Fairbanx Corp v Royal Bank of Canada, 2010 ONCA 385 (Ont CA), on appeal from 2009 CanLII 55376 (Ont SC)

Fairbanx factored accounts for the debtor, Friction Tecnology Consultants Inc. Fairbanx made its Ontario PPSA registration misspelling the name as Technology, with an “H”. Two years later, the debtor obtained a line of credit from the Bank, which correctly named the debtor in its Ontario PPSA registration.

In the bankruptcy of the debtor, the trial court held priority to the debtor’s receivables to the Bank, given Fairbanx was not perfected for misnaming the debtor in its registration.

Fairbanx appealed on the basis that section 53(1) of the Conveyancing and Law of Property Act gave it ownership of the assigned receivables. Fairbanx had given the account payees notice of the assignment in its favour.

The Court of Appeal dismissed the appeal on the basis that:

  1. section 2 of the Ontario PPSA provides that the Ontario PPSA applies to absolute assignments of accounts. Section 73 of the Ontario PPSA provides that in the event of a conflict between the Ontario PPSA and any other statute except the Consumer Protection Act, 2002, the Ontario PPSA provisions prevail; and
  2. section 46(4) of the Ontario PPSA did not save the debtor name error in the registration. That section provides an objective test as to errors in registrations and makes the error fatal where a reasonable person is likely to be misled materially by the error. This was such an error.