PPSA.NET SECURITY REGISTRATION SYSTEM

Yukon PPSA

Personal Property Security Act

R.S.Y. 1986, c. 130, as amended by 1988, c. 17; 1991, c. 11; 1995, c. 6; 1995, c. 7.

1. Interpretation

(1)

In this Act,

"accessions" means goods that are installed in or affixed to other goods;

"account" means any monetary obligation not evidenced by any chattel paper, an instrument or a security, whether or not it has been earned by performance;

"building" includes a structure, erection, mine or work built, erected or constructed on or in land;

"building materials" includes goods that are or become so incorporated or built into a building that their removal would necessarily involve the removal or destruction of some other part of the building and thereby cause substantial damage to the building apart from the value of the goods removed, but does not include

(a) goods that are severable from the building or land merely by unscrewing, unbelting, unclamping or uncoupling, or by some other method of disconnection, or

(b) machinery installed in a building for use in the carrying-on of an activity where the only substantial damage, apart from the value of the machinery removed, that would necessarily be caused to the building in removing the machinery is damage arising from the removal or destruction of the bed or casing on or in which the machinery is set and the making or enlargement of an opening in the walls of the building sufficient for the removal of the machinery;

"buyer" means a purchaser who takes an interest in property under a transaction that is not intended as security;

"chattel paper" means one or more writings that evidence both a monetary obligation and a security interest in, or lease of, specific goods or a security interest in, or lease of, specific goods and accessions, but does not include

(a) a security agreement providing for a security interest in both specific goods and after-acquired goods other than accessions, or

(b) a charter party or a lease of a ship;

"collateral" means personal property that is subject to a security interest;

"consignment" means an agreement under which goods are delivered to a person who, in the ordinary course of his business, deals in goods of that description for sale, resale or lease, by a person who

(a) in the ordinary course of his business deals in goods of that description, and

(b) reserves a proprietary interest in the goods after they have been delivered,

but does not include an agreement under which goods are delivered to a person for sale or lease if the person is generally known in the area in which he carries on business to be selling or leasing goods of others;

"consumer goods" means goods that are used or acquired for use primarily for personal, family or household purposes;

"creditor" includes an assignee for the benefit of creditors, a trustee in bankruptcy, an executor, an administrator, a committee or a trustee appointed under the Mental Health Act;

"debtor" means a person who owes payment or other performance of the obligation secured whether or not he owns or has rights in the collateral, and includes

(a) the consignee under a consignment,

(b) the lessee under a lease,

(d) the assignee of a debtor‘s interest in collateral,

or such one or more of them as the context requires, but where the debtor and the owner of the collateral are not the same person, the term "debtor" means the owner of the collateral in any provision dealing with collateral and the obligor in any provision dealing with the obligation, and may include both where the context so requires;

"default" means the failure to pay or otherwise perform the obligation secured when due or the occurrence of any event or set of circumstances whereupon under the terms of a security agreement the security becomes enforceable:

"document of title" means any writing that purports to be issued by or addressed to a bailee and purports to cover any goods in the bailee´s possession that are identified, or fungible portions of an identified mass, and that, in the ordinary course of business, is treated as establishing that the person in possession of it is entitled to receive, hold and dispose of the document and the goods it covers;

"equipment" means goods that are not inventory or consumer goods;

"financial institution" means a bank, credit union, trust company or other institution that accepts deposits of money from its members or the public and includes a branch, agency, or office of such bank, credit union, trust company or institution;

"financing statement" means the information prescribed for a statement required or permitted to be registered under this Act;(1995, c. 6, s. 12.)

"fixtures" means goods that are installed on or affixed to real property in such a manner or under such circumstances that they would, but for this Act, become in law fixtures to the real property, but does not include building materials;

"fungible" with respect to goods or securities means goods or securities of which any unit is, by nature or usage of trade, the equivalent of any other like unit, but goods or securities that are not fungible shall be deemed to be fungible for the purposes of this Act to the extent that under the security agreement unlike units are treated as equivalent;

"future advance" means the payment of money, the provision of credit or the giving of value by the secured party pursuant to the terms of a security agreement, whether or not the secured party is obliged to pay the money, advance the credit or give the value, and includes all advances and expenditures made by the secured party for the protection, maintenance, preservation or repair of the collateral;

"goods" means tangible personal property other than money, and includes fixtures, growing crops and the unborn young of animals, but does not include timber until it is cut, or minerals, gas or oil until they are extracted;

"indebtedness" means, when used with respect to a lease, obligation secured;

"instrument" means a bill of exchange, note or cheque within the meaning of the Bills of Exchange Act (Canada), or any other writing that evidences a right to the payment of money and is of a type that in the ordinary course of business is transferred by delivery with any necessary endorsement or assignment, but does not include

(a) a writing that is chattel paper,

(b) a document of title, or

(c) a security other than a security that is a bill of exchange or note within the meaning of the Bills of Exchange Act (Canada);

"intangible" means all personal property, including choses in action, that is not goods, chattel, paper, documents of title, instruments or securities;

"inventory" means goods

(a) that are held by a person for sale or lease, or that have been leased,

(b) that are to be furnished or have been furnished under a contract of service, or

"lease for a term of one year or more" includes

(a) a lease for an indefinite term even though the lease is determinable by one or both parties within one year of its execution,

(b) a lease for a term of less than one year that is automatically renewable, or is renewable at the option of one of the parties or by agreement for one or more terms, the total of which may equal or exceed one year, and

(c) a lease initially for a term of less than one year, where the lessee retains uninterrupted or substantially uninterrupted possession of the goods leased for a period in excess of one year after the day he first acquires possession of the goods, and the lease is deemed to be a lease for more than one year as soon as the lessee‘s possession extends beyond one year,

but does not include

(d) a lease transaction involving a lessor who is not regularly engaged in the business of leasing goods, or

(e) a lease of prescribed goods regardless of the length of the term of the lease;

"money" means a medium of exchange at any time designated by the Parliament of Canada as part of its currency or designated by a foreign government as part of its currency;

"obligation secured" means, when determining the amount payable under a lease, the amount originally contracted to be paid under the lease, any other amounts payable pursuant to the terms of the lease, and any amount required to be paid by the lessee to obtain full ownership of the collateral;

"pawnbroker" means a person who engages in the business of granting consumer credit and who takes a security interest in the form of a pledge of goods to secure the consumer credit or who purchases goods under an agreement or undertaking, express or implied, that those goods may be afterwards repurchased or redeemed on terms, and "consumer credit" means credit granted to an individual for personal, family or household purposes by a person or organization in the business of granting credit, and, unless the agreement under which credit is granted or the context of the transaction indicates otherwise, a grant of credit is presumed to be a grant of consumer credit;

"person" includes an individual, partnership, association, society, body corporate, trustee, executor, administrator or legal representative;

"proceeds" means identifiable or traceable personal property in any form, or fixtures, derived directly or indirectly from any dealing with collateral or proceeds from the collateral, and

(a) includes any payment received by way of damages, insurance, compensation, indemnity or settlement in respect of loss of or damage to the collateral or proceeds from the collateral, or any right to such payment, and any payment received by way of total or partial discharge of an intangible, chattel paper, instrument or security, but

(b) does not include any payment received under a policy or contract of life insurance;

"purchase" includes taking by sale, lease, discount, negotiation, mortgage, pledge, lien, issue, reissue or gift, or any other voluntary transaction creating an interest in personal property;

"purchase-money security interest" means

(a) a security interest in collateral that is taken or reserved by a seller, lessor or consignor of the

(b) a security interest that is taken by a person who gives value for the purpose of enabling the debtor to acquire rights in or to the personal property, to the extent that the value is applied to acquire such rights,

(d) the interest of a consignor of goods delivered under a consignment;

"registered" in relation to a security interest means registered by the registration under this Act of a financing statement in the registry or in the land titles office, as the case may be;

"registrar" means the registrar of personal property appointed under this Act;

"registry" means the registry established under section 40;

"secured party" means a person who has a security interest and, where a security agreement is embodied in a trust deed, means the trustee;

"security" means a share, stock, warrant, bond, debenture, debenture stock or the like issued by a corporation or other person, or government

(a) that is in a form recognized in the area in which it is issued or dealt with as evidencing a share, participation or other interest in property or in an enterprise, or that evidences an obligation of the issuer, and

(b) that is of a type that, in the ordinary course of business, is transferred by delivery with any necessary endorsement, assignment, registration in the books of the issuer or agent for the issuer, or compliance with restrictions on transfers;

"security agreement" means an agreement that creates or provides for a security interest and includes a document that evidences a security agreement where the context permits;

"security interest" means an interest in goods, documents of title, securities, chattel paper, instruments, money or intangibles that secures payment or performance of an obligation, and includes

(a) an interest arising from an assignment of accounts or a transfer of chattel paper,

(b) an interest of a person who delivers goods to another under a consignment, and

notwithstanding that the interests described in paragraphs (a) to (i) may not secure payment or performance of an obligation, but does not include the interest of a seller who has shipped goods to a buyer under a negotiable bill of lading to his own order or to the order of his agent, unless the parties have otherwise evidenced an intention to create or provide for a security interest; (1988, c. 17, s. 9.)

"serial number" means, with respect to an aircraft governed by the Aeronautics Act (Canada), the registration marks assigned by the Minister of Transport;

"special consumer goods" means consumer goods consisting of

(a) a vehicle that is designed to be self-propelled,

(b) a trailer as defined in the Motor Vehicles Act,

(d) a small vessel required to be licensed under section 108 of the Canada Shipping Act (Canada),

(e) an aircraft governed by the Aeronautics Act (Canada), or

(f) goods the retail market value of which exceeds the prescribed amount;

"specific goods" means goods identified and agreed upon at the time a security agreement in respect of those goods is made;

"trust deed" means any deed, indenture or document, however designated, including any supplement or amendment thereto, by the terms of which a person issues or guarantees, or provides for the issue or guarantee of, debt obligations and in which a person is appointed as trustee for the holder of the debt obligations issued, guaranteed or provided for thereunder and secured by a security interest;

"value" means any consideration sufficient to support a simple contract, and includes an antecedent debt or liability.

(2)

Goods are consumer goods, equipment or inventory.

(1988, c. 17, s. 9; 1995, c. 6, s. 12.)

