A banker asked us: Providing debtors with copies of Ontario PPSA verification statements

4 minute read
29 September 2016


Q: Do we still have to provide debtors with copies of Ontario PPSA[1] Financing Statements registered against them? I heard that requirement was now gone.

A: Currently secured parties must still provide those copies, but legislation is on its way to relieve that administrative burden.

Secured Parties are currently required under Section 46 of the Ontario PPSA to deliver a copy of a verification statement to a debtor within 30 days after the date of registration of a financing statement or financing change statement. The failure to deliver the required copy could result in the secured party having to pay the debtor $500 if there was no reasonable excuse for that failure.[2] The government policy behind this requirement was to keep debtors (especially individuals) fully informed of the financing statements registered against them. Other provisions of the Ontario PPSA suggested that the right to receive copies could not be waived by the debtor.[3]

However, Ontario's requirement in this regard is different from the legislation of the other eight common law provinces and two of the three territories. The personal property security act in each of those other jurisdictions expressly permits debtors to waive in writing their right to receive a copy of each financing statement or verification statement. The remaining territory (Yukon) simply does not require the delivery of a copy of a verification statement.

Perhaps in recognition of the fact that its position is different from that in the rest of the country, the Ontario Government recently introduced Bill 218 aptly called the Burden Reduction Act, 2016. Subsection 7(2) of Schedule 12 to that omnibus Bill amends the Ontario PPSA by adding a new Subsection 46(6.1) which provides that:

"(6.1) A copy of a verification statement is not required if the debtor has waived in writing the right to receive a copy."

So secured parties will soon be able to add such waiver clauses to their general security agreements (if they are not already there) to relieve themselves of the administrative burden of providing copies to all debtors of all filings made.

Bill 218 received first reading on June 8, 2016 and still has to work its way through the legislature to ultimately receive Royal Assent and be proclaimed in force. When it does, it will be a welcome change to the documentary obligations of secured parties. It will not, however, have any retroactive effect, and the waiver shall only be available in respect of Ontario PPSA registrations made after Subsection 7(2) of Schedule 12 of Bill 218 comes into force.

* The author acknowledges the assistance of Travis Evens, Articling Student, and Emily Dies, Summer Law Student, with the research for and preparation of this article.

[1] Personal Property Security Act, RSO 1990, c P.10 [Ontario PPSA].

[2] Ontario PPSA, Section 46(7).

[3] Ontario PPSA, Section 67(3) states that any provision in any security agreement which purports to exclude any duty or obligation imposed under this Act or to exclude or limit liability for failure to discharge duties or obligations imposed by this Act is void.

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