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We had a discussion in March 2000 about tracing under the PPSA. Those following that subject might be interested to know that the revised Article 9 has dropped the provisions about the tracing of proceeds which earlier appeared in 9-306(4) (partly because no one knew what they meant). Revised 9-315 says

"(b) Proceeds that are commingled with other property are identifiable proceeds:
(1) if the proceeds are goods, to the extent provided by Section 9-336 [which deals with physical mixtures]; and
(2) if the proceeds are not goods, to the extent that the secured party identifies the proceeds by a method of tracing, including application of equitable principles, that is permitted under law other than this article with respect to commingled property of the type involved."

There is also a recent PPSA tracing case from the Ont CA, TD Bank v Co-Pac Ltd (1999) 178 DLR (4th) 149, leave to appeal to SCC refused 22 June 2000. The Canadian trend is also to use the ordinary rules for tracing the proceeds of collateral. Indeed in Ontario they are still not sure whether you need a fiduciary relationship ...

Lionel