Part 1 Security Interests in Personal Property: The PPSA Section II Registration and Priorities

1
Part 1 Security Interests in Personal Property
The PPSA Section II Registration and Priorities
2
Registration
3
Personal Property Registry

• 42(1) There shall be an electronic registry known
  as the Personal Property Registry for the
  purposes of registrations under this Act and
  under any other Act that provides for
  registration in the Registry.

4
Method of Registration

• In the Atlantic provinces, registration is
  entirely electronic and user administered
• Compare land law/other PPSA jurisdictions
• The registrant may submit a form, but it is
  actually indexed by the registry staff
• There is no delay between registration and
  searchability

5
Method of Registration

• Direct electronic access
• Pre-authorized for billing purposes
• 43(2) The Registrar may enter into an agreement
  with any person to provide access to the Registry
  on terms and conditions that the Registrar
  considers advisable and may vary the terms and
  conditions from time to time as the Registrar
  considers advisable.
• 43(3) A person who has entered into an agreement
  with the Registrar under subsection (2) may
  register a financing statement in the Registry in
  accordance with the agreement and the regulations.

6
Method of Registration

• Registration may be undertaken by anyone at a
  Registry office s.43(1)
• Very uncommon
• Cant rely on the office staff for instructions
• 52(2)Service New Brunswick is not liable directly
  or vicariously for loss or damage suffered by a
  person because of (a) verbal advice given by the
  Registrar, a Deputy Registrar or an officer,
  employee or agent respecting this Act
• Why not?

7
Method of Registration

• The Registrar is not liable for any errors in
  registration
• 52(2) Service New Brunswick is not liable
  directly or vicariously for loss or damage
  suffered by a person because of . . . (b) the
  failure of the Registry to effect a registration
  or to effect a registration correctly.
• Why not?

8
Method of Registration

• Note s.52(1) A person may bring action against
  Service New Brunswick to recover loss or damage
  suffered by that person because of an error or
  omission in the operation of the Registry if the
  loss or damage resulted from reliance on a
  printed search result issued by the Registry.

9
Method of Registration

• Reg s.9(1) A registrant who effects a
  registration at an office of the Registry shall
  be issued a printed verification statement of the
  registration on completion of the registration.
• Registrant protects themselves by comparing
  verification statement with what they intended to
  register

10
Financing statement

• "financing statement" means the data authorized
  by the regulations to be entered in the Registry
  to effect a registration for the purpose of
  perfecting a security interest in collateral
  under this Act
• Only a financing statement is registered the
  security agreement itself is not registered

11
Notice Based Financing

• ...the data...
• Paperless, electronic system
• ....authorized...
• Debtor name
• Secured party name and address
• Description of the collateral
• This is all that is registered

12
Notice Based Financing

• The financing statement is not necessarily a
  perfect reflection of the security agreement
• It may be registered when no security agreement
  is in existence (e.g. pre-registration)
• The description of the collateral in the f.s. may
  not match that in the security agreement
• If the description in the f.s is narrower than
  the collateral in the agreement, the lender is
  unperfected with respect to the collateral which
  is not caught by the description
• The debtor is entitled to have the f.s. amended
  or discharged to reflect the true state of the
  agreement

13
Notice Based Financing

• D may require SP to provide information about the
  security agreement to any specified person
• 18(1) The debtor, a creditor, a sheriff, a person
  with an interest in personal property of the
  debtor, or an authorized representative of any of
  them may require a secured party, by a demand in
  writing, to send or make available the
  information or documentation referred to in
  subsection (3) incl. a statement of indebtedness
  and list of collateral to the person making the
  demand or, if the demand is made by the debtor,
  to any person at an address specified by the
  debtor.
• SP who fails to reply may be compelled to do so
  by Court order s.18(11)

14
Notice Based Financing

• SP is estopped from denying the validity of the
  information provided
• 18(14) If a secured party replies to a demand
  under subsection (1), the secured party . . .
  is estopped, . . . from denying
• (a) the accuracy of any of the information
  referred to in paragraph (3)(b), (c) or (d) that
  is contained in the reply, or

15
Notice Based Financing

• Ensuring the f.s. reflects the agreement
• 50(3) The debtor, or any person with an interest
  in property that falls within the collateral
  description included in a registered financing
  statement, may give a written demand to the
  secured party if the f.s. does not reflect the
  agreement
• (a) The debt has been paid off (b) SP has
  released some of the collateral (c) the f.s.
  describes the collateral too broadly (d) no
  security agreement exists between the secured
  party and the debtor. e.g. pre-registration and
  negotiations fell through

