Scott Auto Sales Ltd. v. Becker

2012 BCSC 988 Scott Auto Sales Ltd. v. Becker IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Scott Auto Sales Ltd. v. Becker, 2012 BCSC 988 Date: 20120706 Docket: S121089 Registry: Victoria Between: Scott Auto Sales Ltd. and Scott Auto Sales Ltd. doing business as Budget Car Sales Petitioner And Floyd Becker and Kristie Haz Respondents Before: The Honourable Mr. Justice Kelleher Reasons for Judgment Counsel for the Petitioner: L.B. Jamieson Counsel for the Respondent, Haz: D. Mildenberger The Defendant, Becker no appearance Place and Date of Hearing: Victoria, B.C. June 22, 2012 Place and Date of Judgment: Victoria, B.C. July 6, 2012 [1] In this petition, Scott Auto Sales Ltd. and Scott Auto Sales Ltd. doing business as Budget Car Sales (the "Petitioner" or "Scott Auto Sales") seeks a declaration that it has a valid security interest registered under the Personal Property Security Act R.S.B.C. 1996, c. 359 ("PPSA"). [2] The facts are unusual. A sales finance contract was signed by the respondent, Floyd Becker in connection with the purchase of a 2008 Land Rover. The registered owner of the vehicle is the respondent, Kristie Haz. The Petitioner, acting under this security agreement, has seized the vehicle and is in possession of it. Ms. Haz has demanded that the security interest be discharged. In these circumstances, s. 50(5) of the PPSA applies: (5) If the secured party fails to amend or discharge the registration as required in subsection (4), the person who has made the demand may require the registrar to give a notice in writing to the secured party stating that the registration will be discharged or amended, by the registrar in accordance with the demand, on the expiry of 40 days after the day the registrar gives the notice to the secured party, unless in the meantime the secured party gives to the registrar an order of a court maintaining the registration. [3] Thus, the petitioner is seeking an order from this court maintaining the registration. The Facts [4] Kristie Haz owns property in Shawnigan Lake. She deposed that on approximately May 24, 2011, she reached a verbal agreement to sell the property to Mr. Becker and his wife, Marjorie Becker. One of the terms of the agreement is that Ms. Haz would receive a Range Rover automobile as an initial down payment. [5] Mr. Becker disputes this. There is other litigation involving Mr. Becker and Ms. Haz. [6] The arrangements for the automobile were made with a Donald Moss at Victoria Premium Automobiles Ltd ("VPAL"). On May 20, 2011, he sent an email to Ms. Haz: Great News !!!!!!!!!!!!!!!! I reached out to some of my sources for you to find that rare Alaska White Range Rover Super Charged, and I have located one, I am sending you a couple of pics attached. The selling price will be if you want it $65,900.00 plus fees and taxes Please let me know your thoughts as soon as you can as i do not have a hold on it as of yet. If you want to proceed with the transaction let me know and I will need a partial payment to bring the vehicle in. [7] After an exchange of emails, on May 25, Mr. Moss sent this email: Kristie The White RR S/C is on the lot, looks fantastic [8] Ms. Haz replied a few minutes later: Great! When I have an agreeable deal with Floyd, I will come have a look. Thank-you for your efforts!!! Kind Regards, Kristie [9] On May 27, Ms. Haz attended at the dealership. She was satisfied with the vehicle. She deposed that Mr. Moss assured her that Mr. Becker had paid for the vehicle and had instructed him to deliver it to her. [10] On May 27, 2011, VPAL transferred the vehicle to the Petitioner. Although there is no evidence to this effect, counsel advised, and it is not disputed, that the petitioner became involved because of its access to financing. It had a relationship with TD Finance Sales. [11] Then, also on May 27, a transfer/tax form known as Form APV9T was executed. This is the multi-purpose form customarily used to transfer ownership of a motor vehicle from one person to another and to compute sales tax. The bottom of the form is completed by the Insurance Corporation of British Columbia's Autoplan agent. [12] The "seller" is shown as "Scott Auto Sales Limited dba Budget Car Sales". The Petitioner signed this as the seller and in doing so agreed "I/we the seller certify that we are the registered owner(s) of the described vehicle and that I/we are entitled to sell it and that the information above is true." [13] The "purchaser" was shown as "Kristie Lee Haz". She signed it as