PART 1 — Application of Act and Conflict of Laws

2. Transactions under the Act

Subject to sections 3 and 53, this Act applies to every transaction without regard to its form and without regard to the person who has title to the collateral that in substance creates a security interest, including, without limiting the foregoing,

(a) a chattel mortgage, conditional sale, equipment trust, floating charge, pledge, trust deed, trust receipt, lease, assignment, consignment or transfer of chattel paper, and

(b) an assignment of accounts, transfer of chattel paper, consignment, or a lease for a term of one year or more, notwithstanding that such interest does not secure payment or performance of an obligation

3. Transactions not under the Act

Except as specifically otherwise provided, this Act does not apply to

(a) a lien, charge or other interest given by statute, or a lien given by rule of law for the furnishing of goods, services or materials,

(b) an assignment of wages, salary, pay, commission or other compensation for labour or personal services,

(c) a transfer of an interest or claim in or under a policy of insurance except insofar as money paid or payable under the policy may be indemnity or compensation for loss of or damage to collateral,

(d) a transfer of an interest or claim in or under a policy of life insurance or a contract of annuity,

(e) an assignment of a right to payment under a contract to an assignee who is to perform the assignor´s obligations under the contract,

(f) a sale of accounts or chattel paper as part of a sale of the business out of which they arose, unless the vendor remains in apparent control of the business after the sale,

(g) an assignment of accounts solely to facilitate the collection of accounts for the assignor,

(h) the assignment of any right to payment that arises in connection with an interest in or lease of real property other than an assignment of a right to payment evidenced by a security,

(i) the creation or assignment of an interest in or a lien on real property, including a lease, except to the extent that provision is made with respect to fixtures,

(j) an assignment of a claim for damages or a judgment representing a right to damages,

(k) an assignment for the general benefit of creditors made pursuant to legislation of the Parliament of Canada relating to insolvency, and

(l) an interest in or claim to property arising under the Family Property and Support Act.

Conflict of Laws

4. Validity of interest

(1)

Except where otherwise provided in this Act, the validity, perfection and effect of perfection or non-perfection of

(a) a security interest in goods, and

(b) a possessory security interest in securities, instruments, negotiable documents of title, money and chattel paper,

are determined by the law of the jurisdiction where the collateral is situated when the security interest attaches.

(2)

A security interest in goods perfected, under the law of the jurisdiction in which the goods are situated when the security interest attaches, before the goods are brought into the Yukon, continues perfected in the Yukon

(a) as against a buyer in good faith who acquires an interest in the goods after they are brought into the Yukon, if the security interest is perfected in the Yukon prior to the acquisition, and

(b) as against all other persons, if the security interest is perfected in the Yukon

(i) within 60 days after the day the goods are brought into the Yukon,

(ii) within 15 days after the day the secured party receives notice that the goods have been brought into the Yukon, or

(iii) prior to the day that perfection ceases under the law of the jurisdiction in which the goods were situated when the security interest attached,

whichever is earliest.

(3)

A security interest that is not perfected as provided in subsection (2) may be otherwise perfected in the Yukon under this Act.

(4)

Where a security interest mentioned in subsection (1) is not perfected under the law of the jurisdiction in which the collateral was situated when the security interest attached before being brought into the Yukon, it may be perfected under this Act.

5. Goods brought into the Yukon

(1)

Subject to section 6, if the parties to a security agreement creating a security interest in goods in one jurisdiction understand at the time the security interest attaches that the goods will be kept in another jurisdiction, and the goods are removed to another jurisdiction within 30 days after the security interest attaches for purposes other than transportation through the other jurisdiction, the validity, perfection and effect of perfection or non-perfection of the security interest are determined by the law of the other jurisdiction.

(2)

Where the jurisdiction to which the goods are removed is other than the Yukon and the goods are later brought into the Yukon, the security interest in the goods is deemed to be one to which subsection 4(2) applies if it had been perfected under the law of the jurisdiction to which the goods were removed.

6. Choice of law

(1)

The validity, perfection and effect of perfection or non-perfection of

(a) a security interest in intangibles or in goods which are of a type that are normally used in more than one jurisdiction, if such goods are classified as equipment or as inventory leased or held for lease by a debtor to others, and

(b) a non-possessory security interest in securities, instruments, negotiable documents of title, money and chattel paper,

are governed by the law of the jurisdiction where the debtor is located when the security interest attaches.

(2)

For the purposes of this section, a debtor is deemed to be located at his place of business if he has one, at his chief executive office if he has more than one place of business, and otherwise at his place of residence.

(3)

When a debtor changes his location to another jurisdiction, a perfected security interest mentioned in subsection (1) continues perfected in the new jurisdiction if it is perfected in the new jurisdiction

(a) within 60 days after the day the debtor changes his location,

(b) within 15 days after the day the secured party receives notice that the debtor has changed his location, or

whichever is earliest.

(4)

If the jurisdiction in which a debtor is deemed to be located under this section does not provide for public registration or recording of security interests mentioned in subsection (1) and the collateral is not in the possession of the secured party, any security interest in the collateral that is not perfected under this Act is deemed to be an unperfected security interest in relation to any interests in the collateral acquired by a person in the Yukon.

(5)

A security interest that is not perfected as provided in subsection (3) or is deemed to be unperfected in the Yukon under subsection (4) may be otherwise perfected under this Act.

(6)

Notwithstanding section 5 and subsection (1) of this section, the validity, perfection and effect of perfection or non-perfection of a security interest which is created by a debtor who has an interest in minerals or the like, including oil and gas, before extraction and which attaches thereto upon extraction, or attaches to an account resulting from the sale thereof at the wellhead or minehead, is governed by the law of the jurisdiction in which the wellhead or minehead is located.

7. Priority rules

(1)

Except as otherwise provided in this Act, when goods other than those mentioned in subsection (2), securities, instruments, negotiable documents of title, money and chattel paper are dealt with in two or more jurisdictions and a conflict exists between the priority rules of the jurisdictions,

(a) the priority rules of the last jurisdiction in which the collateral was dealt with in such a way as to give rise to an interest in conflict prevail if all interests in conflict were perfected by registration, and

(b) the priority rules of the last jurisdiction in which a conflicting possessory security interest in the collateral was taken prevail.

(2)

Subject to subsection 6(4), when intangibles or goods that are of a type that are normally used in more than one jurisdiction, if such goods are equipment or inventory leased or held for lease by a debtor to others, are dealt with in two or more jurisdictions and a conflict exists between the priority rules of the jurisdictions, the priority rules of the jurisdiction in which the debtor is located when the last dealing giving rise to the interest in conflict occurs prevail.

(3)

For the purposes of this section, collateral is dealt with when

(a) it is purchased,

(b) it is seized under judicial process, or

(4)

Notwithstanding sections 4, 5 and 6 and subsections (1) and (2) of this section

(a) all procedural issues involved in the enforcement of the rights of a secured party against collateral other than intangibles are governed by the law of the jurisdiction in which the collateral is located at the time of the exercise of such rights,

(b) all procedural issues involved in the enforcement of the rights of a secured party against intangibles are governed by the law of the forum, and

(c) all substantive issues involved in the enforcement of the rights of a secured party against collateral are governed by the proper law of the contract between the secured party and the debtor.

PART 2 — Validity of Agreements and Rights of Parties

8. Enforcement of security interests

(1)

A security interest is not enforceable against a person other than the debtor unless

(a) the collateral is in the possession of the secured party at the time when the other person acquires an interest in the collateral, or

(b) the debtor has signed a security agreement that contains a description of the collateral that enables the type or kind of collateral taken under the security agreement to be distinguished from types or kinds of collateral that are not collateral under the security agreement.

(2)

For the purposes of paragraph (1)(b), in the case of a security interest taken in all of the debtor‘s present and after-acquired property, a statement indicating that a security interest has been taken in all of the debtor´s present and after-acquired property is sufficient.

(3)

A security interest in proceeds is not unenforceable against a person other than the debtor by reason only that the security agreement does not contain a description of the proceeds as required by paragraph (1)(b).

9. Delivery of copy of agreement

(1)

Where a security agreement is in writing, the secured party shall deliver a copy of it to the debtor, without charge, within 21 days after its execution.

(2)

Where a secured party fails to comply with subsection (1) after a request to do so by the debtor, a judge, on application by the debtor, may make an order for the delivery of a copy to the debtor and make such order as to costs as the judge deems just.

(3)

Subsection (1) does not apply to assignments of accounts or chattel paper not intended as security.

10. Failure to deliver copy

(1)

Where the secured party fails to comply with an order made under subsection 9(2), the debtor may apply to have the secured party‘s security interest, or any part of it, declared void, and if in all the circumstances, and having regard to the prejudice suffered by the debtor and the secured party, this is an appropriate remedy, the judge shall declare the security interest or part of it void.

(2)

Where all or part of a security interest has been declared void, a judge may, on application by the person who but for such declaration would have been a secured party, order the security interest to be reinstated, if satisfied that it would be appropriate to do so.

(3)

Where all or part of a security interest is ordered to be reinstated, priority in that security interest shall be determined by the latest of the following events

(a) the date on which the reinstatement is ordered;

(b) the date on which the security interest is registered;

11. Attachment

(1)

A security interest attaches when

(a) value is given,

(b) the debtor has rights in the collateral, and

(c) except for the purpose of enforcing inter partes rights of the parties to the security agreement, it becomes enforceable within the meaning of section 8,

unless the parties intend it to attach at a later time, in which case it attaches in accordance with the intentions of the parties.

(2)

For the purposes of subsection (1),

(a) a debtor has rights in goods purchased by him under an agreement for sale when he obtains possession of them pursuant to the agreement, and

(b) a debtor has rights in goods leased to him, hired by him or delivered to him under a consignment when he obtains possession of them pursuant to the lease, hiring agreement or consignment.

(3)

For the purposes of subsection (1), the debtor has no rights in

(a) crops until they become growing crops,

(b) fish until they are caught,

(d) oil, gas or other minerals until they are extracted, or

(e) timber until it is cut.

12. After-acquired property

(1)

Except as provided in subsection (2), a security agreement may cover after-acquired property, and such a security interest attaches in accordance with section 11 without specific appropriation by the debtor.

(2)

No security interest attaches under an after-acquired property clause in a security agreement to crops that become such more than one year after the security agreement has been executed, except that a security interest in crops given in conjunction with a lease, purchase or mortgage of land may, if so agreed, attach to crops to be grown on the land during the term of the lease, purchase or mortgage.

13. Future advances

(1)

Obligations covered by a security agreement may include future advances whether or not the advances are given pursuant to a commitment in the security agreement.

(2)

No obligation to make future advances is binding on a secured party if the collateral has been seized, attached or charged under circumstances described in paragraph 19(1)(b) or (c) and the secured party receives notice of this fact.

