Totem Mercury Sales Ltd. v. Californa Auto Sales Inc.

2000BCSC0370 Citation: Totem v. California Auto Date: 20000229 2000 BCSC 370 Docket: A972347 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: TOTEM MERCURY SALES LIMITED PLAINTIFF/PETITIONER AND: CALIFORNIA AUTO SALES INC. AND PACIFIC GROVE AUTO SALES INC. CARRYING ON BUSINESS AS CALIFORNIA AUTO SALES, AND THE SAID CALIFORNIA AUTO SALES INC., AND THE SAID PACIFIC GROVE AUTO SALES INC., AND JOGINDER S. KHAIRA DOING BUSINESS AS G.N. MOTORS AND THE SAID G.N. MOTORS DEFENDANTS/RESPONDENTS REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE COULTAS Counsel for Plaintiff/Petitioner: Dennis Fitzpatrick R. Morgan Representative for Defendants/ Respondents: California Auto -Sales Inc. and Pacific Grove Auto Sales Inc. Phillip Walkinshaw o.k.a. Philip Walkinshaw Joginder S. Khaira dba G.N. Motors/G.N. Motors In Person Date and Place of Trial: November 25,26,29,30, 1999 January 10, 2000 Vancouver, B.C. [1] This action is about good and proper title to a group of used motor cars and it is about credibility. The defendants Joginder Khaira dba G.N. Motors and G.N. Motors (plaintiffs by counterclaim) say that in 1997 they paid the plaintiff $13,485 for motor cars which were delivered to Khaira which the plaintiff later seized and sold, wrongfully retaining the sale proceeds which Khaira claims are lawfully his. [2] The plaintiff says it never had any business dealings with Khaira or G.N. Motors, never agreed to sell cars to them and owes the defendants nothing. The plaintiff says it sold and transferred certain cars to the defendant California Auto Sales through its owner and agent Phillip Walkinshaw under Conditional Sales contracts which were registered in the PPSA Registry and these cars were improperly transferred from the plaintiff's name to G.N. Motors without the plaintiff's knowledge, authority or consent. Those cars were seized by court order and sold resulting in a loss to the plaintiff. It is not seeking reimbursement for the loss but does seek to keep the money it received after seizure and sale. [3] The cars in dispute are listed as "Group 2" cars in trial Exhibit 2. The relevant facts follow. [4] The plaintiff is a car dealer in the City of Vancouver, in the business of buying and selling new and used motor cars. Andre Papp is the owner, president and general manager of the plaintiff. Brian Rathbun buys and sells cars on behalf of the plaintiff and has for seven years. He has been in the car business for twenty years. [5] The defendants Joginder Khaira dba G.N. Motors ("Khaira"), California Auto Sales Inc. ("California") and Pacific Grove Auto Sales Inc. were at all material times in the business of buying and selling new and used motor cars. Phillip Walkinshaw was the principal of California. At all material times, Khaira shared the sales lot at 4290 Halifax Street, Burnaby, B.C. with California. [6] Over a four to five year period, the plaintiff sold some 500 cars to California. The business arrangement between California and the plaintiff was this: cars delivered by the plaintiff to California were paid for one week following delivery. This arrangement was adhered to for years until April, 1997 when the plaintiff began to receive "NSF" cheques from California. Six cars were not paid for. Their value was $12,733. Those cars are listed in Group 1, Exhibit 2. The plaintiff told Walkinshaw it would not sell any further cars to California until the $12,733 was paid. Mr. Papp insisted that the arrears be paid by bank drafts or in cash. On July 10, 1997, Mr. Papp received a bank draft for $4,494 payable to the plaintiff, delivered to Papp by Phillip Walkinshaw. He credited that payment and two others towards the amount owing for specific cars included in the Group 1 list. Mr. Papp did not inquire and did not know the source of the funds used to purchase that draft and a succeeding one. Papp testified that he had no knowledge of G.N. Motors and did not do business with that firm at any time. Earlier in 1997, Walkinshaw had introduced Khaira to Papp and said that he was teaching Khaira the car business and they would be working together. [7] The plaintiff received a second bank draft, for $8,025 in July which it again credited to the balance owing by California for the Group 1 cars. Mr. Papp testified that bank draft was delivered by Walkinshaw and it was understood by both men that it was to be applied to the arrears owing for the Group 1 cars. The draft does not mention the source of the funds to purchase it. The name G.N. Motors and the name Khaira do not