Peter A. Allard School of Law

LAW 438 002 (Uteck)Fall 20171

PETER A. ALLARD SCHOOL OF LAW

UNIVERSITY OF BRITISH COLUMBIA

LAW 438 002 | SECURED TRANSACTIONS

FALL 2017 | Sept. 5, 2017 to Dec. 1, 2017

Professor Anne Uteck

COURSE DATES AND HOURS

Tuesday & Thursday | 3:30-4:50 | LAW 123

In the event that a class is cancelled, where possible a make-up class will be scheduled and students will be notified of the new time and venue by email.

OFFICE HOURS

By appointment | LAW 358

COURSE DESCRIPTION

This course is designed to provide students with an understanding of the rules, principles, and policies underlying personal property security law. It will examine the important features of the British Columbia Personal Property Security Act. Topics will include: the nature and function of security, the scope of the Act, the form and validity of security agreements, securing interests in personal property, the function of registration, third party disputes – the specific and residual priority rules, enforcement of security interests, and conflict of laws issues. An emphasis in this course is the resolution of priority disputes between secured parties and a variety of competing claims. The course will also provide an overview of the Bank Act security device.

REQUIRED READINGS

Please see the Schedule of Classes and Required Readings on pages 3-16 of this syllabus.

SUPPLEMENTAL READINGS

Please feel free to consult B. MacDougall, Canadian Personal Property Security Law (LexisNexis: Markham, ON 2014) on reserve at the Law Library.

ASSESSMENT

In addition to regular attendance, keeping pace with the assigned readings and participating in classroom discussions, students will complete a 2.5 hour modified closed book examination worth 100% of their final grade on Tuesday, December 5, 2017 at 9:00 AM.

Students are only permitted to bring into the exam:

•a clean copy of the PPSA, including any relevant Regulations (tabs and highlighting are permitted, but writing is not); and

•a “cheat sheet” — one 8.5 x 11 double-sided page.

The relevant sections of the Bank Act will be provided to students with their examination papers.

For more information about examinations, please refer to Allard School of Law Computerized Exam Policies.

ATTENDANCE

Although attendance lists will not be taken, students are expected to attend all lectures in this course. Additionally, students are expected to:

•not record lectures without prior permission;

•use laptops only for note taking or accessing course materials;

•put away laptops when asked by the instructor;

•not use cell phones during lectures; and

•arrive on time for the scheduled lecture, and to try to avoid disrupting the class by leaving early.

ACADEMIC FRAUD

All UBC law students are subject to UBC’s policies regarding Academic Misconduct, and are expected to act with academic integrity at all times. Students should be especially aware of UBC’s rules in relation to plagiarism. A student who plagiarizes may be subject to UBC’s Disciplinary Measures in accordance with UBC’s Academic Misconduct Process and Appeal Procedures.

ACADEMIC CONCESSIONS & ACCOMMODATIONS

Academic Concessions — Exam Deferrals & Attendance Waivers

The Allard School of Law at UBC recognizes that a student’s ability to write examinations, meet assignment deadlines or to participate in class activities may be seriously affected by illness, family emergency, or other special circumstances. Requests for academic concessions should be directed to the Examinations Committee (through the Assistant Dean, Students) rather than through a student's professor.

Students requesting academic concessions should review the Examinations Committee Procedures Governing Allard Law Students’ Academic Concession Requests.

Accommodations — Disability or Ongoing Medical Conditions

UBC’s Office of Access & Diversity assists students with a disability or ongoing medical condition overcome challenges that may affect their academic success. Allard Law students who believe that they may be eligible for academic accommodations while in law school should contact Access & Diversity as soon as possible and ideally prior to the start of their law studies to set up an appointment and register for accommodations.

Academic accommodations at Allard Laware processed through Academic Services rather than through a student’s individual instructors. Once a student receives a letter outlining his or her academic accommodations from Access & Diversity, the student should follow up with the Assistant Dean, Students (with regards to accommodations) or the Director, Academic Services (with regards to exams) about implementation within the Faculty.

