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ARTICLE · 20 MAY 2013

The Nature And Priority Of "Bank Act" Security

Aird & Berlis LLP
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Section 427 of the "Bank Act" provides a comprehensive scheme for the giving of security over certain assets from certain types of borrowers.

CanadaFinance and Banking
Aird & Berlis LLP
Aird & Berlis LLP
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Bank Act Security

Section 427 of the Bank Act1 provides a comprehensive scheme for the giving of security over certain assets (usually inventory) from certain types of borrowers. The current scheme has existed in substantially similar form since its enactment in 1890.2 Sections 425-436 of the current Bank Act are similar to ss. 82 and 86-90 of earlier Bank Acts and ss. 177-180, 186-187 and 189 of the previous Bank Act3. This scheme was designed to facilitate the development of the natural resource industry in Canada through secured lending.4 Courts have held that ss. 425-436, and its predecessors, should be interpreted in a "fair, large and liberal" manner to "best ensure the attainment of the object of the Act."5

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