14. Sales law

Where a seller retains a purchase-money security interest in goods,

(a) the Sale of Goods Act governs the sale and any disclaimer, limitation or modification of the seller´s conditions and warranties, and

(b) the conditions and warranties in the sale agreement are not affected by any security agreement.

15. Acceleration provisions

A provision in a security agreement that provides that the secured party may accelerate payment or performance when he deems himself insecure shall be construed to mean that he may do so only if he has commercially reasonable grounds to believe that the prospect of payment or performance is or is about to be impaired.

16. Rights and duties of secured party

(1)

A secured party shall use reasonable care in the custody and preservation of collateral in his possession and, unless otherwise agreed,

(a) in the case of an instrument, a security or chattel paper, reasonable care includes taking necessary steps to preserve rights against prior parties, and

(b) the secured party shall keep the collateral identifiable, but fungible collateral may be commingled.

(2)

Unless otherwise agreed, where collateral is in the secured party‘s possession,

(a) reasonable expenses, including the cost of insurance and payment of taxes or other charges incurred in the custody and preservation of the collateral, are chargeable to the debtor and are secured by the collateral,

(b) the risk of loss or damage, except where caused by the negligence of the secured party, is on the debtor to the extent of any deficiency in any insurance coverage,

(c) the secured party may hold as additional security any increase or profits, except money, received from the collateral, and shall apply money so received, unless remitted to the debtor, forthwith upon its receipt, in reduction of the obligation secured, and

(d) the secured party may create a security interest in the collateral upon terms that do not impair the debtor´s rights under Part 5.

(3)

A secured parry does not lose his security interest for failing to meet any obligation imposed by subsection (1) or (2).

(4)

A secured party may use the collateral

(a) in the manner and to the extent provided in the security agreement,

(b) for the purpose of preserving the collateral or its value, or

(i) a court before which a question relating thereto is being heard, or

(ii) a judge upon application with notice to all persons concerned.

17. Information for debtor from secured party

(1)

A debtor, creditor, sheriff or person with a legal or equitable interest in the collateral may, by a notice in writing, containing an address for reply and served on the secured party, require the secured party to send or deliver to him, at the address for reply,

(a) a statement in writing of the amount of indebtedness and the terms of payment as of the date specified in the notice,

(b) a written approval or correction, as of the date specified in the notice, of the itemized list of the collateral attached to the notice,

(c) a written approval or correction, as of the date specified in the notice, of the amount of the indebtedness and the terms of payment, and

(d) a copy of the security agreement, and amendments, if any,

or any one or more of the foregoing.

(2)

Where a notice referred to in paragraph (1)(b) is served on the secured party and he claims a security interest in all of a particular type of collateral in which the debtor has rights, the secured party may so indicate in lieu of approving or correcting the itemized list of the collateral.

(3)

The secured party shall comply with a notice given under subsection (1) within 15 days after it is served and, if without reasonable excuse he fails to do so or his reply is incomplete or incorrect, the person who has given the notice is entitled, in addition to any other remedy provided under this Act, to apply to a judge for an order requiring the secured party to comply with the notice.

(4)

Where the person receiving a notice under subsection (1) no longer has are interest in the obligation or collateral, he shall, within 15 days after it is served, disclose the name and address of the latest successor in interest known to him, and if without reasonable excuse he fails to do so or his reply is incomplete or incorrect, the person who has given the notice is entitled to the same remedies as provided in subsections (3) and (6).

(5)

A successor in interest shall be deemed to be the secured party for the purposes of this section when he receives a notice under subsection (1).

(6)

Where a secured party fails to comply with an order granted under subsection (3), a judge on application of the person who obtained the order may

(a) declare the security interest of the secured party void and order that registration of the security interest be removed from the registry, and

(b) make any order he considers necessary to ensure compliance with the order granted under subsection (3).

(7)

The secured party may require payment of the prescribed charges for each reply to a notice under subsection (1), but the debtor is entitled to a reply without charge once in every six months.

(8)

Upon application of the secured party or in an application under subsection (3), a judge may

(a) make any order that is reasonable and just, including an order exempting the secured party in whole or in part from complying with the notice, if the judge is satisfied that the person giving the notice, not being the debtor, is acting in bad faith and is seeking the information for other than ordinary commercial purposes, and

(b) make any order as to costs that he considers fair and reasonable.

(9)

(10)

Where all or part of a security interest is ordered to be reinstated, priority in that security interest shall be determined by the latest of the following events:

(a) the date on which the reinstatement is ordered;

(b) the date on which the security interest is registered;

(11)

The notice mentioned in subsection (1) may be served in accordance with section 65 or by registered or certified mail addressed to the post office address of the secured party as it appears on the security agreement or financing statement.

(12)

The secured party is not required to provide a copy of any document registered in the registry.

PART 3 — Perfection and Priorities

18. Time of perfection

A security interest is perfected when

(a) it has attached, and

(b) all steps required for perfection under this Act have been completed,

regardless of the order of occurrence.

19. Subordination of security interests

(1)

An unperfected security interest is subordinate to an interest of

(a) a person who has a perfected security interest or who is otherwise entitled to priority under this Act,

(b) a person who causes the collateral to be seized under legal process, including execution, attachment or garnishment, or who obtains a charging order or equitable execution affecting the collateral,

(d) a representative of the creditors of the debtor, but only for the purpose of enforcing the rights of persons mentioned in paragraph (b), and a trustee in bankruptcy, and

(e) a transferee who is not a secured party and acquires his interest for value without notice of the security interest and before it is perfected

(i) in documents of title, securities, instruments or goods, where the transferee receives delivery of the collateral,

(ii) in intangibles other than accounts,

(iii) in accounts acquired through a transaction not otherwise governed by this Act, or

(iv) in chattel paper acquired through a transaction not otherwise governed by this Act, where the transferee receives possession of the chattel paper.

(2)

A perfected security interest is subordinate to the rights of persons mentioned in paragraphs (1)(b) to (d) except to the extent that the security interest secures

(a) advances made before the interest of such a person arises,

(b) advances made before the secured party receives notice of the interests of such persons, or

(c) reasonable costs incurred and expenses made by the secured party for the protection, maintenance, preservation or repair of the collateral.

20. Purchase-money security interests

A purchase-money security interest that is registered before or within 15 days after the debtor‘s possession of the collateral commences, or in the case of an intangible, within 15 days after the security interest attaches, has priority over the interest of a person mentioned in paragraphs 19(1)(b) to (d).

21. Continuity of perfection

(1)

If a security interest is originally perfected in any way permitted under this Act and is again perfected in some way under this Act without an intermediate period when it is unperfected, the security interest shall be deemed to be perfected continuously for the purposes of this Act, and shall be deemed for the purposes of section 34 to be continuously perfected in the way in which it was originally perfected.

(2)

An assignee of a security interest succeeds in so far as its perfection is concerned to the position of the assignor at the time of the assignment.

22. Perfection by possession

(1)

Subject to section 18, possession of the collateral by the secured party, or on his behalf by a person other than the debtor or the debtor´s agent, perfects a security interest in

(a) chattel paper,

(b) goods,

(d) securities,

(e) negotiable documents of title, or

(f) money

but, subject to section 21, only while it is actually held as collateral.

(2)

For the purposes of subsection (1), a secured party is deemed not to have taken or retained possession of collateral that is in the apparent possession or control of the debtor or the debtor‘s agent.

23. Perfection by registration

Subject to section 18, registration perfects a security interest in any collateral, but only during the period in which the registration of a financing statement relating to the security interest is effective.

24. Automatic perfection

A security interest that is a purchase-money security interest in consumer goods other than special consumer goods is perfected automatically immediately upon attachment without the need for compliance with section 22 or section 23, or any other provision of this Act dealing with the perfection of a security interest except paragraph 18(a).

25. Temporary perfection

(1)

A security interest in instruments, securities or negotiable documents of title is a perfected security interest for the first 15 days after it attaches to the extent that it arises for new value given under a written security agreement.

(2)

A security interest perfected under section 22 in

(a) an instrument that a secured party delivers to the debtor for the purpose of

(i) ultimate sale or exchange,

(ii) presentation, collection, or renewal, or

(iii) registration of transfer, or

(b) a negotiable document of title, or goods held by a bailee that are not covered by a negotiable document of title, which document of title or goods the secured party makes available to the debtor for the purpose of

(i) ultimate sale or exchange,

(ii) loading, unloading, storing, shipping or trans-shipping, or

(iii) manufacturing, processing, packaging or otherwise dealing with goods in a manner preliminary to their sale or exchange,

remains perfected for the first 15 days after the collateral comes under the control of the debtor.

(3)

After the expiration of the period of time mentioned in subsection (1) or (2), a security interest under this section becomes subject to the provisions of this Act for perfecting a security interest.

26. Proceeds

(1)

Subject to this Act, where collateral gives rise to proceeds, a security interest in the collateral

(a) continues as to the collateral, unless the secured party expressly or impliedly agrees otherwise, and

(b) extends to the proceeds.

(2)

A security interest in proceeds is a continuously perfected security interest if the interest in the original collateral

(a) is perfected by the registration of a financing statement that covers the original collateral and proceeds from it, and contains a prescribed description,

(b) is perfected by the registration of a financing statement that covers the original collateral and proceeds from it, where the proceeds are of a type that falls within the description of the original collateral contained in the financing statement, or

(c) is perfected by the registration of a financing statement that covers the original collateral and proceeds from it, where the proceeds consist of money, a bill of exchange drawn on a financial institution, or a deposit account with a financial institution.

(3)

In a case other than one mentioned in subsection (2), a security interest in proceeds is a continuously perfected security interest if the interest in the original collateral was perfected, and the security interest in the proceeds remains perfected for a period of 15 days after receipt of the proceeds by the debtor but becomes unperfected thereafter, unless the security interest in the proceeds is otherwise perfected by any of the methods and under the circumstances prescribed in this Act for original collateral of the same type or kind.

27. Goods held by bailee

(1)

A security interest in goods in the possession of a bailee is perfected

(a) by the issuance of a document of title in the name of the secured party,

(b) by a holding on behalf of the secured party pursuant to section 22,

(d) where the bailee has issued a negotiable document of title covering the goods, by perfection of a security interest in the negotiable document of title.

(2)

The issuance of a negotiable document of title covering goods does not preclude any other security interest in the goods from arising during the period that the negotiable document of title is outstanding.

(3)

A security interest in a negotiable document of title covering goods takes priority over a security interest in the goods otherwise perfected after the goods become covered by the negotiable document of title.

