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SECURED TRANSACTION - Description of collateral

Tuesday, September 03, 2019 @ 10:04 AM  

Lexis Advance® Quicklaw®
Appeal by Coleman Management from a decision finding that the respondent Prestige’s interest in the collateral ranked in priority to that of Coleman. Prestige undertook to build and supply camp trailers for a road construction project for 827 Inc. When 827 failed to make the payments required under the asset purchase agreement, Prestige gave notice of its intention to enforce its security against the collateral described as the “Camp Assets”. Coleman had also entered into a security agreement with 827, claiming an interest in various assets, including the Camp Assets in which Prestige claimed a security interest.

HELD: Appeal dismissed. The applications judge did not err in concluding that Prestige’s description of the collateral was adequate for the purpose of enforcing the security interest in priority to that of Coleman. The security agreement provided for a security interest in the Camp Assets which was a defined term that identified the collateral intended to be included and for which priority was claimed. There was nothing in s. 11 of the Personal Property Security Act (PPSA) to preclude description of the collateral by item or kind, or to require the inclusion of the word goods or some other category, if the collateral was described by item or kind. To permit description, where appropriate, by item, by kind, or by category would be consistent with the stated objective of achieving harmony in the legislation throughout the country. The applications judge also did not err in concluding that the discrepancies in the dates in the documentation did not affect the security interest for purposes of enforcement pursuant to s. 11 of the PPSA. There was a signed security agreement describing the collateral which was intended to secure the debt owed pursuant to the promissory note and the asset purchase agreement. This was sufficient to satisfy the requirements of s. 11 of the PPSA for purposes of enforcing the security interest against Coleman.

Coleman Management Services Ltd. v. M.M.H. Prestige Homes Inc., [2019] N.J. No. 221, Newfoundland and Labrador Court of Appeal, B.G. Welsh, C.W. White and F.P. O'Brien JJ.A., July 18, 2019. Digest No. TLD-September22019001