What Type of Security is a Vehicle, Motorcycle and a Boat Under the PPSA?

For the purposes of the PPSA, are vehicles as noted above considered consumer goods or equipment?

A court in British Columbia was required to consider this issue in the case of Summit Leasing v. Rutledge, 2025 BCSC 2142 (British Columbia Supreme Court).

The reason this classification is important to secured lenders/creditor is that the classification of the type of security can affect the rights of the secured creditor in the event of default by the borrower.

In this case, the borrower’s spouse and her company granted to a leasing company a security interest in several items of personal property. These included:

1. a vehicle;
2. two motorcycles;
3. a boat;
4. a boat trailer.

The borrower and the spouse (collectively described as the “debtors”) argued that these items ought to be considered ‘consumer goods’. In that case, the PPSA provides that a secured creditor must choose to either seize the goods or sue for the debt owing, but not both.

The British Columbia Personal Property Security Act defines “Consumer goods” as goods that are used or acquired for use primarily for personal, family or household purposes.

The secured creditor argued that the debtors had not established that the goods in question had been primarily for personal or household purposes at the time that the secured interest of the creditor attached to the goods.

The British Columbia Supreme Court noted that goods are characterized by their use of them made by the debtor and not their ‘inherent’ characteristics.

Accordingly, the court decided that the creditor could both seize the items and sue for any residual indebtedness still owing.

A key takeaway for lenders is to note that security agreements should include appropriate representations as to the applicable category of the collateral, to ensure the lender is not restricted in its remedies in enforcing its security.

Please reach out to any member of our Financial Services team if you have any questions about the use of collateral as security for a loan.  

This article is intended to be an overview of the law and is for informational purposes only. Readers are cautioned that this article does not constitute legal or professional advice and should not be relied on as such. Rather, readers should obtain specific legal advice in relation to the issues they are facing.