May 2011

Until recently, I have interpreted Section 4(f) of the Manitoba Personal Property Security Act (the "MPPSA") to mean that:

(i)         where you are dealing with an assignment of all of a lessor's rights and interests under one or more land leases (including the right to rentals), the MPPSA does not apply, and that instead, one "perfected" by filing a caveat against the relevant land at the Land Titles Office; and

(ii)       where you are dealing with a "pure" assignment of rents (ie, none of the lessor's rights under the lease except for its right to claim payment of rentals), the MPPSA does apply and that one perfected by first filing a financing statement in the PPR, and thereafter, based on that PPR filing, one filed a MPPSA (Rentals) Notice against the relevant land at the Land Titles Office.

Now I am not so sure.  Three matters trouble me:

(a)          if a security assignment of all of a land lessor's rights under a lease includes - as it surely does - the lessor's entitlement to payment of rentals, isn't is arguable that with the rentals (among other things) being assigned, the MPPSA does apply, so that the secured party should - in addition to whatever else it does - file a financing statement and an MPPSA (Rentals) Notice?  In other words, file a financing statement and an MPPSA (Rental) Notice for both an assignment of rents and leases and a "pure" assignment of rents.

(b)          if the argument in (a) above is correct, does it necessarily follow that where you have an assignment of rents and leases, the secured party should additionally file a caveat (to give notice of the security assignment to it of the lessor's rights and interests other than the entitlement to the payment of rent?  Are the lessor's rights under one or more leases, other than its entitlement to payment of rentals, interests in land at all?  I believe that the answer is "yes", at least with respect to some of the tenant's covenants and undertakings under a lease.  So a caveat should be additionally registered.  Also, future accruing rentals are probably land interests, so registration of a caveat is probably justified for this reason alone.

(c)          there appears to be an ambiguity in the wording in Section 4(f).  That is:

(i)            Section 4(f) first says that "the transfer of a right to payment that arises in connection…a lease of land" is not covered by the PPSA; and

(ii)           thereafter, it provides an exception (which of course means that the PPSA does apply) for "a transfer of rental payments payable under a lease of land…".

What is the difference between "a right to payment that arises in connection with the lease of land" and "rental payments payable under a lease of land"?

Perhaps the only safe practice when dealing with a security assignment of all of a land lessor's rights under a lease (including the lessor's right to receive rents) is to do all three of making a PPR financing statement filing, filing an MPPSA (Rentals) Notice against the title to the relevant land and additionally filing a caveat against such title.  At least until this matter is clarified either by the Courts or preferably, by the Legislature.

In preparing this paper, the writer wishes to acknowledge the valuable input of his legal colleagues Wells Peever, Q.C., Len Weinberg, Q.C. and ProfessorArt Braid, Q.C.

May 2008

Under currently in effect legislation The Cemeteries Act (Manitoba) ("Act"), a "cemetery" is defined to include land which is "used as a place for the burial of dead human bodies or other human remains or in which dead human bodies or other human remains have been buried".  This definition is broad enough to go well beyond what one would normally think of as a cemetery (ie. lands intentionally laid out/designed for the burial of the dead including gravestones or other markers of remembrance, tribute, respect etc., established and operated/maintained by (typically) a non-profit and/or religiously affiliated organization).  It has recently been brought to the writer's attention that outside of the larger urban areas in the province, in times past, it was fairly common for deceased persons to be buried on their own (usually farm) land.  In many (if not most) cases, the burial site would be marked in some manner, but over time, such markings have deteriorated and in some cases disappeared completely leaving no visible trace of the burial site.  It is the writer's understanding that even today, on an ongoing basis, families continue to bury their dead in rural acreages.

Because nothing in the Act requires (or even contemplates) that one's title to land must have recorded on it some notification of the fact that one or more dead human bodies have been buried beneath the surface of the land, other persons (and their lawyers) contemplating buying or otherwise taking in interest (eg. by way of mortgage security) would not usually become aware (at an early stage) of the fact that the land is a "cemetery" under the Act.  This situation may well pose a problem for someone who acquires an interest in such land, given the obligations imposed upon the owner of a "cemetery" by the Act.  Among other matters, a "cemetery" owner must erect and maintain certain fencing and ensure proper drainage of the "cemetery" land. 