SCHEDULE OF CLASSES & REQUIRED READINGS

Please note that in addition to the PPSA sections listed in the Schedule below, students are responsible for all other sections listed on PowerPoint lecture slides.

UNIT I — SCOPE OF THE BC PERSONAL PROPERTY SECURITY ACT
When a creditor is owed payment or performance of an obligation by a debtor, the creditor may wish to secure their position by taking a security interest in the debtor's personal property as collateral. In participating in such a secured transaction (“ST”), the creditor (now a “secured party”) achieves a secured position under the BC Personal Property Security Act (“PPSA”). If the debtor defaults on their payment or performance, the secured party is thereby entitled to the rights and remedies contained in the PPSA.
Is there a secured transaction?
Class | Date / TOPIC / PPSA / CASE LAW
Class 1 | Tue Sept 5 / — Course introduction
Class 2 | Thu Sept 7 / — Introduction to Secured Transactions / -Yeung (Guardian ad litem of) v Au, 2006 BCCA 217
•paras 1-2, 20-27, 42-52
-Marine Building Holdings Ltd v Proton Engineering & Construction Ltd, 1993 CanLII 1791
Class 3 | Tue Sept 12
Class 4 | Thu Sept 14
Class 5 | Tue Sept 19 / (1) Is there a debtor (“D”) / -s 1(1) — “debtor”
(2) Is there a secured party (“SP”)? / -s 1(1) — “secured party”
(3) Is there a security interest (“SI”)? / -s 1(1) — “security interest"
(a) Is there collateral (“C”)? / -s 1(1) — “collateral" / -Saulnier v Royal Bank of Canada, 2008 SCC 58
(b) Does SP have an interest in C? / -s 1(1)(a) — “security interest”
-s 2(1) / -DaimlerChrysler Services Canada Inc v Cameron, 2007 BCCA 144
-Newcourt Financial Ltd (c.o.d. Financialinx) v Frizzle,2000 BCSC 1196
-Mercedes Benz Financial v Wagner, 2010 BCSC 1090
-Skybridge Holidays Inc (Trustee of) v British Columbia (Registrar of Travel Services), 1999 BCCA 185
(4) Is the transaction excluded? / -s 4
UNIT II— PERFECTION
In order for the secured party to obtain the security interest in the collateral that will best secure their position, they must perfect the security interest. Perfection entails attachment of the security interest to the personal property that will form the basis of the secured transaction (i.e. the “collateral" and its “proceeds”). Perfection also entails taking a perfection step to establish the secured party’s priority position to the collateral and proceeds in which other creditors may hold secured or unsecured interests.
(A) Does the secured party have a perfected security interest in the collateral?
Class | Date / TOPIC / PPSA / CASE LAW
Class 6 | Thu Sept 21
Class 7 | Tue Sept 26 / (1) Has the SI attached? / -s 19(a)
-s 12
-Note: s 13(2)(b) wrt PMSIs
(a) Has value been given for C? / -s 12(1)(a)
-s 1(1) — “value” / -Toronto-Dominion Bank v Nova Entertainment Inc, 1992 CanLII 6229 (note: Alberta case)
(b) Does D have rights in C? / -s 12(1)(b) / -Haibeck v No 40 Taurus Ventures, 1991 CarswellBC 221 (note: WestlawNext Canada link)
•paras 1-4, 34-42
-Kinetics Technology International Corporation v The Fourth National Bank of Tulsa, 705 F2d 396 (1983) (notes: US case; Westlaw link)
•read until “II. SALE OF GOODS BY OHT”
-Anderson’s Engineering Ltd, Re,2002 BCSC 504
Class 8 | Thu Sept 28 / (c) Is SI enforceable under s 10? / -s 12(1)(c)
(i) Is SP in possession of C? / -s 10(1)(a)
