Perimeter Transportation Ltd. (Bankrupt), Re, 2010 BCCA 509

• Judge: Ryan, Newbury and Groberman, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: October 01, 2010
• Jurisdiction: British Columbia
• Citations: 2010 BCCA 509;(2010), 294 B.C.A.C. 304 (CA)

Perimeter Transportation (Bankrupt), Re (2010), 294 B.C.A.C. 304 (CA);

    498 W.A.C. 304

MLB headnote and full text

Temp. Cite: [2010] B.C.A.C. TBEd. NO.019

Vancouver International Airport Authority (appellant/applicant) v. Century McMynn Leasing Partnership, 1019553 Alberta Ltd., GE Canada Equipment Financing G.P. and General Electric Equipment Finance G.P. (respondents/respondents)

(CA037606; 2010 BCCA 509)

Indexed As: Perimeter Transportation Ltd. (Bankrupt), Re

British Columbia Court of Appeal

Ryan, Newbury and Groberman, JJ.A.

November 17, 2010.

Summary:

Perimeter was in the business of providing bus transportation to an airport. In April 2008, Perimeter leased three buses from Century for a term of eight years. Century did not file a financing statement in the Personal Property Registry regarding the lease. In May 2008, Century borrowed $4.3 million from GE, granting GE a security interest in the three buses. GE filed a financing statement as against Century, identifying the three buses by serial number. In November 2008, Perimeter assigned into bankruptcy. Century filed its financing statement regarding the lease the following day. Perimeter's trustee applied for directions from the court regarding the effect of s. 30(2) of the Personal Property Security Act, particularly whether GE had priority in the buses over the trustee. Both Century and GE were in the business of leasing buses.

The British Columbia Supreme Court, in a decision reported at [2009] B.C.T.C. Uned. 1458, found that GE's interests in the buses stood in priority to any interest of the trustee. The trustee appealed.

The British Columbia Court of Appeal dismissed the appeal.

Bankruptcy - Topic 431

Property of bankrupt - Particular property - Property leased by bankrupt - [See Personal Property - Topic 6463 ].

Personal Property - Topic 6214

Security interests - Priorities - Trustee in bankruptcy - [See Personal Property - Topic 6463 ].

Personal Property - Topic 6216

Security interests - Priorities - Lessor's interest - [See Personal Property - Topic 6463 ].

Personal Property - Topic 6463

Security interests - Loss of title to third parties - Goods sold or leased in ordinary course of business - What constitutes - Perimeter was in the business of providing bus transportation to an airport - In April 2008, Perimeter leased three buses from Century for a term of eight years - Century did not file a financing statement in the Personal Property Registry regarding the lease - In May 2008, Century borrowed $4.3 million from GE, granting GE a security interest in the three buses - GE filed a financing statement as against Century, identifying the three buses by serial number - In November 2008, Perimeter assigned into bankruptcy - Century filed its financing statement regarding the lease the following day - Perimeter's trustee applied for directions from the court regarding the effect of s. 30(2) of the Personal Property Security Act, particularly whether GE had priority in the buses over the trustee - Both Century and GE were in the business of leasing buses - A chambers judge found that GE's interests in the buses stood in priority to any interest of the trustee - The British Columbia Court of Appeal dismissed the trustee's appeal - Section 30(2) applied to the security interest granted by Century to GE - It was an interest in goods given by the lessor (Century) and Century had leased the goods to the lessee (Perimeter) in the ordinary course of Century's business - Assuming that, the question became what exactly the trustee "took" free of the security interest described in s. 30(2) - Nothing in s. 30(2) contemplated or required that the trustee acquired title to the buses free of GE's interest in Century's perfected reversionary interest - Both the policy underlying s. 30(2) and the section's wording required only that the trustee remained entitled to the bankrupt's interest under the lease, free of all interests described in s. 30(2) - As long as the lease was extant, the lessee's rights would not be affected by the security interest granted by the lessor - Here, the lease came to an end, at the latest, when the buses were returned to Century at GE's request in December 2008 - The operation of s. 30(2) had been spent - GE was entitled to assert its perfected interest against the trustee - See paragraphs 27 to 38.

