Amending the Personal Property Security Act to clarify issues regarding Purchase Money Security Interests

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Submitted to: The Ministry of Government and Consumer Services
Submitted by: The Ontario Bar Association, Personal Property Security Law Committee
Date: December 8, 2020

The Ontario Bar Association (“OBA”) appreciates the opportunity to provide advice to the Government on reforming the law of purchase-money security interests (“PMSIs”) an important initiative that we believe will modernize the Personal Property Security Act (“PPSA”). As set out below, PMSIs are an important method of allowing sellers and lenders to take a security interest in a personal property. Our proposed reforms would provide for greater certainty: when there are both PMSI and non-PMSI security interests in the same collateral; when the PMSI secures multiple interests; and when determining allocation of payments among different types of obligations. These changes would provide greater commercial efficiencies, generally reduce bookkeeping requirements and make PMSIs a more effective security feature. Below you will find a description of the OBA proposal with recommended statutory amendments set out at Appendix A. The OBA Established in 1907, the OBA is the largest legal advocacy organization in Ontario, representing 18,000 lawyers, judges, law professors and law students. We advocate both in the interests of the profession, and, as in this case, in the interests of the public. The OBA’s Business Law Section has nearly 2000 members and its Personal Property Security Law Committee (“PPSLC”) includes the leading experts in the field. The PPSLC members would count among their clients virtually every stakeholder in the personal property security regime including lenders, borrowers, financial institutions, derivatives counterparties and regulators. The OBA’s Business Law Section and PPSLC have assisted government with virtually every reform of the PPSA.