(4)

Notwithstanding subsection (3), a perfected security interest in goods takes priority over a security interest in a negotiable document of title covering the goods where the security interest in the goods was registered at the time when the security interest in the negotiable document of title was perfected.

28. Returned or repossessed goods

(1)

A security interest in goods that are the subject of a sale or lease and that are returned to, or repossessed by,

(a) the person who sold or leased the goods,

(b) a transferee of chattel paper or a person having a security interest in an intangible resulting from the sale or lease of the goods, or

(c) a secured party who had a security interest in the goods at the time they were sold or leased or anyone claiming from or under him,

reattaches to the extent that the obligations under the security agreement remain unfulfilled.

(2)

Where a security interest that reattaches under subsection (1) was perfected at the time of the sale, lease or exchange by a registration that is still effective at the time of the return or repossession of the goods, the security interest reattaches as a perfected interest, but otherwise requires for its perfection a registration or a taking of possession by the secured party.

(3)

A security interest in goods that attaches while the goods are in the possession of a buyer or lessee of the debtor and that is perfected before the goods are returned or repossessed has priority over the security interest mentioned in paragraph (1)(c).

(4)

Where a sale or lease creates chattel paper and the goods are returned or repossessed, the unpaid transferee of the chattel paper has a security interest in the goods, and, if the unpaid transferee took possession of the chattel paper in the ordinary course of business and for new value, the transferee´s security interest has priority over the security interest mentioned in paragraph (1)(c) and has priority over a security interest in the returned or repossessed goods as after-acquired property which first attaches on return or repossession.

(5)

Where a sale or lease creates an intangible and the goods are returned or repossessed, the secured party who had the security interest in the intangible has a security interest in the goods, but the security interest mentioned in paragraph (1)(c) has priority over that interest.

(6)

A security interest asserted under subsection (4) or (5) is a perfected security interest in the goods when the security interest in the chattel paper or intangible was perfected, but it becomes unperfected 15 days after the day of return or repossession of the goods unless the secured party perfects his interest in the goods by taking possession of them or registering his security interest in them before the expiration of the 15 day period.

29. Dealings in the ordinary course of business

(1)

A buyer or lessee of goods sold or leased in the ordinary course of the business of the seller or lessor takes them free from any perfected or unperfected security interest in the goods given by or reserved against the seller or lessor or arising under section 28, whether or not the buyer or lessee knows of it, unless he also knows that the sale or lease constitutes a breach of the security agreement.

(2)

Where goods of a type in respect of which registration by serial number is permitted by the regulations are sold or leased otherwise than in the ordinary course of business of the seller or lessor and the goods were equipment of the seller or lessor, the buyer or lessee takes free from any security interest in the goods given by the seller or lessor and perfected under section 23 if

(a) he buys or leases the goods without knowledge of the security interest, and

(b) the goods are not described by serial number in a financing statement.

(3)

A buyer or lessee of consumer goods other than special consumer goods takes free of a perfected security interest in those goods if

(a) he buys or leases the goods without knowledge of the security interest,

(b) he gives new value for his interest, and

(4)

For the purposes of subsections (1), (2) and (3), the sale or lease may be for cash, by exchange for other property, on credit or by delivery of goods or documents of title under a pre-existing contract for sale or lease, but subsections (1), (2) and (3) do not apply to a transfer in bulk, or to a transfer as security for or in total or partial satisfaction of a past liability.

(5)

A buyer or lessee of goods takes free of a security interest that is temporarily perfected under subsection 25(2), 26(3) or 28(6) or a security interest the perfection of which is continued under subsections 45(2) to (5) during any of the 15 day periods mentioned in subsections 45(2) to (5) if

(a) he gives new value for his interest,

(b) he buys or leases the goods without notice of the security interest, and

30. Money, instruments, securities, etc

(1)

A holder of money has priority over any security interest in it perfected under section 23 or temporarily perfected under subsection 26(3) if the holder

(a) acquired the money without notice that it was subject to a security interest, or

(b) was a holder for value, whether or not he acquired the money without notice that it was subject to a security interest.

(2)

Notwithstanding subsections (1) and (3), a creditor who receives money or an instrument drawn or made by a debtor and delivered in payment of a debt owing to him by that debtor takes free from a security interest in the money or instrument drawn or made by the debtor whether or not the creditor has notice of the security interest.

(3)

A purchaser of an instrument or a security has priority over any security interest in the instrument or security perfected under section 23 or temporarily perfected under section 25 or subsection 26(3) if the purchaser

(a) gave value for his interest,

(b) acquired the instrument or security without notice that it was subject to a security interest, and

(4)

A holder to whom a negotiable document of title has been negotiated has priority over any security interest in the negotiable document of title that is perfected under section 23 or temporarily perfected under section 25 or subsection 26(3) if the holder

(a) gave value for the document of title, and

(b) took the negotiable document of title without notice that it was subject to a security interest.

(5)

A purchaser of chattel paper who takes possession of it in the ordinary course of business and who gives new value for it

(a) has priority over any security interest in it that, in the case of chattel paper claimed as original collateral, was perfected under section 23, or any security interest in it as proceeds of equipment or consumer goods, if the purchaser acquired the chattel paper without notice that it was subject to a security interest, and

(b) has priority over any security interest in it as proceeds of inventory, whether or not the purchaser has notice of the security interest.

31. Liens

Where a person in the ordinary course of business furnishes materials or services with respect to goods that are subject to a security interest, any lien that he has in respect of the materials or services has priority over a perfected security interest unless the lien is given by an Act that provides that the lien does not have such priority.

32. Transfer by debtor

The rights of a debtor in collateral may be transferred voluntarily or involuntarily, notwithstanding a provision in the security agreement prohibiting transfer or declaring a transfer to be a default, but no transfer prejudices the rights of the secured party under the security agreement or otherwise, including the right to treat a prohibited transfer as an act of default.

33. Purchase-money security interests

(1)

Subject to section 26, a purchase-money security interest in collateral or its proceeds, other than inventory, has priority over any other security interest in the same collateral or its proceeds given by the same debtor where the purchase-money security interest is perfected

(a) in the case of an intangible, before or within 15 days after the purchase-money security interest in the intangible attaches, or

(b) in the case of collateral other than an intangible, before or within 15 days after the debtor receives possession of the collateral.

(2)

Subject to section 26 and subsection (4), a purchase-money security interest in inventory or its proceeds has priority over another security interest in the same collateral given by the same debtor if

(a) the purchase-money security interest in the inventory is perfected at the time when the debtor obtains possession of the collateral, and

(b) the purchase-money secured party gives a notice in accordance with subsection (3) to the holder of the other security interest, where the holder of the other security interest has, before the earlier of

(i) the date of registration by the purchase money secured party, or

(ii) the date when the collateral comes under the control of the debtor,

registered a financing statement covering the same type or kind of collateral of the debtor.

(3)

For the purposes of subsection (2), a notice shall

(a) state that the person giving the notice has acquired, or expects to acquire, a purchase-money security interest in inventory of the debtor and its proceeds,

(b) contains a description of the inventory and its proceeds according to type or kind, and

(c) be received by the holder of the other security interest within a period of two years before the debtor obtains possession of the collateral.

(4)

No purchase-money security interest in proceeds of inventory has priority over a security interest in accounts given for new value where a financing statement relating to the security interest in accounts is registered before the purchase-money security interest is perfected or a financing statement relating to it is registered.

(5)

A purchase-money security interest in proceeds under subsection (1) or (2) is subordinate to a non-proceeds purchase money security interest in the same collateral if the non-proceeds purchase-money security interest is perfected at the time when the debtor obtains possession of the collateral or within 15 days thereafter.

(6)

A perfected security interest in crops or their proceeds given for value to enable the debtor to produce the crops during the production season and given not more than three months before the crops become growing crops by planting or otherwise has priority over an earlier perfected security interest to the extent that such earlier interest secures obligations that were contracted more than six months before the crops become growing crops by planting or otherwise, even though the person giving the value has notice of the earlier security interest.

(7)

A purchase-money security interest in collateral or its proceeds held by a seller, lessor or consignor of the collateral has priority over any other purchase-money security interest in the same collateral where the interest of the seller, lessor or consignor is perfected

(a) in the case of an intangible, within 15 days after the purchase-money security interest in the intangible attaches, or

(b) in the case of collateral other than an intangible, within 15 days after the debtor receives possession of the collateral.

34. Priorities

(1)

If no other provision of this Act is applicable, priority between conflicting perfected security interests in the same collateral shall be determined by the order of

(a) registration,

(b) possession of the collateral by the secured party under section 22, and

whichever is earliest, and, as between unperfected security interests, by the order of attachment.

(2)

Where, after the registration or perfection of a security interest, or after possession is taken of collateral by a secured party, there is a period during which there is no registration or perfection of the security interest, or there is no possession of the collateral by the secured party, the priority of the security interest shall be determined with reference to the time when, subsequently or again, the security interest is registered or perfected, or possession is taken of the collateral by the secured party.

(3)

The date for determining priority of conflicting security interests in proceeds, where no other provision of this Act is applicable, is the date established under subsection (1) for determining priority between conflicting security interests in the collateral.

(4)

If future advances are made while a security interest is perfected, the security interest has the same priority for the purposes of this section with respect to future advances as it has with respect to the first advance.

(5)

Where the registration of a security interest lapses as a result of the secured party‘s failure to renew the registration or where the registration of a security interest has been discharged fraudulently, in error or without authorization, the secured party may re-register his security interest within 30 days after the lapse or discharge, and where he re-registers the prior lapse or discharge does not affect the priority status of the security interest in relation to competing interests in the collateral that arose prior to the lapse or discharge, except insofar as subsequent advances are made or contracted for following the lapse or discharge and prior to the re-registration.

(6)

Where a debtor transfers his interest in collateral that at the time of the transfer is subject to a security interest, the security interest has priority over any other security interest granted by the transferee before the transfer, except insofar as the security interest granted by the transferee secures advances made or contracted for after the transfer at a time when the security interest is unperfected through the operation of section 45.

(7)

Subsection (6) does not apply where the transferee acquires the debtor´s interest free of the security interest granted by the debtor.