-s 10(2)
(ii) Is there an enforceable security agreement (“SA”)? / -s 10(1)(d)
-s 10(3)
-Note: s 10(4) wrt inventory / -Riepe v Stingray Holdings Ltd, 2002 BCSC 792
•paras 1-8, 14, 27, 32-33, 40-42
-674921 BC Ltd v New Solutions Financial Corp, 2006 BCCA 49
•paras 27-31
-GE Capital Canada Acquisitions Inc v Dix Performance (Trustee of), 1994 CanLII 2661
Class 9 | Tue Oct 3 / (2) When did SI attach? / -s 12(1)
(a) If C is “goods”, how were they used by D at the time of attachment? / -s 1(1) — “consumer goods”
-s 1(1) — “inventory”
-s 1(1) — “equipment”
Class 10 | Thu Oct 5
Class 11 | Tue Oct 10
Class 12 | Thu Oct 12 / (3) Has SP taken a perfection step? / -s 19(b)
(a) Did SP register a financing statement (“FS”)? / -s 25
-s 43(9)
-s 33(15)
-Reg 1(1)(b) — “serial numbered goods”
(i) Is there a defect, irregularity, omission, or error (collectively, a “defect”) wrt FS? / -s 43(6)
-s 43(7)
-s 43(8) / -Alda Wholesale Ltd (Re), 2001 BCSC 921
•paras 1, 8-41
-Regal Feeds Ltd v Walder and Niverville Credit Union Ltd, 1985 CarswellMan 190 (notes: Manitoba case; WestlawNext Canada link)
•paras 1-2, 8, 27-38
-Coates v General Motors Acceptance Corp of Canada, 1999 CanLII 5426
-Re Munro, 1992 CarswellBC 404 (note: WestlawNext Canada link)
-Mutual Life Assurance Co v Toronto Dominion Bank, 1995 CarswellMan 178 (notes: Manitoba case; WestlawNext Canada link)
-Kelln (Trustee of) v Strasbourg Credit Union Ltd, 1992 CanLII 8316 (note: Saskatchewan case)
-UF Media Inc, Re, 2003 BCSC 1105
Class 13 | Tue Oct 17 / (b) Did SP perfect by possession? / -s 24(1)
-2 24(2)
-s 17(2) / -Bank of Nova Scotia v Royal Bank of Canada and Farm-Rite Equipment Ltd (Receivership), CanLII 4656 (note: Saskatchewan case)
•paras 1-2, 5-6, 18-32
-Inland Contracting Ltd v Bakken, 2010 SKQB 122 (note: Saskatchewan case)
-Royal Trust Corp of Canada v Number 7 Honda Sales Ltd, 1988 CarswellOnt 115 (notes: Ontario case; WestlawNext Canada link)
•paras 1-8, 12-19
(B) Does the secured party have a perfected security interest in the proceeds?
Class | Date / TOPIC / PPSA / CASE LAW
Class 14 | Thu Oct 19
Class 15 | Tue Oct 24 / (1) Does SP have a perfected SI in C? / -s 19
(2) Are there proceeds (“P”)? / -s 1(1)(a) — “proceeds”
-Reg 1(1)(a) — “collateral”
(3) Does SP’s SI in C extend to P? / -s 28(1)
-s 10(5) / -Re River Industries Ltd, 1992 CarswellBC 498 (note: WestlawNext Canada link)
•paras 1-4, 9-11, 17-20
-Agricultural Credit Corp of Saskatchewan v Pettyjohn, 1991 CarswellSask 172 (notes: Saskatchewan case; WestlawNext Canada link)
•paras 1-25, 36, 54-55, 59-63, 71-75, 77-85
-Canadian Imperial Bank of Commerce v Marathon Realty Co, 1987 CarswellSask 358 (notes: Saskatchewan case; WestlawNext Canada link)
•paras 4-7, 14, 18-22
(4) Is SP’s SI in the proceeds perfected? / -s 28(2)
-s 28(3)
UNIT III — PRIORITY
Because it is common for multiple creditors to have secured and unsecured interests in the same collateral (and its proceeds) and it is conceivable that a single debtor will not be able to pay or perform his or her obligations to each of these creditors (i.e. in situations of bankruptcy), the PPSA establishes a number of rules for determining the priority of each interest relative to the other. In situations of limited funds to satisfy every claim against the same collateral, these “special" (where there is a specific type of security interest or collateral) and “residual” priority rules determine which creditors are to be repaid before the others, if at all.