There is even an unexpected benefit which would accrue to the owner of such land - although clearly not to a creditor of such owner - under Section 14 of the Act.  Section 14 provides, in effect, that a judgment creditor of a land owner whose land is a "cemetery" is not entitled to enforce that judgment - as any judgment creditor would normally be able to do - by registering his judgment lien against the title to the debtor/owner's property, and then selling that land to generate funds to pay the judgment. In other words, if I (not being the owner/operator of what is usually thought of as being a cemetery) own land under which one or more dead bodies have been buried, my creditors are barred from a remedy which they would otherwise enjoy underManitoba law.  The writer finds it hard to believe that this was the intent of the Legislature in enacting Section 14.

In some cases in some places, land owners and the relatives of a deceased have entered into informal, gratuitous and cooperative arrangements whereby a deceased's family is given access to known gravesites and the landowner will, to a greater or lesser extent, put some effort into maintaining the gravesite.  In other cases, landowners either don't currently know of the existence of any gravesites on their lands, or if they do, are less accommodating to families of the deceased.  Both types of landowners would probably object to being FORCED to fulfill the obligations normally imposed on cemetery owners under the Act.

The writer has been advised by a government official that the government is aware of this problem and is giving consideration to "updating" or "adjusting" the Act to deal with the matter of "private" cemeteries, and hopefully avoid or minimize the above-described potential problems.  Hopefully, one such adjustment will be that the Section 14 exemption from judgment realization will be limited to those properties which are used exclusively or at least substantially as cemeteries.  Similarly (and perhaps more significantly), the obligations imposed on a cemetery owner to maintain, fence, drain, etc. cemetery property would also be limited to lands exclusively or at least substantially used as cemeteries.

Even with the aforementioned changes to the Act, and certainly, if no such changes are made thereto, persons contemplating acquiring rural acreages or taking interests therein and their counsel should be alert to the possibility of the existence of one or more of the graves being located on the property.  It would be convenient if it was mandated that the title to each parcel of land on which one or more gravesites were located had to have some endorsement indicating same thereon, or, that a publicly accessible register of gravesites for the province be established.  There are however problems with this.  Firstly, in many cases, it would be very difficult to ascertain the location of older gravesites whose physical indicia has dissipated over time; in any event, the cost of conducting investigations to determine all (or as many as possible) rural gravesites (ie., other than "normal" cemeteries) would probably be prohibitive.  Secondly, many land owners with gravesites (especially those who even now aren't aware of the existence of the gravesites on their properties) would no doubt balk at the imposition of any duties imposed on them to maintain gravesites which would undoubtedly be so imposed by government in conjunction with any formal recording of gravesite particulars for the whole province.

Original Publication Date Unknown

In land law, a "restrictive covenant" is an undertaking given by the owner of a parcel of land (the "burdened land") to the owner of an adjacent or a neighbouring parcel of land (the "benefitted land") whereby the burdened land owner promises, on behalf of itself and on behalf of its successors in title to the burdened land indefinitely, not to use, develop or improve the burdened land in certain specified manners for the benefit of the benefitted land owner (again, indefinitely, meaning that the promise will benefit - and be enforceable by - the benefitted land owner and all of its successors in title). A building or development scheme is an agglomeration of mutual restrictive covenants benefitting - and burdening - all of the land parcels in a defined area. Such a scheme is typically established by a property developer who wishes to subdivide its land into separate lots and have use restrictions imposed on all of the lots in the subdivision so that the restrictions both benefit and burden each separate lot owner and each of their respective successors in title, indefinitely. The objective is to achieve substantial uniformity in the affected area, thereby (at least, in theory) improving or maintaining property values and enhancing the "aesthetics" of the community.  Most jurisdictions have enacted statutory provisions which enable property owners burdened by restrictive covenants (or building/development schemes) to apply to some authority for the purpose of varying or completely removing the building restrictions applicable to an applicant's property.

The entitlement of property owners to apply for the removal - or variation - of use restrictions applicable to their particular properties is often exercised long after the time when the original restrictions were imposed.  After a period of time, some - or all - of the restrictions may have become out of date, unnecessary or difficult to comply with due to changed circumstances.

