The court then referred to an article by Roderick J. Wood entitled ”Turning Lead into Gold: The Uncertain Alchemy of All Obligations” Clauses.7 The Court referred to the three reasons why the author argued that the courts were not prepared to convert unsecured claims into secured claims at the time of the transfer of security situations. (i) it would be unfair to the debtor; (ii) it would have destructive consequences on the principle of proportional participation in bankruptcy law; and (iii) it would have a disruptive effect on the PPSA regimen, followed by a loss of predictability. While all three reasons are valid and the Court of Justice indicates that they could be applied to this case, the disruption of ACCORD`s priorities is significant. If Eagle Eye`s argument is successful, not only could an unsecured creditor be secured, but any unsecured creditor with an amount due and due could disrupt the priorities set out under the PPSA with respect to the first in-time value by acquiring a significant position and retaining a large unsecured liability. The Court found that the GSA did not previously cover unsecured claims earned from CPCN Eagle Eye. The only amount to be paid to reduce the burden on the GSA was the amount paid to BDC. In determining the amount owed by CPCN to Eagle Eye for relief from the GSA, the Court had to consider whether bdC`s registered GSA could also cover the unsecured funds that Eagle Eye would have lent to CPCN. In other words, can an unsecured creditor cede an irreproachable security position and thus insure its unsecured debt? Eagle Eye found that, as a result of the BDC loan and the GSA, Eagle Eye had followed in BDC`s footsteps and therefore had all the rights and remedies available to BDC under the GSA. One of these rights was that the GSA covered all debts that CPCN owed to BDC (now Eagle Eye), whether they were formed before or after the signing of the GSA. As a result, the GSA could only be discharged after all funds earned by CPCN to Eagle Eye, including Eagle Eye`s debts (so far unsecured).

CPCN responded by committing Eagle Eye to act in good faith; CPCN is a duty of fairness under the Saskatchewan Personal Property Security Act (”SPPSA”). CPCN also submitted that the SPPSA limited the ability of a counterparty group to convert existing, unrelated and unsecured debt securities into secured debt. Finally, CPCN submitted that the GSA was subject to the terms of the loan agreement and that, therefore, CPCN was entitled to relief from the burden on GSA after the payment of the BDC loan. As a general rule, the main elements of the general security agreement are: the first to register in the PPSR are generally given priority in the event of insolvency, except in cases of subordination between the safe parties that change priorities or if the guarantee is not valid. The important analysis focused on the loan contract and the provisions of the GSA. The Court found that the GSA was subject to the terms of the loan agreement. Although the GSA provided, as noted above, that this was a ”general and sustainable guarantee for the payment and performance of all debts, debts and obligations of the borrower to BDC (including interest), whether this was the case before, at the time or after the signing of this guarantee agreement, including extensions and renewals , as well as any other liabilities of the borrower to BDC at present and in the future, in absolute or contingent terms, in common or in several, direct or indirect, having matured or not, renewed or renewed regardless of where and how established … and for the performance of all of the borrower`s obligations to BDC, whether or not they are included in this security agreement” (highlighted by the Court), and that the GSA went wild unprecedentedly, the Court found that the loan contract was a priority.