The Status, Powers, Duties, and Liabilities of the Receiver
| Author | Roderick J. Wood |
| Pages | 543-560 |
543
CH AP TE R 19
THE STATUS, POWERS,
DUTIES, AND LIABILITIES
OF THE RECEIVER
A. THE STATUS OF THE RECEIVER
1) The Traditional View
Historically, there was a significant difference in the status of a court-
appointed receiver and the status of a privately appointed receiver. A
court appointed receiver has an independent status and does not act
as agent of either the secured cred itor or the debtor.1 A privately ap-
pointed receiver acts as an agent of either the secured creditor or the
debtor depending on the function undertaken by t he receiver.2 In man-
aging the busines s, the receiver acts as agent for the debtor; in realizing
the security, the receiver acts as agent of the secured creditor. This
difference was signi ficant in its legal effect. A court appointed receiver
enters into new contract s with third partie s as a principal. The court-
appointed receiver therefore becomes personally li able on the contracts3
but has a right of indemnity from the assets under receivership.4 A pri-
vately appointed receiver enters into new contracts as agent of the debt-
or and therefore does not become personally liable on them. As well, a
2 Peat Marwick Ltd v Consum ers’ Gas Co (1980), 35 CBR (NS) 1 (Ont CA) [Peat
Marwick].
3 Re Ashk Developmen t Corp (1988), 70 CBR (NS) 72 (Alta QB).
393 (Ont HCJ).
BANKR UPTCY AND INSOLVENCY L AW544
court-appointed receiver is an officer of the court, whereas a privately
appointed receiver does not have this status.
This status of a privately appointed receiver has not been d irectly
changed by statute. However, it is possible that provincial personal
property security legislation has modified the powers and duties owed
by the privately appointed receiver to such an extent that it is b etter to
view the privately appointed receiver as hav ing the same independent
status as a court-appointed receiver.
2) The Effect of the Personal Property Security Acts
Personal property secur ity legislation has been adopted in every Can-
adian common law juris diction. These statutes contain provisions th at
govern receiverships. The legislative provisions in most of these juris-
dictions regulate receiverships in t he following manner.5 First, they
provide that the receiver may take possession and control of the assets
and may manage the busi ness if appointed as a receiver and manager.
Second, they give a court the power to appoint, replace, and discharge
receivers and give directions to them. These powers are not restricted
to court-appointed receivers. It is thus possible for an interested part y
to seek a court order replacing a privately appointed receiver, or for
a privately appointed receiver to apply to court for directions. Third,
they impose a number of accounting and report ing duties on receivers.
Fourth, provisions that relate to the enforcement remedies of secured
creditors are made applicable to receivers. A receiver who is reali zing
the collateral is therefore required to f ulfil the same obligations that are
imposed on a secured creditor in the exercise of these remedies.6
The traditional view was t hat a privately appointed receiver acted
as agent of the debtor in managing the business but as an agent of the
secured creditor in enforcing the sec urity interest.7 It is likely that per-
sonal property secur ity legislation has altered thi s position. The legis-
lation directly impose s statutory obligations on a privately appointed
receiver, and this suggests th at the receiver’s duties and liabilities are
no longer to be viewed as being derived from the receiver’s status a s
agent of the secured creditor. Instead, the privately appointed receiver
5 The Ontario PPSA cont ains less extensive r eceivership provisions th an those
contained in t he PPSAs of other Canadia n jurisdictions.
6 See R Cuming, C Walsh, & R Wood, Personal Proper ty Security Law, 2d ed (To-
ronto: Irwin L aw, 2012) at 669–71.
7 Peat M arwick , above note 2.
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