appear on the draft and Papp says he was not told by Walkinshaw or anyone else that the money for the draft had been provided by G.N. Motors. In evidence is a cheque dated July 30th for $8,025 payable to the plaintiff and signed by Khaira. That cheque was not cashed and Khaira testified it was never shown to Papp. [8] On August 1, 1997, the plaintiff received a cheque in the sum of $963. It was paid after a conversation between Papp and Walkinshaw and the amount represented the balance owing for the Group 1 cars. Papp insisted on the balance owing - $963 - be paid before California could have any further cars on credit. Walkinshaw told him it was too late that day to get a bank draft and Papp told him he would accept a cheque for $963. It was received later on August 1st. Unlike the two bank drafts, it was not received by Papp himself. After it was paid, Walkinshaw told Papp that California had paid its overdue account for Group 1 cars, in full. Papp spoke to the plaintiff's accounting department and it confirmed the payment of $963.00. He did not know whose cheque paid the amount. It was, in fact, a cheque from G.N. Motors payable to the plaintiff. Papp spoke to Brian Rathbun telling him that he could commence delivering cars to California. Seven cars were delivered having a value of $24,700. These seven cars are listed in Group 2, Exhibit 2. GROUP 2 CARS [9] I now consider the Group 2 cars. Mr. Rathbun negotiated the sales of these cars with Phillip Walkinshaw. Rathbun wrote the Bills of Sale and the terms of the Conditional Sales contracts. The documents record that the plaintiff was seller and California Auto Sales the purchaser of each vehicle. Each contract was signed by Phillip Walkinshaw. The contracts were registered in the PPSA register recording that the plaintiff held a charge on each vehicle for the unpaid amount. The terms were "net 30 or when transferred" which in the trade means "30 days for payment or when transferred". In each PPSA charge, California Auto Sales is listed as the base debtor. The PPSA documents were registered contemporaneously with the execution of the Bills of Sale. [10] Unbeknownst to the plaintiff and without its knowledge and consent, title to the cars was transferred into the name of Joginder Khaira dba G.N. Motors. The plaintiff, to its knowledge, had never done business with Khaira. It had no credit arrangements with G.N. Motors or with Khaira and the transfers of title were effected by an insurance agent unknown to the plaintiff and without its knowledge and consent. So far as the plaintiff knew, any transactions involving the cars in Group 2 were between the plaintiff and California. The plaintiff believed California and no one else was the purchaser of the Group 2 cars. [11] Rand & Fowler, the plaintiff's insurance brokers occupied space in the plaintiff's business premises. They were authorized to sign vehicle transfers on the plaintiff's behalf and in the past, Phillip Walkinshaw had dealt with Rand & Fowler in respect to transferring cars purchased by California from the plaintiff. [12] About the time the Group 2 cars were delivered by Rathbun, he gave signed Bills of Sale to Walkinshaw (save for one vehicle in the Group, the 1984 Honda). The Bills of Sale were signed on the understanding that the cars would be transferred to California. That was the agreement the plaintiffs had with California. On August 1, 1997 the Honda Accord was included in the Group 2 cars. [13] Around mid-August, 1997, the plaintiff received a call from Lawrence Auto Auctions requesting that the plaintiff release its lien against a 1989 Chrysler New Yorker car, part of the Group 2 cars, for it had been sold at auction. Papp assumed that California had put it into the auction. Papp refused to lift the lien until the plaintiff had been paid for the car. Within an hour, Walkinshaw called and asked the plaintiff to release the lien on the Chrysler, promising to bring the money in later. Papp refused. Lawrence Auto Auctions paid out the plaintiff for the Chrysler and the lien was lifted. [14] This incident caused Papp to be concerned and he asked Active Bailiffs to do an ownership search on the other cars in Group 2. [15] He received word that all the others had been transferred into the name of the defendant Khaira. Initially, Mr. Papp did not know who had signed the transfers on behalf of the plaintiff. He knew that the signatures were not those of anyone authorized to sign transfers on the plaintiff's behalf and the signatures were not those of anyone at Rand & Fowler. Later, Papp learned that