Paccar contested that its unperfected security interest in leased trucks should take priority over Royal Bank of Canada's (RBC) perfected security interest, arguing that it retained ownership under a "true lease."

Legal Context:

• PPSA (Personal Property Security Act): Ontario’s PPSA was amended in 2007 to include "true leases" of more than one year within its scope, shifting the focus from ownership to the priority of perfected security interests.
• Key Statutes:
  • PPSA: Governs security interests, including leases, emphasizing the priority of perfected interests.
  • Bankruptcy and Insolvency Act (BIA) and Courts of Justice Act (CJA): Relevant for the appointment of a receiver and enforcement of security interests.

Court's Analysis:

• Failure to Perfect Security Interest: Paccar did not perfect its interest in the trucks under the PPSA, which is necessary to maintain priority over RBC’s perfected security interest.
• Impact of 2007 PPSA Amendments: The court noted that the amendments prioritize perfected security interests over unperfected ones, even in cases of "true leases." This change displaces traditional common law concepts of ownership.
• Rejection of Paccar’s Arguments:
  • The court rejected Paccar’s claim that it should retain priority based on ownership, emphasizing that PPSA’s priority rules prevail.
  • Section 20(1) of the PPSA subordinates unperfected interests to perfected ones.
  • Section 57.1’s exclusion of true leases from Part V does not affect the priority rules under the PPSA.

Decision:

• Appeal Dismissed: The Court of Appeal upheld the lower court's ruling that RBC’s perfected security interest takes priority over Paccar’s unperfected interest, allowing the receiver to take possession and sell the trucks.
• Paccar to pay $15,000 in costs.