well. [14] William MacMunn is the general manager of the Petitioner. He deposed that the Form APV9T was completed by the Petitioner's insurance agent. The transaction reflected in the form was contrary to what the Petitioner had told VPAL: namely that the respondent Becker was to be the owner and that Ms. Haz was to be the principal operator. [15] According to Mr. MacMunn, the APV9T transferred title to Ms. Haz. However, he said, the Petitioner's employee who signed the form was "... not familiar with the transaction and directions given by the Petitioner to VPAL." [16] There was no bill of sale executed. There was only the transfer form described above. [17] Mr. Becker has a different recollection of the transaction. According to him, he believed he was purchasing the vehicle but Ms. Haz would be the "principal driver". That was because she was contracted to work for a company Mr. Becker owned. He provided no further explanation. [18] On May 30, Mr. Becker and the Petitioner entered into an agreement of purchase and sale of the same vehicle. [19] Mr. Becker and the Petitioner also entered into a "Sales Finance Agreement" on the same day. This included an assignment by the Petitioner of its interest in the loan to TD Finance Sales. The assignment includes these words: The seller retains title to, and a security interest in, the [vehicle]. [20] Ms. Haz deposed that she and her family moved out of the Shawnigan Lake property in time for the completion date of June 15, 2011. However, Mr. Becker did not complete the purchase of the property. [21] On September 16, 2011, Ms. Haz conducted a Personal Property Registry Search. She learned that TD Finance Sales had registered a financing statement, showing Mr. Becker as the debtor. [22] Ms. Haz objected to this. She contacted TD Finance Sales and pointed out that the vehicle was registered in her name on May 27, 2011, and that she had not authorized it as collateral. [23] On October 19, 2011 TD Finance Sales wrote to the Petitioner. It stated: 1. the Petitioner did not have "clear title" to the vehicle when it sold the vehicle to Mr. Becker. The vehicle was registered in the name of Ms. Haz at the time. 2. the Petitioner did not deliver the vehicle to Mr. Becker. [24] TD Finance Sales also asserted that the transfer of the vehicle from VPAL to the Petitioner took place on May 31, the day after Scott Auto Sales purported to enter into a bill of sale with Mr. Becker. This last assertion is inconsistent with the evidence of Mr. McMunn who deposes the transfer took place on May 27. [25] In any event, TD Finance Sales required the Petitioner to repurchase the contract. [26] The Petitioner complied with this demand. On November 7, Scott Auto Sales and TD Finance Sales entered into an agreement whereby Scott Auto Sales repurchased the contract. [27] On November 3, 2011, TD Finance Sales registered a total discharge of its interest in the Personal Property Registry. [28] On October 27, 2011, Scott Auto Sales registered what purports to be a PPSA Security Agreement, registration number 419229G. It describes the base debtor as Kristie Lee Haz. It describes the collateral as the Range Rover in question and then entered this in the registry: Client fraudulently registered the vehicle into her name. The registered owner was to be Floyd Becker. He took out a loan to finance the vehicle. She has no right to own this vehicle. This vehicle was never gifted to her nor did she pay the taxes. B.C. Driver's Licence number is [...]. [29] On November 8, 2011, Scott Auto Sales registered a similar "Security Agreement" in the registry under registration number 438496G. Again it lists the Range Rover as the collateral and includes these remarks: Kristie Lee Haz fraudulently registered the vehicle into her name. The registered owner is to be Floyd Becker. He took out a loan with TD Canada Trust to finance this vehicle. She has no right to be registered owner of this vehicle. The vehicle has never been gifted to her and payment was not made by Kristie Lee Haz. B.C. Driver's Licence number is [...]