Commemorating another decade of the Ontario PPSA check-the-box system

This article was authored by Aaron Goldstein, an articling student in Gowling WLG's Hamilton office.

It is now 2017 and we can mark 10 years of the iPhone, 40 years of the Toronto Blue Jays and 25 years since the signing of the North American Free Trade Agreement. In addition to those milestones, August 1, 2017 marked the 10^th anniversary of the legislative decision to repeal and replace sections of the Ontario PPSA^[1] dealing with the check-the-box system used on financing statements to identify the collateral subject to the security interest. In an earlier edition of Fully Secured (September 2012), we provided an update on the fifth anniversary of the Ontario Government's plan to modernize the personal property register by replacing this system with narrative collateral descriptions. However, it is now five years later and the check-the-box system endures.

In 2007, certain legislative changes were made to the Ontario PPSA in anticipation of a move away from check-the-boxes toward narrative collateral descriptions on financing statements. More specifically, sections of the Ontario PPSA detailing the check-the-box classification of collateral were to be repealed and replaced. The goal at the time was to bring Ontario's registration process more in line with those in the other provinces. Before the narrative collateral descriptions could be implemented however, the Ministry of Government and Consumer Services needed to update its Ontario PPSA computer search and registration system. Thus the implementation had to be deferred. The deferral was initially expected to be two years, but two years soon rolled into five years, and now into ten years. The cost of such a significant computer system overhaul across the province has probably contributed to the delay.

We have recently consulted with Ministry officials who have informed us that the Ministry has no immediate plans to move forward with the intended replacement of the current check-the-box system with a narrative collateral description. There continues to be no definitive timeline for the change, and it was not included in Ontario Bill 154^[2], the most recent "Red Tape Reduction" legislation, which passed first reading on September 14, 2017. While this does not explicitly preclude such a change from occurring in the future, it seems that the check-the-box system is primed to endure at least a little while longer.