Security Interests in Goods Held for Lease: The Double Perfection Requirement

The Canadian provincial and territory Personal Property Security Acts all provide that an unperfected security interest is ineffective against the debtor's trustee in bankruptcy. The PPSAs apply to all transactions that in substance secure payment or performance of an obligation and they extend to any lease for a term of more than one year, in effect deeming the transaction to be a security agreement for the purposes of the statute. In Re Giffen [1998] 1 SCR 91, the Supreme Court of Canada held that the failure of a lessor to perfect its deemed security interest made the security interest ineffective against the lessee's trustee in bankruptcy with the consequence that the lessor could not assert its reversionary title against the trustee. This comment discusses the recent British Columbia Court of Appeal decision in Re Perimeter Transportation Ltd 2010 BCCA 509, where the question was how the above provisions apply where the unperfected lessor has assigned its interest to a third party