16
Notice Based Financing

• 50(4) Demand may require that within 15 days SP
  register a financing change statement which
  accurately reflects the nature of the agreement
  or discharging the f.s. if there is no agreement

17
Notice Based Financing

• Self-help remedy for overbroad f.s.
• 50(5) If a secured party fails to comply with a
  demand under subsection (3) within fifteen days
  after it is given, or fails to give to the person
  giving the demand an order of the Court
  confirming that the registration need not be
  amended or discharged, the person giving the
  demand may register the financing change
  statement referred to in subsection (4).

18
Notice Based Financing

• What prevents the abuse of Ds right to register
  a financing change statement?
• Reg s.10 Where a registration discharges,
  re-registers or amends a registration or globally
  changes multiple registrations, the Registrar
  shall send a printed or electronic notice
  verifying the discharge, re-registration,
  amendment or global change to the secured party,
  receiver, judgment creditor, claimant, employee
  or applicant spouse, as the case may be.

19
Notice Based Financing

• What prevents the abuse of Ds right to register
  a financing change statement?
• Deemed damages
• 66(4) If a debtor . . .registers a financing
  statement referred to in subsection 50(5) without
  authority under those subsections and without
  reasonable excuse, the secured party referred to
  in those subsections shall be deemed to have
  suffered damages not less than the amount
  prescribed.
• Currently 300
• In addition to actual damages

20
Error in the Financing Statement

• 43(7) The validity of the registration of a
  financing statement is not affected by any
  defect, irregularity, omission or error in the
  financing statement unless the defect,
  irregularity, omission or error is seriously
  misleading.
• 43(9) In order to establish that a defect,
  irregularity, omission or error is seriously
  misleading, it is not necessary to prove that
  anyone was actually misled by it.
• Objective test for whether an error is seriously
  misleading

21
Error in the Financing Statement

• 43(8) Subject to subsection (10), a registration
  is invalid if there is a seriously misleading
  defect, irregularity, omission or error in
• (a) the name of any of the debtors required to be
  included in the financing statement other than a
  debtor who does not own or have rights in the
  collateral, or
• (b) the serial number of the collateral if the
  collateral is consumer goods of a kind that are
  prescribed as serial numbered goods.
• If the registration is invalid, the interest is
  unperfected

22
Error in the Financing Statement

• The ultimate test of whether a defect is
  seriously misleading is whether a search by the
  correct debtor name/serial number retrieves the
  erroneous debtor name/serial number
• This is dependent on the PPR search algorithm

23
Financing Statement Debtor Name

• Strict rules regarding the debtors name for
  registration purposes
• Reg s.20(5) Where the debtor is an individual,
  the name of the debtor shall be determined, for
  the purposes of this section, by the following
  rules
• (a) where the debtor was born in Canada and the
  debtor's birth is registered in Canada with a
  government agency responsible for the
  registration of births, the name of the debtor is
  the name as stated in the debtor's birth
  certificate or equivalent document issued by the
  government agency

24
Financing Statement Debtor Name

• (b) where the debtor was born in Canada but the
  debtor's birth is not registered in Canada with a
  government agency responsible for the
  registration of births, the name of the debtor is
• (i) the name as stated in a current passport
  issued to the debtor by the Government of Canada,
• (ii) if the debtor does not have a current
  Canadian passport, the name as stated in a
  current social insurance card issued to the
  debtor by the Government of Canada, or
• (iii) if the debtor does not have a current
  Canadian passport or social insurance card, the
  name as stated in a current passport issued to
  the debtor by the government of a jurisdiction
  other than Canada where the debtor habitually
  resides
• (c)where the debtor was not born in Canada but is
  a Canadian citizen. . .

