The Nova Scotia Registrar in Bankruptcy issued the decision Rizzato (Re), 2020 NSSC 63, on April 24, 2020 which held that if a searcher searches the correct name of the debtor and a registration comes up as a “close match” then the “seriously misleading” analysis must occur and if a reasonable person would make further inquiries, then the registration may still be valid despite an error in the name. That decision distinguishes Robie Financial Inc. v. PricewaterhouseCoopers Inc., 2009 NSSC 397.
In Robie Financial Inc., the Registrar held that there is a dual search requirement. Both the serial number and proper name (first, middle, last) of the debtor must be correct or the registration is seriously misleading and, therefore, invalid. The serial number was correct, but the middle name was omitted. The search was invalid. This decision was in keeping with the New Brunswick Court of Appeal decision in GMAC Leasco Ltd. v. Moncton Motor Home & Sales Inc. (Trustee of), 2003 NBCA 26.
The Registrar did leave the “door open” to a Rizzato (Re) factual scenario when he stated: “As there were no near matches, I do not have to consider what a searcher is expected to do with near matches. The point is that a search of the proper name does not find any registrations.”
Despite the holding in Rizzato (Re), we still recommend that a Lender obtain a birth certificate or passport from the debtor and continue to register the first name, middle name and last name of the debtor together with the serial number as both registrations must be correct per the Personal Property Security Act, Robie Financial Inc. and GMAC Leasco Ltd. The holding Rizzato (Re) should only be relied on if the facts of any disallowance are on “all fours” with it.
As indicated at the outset Rizzato (Re) is a Nova Scotia decision, which has not been judicially considered in New Brunswick, Newfoundland and Labrador and Prince Edward Island.
At this time, in New Brunswick a lender must adhere to the strict requirements of the dual registration of name and serial number being correct per GMAC Leasco Ltd.
At this time, in Newfoundland and Labrador a lender must adhere to the strict requirements of the dual registration of name and serial number being correct per Hoskins, (Re), 2014 NLTD(G) 12.
At this time, in Prince Edward Island a search of the correct name revealed the incorrect registration, but the court found this was not “seriously misleading” in PEI Lending Agency v. Island Petroleum Products Ltd., (1999), 185 Nfld & P.E.I.R. 78 (TD).
I caution that this decision was issued prior to the decision of GMAC Leasco Ltd. and the progeny that follow it. As such, I would still recommend a Lender continue to register the first name, middle name and last name of the debtor together with the serial number as both registrations must be correct.
I would be pleased to answer any questions you may have as a result of Rizzuto (Re) and whether a disallowance by a Trustee in Bankruptcy on the basis the registration is a serious misleading error could be successfully appealed.