the transfer forms had been signed on the plaintiff's behalf by a Ms. King who worked for an insurance broker located in Lawrence Auto Auctions' premises. What possessed Ms. King to sign these transfer forms, I do not know and I am reluctant to term it fraud without hearing her evidence. Ms. King did not testify. She used an old Power of Attorney the plaintiff had given 12 years before to W.T. Kidner of Lawrence Auto Auctions. Kidner had retired in 1990. The Power of Attorney had been given because Lawrence Auto Auctions required a Power of Attorney to transfer title when a car was sold by them. Papp testified that the Power of Attorney was limited in its scope. The plaintiff says that Ms. King had no authority at any time to transfer the cars on its behalf in these circumstances. Mr. Papp does not know Ms. King. [16] On August 15th, the defendant Khaira commenced an action against the plaintiff in the Small Claims division of the Provincial Court, seeking $8,025, and later commenced a second action seeking further money. [17] On August 18th, the plaintiff made demand on the defendant California for payment for all the Group 2 cars save for the Chrysler. California did not pay. The plaintiff demanded that the defendant Khaira return the cars. They were not returned. On August 18th, the plaintiff issued bailiff warrants. One of the cars in Group 2 was seized early, others later. [18] On September 8, 1997, the plaintiff filed a petition in the Supreme Court seeking a declaration that it had title to the cars and was entitled to dispose of them in redemption of the amount owing to the plaintiff. [19] On October 31, 1997, Madam Justice Loo ordered that the cars be delivered to the plaintiff and that all right, title and interest in them vest in the plaintiff with the right to transfer title free and clear of any encumbrance. A condition of that order was the plaintiff depositing a stand-by letter of credit in favour of the defendant Khaira which was done and that letter of credit is presently held by the plaintiff's solicitor. The plaintiff consented to the conversion of the action from that of petition to action in which form it has continued. [20] In the defendants' documents is a cheque from G.N. Motors payable to the plaintiff dated July 31, 1997 for $8,025. Papp testified that he never received it. Khaira deposed that he never presented it to Papp. A bank draft for the same amount is in evidence and dated July 30, 1997. I have already spoken of it. This draft does not name the source of funds. The plaintiff says it was delivered by Walkinshaw as payment towards the debt owing for the Group 1 cars and the plaintiff applied it to that debt. [21] With respect to the Group 2 cars, the plaintiff believes, but is not positive, that all were picked up by Phillip Walkinshaw and his wife over a couple of days. Papp did not see Walkinshaw's wife on the lot but considering the plaintiff has some 85 employees and Papp's office is on the north side of the lot facing north, that is not surprising. [22] Papp testified that only very rarely is a transaction and sale cancelled. Within the past 15 years the plaintiff has experienced about 15 cancelled transactions, for usually dealers come to view cars they are considering purchasing. In the event that a transaction is cancelled, providing the plaintiff is not out-of-pocket, it would cancel any PPSA charge if it no longer had a personal interest in the sale. [23] Andre Papp testified that unless credit had been established with a purchaser including a wholesaler, the plaintiff would not give credit and not allow a car to leave its lot unless satisfactory credit had been established. Today, the plaintiff conducts a credit check when credit is sought. It dealt with California without that check because of the high volume of purchases in the previous five years. [24] Brian Rathbun testified for the plaintiff, for whom he has worked as buyer and seller of cars for the past 7 years. He has been in the automotive business for 20 years. [25] Rathbun believes he met Khaira, probably in April/May of 1997 and was introduced to him by Walkinshaw. Rathbun believes he was told that Khaira worked for Walkinshaw in some capacity. He had seen Khaira at the plaintiff's business premises only rarely and never without Walkinshaw being present. [26] Rathbun confirms he was aware that California had been delivering NSF cheques and because of it the plaintiff's credit arrangements with Walkinshaw had changed. Rathbun was told by Papp that Walkinshaw had to pay for the first group of cars before the plaintiff