35. Fixtures

(1)

Except as provided in subsections (2), (3) and (4),

(a) a security interest that attaches to goods before they become fixtures has priority as to the goods over the claim of any person to the extent that his interest in the goods depends upon his interest in the real property, and

(b) a security interest that attaches to goods after they become fixtures has priority as to the goods over the claim of a person to the extent that his interest in the goods depends upon an interest in the real property subsequently acquired, but does not have priority over the claim of a person to the extent that his interest in the goods depends upon an interest in the real property that is registered at the time when the security interest attaches to the goods if he does not, in writing, consent to the security interest or disclaim his interest in the goods depending upon his interest in the real property.

(2)

A security interest mentioned in subsection (1) is subordinate to another interest in the goods to the extent that the other interest depends upon a subsequent purchase for value of an interest in the real property, or upon a prior encumbrance of record on the real property in respect of a subsequent advance, if the purchase or advance is made or contracted for without fraud and before the security interest is registered under the Land Titles Act in accordance with section 43. (1991, c. 11, s. 202(2).)

(3)

A security interest mentioned in subsection (1) is subordinate to another interest in the goods to the extent that the other interest depends upon the binding of the real property by a writ under section 119 of the Land Titles Act without fraud and before the security interest is registered under the Land Titles Act in accordance with section 43. (1991, c. 11, s. 202.)

(4)

Notwithstanding subsection (3), an interest in goods, to the extent that it depends upon the binding of real property under section 119 of the Land Titles Act, is subordinate to a purchase-money security interest in the goods that is registered under the Land Titles Act within 15 days after the debtor receives possession of the goods. (1991, c. 11, s. 202.)

(5)

A secured party who intends to exercise his right to remove fixtures from real property shall serve, on each person who appears by the records of the land titles office to have an interest in the real property, a written notice containing

(a) the name and address of the secured party,

(b) a description of the fixtures to be removed sufficient to enable them to be identified,

(d) a description of the real property, and

(e) a statement of his intention to remove the fixtures unless the obligations secured by his security interest are satisfied before a specified day that is not less than 12 days after the service of the notice.

(6)

A notice under subsection (5) may be served in accordance with subsection 65(1) or by registered or certified mail addressed to the post office address of the person to be served as it appears in the records of the land titles office.

(7)

A secured party shall not exercise his right to remove fixtures from real property

(a) before the expiration of 15 days after the service of every notice required to be served under subsection (5), or

(b) after he is refused permission under subsection (9).

(8)

Any person, other than the debtor, who has an interest in the real property at the time when goods subject to a security interest become fixtures is entitled to reimbursement for any damage to his interest in the real property resulting from the removal of the fixtures, but is not entitled to reimbursement for diminution in the value of the real property caused by the absence of the fixtures removed or by the necessity for their replacement.

(9)

The persons entitled to reimbursement as provided in subsection (8) may refuse permission to remove the goods until the secured party has given adequate security for the reimbursement.

(10)

The secured party may apply to the Supreme Court for an order

(a) determining the persons entitled to reimbursement under this section,

(b) determining the amount and kind of security to be provided by the secured party,

(d) prescribing the depository for the security.

(11)

A person entitled to receive a notice under subsection (5) may apply to a judge for an order postponing the removal of the goods from the real property, and the judge may make any order that he considers just.

(12)

A person having an interest in real property that is subordinate to a security interest by virtue of subsection (1) may, before the fixtures are removed from the real property by the secured party, retain the fixtures upon satisfaction of the obligations secured by the security interest having priority over his interest.

(13)

A secured party who, under this Act, has the right to remove fixtures from real property shall exercise his right of removal in a manner that causes no greater damage or injury to the land or to the other property situated on the land, or that puts an owner, lessee or occupier of the real property to any greater inconvenience, than is necessarily incidental to the removal of the fixtures.

(1991, c. 11, s. 202.)

36. Accessions

(1)

Except as provided in subsections (2), (3) and (4) and in section 37,

(a) a security interest that attaches to goods before they become an accession has priority as to the accession over the claim of any person to the extent that his interest in the accession depends upon his interest in the goods to which the accession is affixed or attached, and

(b) a security interest that attaches to goods after they become an accession has priority as to the accession over the claim of a person to the extent that his interest in the accession depends upon an interest subsequently acquired in the goods to which the accession is affixed or attached, but does not have priority over the claim of a person to the extent that his interest in the accession depends upon an interest in the goods to which the accession is affixed or attached, acquired before the attachment of the security interest in the accession, if he does not, in writing, consent to the security interest in the accession or disclaim his interest in the accession depending upon his interest in the goods to which the accession is affixed or attached.

(2)

A security interest mentioned in subsection (1) is subordinate to another interest in the accession to the extent that the other interest depends upon a subsequent purchase for value of an interest in the goods to which the accession is affixed or attached, or upon a prior perfected security interest in those goods in respect of a subsequent advance, if the purchase or advance is made or contracted for before the security interest mentioned in subsection (1) is perfected.

(3)

A security interest mentioned in subsection (1) is subordinate to the interest of a sheriff or a creditor who has caused the goods to which the accession is affixed or attached to be seized under judicial process to enforce a judgment before the security interest is perfected.

(4)

Notwithstanding subsection (3), an interest in an accession, to the extent that it depends upon the exercise of the rights of a sheriff or a creditor referred to in subsection (3), is subordinate to a purchase-money security interest that is perfected within 15 days after the debtor obtains possession of the collateral.

(5)

A secured party who intends to exercise his right to remove accessions from the goods to which they are attached shall serve, on each person known by him to have an interest in those goods and on any person who has registered a financing statement indexed in the name of the debtor and referring to those goods, a written notice containing

(a) the name and address of the secured party,

(b) a description of the accession to be removed sufficient to enable it to be identified,

(d) a description of the goods to which the accession is affixed or attached sufficient to enable the goods to be identified, and

(e) a statement of his intention to remove the accessions from the goods to which they are affixed or attached unless the obligations secured by his security interest are satisfied before a specified day that is not less than 12 days after the service of the notice.

(6)

A notice under subsection (5) may be served in accordance with subsection 65(1) or, in the case of a person who has registered a financing statement, by registered mail addressed to his post office address as it appears on the security agreement or financing statement.

(7)

A secured party shall not exercise his right to remove an accession from the goods to which it is affixed or attached

(a) before the expiration of 15 days after the service of every notice required to be served under subsection (5), or

(b) after he is refused permission under subsection (9).

(8)

Any person, other than the debtor, who has an interest in the goods to which an accession is affixed or attached at the time when the goods subject to a security interest become an accession is entitled to reimbursement for any damage to his interest in the goods to which the accession is affixed or attached resulting from the removal of the accession, but is not entitled to reimbursement for diminution in their value caused by the absence of the accession or by the necessity for its replacement.

(9)

The persons entitled to reimbursement as provided in subsection (8) may refuse permission to remove the goods until the secured party has given adequate security for the reimbursement.

(10)

The secured party may apply to the Supreme Court for an order

(a) determining the persons entitled to reimbursement under this section,

(b) determining the amount and kind of security to be provided by the secured party,

(d) prescribing the depository for the security.

(11)

A person entitled to receive a notice under subsection (5) may apply to a judge for an order postponing removal of the accession from the goods to which it is affixed or attached, and the judge may make any order that he considers just.

(12)

A person having an interest in goods that is subordinate to a security interest by virtue of subsection (1) may, before the accession is removed, retain the accession upon satisfaction of the obligations secured by the security interest having priority over his interest.

(13)

A secured party who has the right to remove an accession from the goods to which it is affixed or attached shall exercise his right of removal in a manner that causes no greater damage or injury to those goods, or that puts the person who is in possession of those goods to any greater inconvenience, than is necessarily incidental to the removal of the accession.

37. Commingled goods

(1)

A perfected security interest in goods that subsequently become part of a product or mass continues in the product or mass if the goods are so manufactured, processed, assembled or commingled that their identity is lost in the product or mass.

(2)

Where more than one perfected security interest attaches to the product or mass, the security interests are entitled to share in the product or mass according to the ratio that the obligations secured by each security interest entitled to share bear to the sum of the obligations secured by all the security interests entitled to share.

(3)

This section does not apply to a security interest in an accession to which section 36 applies.

38. Subordination by agreement

A secured party may, in the security agreement or otherwise, subordinate his security interest to any other security interest.

39. Assignment by secured party

(1)

Unless a debtor on an intangible or chattel paper has made an enforceable agreement not to assert defences or claims arising out of a contract between the debtor and the assignor, the rights of an assignee are subject to

(a) all the terms of the contract between the debtor on an intangible or chattel paper and the assignor and any defence or claim arising out of the contract, and

(b) any other defence or claim of the debtor on an intangible or chattel paper against the assignor that accrued before the debtor on an intangible or chattel paper received notice of the assignment.

(2)

So far as the right to payment under an assigned contract right has not been earned by performance, and notwithstanding notification of the assignment, any modification of or substitution for the contract made in good faith, in accordance with reasonable commercial standards, and without material adverse effect upon the assignee‘s rights under or the assignor´s ability to perform the contract, is effective against an assignee unless the debtor on an intangible or chattel paper has otherwise agreed, but the assignee acquires corresponding rights under the modified or substituted contract.

(3)

Nothing in subsection (2) affects the validity of a term in an assignment agreement that provides that any modification or substitution in relation to the agreement by the assignor is a breach of the agreement by the assignor.

(4)

Subject to section 23 of the Judicature Act, the debtor on an intangible or chattel paper may pay the assignor until the debtor receives notice of the assignment reasonably identifying the relevant rights and, if requested by the debtor within a reasonable time, proof of the assignment.

(5)

A term in a contract between a debtor on an intangible and an assignor that prohibits assignment of the whole of an account or intangible for money due or to become due is void.

PART 4 — Registration System

40. Registry and staff

(1)

A registration system, including a registry for the registration of financing statements, shall be established for the purposes of this Act.

(2)

There shall be appointed, from among the members of the public service, a registrar of personal property security.

(3)

The registrar shall supervise the administration of the registration system established under subsection (1).

(4)

The registrar may designate one or more persons on the staff of his office to act on his behalf.

41. Searches

(1)

Upon the request of any person in a prescribed manner and upon payment of the prescribed fee in the prescribed manner, the registrar shall

(a) issue a search report stating whether there is registered at the time mentioned in the search report a financing statement

(i) that bears the registration number given in the request,

(ii) that shows as a debtor the person named in the request, or

(iii) that describes by serial number any collateral for which the serial number is given in the request,

(b) if such a financing statement is registered, include in the search report the information respecting the financing statement contained in the registration system,

(d) provide such further or other information as he may be required by regulation to provide.

(2)

A search report issued under paragraph (1)(a) is prima facie evidence of its contents.

