Late in 2018, the Saskatchewan Legislature introduced Bill 151, which amends The Personal Property Security Act, 1993 (Saskatchewan) (the PPSA). To inform you about the upcoming changes and how they may impact you, our Saskatchewan Financial Services team has been tracking the progress of Bill 151 and have brought you a number of posts that discuss the amendments.
To follow our posts, you need only to go to one place, this Financial Services & Insolvency Communiqué, which includes broad descriptions of various aspects of the amendments and links to all of our posts covering many of the amendments in detail – we have been updating it with new links and status reports on the progress of Bill 151 on an ongoing basis.
Status of Bill 151
Bill 151 has now been passed into law. On March 11, 2019, it was considered by the Standing Committee on Intergovernmental Affairs and Justice (the Committee), though debate was quite brief. The Committee made some housekeeping amendments and corrections, and then Bill 151 passed Third Reading on March 12, 2019.
While Bill 151 is now law, that does not mean that the amendments are yet in effect. The next step is for Cabinet to give it Royal Assent, and assign a date on which the amendments will come into force. As of March 14, 2019, that had not yet occurred. We also do not know whether any new or amended Regulations will be introduced though it appears that the nature of the amendments are such that they could come into force without new Regulations.
Amendments Made by the Standing Committee
The amendments from what had been introduced in late 2018 fall into two categories:
- As we had noted in a post concerning implementation of the changes to the conflicts of laws rules, there appeared to be an error in Bill 151 in what would be the new section 7.2(1)(d). That error has been corrected as we had anticipated, such that section 7.2(1)(d) will read as follows:
(d) 'prior security interest' means a security interest, other than a security interest mentioned in section 7.1, that arises pursuant to a prior security agreement.
- The definition of "licence" was amended. The original definition in Bill 151 was as follows:
(z) 'licence' means a right, whether or not exclusive:
(i) to manufacture, produce, sell, transport or otherwise deal with personal property;
(ii) to provide services; or
(iii) to acquire personal property;
that is transferrable by the licensee, with or without restriction, or the consent of the licensor, and includes a licence that is subject to cancellation and reissuance by the licensor to another party at the request of either the licensee or the secured party;
The amendments made in Committee deleted the emphasized words. No explanation was provided in the Committee's debate as to the reason for the change. The original language mirrored that proposed by a working group of the Canadian Conference on Personal Property Security Law (CCPPSL), so it is somewhat surprising. It is also surprising because the deleted language already existed in the PPSA's definition of "licence".
In the CCPPSL's 2017 report, the authors note that "A statutory licence falls outside the definition unless it is transferable. It follows that, if the governing statute absolutely prohibits transfers, the licence is not personal property to which the PPSA applies."
Presumably, the rationale was to broaden the definition by eliminating the carve-out of licences that would not be transferable but for the licensor's consent. The effect seems to be that if a licence is not transferable without consent of the licensor, it still will be treated as personal property under the PPSA, in respect of which it will be possible to grant and take security.
More Analysis to Come
We still have several more Communiqué posts to come on the PPSA amendments. Those posts will cover some of the areas for which we have not yet provided more detailed analysis, and will address areas of significance for lenders and their processes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
