Radius Credit Union Limited v. Royal Bank of Canada [2009] S.J. No. 148, 2009 SKCA 36, on appeal from
2007 SKQB 472

1992: Farmer Wayne Hingtgen (“Debtor”) granted a general security agreement to Radius
Credit Union Limited (“CU”) granting a security interest on all his present and after
acquired assets.

1996: Royal Bank of Canada (the”Bank”) registered its section 427 Bank Act security and
claimed “all crops growing or produced upon the farm, all products of agriculture, all
livestock and all implements.” [at para. 6]

1997: The Bank began lending to Debtor.

1998: CU makes a PPSA registration against “all property” and claimed a 1991 GMC truck
and trailer.

2005: CU added a series of serial number goods to its PPSA registration collateral description
and all livestock.

At default, the CU was owed $550,000 and the Bank $100,000. The CU seized and sold certain of the
agricultural goods all of which were after acquired property for the purposes of both the CU and the Bank.

The Chambers Judge followed the trial decision in Innovation Credit Union v. Bank of Montreal and held in
favour of the Bank.

The Court of Appeal disagreed and held in favour of the CU on the basis of:

  1. the Court followed the decision in Bank of Montreal v. Pulsar Ventures Inc. [1988] 1 W.W.R. 250 (Sask CA) which held that for after acquired property the rule of priority as
    between federally and provincially created security interests was to apply the first in time
    principal, giving priority to the first to obtain a security agreement;
  2. while the Pulsar case dealt with two perfected and registered interests, the same rule applies
    here where the CU did not perfect until after the Bank Act security was completed;
  3. by s. 12 of the PPSA, the CU had an attached security interest when the security
    agreement was signed and value given. By s. 13 of the PPSA, the attached security
    interest extends to after acquired collateral;
  4. the time of vesting in the Bank of after acquired goods is less clear as to whether s. 427(2)
    means at the time the security agreement is signed or the time the Debtor becomes the
    owner of each item of collateral. After an analysis of case law, the Court of Appeal held
    that Bank Act security attaches to after acquired property when the Debtor acquires rights
    in the collateral;
  5. in this case the Debtor acquired rights in the disputed goods when he purchased them and
    attachment of both the Bank Act security and PPSA security occurred simultaneously;
  6. the Bank Act has no priority rule for competing interests in after acquired property. Where
    the federal law is silent, the applicable law must be provincial law of Saskatchewan. As
    held in the Innovation Credit Union case the PPSA of Saskatchewan priority rules do not
    apply to resolve a PPSA – Bank Act dispute. Hence, the Court must look to the common
    law and rules of equity;
  7. the Court analyzed various cases and authors and its own ruling in Innovation Credit
    Union and applied the first in time execution of the security agreement;
  8. the Court did further analysis and rejected the first in time to register argument.