Personal Property Security Act does not apply to a transfer of interest under policy of insurance

The Personal Property Security Act (PPSA) does not apply to a transfer of interest i.e. such as a vehicle to an insurer under a policy of insurance, the Ontario Superior Court of Justice has confirmed.
In GE Canada Equipment Financing v. ING Insurance Company of Canada, GE asked the court to declare its security interests in two leased (and stolen) highway tractors to be of a greater priority than ING’s claim to the two stolen vehicles after the insurer had made a “total loss” settlement payment for the recovered vehicles.
GE financed vehicles for Brampton Leasing and Rental Inc. (“Brampton”) and retained title to the vehicles until they were fully paid for.
GE registered its interests in the vehicles under the PPSA.
Brampton leased the vehicles to third parties, under whose care the vehicles were stolen. Brampton issued a proof of loss to its insurer, ING, stating that no one other than the leasing agency and the third parties had any interest in the vehicles.
After ING made insurance payments for the “total loss” of the vehicles, the vehicles were found. ING took possession of the two vehicles, sold one of them, and remains in possession of the second.
According to GE, under the PPSA, GE was entitled to the proceeds of the sale of both vehicles.
The court disagreed, noting s. 9(1) of the PPSA includes the exception “except as otherwise provided by this or any other act, a security agreement is effectiveetc.”
One such exception, the court noted, is Statutory Condition 6(7), incorporated into every insurance policy in Ontario. That rule states that if an insurer replaces the auto or pays the “actual cash value” of the vehicle, “the salvage, if any, shall vest in the insurer.”