(3)

A certified copy issued under paragraph (1)(c) is prima facie evidence of the contents of the financing statement of which it is a copy.

(4)

A search report issued under paragraph (1)(a) may contain a warning in such words as may be prescribed concerning its accuracy.

(5)

A copy of any registered document certified by the registrar is receivable in evidence as prima facie proof for all purposes, without proof of his signature or official position.

(6)

A certificate of the registrar is receivable in evidence as prima facie proof of the time of the registration of a document without proof of his signature or official position.

42. Financing statements

(1)

In order to register under this Act for the purpose of perfecting a security interest, a financing statement shall be registered that contains

(a) the name and address of the debtor,

(b) the name and address of the secured party,

(d) such further or other information as may be prescribed.

(1995, c. 6, s. 13.)

(2)

A financing statement that is a document may be tendered for registration in typed form,

(a) by delivery to the registry; or

(b) by mail addressed to the address fixed by the regulations.

(1995, c. 6, s. 14.)

(2.1)

A financing statement that is data in a prescribed format may be tendered for registration,

(a) by delivery to the registry,

(b) by mail addressed to the address fixed by the regulations; or

(1995, c. 6, s. 15.)

(2.2)

A financing statement to be tendered for registration shall contain the prescribed information and shall be in the form of

(a) a document in the prescribed form, or

(b) data presented in a prescribed format.

(1995, c. 6, s. 15.)

(2.3)

A financing statement in the form of data in a prescribed format may be tendered for registration by direct electronic transmission only by a person who is authorized by the registrar to do so or who is a member of a class of persons who is authorized by the registrar to do so. (1995, c. 6, s. 15.)

(3)

Where, in the opinion of the registrar, a document tendered for registration does not comply with this Act, he may refuse to register it, and shall give the reason for his refusal.

(4)

For the purposes of this Act, a writing is deemed to be signed by a person when it is signed by the person or his agent.

(5)

A financing statement may be registered at any time, and before a security agreement is made or a security interest attaches.

(1995, c. 6, ss. 13–15.)

43. Fixtures and crops

(1)

In order to perfect, against interests to which the Land Titles Act applies, a security interest in crops that are growing or to be grown or in goods before or after they become fixtures, a copy of the financing statement and such form of application for registration as may be prescribed shall also be registered under the Land Titles Act. (1991, c. 11, s. 202(2).)

(2)

A security interest in crops or in fixtures may be perfected as a security interest in goods without also being perfected pursuant to subsection (1).

(3)

A copy of a financing statement accompanied by a form of application for registration prescribed under subsection (1) may be registered under the Land Titles Act, and the registrar or deputy registrar appointed under the Land Titles Act, upon payment of the proper fee, shall enter and register the financing statement as an encumbrance against the land therein described as provided by the Land Titles Act. (1991, c. 11, s. 202(2).)

(4)

A copy of a financing statement is not registrable under subsection (3) unless,

(a) it contains a description of the land to which it relates that is satisfactory to the registrar or deputy registrar appointed under the Land Titles Act, and (1991, c. 11, s. 202(2).)

(b) the title to the land to which it relates is registered under the Land Titles Act. (1991, c. 11, s. 202(2).)

(1991, c. 11, s. 202(2).)

(5)

Where the registration of a financing statement ceases to be effective under section 52, or where a discharge of a security agreement or release of collateral is made under section 50, the registrar or deputy registrar appointed under the Land Titles Act shall, upon the production of such proof if any as he may require, make an entry as provided by the Land Titles Act noting that the registration of the financing statement has lapsed, that the security agreement has been discharged, or that the collateral has been released, as the case may be, in whole or in part. (1991, c. 11, s. 202(2).)

(6)

Sections 44 to 49 apply mutatis mutandis in respect of financing statements registered under the Land Titles Act. (1991, c. 11, s. 202(2).)

(1991, c. 11, s. 202(2).)

44. Assignment by secured party

(1)

Where a financing statement is registered and the secured party assigns his interest, a financing statement disclosing the assignment may be registered if it sets forth at least

(a) the name and address of the debtor,

(b) the name and address of the secured party of record,

(d) the registration number of the previously registered financing statement.

(1995, c. 6, s. 16.)

(2)

Where an assignment under subsection (1) relates to only part of the collateral, the financing statement registered under subsection (1) shall contain a prescribed description of the assigned collateral.

(2.1)

Subsections 42(2) to 42(2.3) of this Act modified to suit the case apply to the registration of assignments. (1995, c. 6, s. 17.)

(3)

Where no financing statement has been registered with respect to a security interest and the secured party assigns his interest, a financing statement may be registered in which the assignee is disclosed as the secured party.

(4)

After registration of a financing statement under this section, the assignee becomes the secured party of the record.

(5)

A financing statement disclosing an assignment may be registered before or after an agreement to assign the security interest has been completed.

(1995, c. 6, s. 17.)

45. Assignment and change of name by debtor

(1)

Where a security interest has been perfected by registration and the debtor has the consent of the secured party to transfer his interest in the collateral or part of the collateral, the transferee is deemed to be the debtor for the purposes of registration, and the security interest is unperfected as against any interest arising subsequent to the transfer and before the secured party registers a financing statement amending the original financing statement.

(2)

Where a security interest has been perfected by registration and the secured party has notice that the debtor has transferred his interest in the collateral or part of the collateral, the security interest, as against any interest arising subsequent to the transfer and before the secured party registers a financing statement in respect of the transfer, is unperfected 15 days after the secured party has notice of the transfer.

(3)

Where a security interest has been perfected by registration and the secured party has notice that the debtor has changed his name, the security interest, as against any interest arising subsequent to the change and before the secured party registers a financing statement in respect of the change, is unperfected 15 days after the secured party has notice of the change.

(4)

Where a security interest has been perfected by registration and the secured party has notice that the debtor is about to transfer his interest in the collateral or part of the collateral, the security interest, as against any interest arising subsequent to the transfer and before the secured party registers a financing statement in respect of the transfer, is unperfected on the later of

(a) the day on which the transfer takes place, and

(b) 15 days after the secured party has such notice.

(5)

Where a security interest has been perfected by registration and the secured party has notice that the debtor is about to change his name, the security interest, as against any interest arising subsequent to the change and before the secured party registers a financing statement in respect of the change, is unperfected on the later of

(a) the day on which the debtor changes his name, and

(b) 15 days after the secured party has such notice.

(6)

This section does not have the effect of unperfecting a security interest in collateral that is permitted by the regulations to be and is described by its serial number in a registered financing statement.

(7)

A security interest that becomes unperfected under this section may thereafter be perfected by registering a financing statement or as otherwise provided in this Act.

46. Amendments to financing statements

(1)

A financing statement disclosing an amendment to a previously registered financing statement may be registered at any time during the period that the previous registration is effective.

(2)

Where an amendment adds collateral or alters the name or description of the debtor, it is effectively registered as to the additional collateral, or as to the altered name or description, only from the date of the registration of the financing statement disclosing the amendment.

(3)

A financing statement releasing certain collateral described in a previously registered financing statement may be registered at any time during the period that the registration is effective, and it takes effect from the date of registration of the financing statement disclosing an amendment releasing collateral.

(4)

A financing statement registered under this section must refer to the registration number of the financing statement that it amends.

47. Subordination

(1)

A financing statement disclosing a subordination of a security interest created or provided for by a security agreement in respect of which a financing statement has been registered under this Act may be registered at any time during the period that the registration of the subordinated interest is effective.

(2)

Unless a contrary intention appears from the financing statement disclosing a subordination to it of a previously registered financing statement, it is effectively registered and takes effect only from the date of registration of the financing statement disclosing the subordination.

(3)

A financing statement registered under this section must refer to the registration number of the financing statement that is subordinated to it.

48. Renewal

(1)

A financing statement disclosing a renewal of a previously registered financing statement may be registered at any time during the period that the previous registration is effective.

(2)

A renewal must refer to the registration number of the number financing statement that it renews.

49. Removal of Records

Financing statements or information provided on a financing statement as the case may require may be removed from the records of the registry

(a) when the registration of the financing statement is no longer effective,

(b) upon the receipt of a financing statement discharging or partially discharging the financing statement,

(c) upon the failure of the secured party to register a financing statement disclosing a judge´s order maintaining a financing statement under subsection 50(5), or

(d) upon the receipt of a court order compelling the discharge or partial discharge of the financing statement.

50. Discharge of security agreements

(1)

Where a financing statement is registered and the collateral or proceeds, as the case may be, is released or partially released, the secured party shall discharge the registration, wholly or partially, as the case may require, by registering a financing statement containing the prescribed information.

(2)

Where a financing statement relating to a security interest in consumer goods is registered, the discharge of the registration under subsection (1) shall be effected by the secured party within one month after all the obligations under the security agreement creating the security interest are performed, unless the registration ceases to be effective within that month.

(3)

No financing statement discharging a registration under subsection (1) shall be registered unless financing statements disclosing all assignments by the secured party or debtor are registered.

(4)

Where a financing statement is registered and

(a) all the obligations under the security agreement to which it relates are performed,

(b) it is agreed to release part of the collateral in which a security interest is taken upon payment or performance of certain of the obligations under the security agreement, then upon payment or performance of such obligations, or

(c) it purports to give the secured party a security interest in property of the debtor in which the secured party does not have, or is not entitled to claim, a security interest,

any person having an interest in the collateral which is the subject of the security agreement or financing statement may serve a written demand on the secured party, demanding a financing statement discharging the registration under subsection (1), and the secured party shall sign and deliver or send to the registry the financing statement together with financing statements discharging the registration of all assignments by the secured party or the debtor in respect of which such financing statements have not been registered, within 15 days after service of the demand.

(5)

Where the secured party fails to deliver the required financing statements within 15 days after receipt of a demand under subsection (4), the person who has made the demand may require the registrar to serve a notice in writing on the secured party stating that the registration of the registered financing statement will be discharged or that a part of the collateral will be released, as the case may be, upon the expiration of 40 days after the day on which the registrar serves the notice on the secured party, unless in the meantime the secured party registers with the registrar a financing statement disclosing an order of a judge that the registration of the interest of the secured party be maintained, in whole or in part, as the case may be.

(6)

The secured party may apply to a judge by originating application with notice of the application to the person demanding under subsection (4) and the registrar, and the judge may,

(a) order that the registration of a financing statement be maintained in whole or in part with or without conditions and, subject to section 52, for any period of time that he considers just,

(b) order that the registration of a financing statement be discharged in whole or in part, with or without conditions, or upon the provision of such security as he considers just, or

(c) if he determines that the secured party had insufficient cause for not filing a financing statement disclosing a discharge of obligations under the security agreement, order the secured party to pay to the person demanding the discharge under subsection (4) the sum of $200 or the amount of the loss, damage or inconvenience suffered by that person, whichever is greater.