25
Financing Statement Debtor Name

• Strict rules are needed for debtor name because
  PPR is indexed by debtor name
• Rules are needed to ensure that registrant and
  searcher use the same name, or registration is
  not an effective means of publicity
• Only the Atlantic jurisdictions have such strict
  debtor name requirements
• The name rules are a significant practical
  impediment to secured lending

26
Financing Statement Debtor Name

• Problem
• D provides drivers licence to SP1, which does
  not have correct legal name, and SP1 registers
  this name
• A search by correct legal name does not return
  name as registered
• Is the registration invalid?
• What if the issue arises in context of challenge
  by trustee in bankruptcy?
• The detailed name rules in the Atlantic
  jurisdictions are designed to resolve this issue

27
Effective Time of Registration

• 43(4) Registration of a financing statement is
  effective from the time that a registration
  number, date and time is assigned to the
  registration in the Registry.
• The number is unique so that security interests
  can be unambiguously ranked according to order of
  registration

28
Registration and Attachment

• 43(5) A financing statement may be registered
  before or after a security agreement is made or a
  security interest attaches.
• Recall s.19
• 19 A security interest is perfected when
• (a) it has attached, and
• (b) all steps required for perfection under this
  Act have been completed,
• regardless of the order of occurrence.

29
Multiple Security Agreements

• 43(6) A registration may relate to one or more
  than one security agreement.
• E.g. a financing statement specifies all the
  debtors present property as the collateral
• This will be effective to perfect separate
  security interests in a chair owned by the debtor
  and a bicycle owned by the debtor, even though
  the security interests are taken in separate
  agreements

30
Duration of Registration

• 44(1) Except as otherwise prescribed, a
  registration under this Act is effective for the
  period of time specified as part of the financing
  statement by which the registration is effected
• Longer duration is more expensive
• Revenue issue

31
Constructive Notice Abolished

• Registration not constructive notice
• 47 Registration of a financing statement in the
  Registry by itself does not constitute notice or
  knowledge to any person of the existence or
  contents of the financing statement or of the
  existence of the security interest or the
  contents of any security agreement to which the
  registration relates

32
Constructive Notice Abolished

• The law surrounding old registration systems
  depended on concept of notice and constructive
  notice s.47 makes these concepts irrelevant
• The PPSA depends on express priority rules

33
Registry Searches

• 48(1) A person may search the records of the
  Registry and obtain a printed search result
• (a) at an office of the Registry, or
• (b) in accordance with an agreement entered into
  with the Registrar under subsection 43(2).
• Individual searching at the registry office is
  permitted (a)
• But on-line searching from the searchers own
  office is standard (b)
• Individuals may go to search firms

34
Registry Searches

• 48(2) A search under subsection (1) may be
  conducted according to
• (a) the name of the debtor,
• (b) the serial number of goods of a kind that are
  prescribed as serial numbered goods, or
• (c) a registration number.
• Debtor name indexing is standard
• Serial number indexing for prescribed goods

35
Evidence of search results

• 48(3) A printed search result that purports to be
  issued by the Registry is receivable as evidence
  and is, in the absence of evidence to the
  contrary, proof of the registration of any
  financing statement to which the search result
  relates, including
• (a) the date and time of registration of the
  financing statement, and
• (b) the order of registration of the financing
  statement as indicated by the registration
  number, date and time set out in the printed
  search result.

36
Evidence of search results

• Date and time of registration is rarely
  controversial
• For convenience any printed search result
• In cases of dispute, an official report from the
  Registrar is conclusive proof to the contrary

37
Priorities
38
Priorities

• The priority rules depend on
• The nature of the security interest
• Perfected v unperfected
• Purchase money security interest (pmsi)
• The nature of the parties
• Secured Party
• Judgment creditor (trustee in bankruptcy)
• Purchaser (lessee)

39
Priorities

• The priority rules depend on
• The nature of the goods
• Serial numbered goods
• Consumer goods
• Inventory
• Equipment

40
Knowledge

• Knowledge of a prior interest is irrelevant to
  priority unless the Act specifically provides
  otherwise
• The priority rules make no reference to knowledge
• and
• 65(3) A person does not act in bad faith merely
  because the person acts with knowledge of the
  interest of some other person.
• Taking with knowledge of a prior unregistered
  interest is not constructive fraud and does not
  affect priority

41
Perfected SP v Unperfected SP

• Residual (general) priority rules apply Where
  this Act provides no other method for determining
  priority between competing security interests in
  the same collateral (s.35(1))
• 35(1)(b) a perfected security interest has
  priority over an unperfected security interest
• This is true even if the unperfected security
  interest attached first
• An unperfected security interest is vulnerable
• nemo dat is not the law

42
Perfected SP v Perfected SP

• 35(1)(a) priority between perfected security
  interests is determined by the order of the
  occurrence of the following
• (i) the registration of a financing statement
  under section 25 without regard to the time of
  attachment of the security interest,...
• If SP1 attaches first, SP2 attaches second, but
  SP2 registers first, SP2 has priority.

