The respondent leased a car to a company, which in turn leased it to an employee.
The employee made an assignment in bankruptcy.
The respondent had not registered its security interest under the Personal Property Security Act (PPSA), leaving it unperfected.
The trustee in bankruptcy claimed the proceeds of the sale of the vehicle, arguing that under s. 20(b)(i) of the PPSA, an unperfected security interest is ineffective against a trustee in bankruptcy.
The Supreme Court of Canada agreed, holding that the bankrupt's right to use and possession of the car constituted property that passed to the trustee under the Bankruptcy and Insolvency Act, and the unperfected security interest was subordinate to the trustee's interest.
