The Status, Powers, Duties, and Liabilities of the Receiver

• Author: Roderick J. Wood
• Profession: Faculty of Law University of Alberta
• Pages: 494-511

494

CHA PTER 19

THE STATUS, POWERS,

DUTIES, AND LIABILITIES

OF THE RECEIVER

A. THE STATUS OF THE RECEIVER

1) The Traditional View

Historically, there wa s a sig nif‌icant d ifference in the status of a court-

appointed receiver and the status of a pr ivately appointed receiver. A

court appointed receiver has an independent status, and he or she does

not act as agent of either the secured creditor or the debtor.1 A pri-

vately appointed receiver acts as an agent of either the secured creditor

or the debtor depending on the function undertaken by the receiver.2

In manag ing the business, the receiver acts as agent for the debtor; in

realizing t he security, the receiver acts as agent of the secured creditor.

This difference was signif‌icant in its legal effect. A court-appointed re-

ceiver enters i nto new contracts wit h third part ies as a principal. The

court-appointed receiver t herefore becomes p ersonally liable on the

contracts3 but has a right of indemnity from the assets under receiver-

ship.4 A privately appointed receiver enters into new contracts as agent

of the debtor and therefore does not become personally liable on them.

1 Parsons v. Sovereign Bank of Canada , [1913] A.C. 160 (P.C.).

2 Peat Marwick Ltd. v. Consumer s’ Gas Co. (1980), 35 C.B.R. (N.S.) 1 (Ont. C.A .)

[Peat Marwick].

3 Re Ashk Developme nt Corp. (1988), 70 C.B.R. (N.S.) 72 (Alta. Q.B.).

4 Burt, Boulton & Hayward v. Bull, [1895] 1 Q.B. 276; Re Smith & Son (1929), 10

C.B.R. 393 (Ont. H.C.J.).

The Status, Powers, Dut ies, and Liabilities of t he Receiver 495

As well, a court-appointed receiver is an off‌icer of t he court, whereas a

privately appointed receiver does not have this statu s.

This status of a privately appointed receiver has not been directly

changed by statute. However, it is possible that provincial personal

property securit y legislation has modif‌ied the powers and duties owed

by the privately appointed receiver to such an extent that it is better to

view the privately appointed receiver as h aving t he same i ndependent

status as a court-appointed receiver.

2) The Effect of the Personal Property Security Acts

Personal property security legislation has been adopted in ever y Can-

adian common law jurisdiction. These statutes contain provi sions that

govern receiverships. The legi slative provisions in most of these jur is-

dictions regulate receiverships in the following manner.5 First, t hey

provide that the receiver may take possession and control of the a ssets

and may manage the business if appointed as a receiver and manager.

Second, they give a cour t the power to appoint, replace, and discharge

receivers and g ive directions to them. These powers are not rest ricted

to court-appointed receivers. It is thus possible for an interested party

to seek a court order replacing a privately appointed receiver, or for

a pr ivately appointed receiver to apply to court for di rections. Third,

they impose a number of accounting and reporting duties on receivers.

Fourth, provisions that relate to the enforcement remedies of secured

creditors are made applicable to receivers. A receiver who is realizing

the collateral is therefore required to fulf‌il the same obligations that are

imposed on a secured creditor in the exercise of these remedies.6

The traditiona l view was that a privately appointed receiver acted

as agent of the debtor in managing the business but a s an agent of the

secured creditor is en forcing the securit y interest.7 It is likely that per-

sonal property security legislation has altered thi s position. The legi s-

lation directly imposes statutory obligations on a privately appointed

receiver, and this suggests that the receiver’s duties and liabilities are no

longer to be viewed as being derived from the receiver’s status as agent

of the secured creditor. Instead, the privately appointed receiver may be

5 The Ontario PPSA contains le ss extensive receivership prov isions than thos e

contained in t he PPSAs of other Canadia n jurisdictions.

6 See R. Cuming, C . Walsh, & R. Wood, Person al Property Security Law (Toro nto:

Irwin L aw, 2005) at 564 –66.

7 Peat Marwick, above note 2.