43
Perfected SP v Perfected SP

• Order of registration, not order of perfection
• SP1 attaches, then SP2 registers, then SP1
  registers, then SP2 attaches, SP2 has priority
  even though SP1 was perfected first.
• Attachment is necessary for perfection, but is
  irrelevant to priorities between perfected
  interests

44
Perfected SP v Perfected SP

• 35(1) (a) priority between perfected security
  interests is determined by the order of the
  occurrence of the following
• (i) registration, or
• (ii) possession of the collateral under section
  24 without regard to the time of attachment of
  the security interest, or
• (iii) special cases
• whichever is earliest
• Taking possession is equivalent to registration
  where perfection by possession is permitted

45
Unperfected SP v Unperfected SP

• 35(1) (c) priority between unperfected security
  interests is determined by the order of
  attachment of the security interests
• Order of attachment is relevant to priority only
  in a competition between two unperfected interests

46
After-Acquired Property

• 13(1) Subject to section 12 and subsection (2), a
  security agreement that provides for a security
  interest in after-acquired personal property
  attaches to that property in accordance with the
  terms of the agreement without any need for
  specific appropriation by the debtor.
• S.13(2) except crops and consumer goods

47
Future Advances

• 35(5) Subject to subsection (6), the priority
  which a security interest has under subsection
  (1) applies to all advances, including future
  advances.

48
Future Advances

• Chronological order of events
• SP1
• Registers a financing statement in respect of all
  Ds property
• No agreement is entered into between SP1 and D,
  and no money is advanced
• SP2
• Inquires of SP1 and D and is told, correctly,
  that no agreement exists between them.

49
Future Advances

• SP2
• Enters into an agreement with D taking Ds chair
  as collateral
• Registers a financing statement to that effect
  and advances
• SP1
• Enters into an agreement with D taking Ds chair
  as collateral and advances
• Who has priority, SP1 or SP2?

50
Future Advances

• Contrast PPSA with common law rule in Hopkinson v
  Rolt
• A mortgage may secure future advances, but
  advances made after a 2nd mortgagee has
• Registered a 2nd mortgage
• Advanced funds under that 2nd mortgage
• Given actual notice of the second mortgage to the
  1st mortgagee
• will be subordinated to 2nd mortgagee
• Which rule is better?
• See Proposed Land Security Act s.13 (Supp)

51
SP v Third Party

• Third Parties fall into two categories
• Purchasers and other transferees in particular
  lessees
• This Section of the Course
• Judgment creditor (j.c.) and related parties i.e.
  trustee in bankruptcy
• Dealt with in a subsequent Section

52
SP v Transferee

• General rule is that security interest follows
  the asset into the hands of the purchaser
• But there are some very important exceptions

53
General Exception

• SP may contractually permit D to transfer assets
  clear of the security interest
• Either in general terms in the security agreement
  itself
• Or specifically in respect of a particular asset,
  by a subordination agreement or release

54
Unperfected SP v Transferee

• Unperfected SP is very vulnerable to transferee
• Vulnerable to BFPFV
• As defined by PPSA

55
Unperfected SP v Purchaser

• 20(3) An unperfected security interest in
  collateral is subordinate to the interest of a
  transferee of the collateral if the transferee
• (a) acquires the interest under a transaction
  that is not a security agreement,
• (b) gives value, and
• (c) acquires the interest without knowledge of
  the security interest and before the security
  interest is perfected.
• Note Unperfected SP also subordinate to
  j.c./trustee in bankruptcy s.20(1),(2)

56
Perfected SP v Transferee

• Ordinary course rule
• Yard sale rule
• Serial numbered goods rules

57
Perfected SP v Purchaser

• Ordinary course buyer takes free of interests
  given by the seller. . .
• 30(2) A buyer or lessee of goods sold or leased
  in the ordinary course of business of the seller
  or lessor takes free of any perfected or
  unperfected security interest given by the seller
  or lessor or arising under section 28 or 29,
  whether or not the buyer or lessee knows of
  it,...
• Buyer is still subject to security interests
  given by prior owners of the goods

58
Perfected SP v Purchaser

• . . . unless
• .30(2). . . unless the buyer or lessee also knows
  that the sale or lease constitutes a breach of
  the security agreement under which the security
  interest was created.