But just because a use restriction has been removed - or varied - from some of the land parcels affected by a building/development scheme, will not - of itself - necessarily justify the further removal - or variation  - of the use restrictions as they apply other lots within the scheme which continue to be subject to the restrictions. This is illustrated by the Alberta Court of Queen's Bench case Restrictive Covenant Instrument 213AT (Re), (2019 ABQB 309, judgment issued April 30, 2019, hereinafter, the "New Casa Case"). In the New Casa Case, a building/development scheme (the "Scheme") was imposed on a tract of land which the original developer had subdivided into a number of lots/parcels. Over the years, some of the affected parcels within the Scheme had their use restrictions removed by Court order.  Nevertheless, a number of the currently owned parcels originally covered by the Scheme continued to be affected by it (i.e., the Scheme continued to be registered against their titles). New Casa Holdings Ltd. applied to have the Scheme removed from its parcel. The New Casa Case involved a hearing to decide whether or not New Casa's parcel should have the restrictions removed in the face of opposition from a number of other parcel owners who wanted the Scheme to continue in effect as it applied to their parcels - including New Casa's parcel.

The Court made the following statements and holdings:

(i)            Although the Scheme had been previously removed from some of the affected parcels, such removals was not a justification in itself to remove the Scheme from any of the parcels which it still affected. A building development scheme is not only a land interest, but a series of mutual contracts between the affected (burdened and benefitted) land owners within the Scheme.

(ii)           The use restrictions under the Scheme were that:

(a)          not more than one dwelling house was to be erected on each of the affected lots;

(b)          each dwelling house on an affected lot was to be of no less than $3000.00 in value;

(c)          no other buildings were to erected on the affected lots, except for "such stable garage or other outhouse as                (the owner) may reasonably deem necessary for the proper enjoyment of the lands";

(d)          no building on the affected lands was to be used for "business or commercial purposes"; and

(e)          no dwelling house on an affected lot shall be less than 25 feet from any street which is a boundary of any of                the affected lots.

As the affected lots were in the middle of Calgary and given the reference to "stables", "outhouses" and improvements having to be of a value of at least $3,000.00, it was arguable that the use restrictions were outdated.

Although arguably outdated, the Court held that it was not appropriate for a Court to "…paternalistically decide that the persons principally interested in the (restrictive covenant's) enforcement will benefit from this modification in the face of protests to the contrary by the interested parties".

(iii)          Notwithstanding the foregoing, the Scheme should not continue to be enforced because of the occurrence of a number of lot consolidations and title "splits".  The boundaries had changed and the altered legal descriptions now made it difficult - and probably impossible - to determine which lots/parcels continued to be affected by the Scheme and to what extent.  If one cannot now determine what is a "lot" for the purpose of applying the restrictions contained in the Scheme to the current title holdings, one of the "bedrock" requirements for a valid restrictive covenant had disappeared.

The New Casa Case should stand as a warning to developers who wish to impose use restrictions on adjacent or neighbouring parcels of land and for lawyers counselling such developers. Of course there is always a danger that restrictive covenants may become outdated when there are future changes to the properties or the neighbourhood. That is one of the main reasons for the existence of the statutory entitlement to apply for the variation or the removal of restrictions. But the New Casa Case was not decided on the basis of change of use or change in circumstances. It was about the difficulty in determining currently what parcels of land were - and were not - affected by the Scheme, given the parcel consolidations and title "splits" which had occurred.

Perhaps a restrictive covenant (or a building/development scheme) should contain provisions to deal with what happens when the underlying boundaries of the affected lands are altered.

April 2014

The recent (Judgment given September 18, 2013) Supreme Court of British Columbia case CFI Trust v. Royal Bank of Canada (the "CFI Case") deals with a scenario which is probably more common in the business world than it should be.  The CFI Case dealt with a number of inter-related issues, each of which should be of interest to business people, financial institutions and their counsel.

1.         The Facts

CFI financed Totem Ford's acquisition of its inventory of motor vehicles and took a security interest in all of Totem's inventory and their proceeds.  The Bank also financed Totem's acquisition of its inventory of motor vehicles and additionally provided other financing, and took security over all of Totem's inventory and the proceeds thereof.  Totem disposed of its inventory by either selling vehicles or by leasing them, thereby generating profits for itself and - as was originally intended - funds to be used to repay Totem's indebtedness owed to CFI and the Bank.

Totem's arrangements with:

(a)          CFI, required Totem to pay all or substantial portions of the proceeds of its disposition of CFI financed vehicles to CFI; and

(b)          the Bank, required (similarly) the proceeds of disposition of the Bank financed vehicles to be paid to the Bank.

As part of its banking arrangement with the Bank, Totem established one or more deposit accounts and was required to pay all of its incoming funds into the Bank as a depository.  The Bank's financing arrangement with Totem additionally authorized and permitted the Bank to debit Totem's deposit account with the monies from time to time owed by Totem to the Bank.

