interest in investment property that arises under a prior security agreement.

(2)For the purposes of this section, but subject to subsection (3), a “prior security agreement” is security agreement entered into before this section comes into force.

(3)If a security agreement described in subsection (2) is amended, renewed or extended by agreement entered into on or after the day this provision comes into force, the security agreement as amended, renewed or extended is a prior security agreement.

(4)Subject to subsections (5), (6) and (7) and section 79, section 7.1 applies for the purpose of determining the law governing the validity, the perfection, the effect of perfection or of non-perfection and the priority of all security interests in investment property, whether attachment occurs before, on or after the day the Securities Transfer Act, 2006 comes into force.

(5)For the purpose of determining the law governing the validity of a prior security interest, prior law continues to apply.

(6)A prior security interest that was perfected by registration and that is a perfected security interest under prior law immediately before the day this provision comes into force continues perfected until the beginning of the earlier of:

(a) The day perfection ceases under prior law, and

(b) The fifth anniversary of the day this provision comes into force.

(7)If a prior security interest referred to in subsection (6) is perfected in accordance with the applicable law as determined under this Act, on or after the day this provision comes into force but before the earlier of the days referred to in paragraphs (a) and (b) of subsection (6), the security interest shall be deemed to be continuously perfected from the day of its perfection under prior law.

Subsection 8 (1) of the Act is amended by striking out "Despite sections 5 to 7 at the beginning and substituting "Despite sections 5 to 7.3".

Subsection 8(2) of the Act is amended by striking “For the purposes of sections 5 to 7” at the beginning and substituting “For the purposes of sections 5 to 7.3.

Next Annual Meeting

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