In an earlier edition of Fully Secured (September 2015; Volume 6, No. 3)1, we reported on the D’Eon Fisheries2 case, where the motions judge determined that the security interest of a secured party in a Nova Scotia fishing quota was not perfected by a NS PPSA3 financing statement that only referenced in its collateral description the Nova Scotia fishing license pursuant to which that quota related, without actually using the word “quota” itself.

D’Eon Fisheries involved a dispute between a number of secured lenders that were claiming prior interests in the quota allotted to the debtor company, D’Eon Fisheries Limited (“D’Eon”) in the total allowable catch of silver hake on the East Coast pursuant to a federally issued fishing licence. D’Eon’s security agreements with the Province of Nova Scotia (“Province”) and Nova Scotia Business Incorporated (“NSBI”) clearly referenced D’Eon’s quota allocation as forming part of the collateral. The registrations under the NS PPSA filed by the Province and NSBI, however, were not as clear and referred to D’Eon’s rights and interests under its fishing licence as well as the books, records and documents related to that licence.4 Neither the Province nor NSBI held a general “all present and after-acquired personal property” registration that would have extended to quota.

Lower Court Decision

On a motion before the Nova Scotia Supreme Court in Bankruptcy and Insolvency, the Province and NSBI had argued that, due to the legal relationship between the licence and the quota and the standard commercial practice that treated quotas and licences as inseparable items for the purposes of transferring such rights, the licence and the quota were of the same type such that a reference to the licence in their registrations included and gave notice of their security interest in D’Eon’s quota. However, the motions judge disagreed with the Province and NSBI and held that the evidence did not support the conclusion that the quota was so “inextricably linked” to the licence that a reference to one amounted to a collateral description of both. The quota and the licence were administered under distinct regulatory regimes and were capable of being transferred separately. The reference to the licence in the registration could not, in the Court’s view, be read as a general term encompassing the quota entitlements.5 If a secured party wished to perfect a security interest in “quota”, the motions judge indicated that term should have been included in the financing statement.


The Province and NSBI appealed and found a more receptive audience for their position with the Nova Scotia Court of Appeal.6 The appellate court focussed on the questions as to what is captured within the meaning of the term “fishing licence” under the Fisheries Act7 and whether it included quota, and based upon that determination, whether a reference to a “fishing licence” in a financing statement registered under the NS PPSA was sufficient to capture both the licence and the quota.8

Justice Scanlan chose to answer these questions by referring to the applicable Fisheries Regulations9, rather than focussing on whether a commercial market existed for quota. He noted that the Fisheries Regulations do not use the word “quota” and that it is the conditions of the licence that set limits or restrictions on the amount of fish that can be caught under the licence. Justice Scanlan determined that the quota was simply a part of the variable terms and conditions of the licence, noting that the Federal Department of Fisheries and Oceans licence transfer process did not contemplate a separate concept of quota.10

In the end result, the appellate court was satisfied that the reference to “all of the debtor’s right, title and interest of every kind which the debtor has in, to or under … ground fish license #304715” in the financing statement was sufficient to include the quota as it existed at the time the security was given and to perfect the security interest in on the quota.11

In many instances, secured creditors will have a general security agreement supported by a general “all present and after-acquired personal property” registration which will clearly cover both the quota and the licence. Despite the appellate court’s decision, secured creditors taking specific or limited security may wish to still specifically reference both the licence and the quota in both their security agreement and their financing statement. There is no guarantee that another court examining another commodity licence and quota under other legislation would find the same inextricable linkage between the two as the Nova Scotia Court of Appeal did in D’Eon Fisheries.