Totem failed to pay disposition proceeds to CFI, and instead, those proceeds were placed in its deposit account with the Bank, with the Bank then applying those funds (as well as other funds placed in the deposit account) on account of the Bank indebtedness.  CFI answered the question that forms the title to this paper by responding that its monies ended up in the Bank's hands and then were then unfairly used by the Bank to improve its position (pay off Totem's debt to the Bank).  The CFI Case was the result of CFI's claim for reimbursement from the Bank.

It is of considerable significance in this case that the Court observed and held that:

(i)            CFI became aware of suspicious and probably fraudulent activity on the part of Totem long before the Bank became aware of same, and, CFI did not effectively challenge Totem with respect to tis conduct until long after CFI's suspicions were - or should have been - alerted;

(ii)           the amount claimed by CFI from the Bank represented a very small portion (0.6%) of all of the money which flowed into and out of Totem's deposit account with the Bank.

2.         Issue - Interpretation of the Intercreditor Agreement

CFI and the Bank entered into an intercreditor agreement which carved out each of the secured parties' respective areas of priority over Totem's assets.  The Bank was given priority over all of Totem's assets (present and future) except for CFI financed vehicles subject to leases or other sale contracts between Totem and its customers.  However, this exclusion did not extend to the proceeds (of disposition) of such vehicles.  Accordingly, the Court held that the Bank had priority over CFI with respect to proceeds, with CFI having priority over only the vehicles themselves.

Alternatively, CFI asked the Court to hold that a term be implied into the intercreditor agreement which would give CFI priority with respect to disposition proceeds.  The Court noted that there is a presumption against adding an unexpressed term to a contract by implication, unless, among other things, "it is necessary to do so in order to give the contract business efficacy (this does not include a test of reasonableness for the contract)".  The Court held that the intercreditor agreement was not ambiguous, and that it was not necessary to add an implied term to give CFI priority over proceeds in order to provide "business efficacy to the contract".  The way the intercreditor agreement was worded was advantageous to the Bank and disadvantageous to CFI, but this was not enough reason to add the CFI requested implied term.  Presumably, CFI and the Bank had - or at least had the opportunity to have - counsel review and finalize the appropriate wording.

Interestingly enough, the Court held that its interpretation of the intercreditor agreement was of itself sufficient to defeat CFI's claim, but nevertheless went on to consider and provide very useful guidance on a number of another issues raised by the parties.

3.         Issue - Restoration of CFI's Pre-Discharge PPR registration priority

During the course of CFI's dealings with Totem, CFI's Personal Property Security Act financing statement registration was inadvertently discharged.  Section 35(7) of the BC Act (the identical provision appears under the same section number in the Manitoba Act) would have allowed CFI to regain its original registration priority over the Bank, but only if CFI had discovered the inadvertent discharge and re-registered no later than 30 days following the date of the inadvertent discharge.  CFI did not discover the discharge until long after the expiration of such 30 day period.

CFI raised two arguments for the Court to restore its original registration priority over the Bank, notwithstanding the "drop dead" time period specified in Section 35(7) of the Act, namely:

(a)          that the Court should make an order under Section 63(2)(e) of the BC Act (substantially similar to Section 63(2)(e) of the Manitoba Act) bringing back CFI's priority on the basis that such order would be "necessary to ensure the protection of the interest of (a) person (here CFI) in the collateral".  The Court concluded that the meaning of the wording in Section 63(2)(e) was such that it did not justify issuance of an order "rejigging" the priorities between CFI and the Bank.  That was not what this Section was intended for.  It is interesting to note that in the Manitoba version of Section 63(2)(e) the words "any person in" do not appear.  This would suggest, at least in Manitoba, that it would be even less likely to convince a Court that this Section should be used to alter the priorities otherwise established by the rules in the Act.

(b)          that the Court should issue an order based on a combination of Section 68 of the BC Act (substantially the same as Section 65(2) of the Manitoba Act) and Section 70 of the BC Act (substantially the same as Section 66(1)(a) of the Manitoba Act) to reinstate CFI's registration priority over the Bank.  Section 68 of the BC Act provides that the "principles of the common law, equity and the law merchant, except insofar as they are inconsistent with the provisions of this Act, supplement this Act and continue to apply".  Section 70(a) of the BC Act provides that on the application of an interested person, a Court may "make an order determining questions of priority or entitlement to collateral".  Here, the Court agreed with CFI's submission and held that CFI's priority vis-a-vis the Bank should be restored.  The Court's reasoning appears to be based on its conclusions that:

(i)            Section 35(7) does not "address the consequences of failing to re-register within 30 days"; and

(ii)           Section 70(a) does not "include any language indicating that the discretion afforded to the courts to make                   orders determining priority is always subject to the other priority provisions (of the Act)".

