Jason Bryk 

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A Couple of PPSA Scenarios

OCTOBER 2013


The following-described scenarios may, at first glance, seem to be questions which might be raised at a Law School to test the analytical capacity of law students.  In fact, they represent "real life" scenarios that the writer has recently encountered.

  1. May one hold a security interest in a debtor's collateral without the debtor owning any obligations (of any type) to the security holder?

A extends credit to B (either by way of a sale or a loan) and to secure B's obligations arising out of the indebtedness, B creates a security interest in B's personalty (presently owned and after-acquired), but grants that security interest not to A, but rather to C with C holding the security for A.  Is this legally feasible, given the fact that a security interest cannot legally exist unless it secures payment or performance of obligations and given that in this situation, the debt obligation is owed to A, not the holder of the security, B?  Note that such an arrangement would not be one where A first got the security interest itself from B and then assigned the debt and the security interest to C.  Nor would this be a situation where A assigns the debt to C and then C takes the security interest directly from B.  A careful reading of the definition of "security interest" in The Manitoba Personal Property Security Act reveals that such an arrangement would indeed be legally possible.  The definition does not provide that the security interest has to be held by the person to whom the obligations secured are owed, merely that the security interest has to secure obligations.  Thus there is no legal - or for that matter policy - reason why a creditor can't have someone else hold a security interest granted by the creditor's debtor.  Such an arrangement will be advantageous to all concerned where multiple creditors band together to provide credit to a debtor, and rather than having the debtor provide separate security interests in its assets to each of the creditors, or having all of the creditors named as grantees of the security, all the creditors and the debtor agree that the debtor's security interest will be provided to either one only of the creditors, or to a separate entity which will hold as a "collateral agent".  Needless to say, there will have to be an agreement amongst the participants - especially amongst the creditors and with the "collateral agent" if there is one - that spells out the rights of the holder of the security and the obligations that holder will have to the other creditors with respect to the security, in particular, in a realization/enforcement situation.

  1. Change of ownership of collateral subject to a general security agreement.

A grants a security interest in all of A's presently owned and after-acquired personal property to B's Bank X.  X properly register's a financing statement in the Personal Property Registry giving notice of its security interest in A's assets.  B grants a security interest in all of its presently owned and after-acquired personal property to its bank, Bank Y, and, Bank Y duly registers its security interest in the Personal Property Registry.  Subsequently, A sells its business and all (or virtually all) of its assets, including its personal property, to B.  Bank X's security interest, covering, as it does, all of B's after-acquired personalty, would, upon B's acquisition from A of A's personalty, extend to and charge A's personalty now held by B.  But wouldn't also Bank X's security interest "follow" A's assets into the hands of B and charge A's personalty, now in the hands of B?  Would Bank X's security, pursuant to the terms of its security agreement, also extend to the personalty that B acquires subsequent to its acquisition of A's personalty?  Who would have priority - Bank X or Bank Y over (i) the personalty now held by B which it has just acquired from A, and, (ii) B's personalty that it currently owns other than the personalty it has acquired from A, and, (iii) personalty that B acquires in the future?

The "threshold" question to ask here is whether or not Bank X consented to the transfer of A's assets to B.  Under the PPSA, if Bank X did consent to A's disposition, then Bank X's security interest in the transferred assets is extinguished.  Bank X would have a security interest in any proceeds obtained by A for its disposition to B, but Bank X would no longer have any security interest in the transferred assets.  Unless B had confirmed or regranted a security interest in B's other personalty and/B's subsequently acquired personalty, Bank X would (also) have no security interest in such other assets of B.

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February 2020


When you obtain a document from a Manitoba Land Titles Office/Manitoba Registry Office (a "Document"), you pay a fee.  Such payment is long accepted by lawyers and by others who, for their own purposes, choose to obtain Documents directly from a Land Titles Office.  The quid pro quo for such charge is in part related to the costs incurred in operating the land titles system, including the receipt, processing, storage and regurgitation of Documents and other information "officially" provided to the system.  It is also in part based on the fact that the operator of the land titles system either holds or operates under the copyright which attaches to Documents - or at least to certain Documents.


The types of documents obtainable from a Land Titles Office may be broken down - generally - into these categories:

(i)            statements, declarations or confirmations of certain of the information held by the system pertaining to particular types of interests in land, the most common being ownership ("Land Ownership Confirmation").  The most frequently requested form of Land Ownership Confirmation is the document currently called a "Status of Title Certificate".  It not only contains a current (as at the date of its issuance) summary of (certain of) the system's recorded/held information pertaining to the ownership of a particular parcel of land, but additionally comprises a certification by the system that such information is substantially correct.

(ii)           copies of documents which, in one manner or another, affect dealings with land interests ("Conveyancing Documents"). Examples of frequently obtained Conveyancing Documents are mortgages, caveats, easements, transfers and discharges.

(iii)          plans prepared by properly licenced surveyors which, when recorded/registered in a Land Titles Office, become "official" determinants used by lawyers, courts and other officials to ascertain the precise boundaries and the extent of parcels of land ("Ownership Delineation Plans").  A plan of subdivision delineating two or more parcels of land would be the most frequently encountered/dealt with Land Ownership Plan.

