CN Credit Union Ltd. v. Alberta (Treasury Branches) and Ramoudit, (1987) 83 A.R. 247 (QBM)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 22, 1987
• Citations: (1987), 83 A.R. 247 (QBM)

CN Credit Union v. Alta. Treas. Br. (1987), 83 A.R. 247 (QBM)

MLB headnote and full text

CN Credit Union Limited (applicant) v. Province of Alberta Treasury Branch (claimant) and John Ramoudit (respondent)

(Action No. 8703 01420)

Indexed As: CN Credit Union Ltd. v. Alberta (Treasury Branches) and Ramoudit

Alberta Court of Queen's Bench

Judicial District of Edmonton

Funduk, Master in Chambers

June 22, 1987.

Summary:

CN Credit registered a chattel mortgage respecting an automobile. One of the 12 serial numbers was incorrect. The purchaser traded the automobile to Ramoudit and International pursuant to a "bill of sale" containing the same error. Ramoudit and International knew the automobile was encumbered, but opted not to search the title in reliance on the purchaser's assurance that the encumbrance would be removed. Alberta Treasury Branch held a prior registered chattel mortgage respecting assets owned by International. The mortgage included an after-acquired property clause. CN Credit, Ramoudit, International and Alberta Treasury Branch all claimed priority to the automobile.

A Master of the Alberta Court of Queen's Bench held that CN Credit had priority. The Master held that assuming CN Credit's chattel mortgage did not comply with the registration requirements of the Bills of Sale Act, CN Credit did not lose title to Ramoudit and International as subsequent purchasers, because they did not purchase "in good faith" or "without notice", as required under s. 2(1)(b). The Master also held that Alberta Treasury Branch was not a "subsequent mortgagee" under s. 2(1)(b).

Chattel Mortgages and Bills of Sale - Topic 2285

Registration and filing - Contents of bill or mortgage - Serial number of automobile - A mortgagee registered a chattel mortgage encumbering an automobile - One of the 12 serial numbers was incorrect - A Master of the Alberta Court of Queen's Bench stated that "I am prepared to assume, without deciding, that the error in the serial number in the chattel mortgage results in it not being a registered bill of sale 'in conformity with this Act [Bills of Sale Act]' ... I am prepared to assume that the error in the serial number is a 'default in statutory requirements for a valid bill of sale'" - See paragraph 18.

Chattel Mortgages and Bills of Sale - Topic 4284

Rights of third parties - Loss of title to subsequent purchasers and mortgagees - Subsequent mortgagee defined - Ramoudit and International purchased an automobile encumbered by a chattel mortgage - Alberta Treasury Branch held a chattel mortgage on International's assets, including assets caught by an after-acquired property clause - Alberta Treasury Branch claimed priority over the chattel mortgagee as a "subsequent mortgagee" under s. 2(1)(b) of the Bills of Sale Act - A Master of the Alberta Court of Queen's Bench held that Alberta Treasury Branch was not a subsequent mortgagee, because the chattel mortgage it relied on for title was registered prior to the chattel mortgage on the automobile - See paragraphs 43 to 55.

Chattel Mortgages and Bills of Sale - Topic 4288

Rights of third parties - Loss of title to subsequent purchasers and mortgagees - Resale to purchaser in good faith, for valuable consideration, without notice - Section 2(1)(b) of the Bills of Sale Act provided that a chattel mortgage was void as against subsequent purchasers or mortgagees who purchased in good faith, for valuable consideration and without notice - Subsequent purchasers purchased an automobile, knowing it to be encumbered - They failed to search title in reliance on the vendor's assurance that the encumbrance would be removed - The subsequent purchasers claimed priority under s. 2(1)(b), where the chattel mortgage failed to comply with the registration requirements of the Act (1 of 12 serial numbers in error) - A Master of the Alberta Court of Queen's Bench held that the chattel mortgagee did not lose its priority, because the subsequent purchasers did not purchase "in good faith" and "without notice".

Cases Noticed:

O'Brien v. Stebbins, [1927] 2 W.W.R. 176 (Sask. C.A.), refd to. [para. 3].

Moses v. Bank of Montreal (1982), 40 A.R. 441; 19 Alta. L.R.(2d) 67 (Q.B.), refd to. [para. 3].

T & C Track Service and Welding v. Henning (1981), 30 A.R. 164 (Q.B.), refd to. [para. 3].

Sheriff, Judicial District of Vegreville v. St. Bernard de LaFond Savings & Credit Union Ltd., Spicer, Spicer and Gowing (1982), 42 A.R. 192; 22 Alta. L.R.(2d) 388, refd to. [para. 3].

Humfrey v. Hickey, [1972] 3 W.W.R. 389 (Alta. C.A.), refd to. [para. 18].

Continental Bank of Canada v. Thorne Riddell (1983), 41 A.R. 54 (Q.B. Master), refd to. [para. 19].

G.M.A.C. and Karamanles, Re, 108 D.L.R.(3d) 583 (Alta. Q.B.), refd to. [para. 19].

Klimove v. G.M.A.C. (1955), 14 W.W.R.(N.S.) 463 (Alta. C.A.), refd to. [para. 29].

Grand Trunk Pacific Railway v. Dearborn, 58 S.C.R. 315, refd to. [para. 31].

C.I.B.C. v. Westward Parts Services (1985), 59 A.R. 69 (Q.B.), refd to. [para. 53].

Sperry New Holland v. Central Farm Supply (1983), 41 A.R. 104 (Q.B.), refd to. [para. 54].

Toronto Dominion Bank v. Hayworth Equipment Sales (1985), 60 A.R. 28; 36 Alta. L.R.(2d) 373 (Q.B.), 76 A.R. 69; 49 Alta. L.R.(2d) 193 (C.A.), refd to. [para. 59].

Statutes Noticed:

Bills of Sale Ordinance, C.O. 1898, c. 43, sect. 9 [para. 22].

Bills of Sale Act, R.S.A. 1922, c. 151, sect. 9(2) [para. 23].

Bills of Sale Act, S.A. 1929, c. 12, sect. 3 [para. 24].

Bills of Sale Act, R.S.A. 1980, c. B-5, sect. 2(1) [para. 26].

Authors and Works Noticed:

Lees, Dellas W., Perfection by Registration (1969), 47 Can. Bar Rev. 420, pp. 429-430 [para. 32].

Counsel:

R. Stemp (Brownlee Fryett), for the appellant;

P. Frewer (Cooper and Patrick), for the claimant.

This application was heard before Funduk, Master in Chambers, of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on June 22, 1987.