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Bank of Montreal V Innovation Credit Union


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Bank of Montreal V Innovation Credit Union


The case involved the balancing of unregistered security interests of creditors against the security interests that emanate from the chartered bank under the Bank Act.

In October 1991, a farmer in Saskatchewan, James Buist, took a loan from the Innovation Credit Union. He provided his present personal property as well as after-acquired properties as security interest to the credit union. This was to be governed by the Personal Property Security Act (Saskatchewan). Notably, the security was not accounted for in the PPSA registry until 2004.

The farmer took another loan from the Bank of Montreal and several agreements on the security were effected between 1998 and 2004. However, he did not disclose to the bank the previous dealings with the credit union and by the fact that there was no records made about it by the Bank Act or the PPSA. The registration of the Bank’s security interest was done under the PPSA and the Bank Act. However, the PPSA does not allow registration of parallel interests in its registration.

In 2004, Buist became insolvent and this prompted the bank to seize some of his assets covered by its security. The credit union filed a course of action claiming that it deserved priority in the proceeds of the disposition of the assets over the Bank.

Bank of Montreal V Innovation Credit Union


Was a security registered under the Bank Act able to defeat an unregistered security interest operating under the PPSA (a provincial legislation)?



The appellant (the Bank of Montreal) sought exclusive prioritization of the claim of the proceeds of disposition of Buist’s property. The appellant stated that the Bank Act expressly gave them priority over any prior security interests. They argued that they were the legally recognized parties contracted to the farmer. As a matter of fact, the bank sited s.10 (1)(d) of the PPSA stating that “the principle requirement in a situation such as this, where collateral is tangible equipment, as in line with this………………………..

Bank of Montreal V Innovation Credit Union