Disputes Under The PPSA
Disputes under the Personal Property Security Act (PPSA) commonly arise in the context of priority conflicts between secured creditors, enforcement of security interests, or compliance with statutory obligations. Because secured transactions often involve multiple lenders, borrowers, and third parties, disagreements are inevitable. The PPSA provides a comprehensive framework to resolve these disputes, including recourse to the Superior Court of Justice, which has broad remedial powers to enforce compliance and determine rights in collateral.
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1. Priority Conflicts Between Secured Creditors: Priority disputes are among the most frequent PPSA conflicts. The Act resolves these issues through the rules of perfection and temporal priority, primarily outlined in section 35(1).
2. Perfected vs. Unperfected Interests: A perfected security interest generally has priority over an unperfected one.
3. Third-Party Rights: Certain third parties—such as trustees in bankruptcy or bona fide transferees for value without notice—may rank ahead of unperfected security interests under sections 20(2) and 20(3).
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When disputes escalate, section 67 of the PPSA empowers the Superior Court of Justice to grant a wide range of remedies. Parties eligible to apply include debtors, secured parties, creditors, or anyone with an interest in the collateral. The Court may issue:
Declarations of rights between competing parties
Injunctive relief to stop improper enforcement
Directions for compliance with statutory duties
Determinations of priority or entitlement to collateral or proceeds
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The PPSA provides secured parties with enforcement rights, but these are balanced with debtor protections.
Disposition of Collateral (s. 63): Creditors may seize and sell collateral upon default, provided proper notice is given to debtors and other secured parties.
Right of Redemption (s. 66): Debtors and other entitled parties can redeem collateral by paying secured obligations and associated costs. Redemption rights are prioritized according to the ranking of security interests.
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Disputes also arise when a secured party refuses or fails to discharge a security interest after obligations are satisfied. Under subsection 56(5), the Superior Court can order amendments to the registration system to ensure financing statements are corrected or discharged.
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It is important to note that PPSA disputes cannot be heard in Small Claims Court. All disputes, regardless of dollar value, fall under the exclusive jurisdiction of the Superior Court of Justice, as confirmed in Royal Bank of Canada v. Singh, [2022] O.J. No. 6142.
Why Choose Haider Khan Legal?
At Haider Khan Legal P.C., we assist clients with all forms of PPSA disputes, including:
Creditors: Enforcing secured rights, seizing collateral, and defending against challenges to priority.
Debtors: Contesting improper enforcement, seeking injunctive relief, and exercising redemption rights.
Businesses: Resolving multi-party disputes involving banks, lessors, and private lenders.
Litigation: Bringing or defending PPSA applications before the Superior Court of Justice
PPSA disputes are complex and often high-stakes, involving questions of creditor rights, debtor protections, and the integrity of Ontario’s registration system. Whether you are a creditor seeking to enforce a security interest or a debtor challenging improper enforcement, our firm provides strategic representation and practical solutions.
Contact us today to discuss your PPSA dispute and protect your financial and legal interests.
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