Cases Noticed:

Car-Ant Investments Ltd. et al. v. Peat Marwick Thorne Inc. (1990), 84 Sask.R. 249 (Q.B. Bktcy.), refd to. [para. 12].

North Sky Trading Inc. (Bankrupt), Re, [1994] 9 W.W.R. 680; 158 A.R. 117 (Q.B. Bktcy.), affd. [1996] 7 W.W.R. 332; 184 A.R. 291; 122 W.A.C. 291 (C.A.), refd to. [para. 14].

Morris (David) Fine Cars Ltd. v. North Sky Trading Inc. (Trustee of) - see North Sky Trading Inc. (Bankrupt), Re.

Giffen (Bankrupt), Re, [1998] 1 S.C.R. 91; 222 N.R. 29; 101 B.C.A.C. 161; 164 W.A.C. 161, refd to. [para. 19].

International Harvester Credit Corp. of Canada Ltd. v. Bell's Dairy Ltd. (Bankrupt) (1986), 50 Sask.R. 177; 30 D.L.R.(4th) 387; 34 B.L.R. 76 (C.A.), refd to. [para. 20].

Sinco Trucking Ltd. (Bankrupt), Re; Paccar Financial Services Ltd. v. Touche Ross Ltd. et al. (1989), 74 Sask.R. 181; 57 D.L.R.(4th) 438; 73 C.B.R.(N.S.) 28 (C.A.), refd to. [para. 21].

Paccar Financial Services Ltd. v. Sinco Trucking Ltd. - see Sinco Trucking Ltd. (Bankrupt), Re; Paccar Financial Services Ltd. v. Touche Ross Ltd. et al.

Willi v. Shearer (Don) Ltd. et al. (1993), 35 B.C.A.C. 170; 57 W.A.C. 170 (C.A.), dist. [para. 27].

Gimli Auto Ltd. et al. v. Canada Campers Inc. (Bankrupt) (1998), 219 A.R. 166; 179 W.A.C. 166; 62 Alta. L.R.(3d) 40; 1998 ABCA 154, refd to. [para. 30].

Toronto-Dominion Bank v. R.N.G. Group Inc. (2002), 38 C.B.R.(4th) 110 (Ont. Sup. Ct.), refd to. [para. 30].

Hongkong Bank of Canada v. Wheeler Holdings Ltd., [1993] 1 S.C.R. 167; 148 N.R. 1; 135 A.R. 83; 33 W.A.C. 83, refd to. [para. 32].

Kirkham (H.O.) & Co., Re, [1939] 1 W.W.R. 425 (B.C.S.C.), refd to. [para. 35].

Plourde, Re (1979), 31 C.B.R.(N.S.) 308 (Que. C.A.), refd to. [para. 35].

Statutes Noticed:

Personal Property Security Act, R.S.B.C. 1996, c. 359, sect. 30(2) [para. 10].

Authors and Works Noticed:

Cuming, Ronald C.C., Walsh, Catherine, and Wood, Roderick J., Personal Property Security Law (2005), pp. 279 [para. 29]; 286 [paras. 11, 29]; 287 [para. 11].

Counsel:

J.I. McLean and M. Shalke, for the appellant;

L. Robinson and H.L. Williams, for Century McMynn Leasing Partnership, 1019553 Alberta Ltd., GE Canada Equipment Financing G.P., and General Electric Equipment Finance G.P.

This appeal was heard at Vancouver, British Columbia, on October 1, 2010, by Ryan, Newbury and Groberman, JJ.A., of the British Columbia Court of Appeal. On November 17, 2010, Newbury, J.A., delivered the following reasons for judgment for the court.