It is this writer's respectful opinion that in so holding, the Court may have been implying an intention to the Legislature which didn't really exist.  Nevertheless, this holding provides some possible relief for secured parties who suffer the inadvertent discharge (or lapse) of their security registrations and don't find out about the discharge or lapse until after the 30 day "drop dead" period.

Note however that in the CFI Case, there was no prejudice to the Bank by restoring CFI's registration priority, that is, that the Bank would only have been put back in its original position as a subordinate registrant to CFI.  Additionally, remember that the Court had already determined the outcome of the case based on its interpretation of the intercreditor agreement.

4.         Issue - Should the Bank hold Priority on the Basis of Section 31 of the PPSA?

Several arguments were made, namely:

(a)          Section 31(1) of the BC PPSA (substantially the same as Section 31(1) of the Manitoba PPSA) provides, among other things, that a "holder of money" has priority over a security interest in the money which has been perfected by registration provided that the holder is a "holder for value".  "Money" is defined, in effect, as currency of the realm (or of some other realm).  This is a narrow definition of "money", in that it does not include such things as bank deposits, debts owed by non-depository financial institutions, cheques and other types of payment instruments.  CFI argued that because cheques (presumably drawn on Totem's customer's accounts) payable to Totem were not "money" within the meaning of Section 31(1), the Bank could not claim the protection which would otherwise be provided for against CFI's security interest.  There is little commentary by the Court on this position, but one can only assume that the Court agreed with CFI that Section 31(1) did not protect the Bank.

(b)          Sections 31(3) and 31(5) of the BC PPSA (substantially, although not exactly the same as Sections 31(4) and 31(6) of the Manitoba PPSA) provide that the "purchaser of an instrument" has priority over a security interest in the instrument perfected by registration, if the purchaser "gave value" for the instrument, and, the purchaser acquired the instrument "without knowledge" that it was subject to a security interest, and, the purchaser took possession of the instrument. Knowledge which would "taint" the purchaser (and not give it the Section's protection) is not only knowledge of the existence of another party's security interest in the instrument, but also knowledge that the transaction whereby the purchaser acquires the instrument violates the terms of the other party's security agreement.  No one argued that the Bank had not taken possession of Totem's customers' cheques, but CFI did challenge the Bank with respect to the other elements of the Section 31 requirements for a purchaser of an instrument, namely:

(i)            CFI tried to argue that when a customer's cheque was deposited to Totem's account at a time when that account was not overdrawn, the Bank would not be providing "value" to Totem for its acquisition of the cheque.  CFI emphasized that the manner in which the Bank provided its services to Totem (a deposit or operating account and a loan account) meant that Totem could never overdraw on its deposit/operating account (unless it has somehow managed to exceed its borrowing limits and the Bank let this happen).  The Court rejected this reasoning, holding that "value" was given by a depository/lender whenever a cheque is deposited (and "cleared" under the payment system), with that "value" being either the depository/lender crediting the account with the amount of the cheque, or with the depository/lender using the funds to pay back the depositor's debt.

(ii)           CFI argued that the knowledge possessed by the Bank of CFI's business activities was sufficient to disqualify it from the Section 31 protection given to instrument purchasers.  As noted above, Section 31(5) of the BC Act (virtually identical to Section 31(6) of the Manitoba Act) provides that to lose the Section 31 protection given to purchasers of instruments, the depository/creditor must not only know of the existence of a security agreement whose security interest would extend to the instrument (and the funds thereby represented), but also must know that acquisition of the cheque by the Bank and in particular, application of the proceeds thereof to reduce Totem's indebtedness was in violation of the security/financing arrangements between Totem and CFI.  The Court held that, while the Bank had acquired some knowledge of CFI's questionable business activities, it did not have actual notice or knowledge that the cheques were being deposited to the Bank (and then used to pay off the Bank) was in violation of Totem's obligations owed to CFI.  Actual - not constructive - knowledge was needed, and the knowledge that the Bank did have did not rise to the level of knowledge that would disentitle the Bank to take the cheques and apply the proceeds on account of Bank debt.  The Court also emphasized the fact that the deposits made of CFI's claimed funds represented a very small fraction of the total monies which flowed into (and out of) Totem's account.

