National Bank of Canada v. Gallagher Refrigeration & Air Conditioning Ltd. (Receivership), (1988) 54 Man.R.(2d) 177 (QB)

• Judge: Hanssen, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: August 05, 1988
• Jurisdiction: Manitoba
• Citations: (1988), 54 Man.R.(2d) 177 (QB)

Nat. Bk. v. Gallagher Refrig. (1988), 54 Man.R.(2d) 177 (QB)

MLB headnote and full text

National Bank of Canada (plaintiff) v. Dunwoody Limited as Receiver and Manager for Gallagher Refrigeration & Air Conditioning (defendant)

(Suit No. 87-01-16949)

Indexed As: National Bank of Canada v. Gallagher Refrigeration & Air Conditioning Ltd. (Receivership)

Manitoba Court of Queen's Bench

Winnipeg Centre

Hanssen, J.

August 5, 1988.

Summary:

Gallagher Ltd. granted a security interest in all its equipment to the Toronto-Dominion Bank which kept registration of its security in force in the personal property registry. Two years later, Gallagher Ltd. bought an aircraft by conditional sale. The conditional sales contract was assigned to the National Bank of Canada and the National Bank registered a financing statement in respect of its purchase-money security interest in the aircraft. However, National Bank inserted the aircraft registration mark information in the general collateral area of the financing statement instead of in the area designated for motor vehicles as required by regulation. The receiver seized the aircraft and claimed that the Toronto-Dominion Bank had priority because National Bank's registration was defective.

The Manitoba Court of Queen's Bench held that National Bank's security ranked in priority because the error in the registration was cured by s. 4(2) of the Personal Property Security Act.

Personal Property - Topic 6086

Security interests - Validity of registration - Curing of errors - A conditional sales contract for an aircraft was assigned to National Bank, which registered a financing statement in respect of its purchase-money security interest - However, the aircraft's registration mark information was inserted on the wrong part of the statement - The Manitoba Court of Queen's Bench held that there was noncompliance with the mandatory requirements of the Personal Property Security Act and Personal Property Regulation 323/87 R - The defective registration was not cured by s. 28(a) of the regulation, but was cured by s. 4(2) of the Act - The court stated that a defect, irregularity or error as opposed to an omission was cured by s. 4(2) unless the defect, irregularity or error misled some person.

Cases Noticed:

Re Hickson; Clarkson Co. Ltd. v. Reichhold Ltd., [1984] 3 W.W.R. 164; 26 Man.R.(2d) 5 (C.A.), consd. [para. 15].

Re Hickson, [1983] 3 W.W.R. 167; 20 Man.R.(2d) 422 (Q.B.), consd. [para. 16].

Regal Feeds Ltd. v. Waldner and Niverville Credit Union Ltd., [1985] 5 W.W.R. 259; 34 Man.R.(2d) 299 (Q.B.), consd. [para. 18].

Sifton Credit Union Limited v. Barber et al. (1986), 41 Man.R.(2d) 295 (Q.B.), consd. [para. 18].

Deere (John) Ltd. v. Firdale Farms Ltd. (Receivership) (1987), 50 Man.R.(2d) 45 (C.A.), consd. [para. 19].

Statutes Noticed:

Personal Property Security Act, S.M. 1973, c. 5; C.C.S.M., c. P-35, sect. 4(1) [paras. 14, 15]; sect. 4(2) [paras. 6, 14-23]; sect. 48 [paras. 7, 11]; sect. 48(5) [paras. 14, 15, 18, 23].

Personal Property Security Act, Regulation 323/87 R, sect. 3(4) [paras. 8, 9]; sect. 28(a) [paras. 12, 13].

Counsel:

Raj K. Vohora and Gordon R. DuVal, for the plaintiff;

D.G. Douglas, for the defendant.

This case was heard before Hanssen, J., of the Manitoba Court of Queen's Bench, who delivered the following judgment on August 5, 1988: