Saskatchewan's PPSA Amendments: Changes To The Rules For Serial Number Goods

Late in 2018, the Saskatchewan Legislature introduced Bill 151, which amends The Personal Property Security Act, 1993 (Saskatchewan) (the PPSA). To inform you about the upcoming changes and how they may impact you, our Saskatchewan Financial Services team have been tracking the progress of Bill 151 and have brought you a number of posts that discuss the amendments.

To follow our posts, you need only to go to one place, this Financial Services & Insolvency Communiqué, which includes broad descriptions of various aspects of the amendments and links to all of our posts covering many of the amendments in detail - we have been updating it with new links and status reports on the progress of Bill 151 on an ongoing basis.

Bill 151 was passed into law on March 12, 2019. It awaits Royal Assent and a date to be set for it to come into force.

This post will explain the changes in Bill 151 concerning serial number goods. The amendments fall into several categories.

Treatment of Consumer Goods vs Equipment

Until now the PPSA has distinguished between the requirements for registration for serial number goods held as "consumer goods" and those held as "equipment".

The current rules (pending Bill 151 coming into force) are that for serial number goods that are consumer goods, failure to register by serial number at the Personal Property Registry (PPR) invalidates the registration, thereby rendering the security interest unperfected. The result is loss of priority against perfected secured creditors, buyers/lessors, trustees in bankruptcy and judgment creditors.

Conversely, secured parties in respect of serial number goods held as equipment have had an option to register against the debtor's name only, as a failure to register by serial number would cause a secured party to lose priority only to other secured creditors who do register by serial number or to a bona fide purchaser/lessor. That registration against the debtor's name only would still provide priority over a non-bona fide buyer/lessor, a trustee in bankruptcy, and judgment creditors.

There are secured parties who decide to accept the risks of registration by debtor name only, particularly where financing large fleets of equipment or vehicles which will turn over in relatively brief cycles. They do so to reduce the administrative burden of managing the serial number registrations, in the hopes that the losses to other secured creditors and bona fide purchasers will be minimal.

Bill 151 amends...