(c)          Sometimes when Totem's customers made payments to Totem, instead of writing cheques on their financial institutions' accounts, Totem and its customers would arrange for the direct electronic transfer of funds from the customers' accounts to Totem's account with the Bank.  CFI argued that funds represented by such electronic transfers were not only not "money" as aforementioned, but also were not "instruments" within the meaning of Section 31.  The Court agreed with this submission, although again, the outcome of the case had already been decided on the basis of the wording in the intercreditor agreement.  Nevertheless, this finding may prompt the British Columbia Legislature to consider amending Section 31 so that electronically transferred funds can be treated (in the hands of the transferee) with the same protection given to purchasers of "instruments". Note however that in Manitoba, its Section 31(3) - dealing with "debtor initiated payments" - should be sufficiently broad in its application (it includes payments of funds made by an "electronic funds transfer initiated by the debtor") to overcome the fact that electronically transferred funds are neither "money", nor "instruments".  Manitoba Section 31(3)(c) deals specifically with funds received by a "deposit taking institution from a deposit account of the debtor held by the institution".  Nevertheless, there is a limitation specified at the very end of this Section which probably would not permit the deposit taking institution to be protected against a security interest in its debtor's deposit account money where the financing arrangement between the institution and the debtor simply permits the institution to take funds generally from the account to pay any and all debts.  Such an arrangement would be similar to a financial institution's right of set-off, but it would appear that it would not obtain the protection otherwise provided by Manitoba Section 31(3).

5.         Issue - Completely Aside from the Rules in Section 31 of the PPSA, did CFI have a Claim against the Bank on the (Common Law basis) of "Knowing Receipt" or "Unjust Enrichment"

(a)          "Knowing Receipt".  The Court pointed out that the Supreme Court of Canada held (in 1997) that in order to succeed in a claim of knowing receipt, the claimant must show that:

"(a)      the property in question was held in trust by a third party (here, Totem);

          (b)        the property was taken from the plaintiff (here, CFI) in breach of trust;

          (c)        the defendant (here, the Bank) received the trust property and applied it for its own use and benefit; and

          (d)        the defendant (here, the Bank) had either actual or constructive knowledge of the breach of trust".

          As noted in #4 above dealing with knowledge sufficient to "taint" someone who would otherwise be entitled to the protection afforded to a purchaser of an instrument by Section 31, the Court held that the Bank had very little actual knowledge of Totem's nefarious conduct.  Also, the Bank did not acquire sufficient knowledge or information that would "put it on notice" and thus oblige it to make further inquiries (ie, no or no sufficient constructive knowledge).  Depository financial institutions need to have it clearly brought home to them that a customer is paying funds to the institution in breach of a trust or other obligation owed by the depositing customer.  The Court emphasized that this state of affairs does not provide complete immunity to a depository financial institution, and the Court cited several earlier cases in which such institutions have had sufficient information brought to their attention that they should have ceased to do business with a customer and in particular, ceased to apply the customer's funds to debt owed to the institution.

(b)          Unjust Enrichment.  The Court noted that in order to succeed in a claim for unjust enrichment, the plaintiff must show:

"(i)        that it has been deprived;

(ii)        that the defendant has been enriched; and

(iii)       that there was no juristic reason for the enrichment.

Clearly, CFI had been deprived and the Bank had been enriched at the expense of CFI.  However, the Court agreed with the Bank's contention that there was a juristic reason for the enrichment, "namely the loan agreements between (the Bank) and Totem".

(c)          The Bank argued that with respect to both of CFI's claims for "knowing receipt" and for "unjust enrichment", the enactment of the Personal Property Security Act constituted a "complete code for secured transactions", so that there could be no such claims made against the Bank.  The Court chose not to deal with this position, but it will be interesting to see if anyone else raises a similar argument in a secured transaction dispute where a party is claiming reimbursement on the basis of either knowing receipt or unjust enrichment.  It is the writer's strong suspicion that a Court called upon to decide this issue would hold that there is still "room" for claims based on knowing receipt or unjust enrichment, notwithstanding the fairly broad coverage of the Personal Property Security Act to secured transactions.

6.         Lessons to be Learned

(a)          Issue #2 - CFI lost this case based primarily on the Court's interpretation...