would deliver any further cars. [27] Rathbun was responsible for handling the second group of cars. Rathbun's signature appears on the transfer forms and so does Walkinshaw's. No one from the plaintiff signed the transfer forms prepared by Ms. King and signed by her. [28] Rathbun gave a copy of the seven transfer forms to Walkinshaw at the same time he received the Bills of Sale signed by Walkinshaw. He did not see the seven cars leave the lot but Walkinshaw was permitted to take them after the plaintiff was paid in full for the Group 1 cars. [29] Under cross-examination by Joginder Khaira, Mr. Rathbun testified that it was not always his practice to provide California a transfer form. When requested to do so, he did so. Rathbun testified that Totem's name on a transfer form could be forged and he had seen this happen. Rathbun agreed that he had seen Khaira at Totem's place of business after April, 1997, probably in July. He was with Walkinshaw when Walkinshaw was looking for cars on Totem's lot. Rathbun believed that Totem was protected for the Group 2 cars by the PPSA charges. With respect to one of the Group 2 cars, a Chevrolet Lumina sold for $4,200, Rathbun prepared the Bill of Sale and signed it. The purchaser was California. Walkinshaw signed the Bill of Sale. [30] In his affidavit sworn in September, 1997, Rathbun deposed that he personally saw delivery of the cars to Walkinshaw and his wife. He testified that was true but by "delivery", he meant documentation for delivery, not actual delivery. He does not know who drove the cars from Totem's lot. [31] So far, I have recited the evidence of the plaintiff through its witnesses, Papp and Rathbun. Defence of Joginder Khaira dba G.N. Motors, ON DISCOVERY [32] Evidence that Khaira gave on his Examination for Discovery held on September 28, 1999 was read in at trial. [33] Khaira testified that Walkinshaw is an employee of G.N. Motors and has been since July, 1998. He is a car salesman. [34] Khaira has never made any payments to California for anything except when he bought cars from that company. [35] Khaira has never conducted a PPSA registry search before buying a vehicle from a "big dealer" like the plaintiff. If he buys a vehicle from a member of the public, he conducts a search. Khaira believes that he first met Papp sometime in July, 1997 but really doesn't remember. He believes it must have been at Totem Mercury's car lot. He only vaguely remembers being introduced to Papp. [36] Khaira was asked on Discovery if when he picked up the Group 2 cars, he spoke to Rathbun. He did not remember if he had spoken to Rathbun at all and if he did what he said to him. He does not remember if he saw Rathbun at the time he picked up the cars. [37] At that point, Khaira's affidavit of October 21, 1997 was produced in which Khaira deposed that Rathbun's sworn statements were absolutely untrue because Rathbun handed Khaira the owner's certificates and saw him pick up the seven cars. EVIDENCE OF PHILLIP WALKINSHAW AT TRIAL [38] At trial, Walkinshaw was shown a number of cheques and bank drafts and this is what he said of them. With respect to the July 10th bank draft for $4,400, he does not recognize it. Nor does he recognize the July 30th cheque for $8,025 of G.N. Motors to the plaintiff. With respect to the bank draft of that date for $8,025 he only remembers seeing this document in the court file. He had never seen it prior to that time. It is, of course, the evidence of the plaintiff that this bank draft was delivered by Walkinshaw and it was understood by them both that it was being used to reduce the overdue debt for the Group 1 cars. With regard to the cheque of August 1, 1997 for $963, Walkinshaw testified the only time he saw this cheque was after the trial started. With respect to the Bill of Sale of July 29, 1997 for a vehicle costing $4,494, Walkinshaw acknowledges that his signature appears on the Bill of Sale as purchaser and testified he intended to buy the car but did not, and was never given a signed transfer. With respect to a Mercury Sable, Bill of Sale dated July 29th, he testified he signed it, but never took delivery, was never given a transfer or a registration form. With respect to a Chevrolet Corsica and Bill of Sale pertaining to it, he conceded he signed it but says he never took delivery and that is true of all the cars for which he signed Bills of Sale in respect of the Group 2 cars - he did not take delivery of any one of them. [39] Walkinshaw was asked by the court why he signed the numerous Bills of Sale on July 29th and did not take delivery