59
Perfected SP v Purchaser of Consumer Goods

• A buyer for value of small ticket consumer goods
  takes free of any security interest (not just
  those granted by the seller)
• 30(3) A buyer or lessee of goods that are
  acquired as consumer goods takes free of a
  perfected or unperfected security interest in the
  goods if the buyer or lessee
• (a) gave value for the interest acquired, and
• (b) bought or leased the goods without knowledge
  of the security interest.

60
Perfected SP v Purchaser of Consumer Goods

• Low value goods only
• 30(4) Subsection (3) does not apply to a security
  interest in
• (b) goods if the purchase price of the goods
  exceeds one thousand dollars or if the market
  value of the goods, in the case of a lease,
  exceeds one thousand dollars.

61
Serial Numbered Goods

• Reg s.2 serial numbered goods" means a motor
  vehicle, trailer, mobile home, aircraft, boat or
  an outboard motor for a boat
• Does not mean all goods which happen to have a
  serial number
• In Ontario, only motor vehicles
• For serial numbered goods, registration by serial
  number is permitted
• But not always required

62
Serial Numbered Goods

• Serial number registration addresses problem of
  remote security interests (interests granted by a
  predecessor in title to the seller)
• Why not use serial number registration for all
  goods?

63
Serial Numbered Goods

• All goods, including serial numbered goods, fall
  into three categories
• Inventory
• Consumer goods
• Equipment "equipment" is the residual category
  goods that are held by a debtor other than as
  inventory or consumer goods

64
Serial Numbered GoodsGeneral Scheme

• Failure to register by serial number
• Fatal for collateral held as consumer goods
• Irrelevant for collateral held as inventory
• Halfway between for collateral held as equipment
• Ineffective against purchaser and secured parties
• Effective against judgment creditor and trustee
  in bankruptcy

65
Serial Numbered Goods

• 2(2) Except as otherwise provided in this Act,
  the determination as to whether goods are
  "consumer goods", "inventory" or "equipment"
  shall be made as of the time the security
  interest attaches.
• Why at the time of attachment?

66
Serial Numbered Consumer Goods

• If the collateral is
• serial numbered goods, and
• consumer goods
• Then
• the registration is invalid and therefore
• the security interest is not perfected if the
  serial number if omitted or inaccurate

67
Serial Numbered Consumer Goods

• 43(8) Subject to subsection (10), a registration
  is invalid if there is a seriously misleading
  defect, irregularity, omission or error in
• (b) the serial number of the collateral if the
  collateral is consumer goods of a kind that are
  prescribed as serial numbered goods.
• The defect is not cured if D name is correct
• Why not?

68
Serial Numbered Consumer Goods

• "consumer goods" means goods that are used or
  acquired for use primarily for personal, family
  or household purposes
• The test for consumer goods is subjective. What
  in fact is the purpose for which the goods are
  used, not what is the purpose for which those
  types of goods are generally used.
• Determined at the time the security interest
  attaches s. 2(2)

69
Serial Numbered Inventory

• Registration by serial number is not necessary to
  perfect a security interest in serial numbered
  goods which are held as inventory
• Since the specific rules apply only to consumer
  goods and equipment, the general rules apply to
  inventory

70
Serial Numbered Inventory

• Why isnt serial registration required for
  inventory?
• Recall that the determination of the nature of
  the goods is made at the time the security
  interest attaches
• D1 grants interest to SP1, sells in bulk to B,
  who sells to P in the ordinary course
• Is SP1's interest effective against P?

71
Serial Numbered EquipmentSP v Purchaser

• 30(6) A buyer or lessee of goods takes free of a
  security interest in the goods perfected by
  registration under section 25 if
• (a) the buyer or lessee bought or leased the
  goods without knowledge of the security interest,
  and
• (b) the goods were not described by serial number
  in the registration relating to the security
  interest.

72
Serial Numbered EquipmentSP v Purchaser

• 30(7) Subsection (6) applies only to goods that
  are equipment and that are of a kind that are
  prescribed as serial numbered goods
• Purchaser without knowledge takes free if serial
  number not used in registration
• P takes clear of ALL security interests
• NOT just those granted by the seller
• takes free of a security interest

73
Serial Numbered EquipmentSP v SP

• 35(4) A security interest in goods that are
  equipment and are of a kind that are prescribed
  as serial numbered goods is not registered or
  perfected by registration for the purposes of
  subsection (1)competing security interests, (7)
  lasped registration or (8) security interest
  granted by transferee or 34(1) purchase money
  security interests unless a financing statement
  relating to the security interest that includes a
  description of the goods by serial number is
  registered

74
Serial Numbered Equipment

• Serial number goods which are not inventory or
  consumer goods must be registered by serial
  number in order to be perfected as against
  another secured party
• Knowledge is irrelevant
• Cf SP v P, where knowledge is relevant

75
Serial Numbered EquipmentSP v J.C.

• 35(4) A security interest in goods that are
  equipment and are of a kind that are prescribed
  as serial numbered goods is not registered or
  perfected by registration for the purposes of
  subsection (1), (7) or (8) or 34(1) unless a
  financing statement relating to the security
  interest that includes a description of the goods
  by serial number is registered.

