AuthorRonald C.C. Cuming, Catherine Walsh, Roderick Wood
A. InTRoduCTIon
1) Personal Claims and Proprietary Claims
A creditor who is given a security i nterest in the debtor’s property ob-
tains a proprietar y right to the collateral. The def‌ining characterist ic of
a proprietary right (which is also referred to as a real right or a right in
rem) is that it is a r ight in a thing that is generally enforceable against
the world. By way of contrast, a personal right is a r ight in respect of
a particular person or identif‌iable group of persons. For example, a
creditor who lends money to a debtor has a personal right to recover
the debt. This right is owed only by the debtor to the creditor.
A proprietary right in t he form of a security intere st may be directly
vindicated by enforcement of the security interest. This will t ypically
involve the seizure and sale of tang ible collateral in the hands of the
debtor or in the hands of some third par ty to whom it has been trans -
ferred. The law provides another means by which the secured party ’s
proprietary right in t he collateral may be protected. A secured part y is
given a personal right against a person who wrongfully interferes with
the secured part y’s security interest in the collateral. A secur ity interest
therefore provides the foundation for two distinct ty pes of claims th at
can be made by the secured party: (1) the enforcement of the security
interest against the collatera l; and (2) a personal claim aga inst persons
who wrongfully interfere wit h the collateral.
Part 5 of the PPSA provides a comprehensive remedial system t hat
sets out in considerable detail the right s and obligations of a secured
party who seeks to en force its claim against the collateral. In contrast,
the right of a secured part y to bring a personal action again st those
who interfere with the collateral i s almost entirely unregulated by t he
PPSA. Instead, the Act leaves these matters to be determined by the
common law.
This chapter will focus pr imarily on the remedi al system found
in Part 5 of the Act. However, in order to appreciate the full range of
remedies available to a secured pa rty, it is also necessar y to understand
how the common law protects proprietary interests through the avail-
ability of personal actions against persons who unlawf ully interfere
with the secured pa rty’s interest. This chapter will therefore conclude
with a discussion of the available personal actions.
2) Secured and Unsecured Creditors’ Remedies
One of the major reasons why a creditor may wish to take a security
interest in the debtor’s property is th at it gives the creditor a superior
set of enforcement remedies. Without a security interest, the creditor
has no proprietary interest in the debtor’s assets, and must enforce the
claim through the provincial judgment enforcement system. In order
to do this, the creditor must bring a civil action and obtain a judgment.
This can produce delays, part icularly if the debtor defends the action.
Once a judgment is obtained, the creditor will usually obtain a writ of
execution, writ of enforcement or judgment charge. The creditor will
then seek to enforce the judgment through seiz ure and sale of the debt-
or’s personal property, garnishment of intang ible claims, or sale pro-
ceedings against t he debtor’s land. These proceedings tend to be more
cumbersome, particul arly in jurisdictions t hat have not reformed their
judgment enforcement systems. As well, the judgment enforcement
creditor is generally required to share f unds produced as a result of
enforcement proceedings with other judgment enforcement creditors.
A creditor who takes a secur ity interest in some or all of the debtor’s
personal property has a more powerful set of default remedies. The se-
cured creditor does not need to obtain a judgment before commencing
enforcement proceedings. Upon default, the secured creditor ha s the
right to take posse ssion of the collateral. In most jurisdict ions, a seizure
and sale of personal property does not need to be undertaken by the
sheriff. In six PPSA juri sdictions, provincial and ter ritorial exemptions
law does not apply to secured creditors (the other six have enacted legis -
lation that makes security interests subject to exemptions).
Remedies 615
Despite the superiority of its secured party remedies, a creditor
may decide to invoke its judgment enforcement remedies. If the se-
cured party is undersecured (that is, if the anticipated proceeds from
the collateral are insu ff‌icient to cover the obligation secured), the se-
cured party may wish to obtain a judgment to cover the shortfall. Thi s
shortfall is commonly referred to a s a “def‌iciency,” and the judgment
obtained in respect of it is called a “def‌iciency judgment.” The creditor
may then use the judgment enforcement system in order to proceed
against the debtor’s unencumbered property to collect the def‌icien-
cy. The PPSA provides that a security interest does not merge merely
because the clai m has been reduced to judgment.1 The creditor may
therefore invoke its secured party remedies against the collateral and
concurrently invoke its judgment enforcement remedies against the
debtor’s other assets. Of course, the creditor can not receive more than
one satisfaction of the judgment debt. Any amount received from the
disposition of the collateral must be applied so as to reduce the amount
payable on the judgment.
In other instances, a sec ured party may decide to enforce its claim
using its judgment enforcement remedies inste ad of its secured party
remedies. This might occur if t he secured party ha s a security interest
in one piece of equipment, but has obtained judgment and is direct ing
seizure of several other pieces of equipment under judgment enforce-
ment proceedings. Under these circum stances, it may be more conven-
ient to have all the property seized under the judgment enforcement
proceedings rather than having to effect two different types of enforce-
ment proceedings. The fact that the secured party instructs seizure
of the collateral under judgment enforcement proceedings should not
prevent the secured party f rom asserting its secured party’s remedies.
Therefore, the secured party may choose to sell its collateral under the
sale mechanism set out in the PPSA despite the fact that seizure was
undertaken under judgment enforcement proceedings.
Although the remedies are cumulative, a secured party will even-
tually be required to m ake an election between inconsistent remedies.
For example, a secured party who elects to e xercise its right under the
PPSA to retain the collateral in satisfaction of the obligation secured
thereafter loses t he right to recover on a judgment, since the underlying
obligation is extinguished. However, a claimant will not be regarded
1 PPSA (A, NB, PEI, NW T, Nu) s 55(8); BC s 55(9); M s 55(4); (NL, NS) s 56(8); O
s 59(7), S s 55(7); Y s 53(9).

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