and replied (my notes): It is common practice to give or take a Bill of Sale without completing the sale. When I signed the Bills of Sale, I intended to buy and take delivery. It is common in the business to execute a Bill of Sale and the sale not complete. In that event, the dealership would sell then to someone else. Frequently, Totem would sell a car to me and before I picked it up, would resell it to someone else. [40] Walkinshaw does not deny that he signed the Bills of Sale as purchaser of the Group 2 cars or that he negotiated the sale prices with Rathbun. He deposes in his September 10, 1997 affidavit that he was never took delivery of the Group 2 cars and for that reason, the purchase was never completed. [41] Mr. Walkinshaw testified he never agreed to pay the debt owing for Group 1 cars because he was not sure whether he owed the plaintiff money or it owed him money. In answer to the court's question with respect to payment of the debt for Group 1 cars, he said "I cannot say whether or not those cars were paid for by me or someone on my behalf. There was no paperwork done to know what cars were paid for". Walkinshaw denied that Papp told him that he could not have any more cars until the Group 1 cars were paid for, and says that Papp told him he could have a $20,000 to $30,000 credit, not a $100,000 credit as in the past. Walkinshaw admits that he issued NSF cheques to the plaintiff. Walkinshaw admits that he never gave the plaintiff written notice that he had changed his mind about buying the Group 2 cars, after signing the Bills of Sale. [42] In evidence is an affidavit from Peter Powers, a bailiff with Active Bailiffs, who was acting on the court order of Master Brandreth-Gibbs made September 8, 1997 that five of the Group 2 cars be delivered to the plaintiff. Powers deposes that he attended at the premises of California Auto Sales and there spoke with Walkinshaw on the telephone and demanded the return of the five cars or payment for them. Mr. Powers deposes that Walkinshaw told Powers that he (Walkinshaw) had made arrangements to pay for the cars 30 days after delivery. Powers then told him that the Bills of Sale in question provided for payment within 30 days or on transfer of the cars and he (Walkinshaw) replied that he had not transferred the cars. By that time they had been transferred into the name of Khaira. [43] I find it significant that when Powers demanded return of the cars, Walkinshaw did not say that he had never taken delivery, although agreeing to buy them, and did not say that the sale never completed. At trial, Walkinshaw could not remember what he told Powers in that conversation. He could not remember, either, if he had been given copies of the signed Bills of Sale. [44] In answer to the court's question at trial, Walkinshaw agreed that if Powers had demanded delivery up of the cars, (which I find he did), then likely the first thing Walkinshaw would have said to Powers was "I never took the cars". Evidence in chief of Joginder Khaira, AT TRIAL [45] Khaira has no knowledge of any business dealings between the plaintiff and California in 1997 or earlier. He started G.N. Motors in November of 1996 and in February of 1997 moved to 4290 Halifax Street, sharing a car lot with California Auto Sales. That was the only common business they shared. He was introduced to Papp in April/May, 1997 and Rathbun about the same time. [46] In or about the first week of July, 1998, he bought a car from the plaintiff, a 1992 Chevrolet for $4,494, paid for by bank draft and gave the draft to Papp in his office. He picked up the car in the first week of July and took it to his Halifax Street lot. He did not ask for a Bill of Sale or a transfer form, and was not given either. At the end of July, the plaintiff communicated with him and said that Chevrolet had to be returned to a customer because that customer did not have the finances to buy a new car. He told Papp that he had paid for the car and Papp replied "do not worry about it, we will work something out". It was understood by them both that the plaintiff owed Khaira money. He testified that if he had had a customer for the car, he would have phoned Papp and asked for a transfer and registration. At the end of July, he and Papp entered into a verbal contract that Khaira would buy seven cars from the plaintiff for approximately $21,000. Those are the cars in Group 2, Exhibit 2. He paid Papp $8,025 personally. Papp did not give him a receipt and he never asked for one and he didn't ask for a Bill of Sale either but was under the impression it would