A banker asked us: Source documents for Ontario PPSA registrations against individuals

By Richard Dusome and *Paula Millar

Q:  I need to make an Ontario PPSA¹ registration against my borrower who is an individual.  To evidence his name, he has provided me with his Driver’s Licence but does not have his birth certificate with him.  Can I use the information as to his name and birth date on his Driver’s Licence to make a PPSA registration against him in respect to the security documents he is executing and delivering, or do I need to obtain other documentation from him?

A:  When a secured party is making a PPSA registration against a debtor who is an individual, the Ontario PPSA requires the secured party to include the first given name, the initial of the second given name and the surname of the individual debtor, as well as the individual’s date of birth on the financing statement.  However, the Ontario PPSA does not specify the source document which the secured party should use to identify those names and the birthdate.  Although the Ontario Government issued a registration guide which gave some insight, the guide did not have the force of law and included a caution that registrants should consult their lawyers to determine the correct name for registration purposes.² 

The courts and the PPSA legislation in other provinces offer secured parties some guidance on the completion of these types of registrations.

In Haasen³, an Ontario court found a security interest invalid in light of a discrepancy between the debtor’s name listed on the financing statement and that found on his source document. While the PPSA registration showed the debtor’s name as “Dominic J. Haasen”, the name on the debtor’s birth certificate appeared as “Dominicus Henricus Johan Haasen.” The court advised the debtor’s correct name for registration purposes was that listed on his birth certificate, as there was no evidence the bankrupt had changed his name pursuant to the Change of Name Act or by common law means.

In Melnitzer⁴, a financing statement was registered in the debtor’s name as it appeared on his Canadian citizenship certificate – “Herman J. Melnitzer.” However, the debtor’s name was spelled with an extra “n” on his German birth certificate. Nonetheless, an Ontario court reasoned that it is “practical and rational” to look to Canadian citizenship documents to confirm the name and birthdate of a foreign-born debtor as opposed to an original birth certificate.

The takeaway from these cases is that an Ontario secured party should confirm the name and birth date of a Canadian born debtor by way of a birth certificate or change of name certificate, and should look to Canadian citizenship documents to confirm the name and birth date of a foreign-born debtor.

It is interesting to note that some provinces (e.g., Alberta and Newfoundland) have elaborate regulations stipulating the source documents to be used for different types of individuals born in Canada and abroad, citizens and non-citizens.  Those provinces require the registrant to use birth certificates and passports as being the most reliable source documents.  An individual’s driver’s licence is far down the list, and is only acceptable where none of the more reliable documents have been issued (as opposed to the debtor not having them handy to present to the secured party).  Other provinces (e.g., BC) are silent as to the source documents just like Ontario.

Overall, the birth certificate/change of name certificate, Canadian citizenship certificate or passport appear to be the best source documents for Ontario secured parties to use.  At the same time, secured parties should also consider asking an individual, upon receiving his or her birth certificate, whether the individual has ever changed his or her name. 

Ideally, Ontario secured parties should consider asking for two pieces of ID, one of which is the birth certificate, change of name certificate, Canadian citizenship certificate or passport. Reliance on the driver’s licence should be avoided.  If there is any uncertainty as to an individual debtor’s name, all possible alternative forms of the name should be included as “Additional Debtors” on the financing statement, which can be done at no additional cost.

*Contributions to this article were also made by Paula Millar, Articling Student at Gowling WLG's Hamilton office.