(7)

The demand or notice mentioned in subsection (4) or (5) may be served in accordance with subsection 65(1) or by registered or certified mail addressed to the post office address of the secured party as it appears on the security agreement or financing statement.

(8)

Subsection (5) does not apply to a financing statement registered with respect to a security interest taken under a trust deed where the financing statement indicates that the security agreement with respect to which the financing statement was registered is a trust deed.

(9)

Where the secured party under a registration under a trust deed fails to deliver the financing statements demanded in subsection (4), the person making the demand may apply to the Supreme Court, upon notice to all persons concerned, for an order directing that the financing statement be removed from the registry.

51. Action against registrar

(1)

Subject to the other provisions of this section, any person who suffers loss or damage as a result of his reliance upon a prescribed registry document or printed search result that is incorrect because of an error or omission in the operation of the registry may bring an action against the registrar in the Supreme Court for recovery of damages, but no award of damages to any single claimant shall exceed the prescribed amount.

(2)

No action for damages under this section lies against the registrar unless it is commenced within one year after the time of the person‘s having suffered the loss or damage.

(3)

Any action for recovery of damages under this section brought by a person shall be brought as an action on behalf of all other persons who relied on the same document or result, and the judgment in the action, except to the extent that it relates to the finding of the fact of reliance by each person and provides for subsequent determination of the amount of damages suffered by each person, constitutes a judgment between each person and the registrar in respect of an error or omission in the operation of the registry.

(4)

An action for recovery of damages under this section brought by a trustee under a trust deed or any person with an interest in a trust deed shall be brought as an action on behalf of all persons with interests in the same trust deed, and the judgment in the action, except to the extent that it provides for subsequent determination of the amount of damages suffered by each such person, constitutes a judgment between each such person and the registrar in respect of the error or omission.

(5)

In an action brought by a trustee under a trust deed or by any person with an interest in a trust deed, proof that each person relied on the document or result is not necessary if it is established that the trustee relied on the document or result, but no person is entitled to recover damages under this section if he knew at the time he acquired his interest that the document or result relied on by the trustee was incorrect.

(6)

The total of all claims for compensation paid under subsections (3) and (4) in any single action shall not exceed the prescribed amount.

(7)

In proceedings under subsections (3) and (4) the Supreme Court may make any order it considers appropriate to give notice to members of the class.

(8)

Except as provided by this section, no action shall be brought against the Government of the Yukon, the registrar or any officer or employee of the registry for any act or omission of the registrar or any officer or employee of the registry in respect of the discharge or purported discharge of any duty or function under this Act.

52. Effect of registration

(1)

A registration under this Act is effective only from the time of the assignment to it of the registration number and the recording of the prescribed particulars of it in the registry or in the land titles office, as the case may be.

(2)

Registration under this Act of a financing statement is effective for the prescribed length of time.

(3)

Registration of a document in the registry does not constitute constructive notice or knowledge of its contents to third parties.

PART 5 — Rights and Remedies on Default

53. Application of this Part

(1)

Unless otherwise provided in this Part, this Part applies only to a security interest that secures payment or performance of an obligation.

(2)

This Part does not apply to a transaction between a pledgor and a pawnbroker.

(3)

The rights and remedies mentioned in this Part are cumulative.

(4)

Where the debtor is in default under a security agreement, the secured party has, in addition to any other rights and remedies,

(a) the rights and remedies provided in the security agreement except as limited by subsection (7),

(b) the rights and remedies provided in this Part, and

(5)

The secured part may enforce the security interest by any method available in or permitted by law, and if the collateral is or includes documents of title, the secured party may proceed either as to the documents of title or as to the goods covered thereby, and any method of enforcement that is available with respect to the documents of title is also available, mutatis mutandis, with respect to the goods covered thereby.

(6)

Where the debtor is in default under a security agreement, he has, in addition to the rights and remedies provided in the security agreement and any other rights and remedies, the rights and remedies provided in this Part and in section 16.

(7)

Except as provided in sections 16, 59 and 60, no provision of section 16, or sections 57 to 61, to the extent that they give rights to the debtor and impose duties upon the secured party, shall be waived or varied, but the parties may by agreement determine the standards by which the rights of the debtor and the duties of the secured party are to be measured, so long as such standards are not manifestly unreasonable having regard to the nature of such rights and duties.

(8)

Subject to any other Act or rule of law to the contrary, where a security agreement covers both real and personal property, the secured party may proceed under this Part as to the personal property or he may proceed as to both the real and the personal property, in which case this Part applies to the personal property only to the extent that it is not inconsistent with laws applicable to proceedings against real and personal property in a single action.

(9)

A security interest does not merge merely because a secured party has reduced his claim to judgement.

54. Receivers and receiver-managers

(1)

A security agreement may provide for the appointment of a receiver or a receiver-manager and, except as provided in this Act, prescribe his rights and duties.

(2)

Upon the application of any person entitled to make an application under section 61, and after notice has been given to any person that the Supreme Court directs, the Supreme Court may

(a) appoint a receiver or receiver-manager,

(b) remove, replace or discharge a receiver or receiver-manager whether appointed by a court or pursuant to a security agreement,

(d) approve the accounts and fix the remuneration of a receiver or receiver-manager, and

(e) make any order it thinks fit in the exercise of its jurisdiction over receivers and receiver-managers.

(3)

Notwithstanding any other Act, and except as otherwise ordered by the Supreme Court, a receiver or receiver-manager appointed under a security agreement has the rights of a secured party under this Part and shall comply with this Part and section 16 as if he were a secured party.

(4)

Unless the Supreme Court orders otherwise,

(a) a receiver-manager is only required to comply with section 16 and sections 55 to 58 when he disposes of collateral otherwise than in the course of carrying on the business of the debtor, and

(b) sections 59 and 60 do not apply whenever a receiver or receiver-manager has been appointed.

55. Collection rights of secured party

(1)

Where so agreed and in any event upon default under a security agreement, a secured party is entitled

(a) to notify any debtor on an intangible or chattel paper or any obligor on an instrument to make payment to him whether or not the assignor was theretofore making collections on the collateral, and

(b) to take control of any proceeds to which he is entitled under section 26.

(2)

A secured party who by agreement is entitled to charge back uncollected collateral or otherwise to full or limited recourse against the debtor and who undertakes to collect from the debtors on intangibles or chattel paper or obligors on instruments may deduct his reasonable expenses of realization from the collections.

56. Seizure on default

Subject to sections 35 and 36, upon default under a security agreement,

(a) the secured party has, unless otherwise agreed, the right to take possession of the collateral by any method permitted by law,

(b) if the collateral is equipment and the security interest is perfected by registration, the secured party may render such equipment unusable without removal thereof from the debtor´s premises, and the secured party shall thereupon be deemed to have taken possession of such equipment, and

57. Disposal of collateral

(1)

Upon default under a security agreement, the secured party may dispose of any of the collateral in its condition either before or after any repair, processing or preparation for disposition, and the proceeds of the disposition shall be applied consecutively to

(a) the reasonable expenses of seizing, holding, repairing, processing, preparing for disposition and disposing of the collateral and any other reasonable expenses incurred by the secured party, and

(b) the satisfaction of the obligation secured by the security interest of the party making the disposition.

(2)

Collateral may be disposed of

(a) by public or private sale at any time of day or place,

(b) as a whole or in commercial units or parts, or

(3)

The secured party may delay disposition of the collateral in whole or in part for such period of time as is commercially reasonable.

(4)

Not less than 20 days prior to disposition of the collateral, the secured party shall serve a notice on

(a) the debtor or any other person who is known by the secured party to be the owner of the collateral,

(b) any creditor or person with a security interest in the collateral whose interest is subordinate to that of the secured party and who has registered a financing statement indexed in the name of the debtor or according to the serial number of the collateral, when it is permitted by the regulations for registration, and

(c) any other person with an interest in the collateral who has delivered a written notice to the secured party of his interest in the collateral prior to the date of the service of the notice of the debtor.

(5)

The notice mentioned in subsection (4) shall contain

(a) a description of the collateral sufficient to enable it to be identified,

(b) a statement as to the amount required to satisfy the obligation secured by the security interest,

(c) a statement as to the sums actually in arrears, exclusive of the operation of any acceleration clause in the security agreement, and a brief description of any other provision of the security agreement for the breach of which the secured party intends to dispose of the collateral,

(d) a statement as to the amount of the applicable expenses referred to in paragraph (1)(a) or, in a case where the amount of such expenses has not been determined, a reasonable estimate,

(e) a statement, where applicable, that upon payment of the amounts due under paragraphs (b) and (d) the debtor or other person may redeem the collateral,

(f) a statement, where applicable, that upon payment of the sums actually in arrears or the curing of any other default, as the case may be, together with the amounts due under paragraph (1)(a), the debtor may reinstate the security agreement,

(g) a statement that unless the collateral is redeemed or the security agreement is reinstated the collateral will be disposed of and the debtor may be liable for any deficiency, and

(h) a statement as to the date, time and place of any public sale, or the date after which any private disposition of the collateral is to be made.

(6)

A notice under subsection (4) given by a receiver or receiver-manager need contain only

(a) a description of the collateral by type or kind, and

(b) a statement as to the date, time and place of any public sale, or the date after which any private disposition of the collateral is to be made.

(7)

Where the notice required in subsection (4) is served on any person other than the debtor, it need not contain the information specified in paragraphs (5)(c), (f) and (g), and where the debtor is not entitled to reinstate the security agreement, the notice to the debtor need not contain the information specified in paragraphs (5)(c) and (f).

(8)

No statement mentioned in paragraph (5)(g) shall make reference to any liability on the part of the debtor to pay a deficiency if under any Act or rule of law the secured party does not have the right to collect a deficiency from the debtor.

(9)

The secured party may purchase the collateral or any part thereof only at a public sale and only for a price that bears a reasonable relationship to market value.

(10)

When a secured party disposes of collateral by sale to a bona fide purchaser for value who takes possession of it, the purchaser acquires the collateral free from the interests of the debtor and from any interest subordinate to that of the secured party, whether or not the requirements of this section have been complied with by the secured party, and all obligations secured by such subordinate interests are deemed to be performed for the purposes of section 50.