(A) Are there multiple secured parties with security interests in the same collateral where a special priority rule applies?
Class | Date / TOPIC / PPSA / CASE LAW
Class 16 | Thu Oct 26 / (1) Does at least one SP have a purchase-money security interest (“PMSI”)?
(a) Is SP a PMSI holder? / -Money in a Minute Auto Loans Ltd v Price, 2001 BCSC 864
•paras 7-10, 20, 24-36
(i) Does SP have a deemed PMSI? / -s 1(1)(c) — “purchase-money security interest”
-s 1(1)(d) — “purchase-money security interest”
(ii) Is SP a PMSI seller? / -s 1(1)(a) — “purchase-money security interest”
(iii) Is SP a PMSI lender? / -s 1(1)(b) — “purchase-money security interest” / -Agricultural Credit Corp of Saskatchewan v Pettyjohn, 1991 CarswellSask 172 (notes: Saskatchewan case; WestlawNext Canada link)
•paras 38-54
-Unisource Canada Inc v Laurentian Bank et al, 2000 CanLII 5671 (note: Ontario case)
(b) Is SP’s SI a valid PMSI with super-priority? / -s 34(1)
-s 34(2)
-Note: s 22(1)
-Note: s 28(1) / -McLeod & Co v Price Waterhouse Ltd, 1992 CanLII 8119 (note: Saskatchewan case)
•paras 1-9, 21-24
(c) Is SP’s SI a valid PMSI with super-super-priority? / -s 34(4)
Class 17 | Tue Oct 31 / (2) Is there a third party transferee (i.e. buyer or lessee) of C?
(a) Is C consumer goods? / -s 1(1) — “consumer goods”
-s 30(3)
-s 30(4)
-Note: s 28(1)
(b) Is SI in C unperfected? / -s 1(1) — “value”
-s 20(c)
-Note: s 28(1)
(c) Is SI in C perfected? / -s 30(5)
-s 30(7)
-s 30(6)
-Reg 1(1)(b) — “serial numbered goods”
-Note: s 28(1)
(d) Is the transferee a buyer or lessee in the ordinary course of business (“OCB”)? / -s 1(1) — “goods”
-s 30(2) / -Royal Bank of Canada v 216200 Alberta Ltd et al, 1986 CanLII 3219(note: Saskatchewan case)
•paras 1-20
-Spittlehouse v Northshore Marine Inc, 1994 CanLII 1295 (note: Ontario case)
-Royal Bank of Canada v Wheaton Pontiac Buick Cadillac GMC Ltd, 1990 CanLII 7474 (note: Saskatchewan case)
-Fairline Boats Ltd v Leger et al, 1980 CarswellOnt 607 (notes: Ontario case; WestlawNext Canada link)
•paras 1-17, 31-40
Class 18 | Thu Nov 2 / (3) Is there a trustee in bankruptcy (“TIB”)? / -s 20(b)(i) / -Re Giffen, [1998] 1 SCR 91
•paras 1-7, 23-59
(4) Is there a judgement creditor? / -s 20(c)(i)
-s 35(6)
-Note: ss 38(5) and (6)
(5) Has SP gained their position through assignment / tacking? / -s 45(2)
-s 23(2) / -Canamsucco Road House Food Co v Lngas Ltd, (1991) 1991 CarswellOnt 631 (notes: Ontario case; WestlawNext Canada link)
•paras 1-10
(6) Is there a lien holder? / -s 4(a)
-s 1(1) — “goods”
-s 32 / -Marine Building Holdings Ltd v Proton Engineering & Construction Ltd, 1993 CanLII 1791
Class 19 | Tue Nov 7 / (7) Is C a fixture? / -s 49(2)
-s 36(3)
-s 36(4)
-s 36(5) / -Hot Springs Amusement Park Inc v Pacific Bowling Centers Inc, 2002 BCSC 565
(8) Is C an accession? / -s 1(1) — “accession”
-s 38(2)
-s 38(3)
-s 38(4) / -Kulchyski v Shuswap Ventures Corp, 1994 CanLII 3032
(B) Are there multiple secured parties with security interests in the same collateral where a residual priority rule applies?
Class | Date / TOPIC / PPSA / CASE LAW
Class 20 | Thu Nov 9 / (1) Do both parties have perfected SIs? / -s 35(1)(a)
