Giffen (Re), [1998] 1 S.C.R. 91 (1998)

Giffen (Re), [1998] 1 S.C.R. 91

IN THE MATTER OF the Bankruptcy of Carol Anne Giffen

R. West & Associates Inc. and the Attorney General of British Columbia Appellants v.

Telecom Leasing Canada (TLC) Limited Respondent and

The Attorney General of Canada,

the Attorney General for Ontario and the Attorney General for Alberta Interveners

Indexed as: Giffen (Re)

File No.: 25193.

1997: October 8; 1998: February 12.

Present: L'Heureux-Dubé, Sopinka,* Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

on appeal from the court of appeal for british columbia

Bankruptcy and insolvency -- Personal property security -- Company employee leasing vehicle -- Lessor failing to register financing statements under B.C. Personal Property Security Act and thus perfect its security interest -- Employee making assignment in bankruptcy -- Property of bankrupt vesting in trustee under Bankruptcy and Insolvency Act -- Unperfected security interest in collateral not effective against trustee under Personal Property Security Act -- Whether trustee entitled to proceeds of sale of vehicle -- Personal Property Security Act, S.B.C. 1989, c. 36, s. 20(b)(i) -- Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3, ss. 67(1), 71(2).

The respondent lessor leased a car to a company which in turn leased it to G, one of its employees. The lease between G and her employer was for more than one year and gave G the option of purchasing the vehicle from the lessor. Although the lessor was not a party to the lease agreement, it played an important role in the arrangement. The lessor received a deposit from G, it fixed the lease rates, and it was entitled to receive payments directly from G if her employer stopped paying her. The lessor and G were also named as the owners of the vehicle in the registration and insurance documents; the lessor was described as the "lessor" and G was described as the "lessee". G made an assignment in bankruptcy. Neither the lessor nor the employer had registered financing statements under the British Columbia Personal Property Security Act ("PPSA") in respect of their leases, with the result that the lessor's security interest in the car was not perfected. The lessor seized the vehicle and sold it with the appellant trustee's consent. The trustee subsequently brought a motion for an order that it was entitled to the proceeds of sale, relying on s. 20(b)(i) of the PPSA, which provides that a security interest in collateral is not effective against a trustee in bankruptcy if the security interest is unperfected at the date of the bankruptcy. The lessor opposed the claim on the grounds that the bankrupt never owned the car and that the trustee could not have a better claim to the car than the bankrupt had. The trial judge held that the lessor's unperfected security interest was of no effect as against the trustee. The Court of Appeal reversed the decision and held that the proceeds properly belonged to the lessor.

Held: T...

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