(11)

A person who is liable to a secured party under a guarantee, endorsement, covenant, repurchase agreement, or the like and who receives a transfer of collateral from the secured party or is subrogated to his rights has thereafter the rights and duties of the secured party, and such a transfer of collateral is not a disposition of the collateral.

(12)

The notice mentioned in subsection (4) is not required where

(a) the collateral is perishable,

(b) the collateral will decline substantially in value if not disposed of immediately after default,

(d) due to market conditions, a delay in disposing of the collateral would likely reduce the amount recovered from its disposition,

(e) for any other reason, a judge of the Supreme Court, on ex parte application, is satisfied that a notice is not required, or

(f) after default, every person entitled to receive a notice of disposition under subsection (4) consents in writing to the immediate disposition of the collateral.

(13)

The notice required in subsection (4) may be served in accordance with subsection 65(1), or in the case of a person who has registered a financing statement, by registered mail addressed to his post office address as it appears on the statement or on the security agreement.

58. Surplus or deficiency

(1)

Where a security agreement secures an indebtedness and the secured party has dealt with the collateral under section 55 or has disposed of it in accordance with section 57 or otherwise, he shall account for and pay over any surplus consecutively to

(a) any person who has a subordinate security interest in the collateral who registers a financing statement indexed in the name of the debtor or according to the serial number of the collateral, when it is permitted by the regulations for registration, prior to the distribution of the proceeds,

(b) any other person who has an interest in the surplus, if that person has delivered a written demand for it to the secured party prior to distribution of the proceeds, and

(2)

The secured party is relieved from liability in respect of any sums paid by him in accordance with subsection (1).

(3)

The secured party may request a person who has a subordinate security interest or a person who has delivered a written demand to furnish him with proof of that person´s interest, and unless the person furnishes such proof within ten days after the secured party‘s demand, the secured party need not pay over any portion of the surplus to him.

(4)

Unless otherwise agreed, or unless otherwise provided in any Act, the debtor is liable for any deficiency.

(5)

If the security interest secures an indebtedness, the secured party shall, if requested in writing by the debtor or any other person with an interest in the collateral, provide a statement of the results of any dealing with the collateral under section 55 or 56 or a disposition of the collateral under section 57 or otherwise.

(6)

For each statement under subsection (5), the secured party may require payment of the prescribed charges in advance, but the debtor is entitled to a statement without charge.

59. Retention by secured party

(1)

After default, the secured party in possession of the collateral may propose to retain the collateral in satisfaction of the obligations secured, and shall serve a notice of the proposal on

(a) the debtor or any other person who is known by the secured party to be the owner of the collateral,

(2)

If any person who is entitled to notice under subsection (1), and whose interest in the collateral would be adversely affected by the secured party´s proposal, delivers to the secured party a written objection within 15 days after service of the notice, the secured party shall dispose of the collateral under section 57.

(3)

If no objection is made, the secured party in possession is, at the expiration of the 15 day period or periods mentioned in subsection (2), deemed to have elected irrevocably to retain the collateral in full satisfaction of the obligations secured, and thereafter is entitled to hold or dispose of the collateral free from all rights and interests therein of

(a) any person entitled to notice under paragraph (1)(b) who has been served with such notice, and

(b) any person entitled to notice under paragraph (1)(a) or (c) whose interest is subordinate to that of the secured party and who has been served with such notice.

(4)

The secured party may require any person who has made an objection to his proposal to furnish him with proof of that person‘s interest in the collateral and, unless the person furnishes proof within ten days of the secured party´s demand, the secured party may proceed as if he had received no objection from such person.

(5)

Upon application by a secured party, and after notice to all persons affected, a judge may determine that an objection to the proposal of a secured party is ineffective on the ground that

(a) the person made the objection for a purpose other than the protection of his interest in the collateral or the proceeds of a disposition of the collateral, or

(b) the market value of the collateral is less than the total amount owing to the secured party and the costs of the disposition.

(6)

When a secured party in possession disposes of collateral to a bona fide purchaser for value who takes possession of it, the purchaser acquires the collateral free from any interest subordinate to that of the secured party, whether or not the requirements of this section have been complied with by the secured party, and all obligations secured by such subordinate interests are deemed to be performed for the purposes of section 50.

(7)

The notice required under subsection (1) may be served in accordance with subsection 65(1) or, in the case of service on a person who has registered a financing statement, by registered mail addressed to his post office address as it appears on the statement or the security agreement.

60. Redemption and reinstatement

(1)

Unless he has after default otherwise agreed in writing,

(a) any person entitled to receive a notice under subsection 57(4) may redeem the collateral by tendering fulfillment of all obligations secured by the collateral, or

(b) the debtor may reinstate the security agreement by paying the sums actually in arrears, exclusive of the operation of any acceleration clause, or by curing any other default by reason whereof the secured party has taken possession of the collateral,

upon payment of a sum equal to the reasonable expenses incurred by the secured party in retaking, holding, repairing, processing, preparing the collateral for disposition and arranging for its disposition, and any other reasonable expenses incurred by the secured party.

(2)

A security agreement may be reinstated only once in its life, and then only if the payment terms under the agreement are less than six months in arrears.

(3)

Redemption under paragraph (1)(a) or reinstatement under paragraph (1)(b) may occur at any time before the secured party

(a) has disposed of the collateral,

(b) has contracted for such disposition under section 57, or

61. Non-compliance by secured party

Upon application by a debtor, a creditor of a debtor, a secured party, any person who has an interest in collateral that may be affected by an order under this section or a receiver or a receiver-manager, whether appointed by a court or pursuant to a security agreement, and after notice has been given to any person that the Supreme Court directs, the Supreme Court may

(a) make any order, including binding declarations of right and injunctive relief, that is necessary to ensure compliance with this Part or section 16,

(b) give directions to any party regarding the exercise of his rights or discharge of his obligations under this Part or section 16,

(c) relieve any party from compliance with the requirement of this Part or section 16, but only on terms that are just and reasonable for all parties concerned,

(d) stay enforcement of rights provided in this Part, section 16 or the security agreement on such terms as the Supreme Court considers just and reasonable,

(e) make any order necessary to ensure protection of the interests of any person in the collateral, or

(f) make an order requiring a receiver or receiver-manager, or a person by or on behalf of whom he is appointed, to make good any default in connection with the receiver‘s or receiver-manager´s custody, management or disposition of the collateral of the debtor or to relieve such person from any default on such terms as the Supreme Court thinks fit, and to confirm any act of the receiver or receiver-manager.

PART 6 — Miscellaneous

62. Exercise of rights and duties

(1)

All rights, duties or obligations arising under a security agreement, under this Act or under any other applicable law, shall be exercised in good faith and in a commercially reasonable manner.

(2)

Where a person fails to discharge any duties or obligations imposed upon him by this Act, any person has a right to recover loss or damage that he suffered and that was reasonably foreseeable as liable to result from such failure.

(3)

Except as otherwise provided in this Act, any provision in any agreement that purports to exclude any duty imposed on a person under this Act or to exclude or limit the liability of a person for failure to discharge duties imposed upon him by this Act is void.

(4)

In assessing damages under this Act, the Supreme Court may consider as a mitigating factor evidence that the defendant employed reasonable diligence and took all reasonable precautions to discharge the duties imposed upon him by this Act.

63. Other laws

(1)

The principles of law and equity, including the law merchant, the law relating to capacity to contract principal and agent, estoppel, fraud, misrepresentation, duress, coercion and mistake, and other validating or invalidating rules of law, supplement this Act and continue to apply.

(2)

Except as provided by this or any other Act a security agreement is effective according to its terms.

64. Minor defects and Rules of Court

(1)

The validity or effectiveness of a document to which this Act applies is not affected by reason of a defect, irregularity, omission or error in the document or in the execution or registration of the document unless the defect, irregularity, omission or error is seriously misleading

(2)

Failure to provide a description required by this Act in relation to any type of collateral in a document does not affect the validity or effectiveness of the document as it relates to other collateral.

(3)

Unless otherwise provided by this Act or the regulations, the Rules of Court apply to proceedings under this Act.

65. Service of documents

(1)

Where under this Act a notice or any other written matter may be or is required to be served, it may be served on

(a) an individual, by personal service or by registered or certified mail addressed to him at his residence or place of business and, if he has more than one place of business, at any one of his places of business,

(b) a partnership,

(i) by personal service upon any one or more of the general partners or any person having, at the time of service, control or management of the partnership business at the principal place of business of the partnership within the Yukon, or

(ii) by registered or certified mail mailed to the post office address of the principal place of business of the partnership within the Yukon and addressed to the partnership, to any one or more of the general partners, or to any person having control or management of the partnership business at that place of business at the time of service,

(c) a body corporate, by delivery to the registered office of the body corporate or by registered or certified mail addressed to the body corporate at its registered office, and

(d) an extra-territorial body corporate, by delivery to the attorney for the body corporate appointed under section 278 or 286 of the Business Corporations Act, or section 44 of the Societies Act, or by registered or certified mail addressed to the body corporate at the address of such attorney.

(2)

Service by registered or certified mail is effected when the addressee actually receives a notice or any other written matter, or upon the expiry of four days after the day of mailing, whichever is earlier.

(3)

For the purposes of this Act, a person knows or has notice when,

(a) in the case of an individual, information comes to his attention under circumstances in which a reasonable person would take cognizance of it,

(b) in the case of a partnership, information has come to the attention of one or more of the partners or of a person having control or management of the partnership business under circumstances in which a reasonable person would take cognizance of it, and

(i) a managing director or officer of the corporation, or

(ii) a senior employee of the corporation with responsibility for matters to which the information relates,

under the circumstances in which a reasonable person would take cognizance of it, or the information in writing has been delivered to the registered office of the body corporate or attorney for an extra-provincial body corporate appointed under section 278 or 286 of the Business Corporations Act or section 44 of the Societies Act.

(4)

Where a notice or any other written matter may be served by registered or certified mail to the post office address as it appears on a registered financing statement or security agreement and no financing statement was required to be registered and no sufficient address appears on the security agreement, the notice or other written matter shall be served in accordance with subsection (1).

66. Extension of time

Where in this Act other than sections 4, 5, 6 and 12, Part 3, Part 4 and this Part, any time is prescribed within which or before which any act or thing must be done, the Supreme Court on application may, upon such terms, conditions and notice, if any, as it may order, extend the time for doing the act or thing.

67. Regulations

The Commissioner in Executive Council may make such regulations as he deems necessary

(a) prescribing the duties of the registrar;

(b) prescribing business hours for the office;

(d) requiring the payment of fees and