-Note: s 35(4) / -BMP & Daughters Investment Corp v 941242 Ontario Ltd, 1992 CanLII 7551 (note: Ontario case)
-Jacobs v Laumaillet, 2010 BCSC 1229
-Key West Ford Sales Ltd v Rounis, 1998 CanLII 3807
(2) Does one party have a perfected SI and the other have an unperfected SI? / -s 35(1)(b)
-Note: s 35(4) / -Alberta Treasury Branches v Epic Beverages Ltd, 1997 CanLII 753
(3) Do both parties have unperfected SIs? / -s 35(1)(c)
-Note: s 35(4) / -Ontario Dairy Cow Leasing Ltd v Ontario Milk Marketing Board, 1993 CarswellOnt 655 (notes: Ontario case; WestlawNext Canada link)
(4) Was SI’s registration discharged without authorization or in error, or did SP fail to renew its SI’s registration? / -s 35(7)
-Note: s 35(4)
(5) Do the results of the priority scheme appear to be unfair? / s 68(1) / -KBA Canada Inc v Supreme Graphics Ltd, 2014 BCCA 117
•paras 1-32
(C) Are there multiple secured parties with security interests in the same collateral where there is a circular priority problem?
Class | Date / TOPIC / PPSA / CASE LAW
Class 21 | Tue Nov 14 / (1) Is achieving a stable priority ranking impossible where there are 3+ parties asserting claims to the same C?
(a) Is there a subordination agreement (‘SubA”)? / -s 40 / -Royal Bank of Canada v Gabriel of Canada Inc, 1992 CarswellOnt 646 (notes: Ontario case; WestlawNext Canada link)
-Bank of Montreal v Kimberly Brewing Co, 1999 CarswellBC 2466 (note: WestlawNext Canada link)
-Transamerica Commercial Finance Corp, Canada v Imperial TV and Stereo Centre Ltd, 1993 CanLII 7157
-CIF Furniture Ltd, Re, 2011 ONCA 34 (note: Ontario case)
(b) Did one SP’s registration lapse (“fault-based approach”)?
(c) Is one SI preferred over another for policy reasons (“policy-based approach”)?
(d) Did one SP take more risk than others (“risk-based approach”)
UNIT IV— REMEDIES
Although creditors and debtors enter into secured transactions with the hope that the security need not be relied upon, in some cases the debtor defaults on those of their obligations which they are unable to pay or perform. Subject to PPSA Part 5 — Rights and Remedies on Default (“Part 5”), the security agreement between the debtor and creditor may set out the available remedies upon default. Otherwise, Part 5 will determine the available remedies to the creditor to realize on their security.
What remedies does the secured party have against the collateral?
Class | Date / TOPIC / PPSA / CASE LAW
Class 22 | Thu Nov 16
Class 23 | Tue Nov 21 / (1) Has D defaulted? / -s 1(1) — “default”
-s 56(2)
(a) Is there an acceleration clause? / -s 16
(2) Does Part 5 apply? / -s 1(1) — “lease for a term of more than one year”
-s 3(c)
-s 55(2)(a)
-s 63
-s 68(1)
-Note: Limitation Act s 6(1) / -Andrews and Trotchie v Mack Financial (Canada) Ltd, 1987 CanLII 4731 (note: Saskatchewan case)
•paras 1-14, 17, 19, 24-34
(2) Can SP exercise the right to seizure / repossession? / -s 58
-Note: s 17(2)
-Note: ss 1(1) — “consumer goods” and 67 / -Waldron v Royal Bank of Canada, 1991 CanLII 5710
•paras 3, 6, 10-13, 15-18
(3) Did SP give notice of disposition or foreclosure to D? / -s 59
-s 61
(4) Did SP dispose of C? / -s 59(3)
-s 59(7)
-s 60
-s 68(2)
-Note: s 59(18) / -Donnelly v International Harvester Credit Corporation of Canada, 1983 CarswellOnt 133 (notes: Ontario case; WestlawNext Canada link)
•paras 1-4, 12-27