. [30] These allegations of fraud are, to say the least, surprising. It was the Petitioner that transferred the vehicle into the name of Ms. Haz. It regrets that it did so, but at least on the material before me in this petition, there is no evidence of fraud at all. [31] Moreover, neither of these registrations constitutes a "security agreement" as that term is defined in the PPSA, s. 1(1): "security agreement" means an agreement that creates or provides for a security interest and, if the context permits, includes (a) an agreement that provides for a prior security interest, and (b) writing that evidences a security agreement [32] The two registrations described above, numbers 419229G and 438496G were objected to. Ms. Haz delivered demands for discharge of these finance statements and both registrations were discharged. The Personal Property Registry informed her of this on March 5, 2012. [33] Another "security agreement" was registered on December 22, 2011. It again showed Mr. Becker as the debtor and TD Financing Services as the secured party. The Land Rover was described as the collateral. This was registration No. 512129G. [34] This was amended in a registration of January 20, 2012. This registration shows a deletion of TD Financing Services and adds as the secured party "Scott Auto Sales Limited DBA Budget Car Sales". It adds Ms. Haz as a debtor. [35] On February 8, 2012, the Petitioner had a bailiff seize the vehicle in question. In doing so, Scott Auto Sales purported to rely on the security agreement between Mr. Becker and TD Financing Services which had been assigned to Scott Auto Sales on November 7, 2011. [36] Ms. Haz wrote to the Personal Property Registry demanding the discharge of registration number 512129G. As a result of that, the registrar of the Personal Property Registry wrote to Scott Auto Sales pursuant to s. 50(5) of the PPSA as follows: Under section 50(5) of the Personal Property Security Act and upon the requisition of Form 5, copy attached, from KRISTIE HAZ of PO BOX 257, STATION MAIN, BRENTWOOD BAY BC V8M 1R3, I hereby notify you that the Financing Statement registered by you (or on your behalf, or by your assignor, as the case may be) on DECEMBER 22, 2011, registration number 512129G claiming interest in collateral described as follows: ALL COLLATERAL will be TOTALLY DISCHARGED at the expiration of 40 days from service of this notice upon you, unless within the said 40 days, you register a Court Order issued by the Supreme Court of British Columbia maintaining your interest. Court Orders are filed with the Personal Property Registry electronically through BC OnLine. Dated March 14, 2012 [37] Scott Auto Sales is now before me seeking the court order referred to in that letter. Analysis [38] Section 12(1) of the PPSA provides as follows: 12 (1) A security interest, including a security interest in the nature of a floating charge, attaches when (a) value is given, (b) the debtor has rights in the collateral or power to transfer rights in the collateral to a secured party, and (c) except for the purpose of enforcing rights between the parties to the security agreement, the security interest becomes enforceable under section 10, unless the parties have specifically agreed to postpone the time for attachment in which case the security interest will attach at the time specified in the agreement. [39] In my view, there is no valid security interest here. On May 27, 2011, the Petitioner transferred title to the vehicle to Ms. Haz. That is the evidence of Mr. MacMunn: 10. Now shown to me and attached as Exhibit "D" to this my affidavit is a true copy of the APV9T form transferring title to the vehicle to the Respondent Haz. [Emphasis added] [40] Once the Petitioner had transferred title to Ms. Haz, it could not validly transfer title to Mr. Becker. The security interest is with Mr. Becker who does not have title to the vehicle. Ms. Haz, who does have title is not a party to it. [41] As counsel for the Petitioner argues, registration as the registered owner of the vehicle under the Motor Vehicle Act, R.S.B.C. 1996, c. 318 is not the same as a title registration system under, for example, the Land Title Act, R.S.B.C. 1996, c. 250. There is no Certificate of Indefeasible Title. But that does not make registration under the Motor Vehicle Act irrelevant. As Mr. MacMunn deposed, title was transferred to Ms. Haz. The Petitioner having done that could hardly transfer title to Mr. Becker. [42] There is nothing to register in the Personal Property Registry. Mr. Becker signed a financing agreement with TD Financing Sales but the title to the vehicle is in Ms. Haz's name. Ms. Haz has title to the vehicle but is not a party to a security agreement. [43] The Petitioner may have a cause of action against Ms. Haz. I make no comment about that. But the vehicle is registered in her name. She is not party to any security agreement. [44] For these reasons the petition is dismissed. "S.F. Kellher J." The Honourable Mr. Justice S.F. Kelleher