FBDB v. Reg. of Personal Prop. Security, (1984) 3 O.A.C. 241 (DC)

Judge:Henry, J.
Court:Superior Court of Justice of Ontario
Case Date:February 10, 1984
Jurisdiction:Ontario
Citations:(1984), 3 O.A.C. 241 (DC)
 
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FBDB v. Reg. of Personal Prop. Security (1984), 3 O.A.C. 241 (DC)

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Federal Business Development Bank v. Registrar of Personal Property Security

(1757/81)

Indexed As: Federal Business Development Bank v. Registrar of Personal Property Security

Ontario Divisional Court

Henry, J.

April 5, 1984.

Summary:

A bank, as chattel mortgagee, requested an "individual specific search" from the personal property registry in the name of the chattel mortgagor and his business. The name searched included the mortgagor's middle initial. The Registrar's certificate showed no registered encumbrances on the chattels. The bank therefore filed a financing statement and perfected its chattel mortgage. After default by the mortgagor, the bank requested a second search, this time using the mortgagor's name without his initial. The search revealed two previously registered charges. The bank, alleging loss of its priority, claimed compensation from the Personal Property Assurance Fund for loss suffered by relying on an incorrect certificate.

The Master allowed the bank's claim under s. 45(3) of the Personal Property Security Act. See paragraphs 31 to 54 below. The Registrar appealed.

The Ontario Divisional Court allowed the appeal. The court held that the bank did not lose its priority, because the other charges were improperly registered and resulted in unperfected security interests.

Personal Property - Topic 6002

Security interests - Application of Personal Property Security Act, R.S.O. 1970, c. 344 - The Ontario Divisional Court discussed the application and scope of the Personal Property Security Act - See paragraphs 3 to 15.

Personal Property - Topic 6024

Security interests - Financing statement - Contents of - The Ontario Divisional Court referred to the correct name of a debtor as shown in a financing statement registered under the Personal Property Security Act - See paragraphs 18, 23.

Personal Property - Topic 6024

Security interests - Financing statement - Contents of - The Ontario Divisional Court held that failure to include a debtor's middle initial (for those who had one) in a financing statement registered under the Personal Property Security Act constituted improper registration and resulted in an unperfected security interest and loss of priority for the creditor - See paragraph 21.

Personal Property - Topic 6026

Security interests - Financing statement - Effect of filing - The Ontario Divisional Court discussed the effect of perfecting a security interest by registering a financing statement - See paragraph 4.

Personal Property - Topic 6090

Security interests - Registration - Validity - Material misdescriptions - The Ontario Divisional Court held that for a debtor with a second given name, failure to include the debtor's middle initial in any financing statement registered under the Personal Property Security Act was in error in substance and not a clerical error within the saving provisions of ss. 4 or 47(5) of the Act - See paragraph 21.

Personal Property - Topic 6150

Security interests - Registration - Insurance fund - Claims - Defences - Under s. 45(3) of the Personal Property Security Act, anyone suffering loss by relying on an incorrect certificate because of an error or omission in the registration system was entitled to compensation from the Assurance Fund - A creditor requested a search using the debtor's middle initial - The Registrar's certificate showed no registered encumbrances - The creditor believed it had priority - A subsequent search in the debtor's name without initial revealed previously registered interests - The Ontario Divisional Court held that the creditor did not lose its priority because the other interests were unperfected - Thus the certificate was not incorrect and the creditor had no claim to the Fund - See paragraphs 21 to 27.

Words and Phrases

Person named - The Ontario Divisional Court discussed the meaning of the words "person named" as found in s. 44 of the Personal Property Security Act, R.S.O. 1970, c. 344 - See paragraph 22.

Statutes Noticed:

Personal Property Security Act, R.S.O. 1970, c. 344, sect. 4 [paras. 11, 21, 50]; sect. 44 [paras. 13-14, 22-23. 25, 27, 33, 46]; sect. 45 [para. 13]; sect. 45(3) [paras. 19, 27 31, 50]; sect. 47(5) [paras. 11, 21, 50]; sect. 70(e), sect. 70(i), sect. 70(ia), sect. 70(ic), sect 70(k) [paras. 23, 42].

Personal Property Security Regulations, sect. 3 [paras. 7, 23, 45]; sect. 14(1) [paras. 8, 18, 21-23, 44].

Counsel:

Leigh Hunter and T.C. Marshall, Q.C., for the appellant, the Registrar of Personal Property Security;

D.E. Short, for the respondent, Federal Business Development Bank.

This appeal was heard before Henry, J., of the Ontario Divisional Court on February 10, 1984, whose decision was delivered orally and released on April 5, 1984.

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