-Copp v Medi-Dent Service, 1991 CanLII 7147 (note: Ontario case)
(5) Did SP foreclose on C? / -s 61(2)
-s 61(3)
-s 68(2)
-s 61(7)
-Note: s 61(4) / -Angelkovski v Trans-Canada Foods Ltd, 1986 CarswellMan 314 (notes: Manitoba case; WestlawNext Canada link)
•paras 1-20
-Inland Kenworth Ltd v Laboucane, 2004 BCSC 411
•paras 1-8, 47-53
(6) Can D exercise their right of redemption and reinstatement? / -s 62(1)
-s 62(2)
(7) Has any party failed to discharge a duty or perform an obligation owed? / -s 69(2)
-s 69(3)
UNIT V— CONFLICT OF LAWS
Personal property is highly mobile in nature and may move to jurisdictions outside of BC that will have different (though often similar) personal property security legislation. Wherever multiple personal property security laws may apply to a given secured transaction, the principles of conflict of laws in the BC PPSA will apply to determine which jurisdiction's law will take priority over the transaction and legal issues arising therefrom.
Is there a conflict of laws wrt the security agreement's validity and/or the security interest's attachment, perfection, and/or priority?
Class | Date / TOPIC / PPSA / CASE LAW
Class 24 | Thu Nov 23 / (1) What is the applicable law wrt goods and C in possession of SP? / -s 5
-s 1(2)
-Note: s 68(1) / -Re Searcy, 1991 CanLII 1289
(2) What is the applicable law wrt goods intended by the parties to be removed from the jurisdiction? / -s 6
(3) What is the applicable law wrt mobile goods, intangibles, etc? / -s 7(1)
-s 7(2)
-s 7(3)
-s 7(4) / -Juckles (Trustee of) v Holiday Chevrolet Oldsmobile (1983) Ltd, 1990 CanLII 7515 (note: Saskatchewan case)
-Northwest Equipment Inc v Daewoo Heavy Industries America Corp, 2002 ABCA 79 (note: Alberta case)
-Advance Diamond Drilling Ltd (Receiver of) v National Bank Leasing Inc, 1992 CarswellBC 905 (note: WestlawNext Canada link)
•paras 1-16, 51-77
(4) What is the applicable law wrt substance and procedure? / -s 8
UNIT VI— FEDERAL SECURITY REGIME: THE BANK ACT
A province's personal property security legislation is the most comprehensive regime in relation to secured transactions. However, the federal Bank Act (“BA”)may govern situations (though need not be) in which a chartered bank takes a security interest in particular types of personal property from particular debtors.
Does the Bank Act apply?
Class | Date / TOPIC / PPSABA / CASE LAW
Class 25 | Tue Nov 28 / (1) Is the bank (“B”) eligible to grant BA SI? / BA s 425
(2) Does D fit within a category that can grant BA SI? / BA s 427(1)
(3) Does C fit within a category that can be subject to BA SI? / BA s 425 / -Bank of Montreal v Elgin Co-operative Services, 1983 CanLII 1987
•Blair JA’s reasons
(4) Does B have a perfected BA SI in C? / -BA s 427(2)
-BA s 435(2)(c)
-BA s 427(4)
-BA s 427(5)
-BA s 427(6)
(a) Has BA SI attached?
(i) Has a security document been delivered to B?
(b) Has B taken a perfection step?
(5) Does the BA have priority over the PPSA? / -PPSA s 4(b)(ii)
-BA s 428(1)
(a) Was BA SI or PPSA SI perfected first?
(b) If BA SI was perfected first, is there any provision in BA that reserves that priority, including the requirement that B not have knowledge of prior unperfected SIs when taking the BA SI?
(6) How can B enforce its BA SI? / -s 427
-s 428
Class 26 | Thu Nov 30 / — TBA
Final exam | Tue Dec 5 (9:00 AM)