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36 | winter 2019 cmba-achc.ca CMB MAGAZINE As you (BCLI) have explained in your consultation paper, under the ESA, wage liens enjoy a super-priority over other liens, charges and security interests with one exception carved out under section 87(5). at section requires the Director to file a certificate of judgment in order to give the wage lien priority over monies advanced under a mortgage following the date on which the certificate is registered. ere is no similar exception for PPSA liens, and BCLI therefore recommends harmonizing the rules by removing the carve-out for mortgage transactions. e policy reasons you provide for bringing consistency by removing the filing requirement for the Director under land mortgages, rather than adding the requirement for PPSA transactions include that: n contracting commercial entities are in a better position to protect themselves against loss of priority, by such means as indemnities, than are unpaid employees; and n enterprise risk should be borne in the first instance by the venture and the backers of a venture, rather than by the employees of the venture. e BCLI recognizes that the risk of the wage lien complicates some commercial transactions, but it nevertheless preferred the above policy reasons. Simply put, the BCLI recognized the risk to lenders but preferred protecting wages before loans. INCREASING THE COST OF MORTGAGE LOANS MAKING HOUSING LESS AFFORDABLE We wish to point out that there are some fundamental and important differences between mortgages and personal property liens, which justify the different treatment between the two. Aer all, the legislature in its wisdom would only have created the super-priority exception for mortgages in section 87(5) for some fairly compelling reasons. While we cannot discern from a review of Hansard what those exact reasons would have been, we can offer the following justification for the differing treatment: Section 23(2) of the Land Title Act provides that: "An indefeasible title, as long as it remains in force and uncancelled, is conclusive evidence at law and in equity, as against the Crown and all other persons, that the person named in the title as registered owner is indefeasibly entitled to an estate in fee simple to the land described in the indefeasible title, subject to" the exceptions set out in subparagraphs (a) to (j). Real estate is highly controlled with a title registry system which shows ownership and charges against title which is subject to very few exceptions which are not noted on title. Mortgage lenders and property owners rely on this title to make informed decisions about mortgage lending and borrowing. ese decisions are made carefully using underwriting processes which take the state of property title directly into account. e role of mortgage lenders in assisting home buyers and owners to acquire and retain housing cannot be understated. Creating uncertainty for mortgage lenders by permitting unregistered wage liens to take priority over secured debt will add to the cost of housing as increases in lender mortgage risk will result in higher borrowing costs. Home ownership is considered to be a pivotal goal of many, if not most people. is is reflected in current political policy, such as the B.C. government's "30-point plan for housing affordability in British Columbia," which aims to make housing more affordable and not less. By contrast, the title of personal property is not highly controlled. Most personal property, such as furniture, clothes, electronics and even business assets, is not listed in a registry which tracks ownership or disposal. ere is no expectation of personal property indefeasibility. Super-priority wage liens clearly do not create the same challenges and risks for personal property owners or lenders that they do when registered against real estate titles. We acknowledge that the proposed wage lien super priority against real estate potentially only impacts property owners who are employers and "others." However this is not an insignificant number. A recent report from the Fraser Institute concluded that the number of self-employed Canadian workers has increased dramatically in the past two decades. In terms of total employment, the sector accounted for 15 per cent in 2013. Many predict the rate of self-employment to increase to 45 per cent by the year 2020. To remove the section 87(5) exemption to simply make the superiority rule relating to real estate the same as that applied to personal property appears to be a weak rationale for making change. Is there evidence of a problem with collecting unpaid wages which do not rank as superiority wage liens against real estate which would justify the change? ere does not appear to be a problem with the status quo, and if it not broken, why attempt to fix it? e proposal to remove the carve-out for the super priority of unregistered wage liens against real estate title is an attack on the principle of the indefeasibility of real estate title and will cause mortgage loans to become riskier, and therefore more expensive. I ask that you reconsider this element of your proposed changes to the Employment Standards Act in light of this view. AS AN ASSOCIATION, WE ARE EXTREMELY CONCERNED ABOUT A GOVERNMENT TREND TOWARDS FORTIFYING SUPERPRIORITY LIENS, WHICH HAS THE IMPACT OF WEAKENING MORTGAGE SECURITY mortgageinsecurity

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