be faxed to him. He did not ask for a transfer document. He gave another cheque to the plaintiff for $963 on August 1st. Given that he had a credit - for $4,494, including the $963 payment, in all he paid the plaintiff $13,482. According to Khaira, he was never told the plaintiff needed a credit check and he was not asked by the plaintiff for information about his financial worth. He picked up all 7 cars at Totem's lot from Papp or Rathbun. [47] The court commented to Khaira "you picked up cars worth $24,700 and you paid to date, $13,482". Khaira replied: Papp said that's enough. Sell some cars and when you have, come and pay us. He did not say when he expected to be paid. [48] He testified that he transferred the cars to G.N. Motors using Columbia Insurance to transfer. He gave Ms. King the six registrations he had obtained from Totem and advised her to transfer the cars to him, and she did not ask for a Bill of Sale or a transfer form. He testified that he did not go to Totem for the "registrations" as he had done quite a bit of business with Columbia on previous occasions. He believes that Columbia thought they had a Power of Attorney directed to Lawrence Auto Auction to transfer Totem's property although not having explicit authority to do so. In all, he paid $13,482 for the Group 2 cars. [49] Under cross-examination, Khaira said that Walkinshaw did not inform him what credit arrangements he had with the plaintiff. All the cars that Khaira transferred to G.N. Motors went to the Halifax Street car lot except for the Chrysler that he put into auction. [50] With respect to any receipt for his July 11, 1997 payment of $4,494 by draft, he never got it and he was unaware that the plaintiff had credited that amount to California's overdue account. [51] He denies that Walkinshaw delivered that draft to Totem, saying he did so. He concedes the draft does not identify G.N. Motors as payor. He testified that any payments he made to the plaintiff were to be applied towards the purchase of Group 2 cars, not to pay California's debt to the plaintiff for Group 1 cars. [52] On Discovery, Khaira testified "Papp personally handed me the registration documents". At trial, he was cross-examined on that evidence and said that Papp gave him the registrations for maybe two to three cars and the other three or four registration forms were given at a later date. He doesn't remember how many registrations Papp personally handed to him. He testified that Papp never gave him any transfer forms but said "just transfer the cars to G.N. Motors". [53] In an affidavit sworn October 21, 1997, Khaira deposed that Rathbun gave him "the owner's certificate of insurance and vehicle licence" for six of the Group 2 cars. [54] Confronted with the conflict as to who gave him registrations, he said that both Papp and Rathbun were present in Papp's office when Rathbun delivered the registrations to him. [55] On Discovery, he testified that Rathbun was not in the office when he made the agreement with Papp to buy the cars. At trial, he said Rathbun was present. [56] I take note that in his affidavit sworn September 11, 1997, Rathbun deposed that he did participate in and authorize the sale of the cars which are the subject matter of this proceeding, but to California. He deposed that he did not sell any cars to Khaira or G.N. Motors. Rathbun also deposed that Totem's sales records do not record any cars sold to G.N. Motors or Khaira but records many sales to California Auto Sales. [57] There is much conflict between Khaira's averments in his October 21st affidavit, and his trial evidence with respect to his picking up the cars. In his affidavit, he explained that Rathbun saw him pick up the cars. At trial, he said he meant by that he and Rathbun spoke over the phone. He accounts for that conflict in evidence saying: I didn't prepare the affidavit, the lawyer did. [58] He concedes the lawyer did not make the affidavit up "out of the air". [59] On Discovery, he said he didn't remember if Rathbun was around when he picked up the cars. He said the cars were picked up over some days. [60] On Discovery, Khaira testified that he took a G.N. Motor's cheque for $8,025 payable to the plaintiff towards the purchase of the Group 2 cars and Papp refused to accept it because it was not certified. Yet, in his October 21, 1997 affidavit he deposed that "Totem had never seen that G.N. cheque since it received a bank draft, not the cheque". On Discovery, he said the averments in the affidavit were true and at trial, he testified that the first time Papp saw the G.N. cheque