Myers Leasing Services Ltd. v. Peat Marwick Thorne Inc.

Myers Leasing Services Ltd. v. Peat Marwick Thorne Inc. Court Court of Appeal Date 1996-02-02 Citation 1996 NSCA 43 Docket CA 121196 Judge/Registrar/Adjudicator Pugsley, Ronald N. (Honourable Justice); Jones, Malachi C. (Honourable Justice) (CA); Chipman, David (Honourable Justice) Document Type Decision Decision Content C.A. No. 121196 NOVA SCOTIA COURT OF APPEAL Cite as: Myers Leasing Services Ltd. v. Peat Marwick Thorne Inc., 1996 NSCA 43 Chipman, Jones and Pugsley, JJ.A. BETWEEN: MYERS LEASING SERVICES LIMITED ) Wayne R. Marryatt ) for the Appellant Appellant ) ) - and - ) ) D. Bruce Clarke ) Pamela Clarke Priddle ) for the Respondent PEAT MARWICK THORNE, INC., trustee ) in bankruptcy of the estate of LEO THOMAS ) HUGH GRACE ) ) Respondent ) Appeal Heard: ) February 2, 1996 ) ) ) Judgment Delivered: ) February 2, 1996 ) ) ) ) ) ) ) ) THE COURT: Leave to appeal is granted and the appeal dismissed with costs to the respondent in the amount of $1,000 plus disbursements per oral reasons for judgment of Jones, J.A.; Chipman and Pugsley, JJ.A. concurring. The reasons for judgment of the Court were delivered orally by: JONES, J.A.: On June 18, 1990, Leo Thomas Grace signed a motor vehicle lease and agreement with the appellant, Myers Leasing Services Limited (Myers) by which he agreed to lease a 1990 Chevrolet Lumina motor vehicle for a term of 48 months at $299.00 per month. Mr. Grace had the right to purchase the vehicle at the end of the lease term for $6900.00. The contract was executed in the City of Ottawa where Myers, an Ontario company carried on business and where Mr. Grace resided. Under the terms of the agreement Myers had the right to repossess the vehicle upon default of payments by Mr. Grace. A clause in the agreement provided that it was to be construed according to the laws of Ontario and that any action to enforce the agreement against the lessor had to be brought in the Ontario courts. In or before October, 1992 Mr. Grace moved to Nova Scotia with the vehicle. On or before June 11, 1993 the vehicle was registered in Myers' name in Nova Scotia. On January 1, 1994 Mr. Grace defaulted on his monthly lease payment. This occurred again in February, 1994. On December 2, 1993 Grace made an assignment in bankruptcy and the respondent, Peat, Marwick was appointed trustee of the bankrupt's estate. On March 10, 1994 the trustee notified Myers of the appointment. The trustee took possession of the vehicle. The lease agreement was not registered in Nova Scotia under the Conditional Sales Act, R.S.N.S., 1989, c. 84. Extensive litigation ensued over the ownership of the vehicle. The subject matter of this proceeding was commenced by an application to the Supreme Court in bankruptcy for an order pursuant to subsection 128 (1.1) of the Bankruptcy and Insolvency Act, authorizing the trustee to sell the vehicle free and clear of any security under the lease agreement. The order was granted by the Registrar on June 28, 1994. On November 17, 1994 in subsequent proceedings the Registrar held that the leasing agreement had to be registered under the Conditional Sales Act of Nova Scotia. In his view the provision in the agreement whereby title to the vehicle was to remain in Myers was void against creditors of the bankrupt because of the failure to register the agreement. Myers appealed that decision. The appeal was dismissed by Mr. Justice Goodfellow in the Supreme Court. Myers contended that the Registrar erred in applying Nova Scotia law to the leasing agreement because of the term in the contract that Ontario law would apply. The learned judge held that the provisions of the contract relating to the interpretation of the agreement did not bind subsequent creditors and that the provisions of the Conditional Sales Act of Nova Scotia were clearly applicable. He found no error on the part of the Registrar and dismissed the appeal. He ordered Myers to pay the trustee $500.00 costs on the application before the Registrar and $700.00 on the appeal. Myers has appealed from that decision. There are seven grounds of appeal. The first five grounds can be reduced to one argument. The appellant contends that Myers ' rights under the agreement must be determined according to the law of Ontario because of the provision in the agreement making the Ontario law applicable. With deference this argument is based on a misconception of the impact of the Nova Scotia conditional sales legislation. The appellant has referred to a number of cases particularly in Ontario which have no application in this Province. That was made abundantly clear by the decision of the Supreme Court of Canada in Mitsui & Co. (Canada) Ltd. v. Royal Bank of Canada, [1995] S.C.R. 187. The rights of the parties must be determined under the provisions of the Conditional Sales Act irrespective of the terms of the agreement as the vehicle was situated in Nova Scotia. The following provisions of the Conditional Sales Act are relevant: "2(1) In this Act, (b) 'conditional sale' means (i) any contract for the sale of goods under which possession is or is to be delivered to the buyer and the property in the goods is to vest in him at a subsequent time upon payment of the whole or part of the price or the performance of any other condition, or 3(1) After possession of goods has been delivered to a buyer under a conditional sale, every provision contained therein whereby the property in the goods remains in the seller shall be void as against (b) creditors of the buyer who at the time of becoming creditors have no notice of the provision, and, for the purpose of enforcing the rights of such creditors but not otherwise, shall be void as against ... (e) a trustee under the Bankruptcy Act, (Canada); without regard to whether or not the creditor so suing had at the time of becoming a creditor notice of the provision or whether or not the assignee, trustee, receiver or liquidator at the time of his appointment had notice of the provision, and the buyer shall, notwithstanding such provision, be deemed the owner of the goods, unless the requirements of this Act are complied with. 4 In the event of the permanent removal into the Province of goods of the value of fifteen dollars or over, subject to an agreement, made or executed without the Province, that the right of property or right of possession in whole or in part shall remain in the seller or bailor, notwithstanding that the actual possession of the goods passes to the buyer or bailee, then, unless (a) the agreement contains such a description of the goods, the subject of the sale or bailment, that the same may be readily and easily known and distinguished; and (b) a copy thereof and of the affidavits and instruments relating thereto, proved to be a true copy by the affidavit of some person who has compared the same with the originals, is filed in the office of the proper officer of the registration district to which the goods and chattels are removed, within thirty days after the seller or bailor has received notice of the place to which the goods have been removed, the seller or bailor shall not be permitted to set up any right of property or right of possession in or of the goods as against the creditors of the buyer or bailee, a trustee in bankruptcy, a liquidator in winding-up proceedings or subsequent purchasers or mortgagees in good faith for a valuable consideration whose conveyances or mortgages have been duly registered or are valid without registration or as against judgments, executions or attachments against the buyer or bailee. The agreement was clearly a conditional sale under the Act and therefore had to be registered to maintain the rights of the vendor under the contract. The failure to register in Nova Scotia voided the rights of the vendor against subsequent creditors. We can find no error in the exercise of the trial judge's discretion on the award of costs. Leave to appeal is granted and the appeal dismissed with costs to the respondent in the amount of $1,000.00 plus disbursements. J.A. Concurred in: Chipman, J.A. Pugsley, J.A.