AuthorRonald C.C. Cuming/Catherine Walsh/Roderick J. Wood
ProfessionUniversity of Saskatchewan, College of Law/McGill University, Faculty of Law/University of Alberta, Faculty of Law
The concept of perfection plays a central role in the operation of the
PPSA system. The drafters of the PPSA adopted, perhaps unfortunately,
the terms “perfected” and “perfection” from Article 9 of the Uniform
Commercial Code, which in turn were copied from § 60 of the United
States Bankruptcy Code, as it existed at t he time Article 9 was dra fted.
In the context of United States bank ruptcy law, the term “perfection”
means that a security interest has a status giving it invulner ability to
defeat by the debtor’s trustee in bankruptcy or judgment creditors.1
However, it is not particularly helpful in the context of the PPSA to seek
the meaning of the ter m in its origins. The scope of the concept can be
determined only by reference to its use in t he PPSA itself.
The principal use of the term “per fection” in the PPSA is to descr ibe
a priority status acqui red by a security interest. The Act2 provide s that a
security intere st is perfected when it has attached (that is, has come into
ex isten ce)3 and all steps requi red for perfection have been completed,
1 11 USC § 547(e)(1)(B) provides that a tra nsfer of personal property or a fi xture
is perfected whe n a creditor on a simple contract cannot ac quire a judicial lien
that is super ior to the interest of the tra nsferee.
2 PPSA (A, BC, M, NB, NW T, Nu, O, PEI, S) s 19; (NL, NS) s 20; Y s 18.
3 PPSA (A, BC, M, NB, NWT, Nu, PEI, S) s 12; (NL, NS) s 13; (O, Y) s 11.
Perfection 335
regardless of the order of occurrence. In other words, an ex tant security
interest acquires the status of being perfected when a prescribed step
has been taken or the status is conferred (temporarily or permanently)
by the Act.4
The starting point in the analysis of the concept of perfection is rec-
ognition that a secur ity interest is a property interest in the collateral.5
Proprietary rights generally confer priority status i n the sense of being
eective against third p arties under common law principles. Perfection
is the status th at must be achieved if the property rights acquired under
a security agreement are to be protected against specified competing
rights in or claim s to the collateral. The Act inferentially defines per-
fection, not by stating what it is, but by specify ing the interests that can
defeat (subordinate or cut o) a security intere st that is not perfected.6
These interests include judgment creditors (under prescribed ci rcum-
st an ce s),7 the debtor’s trustee in bankruptcy,8 other secured creditors,9
and buyers of the collateral.10
There can be several perfected security interests in the same collat-
eral. Perfection is not invulnerability it is relative, not absolute. The
priority status a per fected security interest has depends upon the natu re
and status of the interest or intere sts with which it is in competition.
The relativeness of the status of per fection results from the various
priority rules conta ined in the Act and in related legislation. A perfected
security interest can be defeated by other interests in the collatera l,
including those of unsecured judgment creditors, other secured credit-
ors, and transferees of t he collateral. Consequently, the only generalized
description of the concept of perfection that is possible is that it is a
status that normally must be attained in order for a security interest to
have priority over other specified proprietary interests in the collateral.
4 As noted below, perfection doe s not always require the ta king of a “perfection
step.” There are circumsta nces in which the Act confers the st atus automatically.
5 For a brief descript ion of the nature of a PPSA securit y interest, see Bank of
Montreal v Innovation Credit Union, 2010 SCC 47 at paras 41–43.
6 Lack of perfection does not re sult in a security intere st being “void.” It is still
enforceable again st the debtor and a donee of the collatera l.
7 See Chapter 9, Section A .
8 PPSA (NWT, Nu, O, PEI) s 20(1); (BC, M) s 20(b); (NB, S) s 20(2); A s 20(a);
NL s 21(1); NS s 21(2); Y s 19(1).
9 PPSA (A, BC, M, NB, NWT, Nu, PEI, S) s 35(1); (NL, NS) s 36(1); O s 30(1);
Y s 34(1).
10 PPSA (NWT, Nu, O) s 20(1); (BC, M) s 20(c); (NB, S) s 20(3); A s 20(b); NL s 21(2);
NS s 21(3); PEI s 20(2).

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