was after Khaira brought his Small Claims action. He accounted for that conflict between his affidavit and discovery evidence saying "I didn't show the G.N. cheque to Papp". [61] He was asked if he had tendered a G.N. cheque for $4,494 to Papp before delivering a bank draft for that amount. At trial, he could not remember if he had. [62] At trial, he conceded that Papp was very careful about credit terms. He was asked if he considered it strange that Papp sold five cars to him for $21,000 when he had sold them to Walkinshaw for $24,000? He replied it did not surprise him. [63] At trial, he admitted he never received Bills of Sale at the time he took delivery of the cars or later by fax. [64] Those are but a few of the conflicts between his discovery evidence and his trial evidence. CONCLUSIONS [65] I find Joginder Khaira was an untruthful and unreliable witness. I find that Phillip Walkinshaw was just as unreliable and unbelievable. [66] Walkinshaw says he never took delivery of the seven cars but concedes that the Bills of Sale were signed by him, all on behalf of California Auto Sales, PPSA charges were registered against the cars and California was shown as the debtor. The plaintiff knew the Group 2 cars had been taken from its lot, but did not know where they went. One was located in California/G.N. Motor's lot. All were transferred to G.N. Motors on Khaira's instructions. One vehicle was placed by Khaira into the Lawrence Auto Auction. Totem demanded the sale proceeds from the auto auction House and received them. [67] I find that Khaira obtained possession of the seven cars fraudulently. It is inconceivable that the plaintiff, who had refused to release any cars to California until the Group 1 cars were paid for, and was careful about its credit arrangements, would simply release cars to Khaira without inquiring about his credit worthiness. [68] At all times, the plaintiff believed it was selling the cars to California. Had it believed otherwise, it would never have released them. [69] I find that Phillip Walkinshaw led the plaintiff to believe that California was the purchaser for the Group 2 cars which, in fact, it was. He personally delivered bank drafts and a cheque to the plaintiff to discharge the balance owing to the plaintiff for the Group 1 cars. Believing that California was the purchaser the plaintiff released the Group 2 cars. They were taken from the plaintiff's lot. So far as the plaintiff knows, they were taken by Walkinshaw or his wife. When the plaintiff learned that the cars had been transferred without its knowledge or consent, it tried to seize them. Only one could be found - on California/G.N. Motor's lot. A court order for their return was made. Still they were not returned. Contempt proceedings were brought and only then were the cars returned. Khaira, without any transfer documents, improperly instructed an insurance agent to transfer the cars to G.N. Motors. A Power of Attorney, issued 12 years before for a very different purpose was used to effect the transfer. The Power of Attorney in its terms had a restricted use. [70] I find that Andre Papp and Brian Rathbun were entirely credible and reliable witnesses. I accept their evidence in its entirety. Their evidence is corroborated by the documents introduced into evidence. Walkinshaw has not told the court why Khaira obtained cars that California agreed to buy; he does not know of any arrangements Khaira made with Totem. Khaira has not produced a single document that suggests he bought any one of the Group 2 cars from the plaintiff. It is inconceivable, too, that the plaintiff would have authorized transfers of Group 2 cars because they were under Conditional Sales Agreements entered into with California. ORDERS [71] I make a declaration affirming the order of October 31, 1997 of The Honourable Madam Justice Loo granting the plaintiff all right, title and interest in the cars registered in the PPSA Registry, free and clear of any encumbrances of the defendants. [72] I declare that the plaintiff is entitled to retain all proceeds from the sale of those cars. [73] I order that the stand-by letter of credit posted by the plaintiff on November 14, 1997 pursuant to the order of Madam Justice Loo, be cancelled. [74] The counterclaim of the defendant Khaira and G.N. Motors is dismissed with costs to the plaintiff, at Scale 3. [75] The plaintiff will have the costs of the contempt proceedings as Special Costs. All other costs in the action are awarded to the plaintiff, at Scale 3. "G.R.B. Coultas, J." The Honourable Mr. Justice G.R.B. Coultas