Recently a client was notified of liens registered under the Personal Property Security Act (“PPSA”) registered against equipment it owns.
The circumstances of the registrations are quite bizarre and very interesting. Our client was approached by individuals to purchase the equipment. The individuals attempted to use some form of doctored government document as payment. Our clients advised the so-called purchasers that there was no deal.
Several days later, our client was served with some form of “Notice of Lien” for trillions of dollars (you read that right). The PPSA registrations claim they would accept trillions of dollars of gold ounces. We are not kidding.
The PPSA registrations can be discharged by the Registrar, because on December 8, 2020 the Ontario Government amended the PPSA to give the Registrar the power to discharge a vexatious registration or to reject a document if it leads to a vexatious registration.
Section 66.1 (1) of the PPSA defines a vexatious registration as the registration of a document that (a) the registrar considers to have been tendered for the purpose of annoying or harassing the person named as the debtor in the document or for other improper purpose and (b) that has been tendered by or on behalf of a person who does not hold the security interest referred to in the document, or is claiming an interest that is not registerable under the PPSA.
The liens against our client’s equipment are vexatious registrations, because they were issued to clearly annoy or harass our client in a fraudulent manner, and the party registering the liens holds no security interest in the equipment. To proceed with a PPSA registration, a Security Agreement must exist to be able to register the Lien. A security agreement is defined in the PPSA as an agreement that creates or provides for a security interest and includes a document evidencing a security interest.
The change in allowing the registrar to discharge these liens rather than bringing court actions frees up valuable Court time for other matters, and it not only reduces the legal fees of the party named as the debtor, but the time it takes to get the lien discharged is significantly less than going to Court.
Murray Brown, Licensed Paralegal