76
Serial Numbered EquipmentSP v J.C.

• No mention is made of subsection (6), which deals
  with JC and trustee in bankruptcy
• Therefore, normal rules apply
• Interest is perfected by registration for
  purposes of priority against j.c and trustee in
  bankruptcy even without serial number

77
Consumer Goods Equipment

• Consequences of failure to register the correct
  serial number is slightly different for consumer
  goods equipment
• Consumer goods
• Interest is unperfected for all purposes s.43(8)
• Including as against JC or trustee in bankruptcy
• Equipment
• Security interest effective against JC or trustee
  in bankruptcy
• Why is there a difference ?

78
Serial Numbered Goods in Ontario

• Serial number registration only required for
  motor vehicles
• Priority rules
• Same for
• Consumer goods
• Serial number registration required (Reg 3(7)) or
  registration invalid
• Inventory
• Serial number registration not required
• Different for equipment

79
Serial Eqpt in OntarioSP v P

• If serial not included
• Purchase clears security interest given by the
  seller
• Includes purchases out of the ordinary course
• Cf Model Act clears all security interests
• In Ont remote purchaser not protected directly
• But initial sale usually cleared
• Because includes purchases out of the ordinary
  course

80
Serial Eqpt in OntarioSP v SP / JC

• Registration valid against SP JC even if no
  serial number

81
Serial Eqpt Comparison
Registration w/o Serial Registration w/o Serial Registration w/o Serial
SP1 v Model Act Ont
P Protected Protected (variant)
SP2 Protected Unprotected
JC Unprotected Unprotected
82
Serial Numbered Equipment in Ontario

• 28(5)Where a motor vehicle. . .is sold other than
  in the ordinary course of business of the seller
  and the motor vehicle is classified as equipment
  of the seller, the buyer takes it free from any
  security interest therein given by the seller
  even though it is perfected by registration
  unless the vehicle identification number of the
  motor vehicle is set out in the designated place
  on a registered financing statement or financing
  change statement or unless the buyer knew that
  the sale constituted a breach of the security
  agreement.

83
Purchase money security interest

• "purchase money security interest" means
• (a) a security interest taken in collateral to
  the extent that it secures all or part of the
  purchase price of the collateral, . . .
• Money loaned to buy the very goods which are used
  as collateral for that loan

84
Purchase money security interest

• Super-priority for PMSI
• 34(1) Subject to section 28, a purchase money
  security interest in
• (a) collateral or its proceeds, other than
  intangibles or inventory,. . .that is perfected
  not later than fifteen days after the debtor. .
  obtains possession of the collateral, or (b). .
  .
• has priority over any other security interest in
  the same collateral given by the same debtor.

85
Purchase money security interest

• Why is there a super-priority for pmsi?
• Grace period because these loans are often made
  at the time of purchase

86
Purchase money security interest

• Super-priority for PMSI
• 34(1) Subject to section 28, a purchase money
  security interest in
• (a) collateral or its proceeds, other than
  intangibles or inventory
• has priority over any other security interest in
  the same collateral given by the same debtor.
• Why is inventory excluded?

87
Purchase money security interest

• Note In BC and Man pmsi in serial numbered
  equipment need not be registered by serial number
  to be effective against another SP
• D name registration thought sufficient

88
Serial Numbered EquipmentSP v SP non-Atlantic

• Purchase money security interests
• In Western jurisdictions s. 35(4) does not list
  34(1) purchase money security interests
• Therefore serial number registration is not
  needed for pmsi
• E.g pmsi gets super-priority over other SP even
  without serial number

89
Proceeds

• 28(1) Subject to this Act, if 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, and
• (b) extends to the proceeds.

90
Proceeds

• The security interest in proceeds is subject to
  tracing rules
• Ie proceeds are deposited in a bank account which
  is then draft down to zero before new money is
  deposited the security interest does not extend
  to the new money