From time to time, questions arise as to who holds the copyright for various types of Documents and if so, who is entitled to enjoy the various rights (subject to the legal obligations) which flow from copyright ownership.  The recently decided Supreme Court of Canada decision in Keatley Surveying Ltd. and Teranet Inc., judgement issued September 26, 2019 (hereinafter the "Keatley Case") dealt with this issue.  An Ownership Delineation Plan was prepared by a "private" surveyor and then recorded in a land registry office.  The land registry office and the land titles system were owned by the Province of Ontario (the "Province") and by way of an arrangement between the Province and Teranet Inc., was operated by Teranet Inc. acting in part, as an agent of the Province.  Part of the arrangement between Ontario and Teranet involved Ontario providing a licence to Teranet to make use of the copyright which Ontario claimed in the Land Ownership Plan.  The Province's (and Teranet's) position was that by Section 12 of the Copyright Act (Canada) (the "Act"), the Province owned the Land Ownership Plan's copyright and that it had properly licenced that copyright to Teranet.  Keatley argued that it should not lose its copyright merely because the plan was recorded in the land titles system.  It's position was that, although Section 12 of the Act did enable the Province to, in effect, expropriate a surveyor's copyright in plans which he/she had prepared and recorded without compensation, claiming copyright in this situation was an "overreach", and that the intent of the drafters of the Act (in 1921) was not to give such broad expropriation rights to the Province (or the federal Crown).

The Supreme Court agreed that Section 12 was not intended to give unrestricted freedom to the Crown to expropriate copyright (without compensation).  However, it was not an "overreach" to conclude that, on a proper application of Section 12, copyright in Land Ownership Plans did, upon recording in the Land Titles system, completely pass to the Province.  Given the Province's interest in ensuring the integrity of Land Ownership Plans (once officially recorded in the system) and the degree to which the Province - through legislation and regulations - governed the manner in which Land Ownership Plans were to be prepared, and perhaps most significantly, given the public interest in maintaining assurance that recorded Land Ownership Plans would continue to officially and unequivocally determine the boundaries between parcels of land, a proper reading of Section 12 was that copyright did pass from the surveyor to the Province.

It is necessary to take a "deep dive" into the meaning of Section 12 and then apply the meaning(s) thereby garnered to the particular situation under consideration in order to properly answer a question regarding the Province's entitlement to copyright in any particular recorded Document.  The Court held that the meaning of Section 12 was that where:

(i)            a "work" has been prepared under the direction of  or control of Her Majesty; or

(ii)           published by or under the direction of or control of Her Majesty;

copyright in the "work" passes to the Crown, in effect, upon the occurrence of such preparation or the occurrence of such publication.

The Court further held that:

(a)          a "work" is prepared by the Crown when "… its agent or employee brings the work into existence for and on behalf of the Crown in the course of his or her employment or when the Crown essentially determines whether and how a work will be made, even if the work is produced by an independent contractor";

(b)          whether or not a work is published with sufficient governmental direction or control "… necessitates and inquiry into the Crown's interest in the work at the time of (and often, after) publication".  Where the following-described situations/circumstances can be proven to exist, it will be held that the work was so published, namely, inter alia, the presence of a statutory scheme transferring property rights in the work to the Crown, a statutory scheme which places strict controls on the form and content of the work, where the Crown physically possesses the work, where exclusive control is given to the government to modify the work and where there is a necessity for the Crown to make the work available to the public.  Presumably, if none - or only a very few - of the aforementioned situations/circumstances exist, then a work prepared by an independent contractor (ie, not a government employee or agent) may be held to have its copyright maintained in the author.  This may be so even though the work is "published" by or at the direction of the Crown.

Where an Ownership Delineation Plan, typically prepared by a private surveyor on engagement by a private person or business, has been placed the plan on record at a land/property registry, copyright passes to the Crown.  No one in the Keatley Case challenged the Crown's right to licence that copyright to Teranet as part of Teranet's contract with the Crown to operate the property registry.  While some may object to this decision on principle (ie, that it is inequitable for the surveyor to lose its copyright without compensation in this manner), this is - absent a change of mind by the Supreme Court or an amendment to the statute - a ruling we must accept.

Note in particular in the Keatley Case:

(a)          the Crown has established rules (some statutory, some regulatory and some merely policy or protocol rulings) in directing surveyors what information must be included in plans and how that information is to be presented;

(b)          once on record in the property registry, the content of plans cannot be altered without formal statutory procedures and/or guidelines; and

(c)          it was pointed out that third parties rely on the accuracy and currency of the information in recorded plans for the purpose of determining the extent of property rights.

Common sense suggests that without the above-mentioned "controls" and limitations, fraud and ultimately, chaos, would occur - or at least that it would be more likely to occur.

Given the Court's reasoning in the Keatley Case, it is interesting to speculate as to whether or not other Documents, once recorded in a property registry, would, upon such registration, have their copyright pass form the originator of any such Document to the Crown?  What about Land Ownership Confirmations and Conveyancing Documents?  Consider the following:

(A)          Land Ownership Confirmations certainly appear to meet the above-described criteria and they are, in any event, wholly created by the property registry.  Thus, assuming that a Land Ownership Confirmation is a "work", copyright in it almost certainly belongs to the Crown.

(B)          Conveyancing Documents are - like most Ownership Delineation Plans, prepared by privately engaged lawyers.  They too appear to meet the above-described criteria provided that they are legally "works".  However, if I as a practicing lawyer obtain a copy of a mortgage previously registered in the property registry, neither I nor (I believe) most other practitioners would consider me as breaching copyright by making further copies of same and distributing same to interested - or potentially interested parties.  Perhaps this question requires further clarification from the Courts.

It is also interesting to speculate on whether or not the Crown has copyright in information produced by the Personal Property Registry.  This may have to be clarified by the Courts in the future.

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