On December 8, 2020, a new Part V.1 was added to the Personal Property Security Act (Ontario) (the PPSA) to safeguard against vexatious registrations.1 The amendments give the registrar the power to discharge a vexatious registration or to reject a document if the result would be a vexatious registration. The amendments reduce the economic burden on debtors and secured parties as they allow a vexatious registration to be discharged without going to court. While this amendment may protect debtors from being harassed by secured parties, it also may protect secured parties from having to assume the risk of funding into a scenario where there is an old or erroneous PPSA registration against their debtor that amounts to a vexatious registration and that has yet to be correctly discharged by the prior secured party.
What is a Vexatious Registration
A “vexatious registration” is defined as the registration of a document that (a) the registrar considers to have been tendered for the purpose of annoying or harassing the person named as the debtor in the document or for any other improper purpose and (b) that has been tendered by or on behalf of a person who does not hold the security interest referred to in the document, or is claiming an interest that is not registrable under the PPSA.