Goodfellow Inc. v. Heather Building Supplies Ltd., (1996) 150 N.S.R.(2d) 341 (SC)

• Judge: MacAdam, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: December 01, 1995
• Jurisdiction: Nova Scotia
• Citations: (1996), 150 N.S.R.(2d) 341 (SC)

Goodfellow Inc. v. Heather Bldg. (1996), 150 N.S.R.(2d) 341 (SC);

  436 A.P.R. 341

MLB headnote and full text

Goodfellow Inc. (plaintiff) v. Heather Building Supplies Limited (defendant)

(S.H. No. 120591)

Indexed As: Goodfellow Inc. v. Heather Building Supplies Ltd.

Nova Scotia Supreme Court

MacAdam, J.

April 3, 1996.

Summary:

The plaintiff alleged that, pursuant to conditional sales contracts, it had a secured creditor's interest in certain lumber it had previously sold to the defendant.

The Nova Scotia Supreme Court deter­mined the plaintiff's interest accordingly.

Bankruptcy - Topic 2304

Proposals - Effect of proposal - Powers of trustee - [See Conditional Sales - Topic 1101 ].

Bankruptcy - Topic 2755

Trustees - Powers of - Respecting secur­ity - [See Conditional Sales - Topic 1101 ].

Conditional Sales - Topic 8

General - Common law rights of condi­tional seller - The plaintiff sold lumber to the defendant - For approximately six years the invoices forwarded to the defen­dants indicated that the plaintiff retained ownership of the lumber provided that the purchase price remained outstanding - At issue was whether the purported reserva­tion of title by the plaintiff in the invoice was effective as a conditional sale - The Nova Scotia Supreme Court held that the invoice constituted a conditional sale between the plaintiff and the defendant only - It in no way affected third parties, and in particular creditors of the defendant, who, at the time of becoming creditors, had no notice of the purported reservation of title - See paragraphs 2 to 27.

Conditional Sales - Topic 8

General - Common law rights of condi­tional seller - The Nova Scotia Supreme Court stated that conditions or terms of sale incorporating a reservation of title in a vendor, until payment in full, were suffi­cient, at common law, to satisfy the re­quirements for a conditional sale - How­ever, if the documents were not registered pursuant to the terms of the Conditional Sales Act (N.S.), s. 3, the reservation of title did not apply to "'creditors of the buyer, who at the time of becoming credi­tors have no notice of the provision'" - See paragraphs 2 to 27.

Conditional Sales - Topic 22

General - Elements of conditional sale - Conditional sale defined - [See both Con­ditional Sales - Topic 8 ].

Conditional Sales - Topic 345

Statutory requirements - Registration - Effect of failure to register - [See second Conditional Sales - Topic 8 ].

Conditional Sales - Topic 345

Statutory requirements - Registration - Effect of failure to register - The plaintiff sold lumber to the defendant - For ap­proximately six years the invoices for­warded to the defendant indicated that the plaintiff retained ownership of the lumber provided that the purchase price remained outstanding - However, these documents were not registered under the Conditional Sales Act - In 1995, the plaintiff, fearing the defendant's closure, issued an originat­ing notice and obtained a recovery order for any of its lumber on the defendant's premises - Thereafter, the defendant's trustee filed a notice of intention to lodge a proposal (Bankruptcy and Insolvency Act, s. 50.4(1)) - The trustee filed a stay of proceedings of the plaintiff's claim and challenged the plaintiff's ownership of the lumber - The Nova Scotia Supreme Court held that the trustee was entitled to main­tain his challenge because of the plaintiff's failure to register under the Act - The court further noted that this defect was not cured simply by the plaintiff retaking possession of the lumber.

Conditional Sales - Topic 1083

Rights of third parties - Creditors - What constitutes a creditor entitled to protection - [See both Conditional Sales - Topic 8 ].

Conditional Sales - Topic 1101

Rights of third parties - Trustees in bank­ruptcy - The defendant's trustee in bank­ruptcy filed a notice of intention to file a proposal on behalf of the defendant (Ban­kruptcy and Insolvency Act, s. 52.4(1)) - Thereafter, the trustee challenged the plaintiff's ownership of certain lumber on the ground that the plaintiff failed to reg­ister a conditional sales agreement - The plaintiff, inter alia, challenged the appro­priateness of a trustee under a proposal to attack the non-registration of a condi­tional sales agreement - The Nova Scotia Supreme Court held that the trustee's actions were appropriate - See paragraphs 42 to 63.

Cases Noticed:

W.C. Fast Enterprises Ltd. v. All-Power Sports (1973) Ltd. et al. (1981), 29 A.R. 483 (C.A.), refd to. [para. 11].

Walker, Re (1929), 11 C.B.R. 25 (Ont. Reg.), refd to. [para. 15].

Waterous Engine Works Co. v. Livingston (1903), 2 O.W.R. 214 (H.C.), refd to. [para. 18].

Wesco Furniture Ltd., Re (1968), 11 C.B.R.(N.S.) 299 (Ont. S.C.), refd to. [para. 19].

Smart & Godin Inc. v. Ritter Industries Ltd. (1982), 41 C.B.R.(N.S.) 180 (B.C.S.C.), refd to. [para. 21].

Richardson Equipment Ltd. v. Jaybee Warehousing Enterprises Ltd. and Archie Colpitts Ltd. (1976), 16 N.B.R.(2d) 428; 21 A.P.R. 428 (Q.B.), refd to. [para. 30].

Sonicus Holdings Ltd. v. Coopers & Ly­brand Ltd. (1979), 31 C.B.R.(N.S.) 115 (B.C.S.C.), refd to. [para. 31].

Continental Bank of Canada v. Equitable Insurance Co. (1986), 64 C.B.R.(N.S.) 121 (B.C.C.A.), refd to. [para. 31].

Berringer, Re, [1930] 1 D.L.R. 882 (N.S.T.D.), refd to. [para. 33].

Lapierre v. McDonald (1906), 39 N.S.R. 24 (C.A.), refd to. [para. 35].

Scott, Re (1963), 40 D.L.R.(2d) 328 (N.S.T.D.), refd to. [para. 36].

Clarkson Co. v. Overland Finance Co., [1963] 1 O.R. 431; 37 D.L.R.(2d) 469; 4 C.B.R.(N.S.) 186 (C.A.), refd to. [para. 37].

Maritime Office Systems Ltd. (Bankruptcy Trustee) v. Borg-Warmer Acceptance Canada Ltd. (1986), 75 N.S.R.(2d) 83; 186 A.P.R. 83 (S.C. Bktcy), refd to. [para. 40].

Zutphen Brothers Construction Ltd. (Insol­vent), Re (1994), 132 N.S.R.(2d) 337; 376 A.P.R. 337 (C.A.), refd to. [para. 42].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 50.4(1) [para. 7]; sect. 69, sect. 73(2) [para. 51].

Civil Procedure Rules (N.S.), rule 48.06(1) [para. 8].

Conditional Sales Act, R.S.N.S. 1989, c. 84, sect. 3(1)(b), sect. 3(1)(e), sect. 3(2)(a), sect. 3(2)(c) [para. 25].

Authors and Works Noticed:

Houlden, Lloyd W. and Morawetz, Carl H., The 1996 Annotated Bankruptcy and Insolvency Act (1996), p. 322 [para. 61].

Counsel:

Joseph M.J. Cooper, Q.C., for the plaintiff;

Douglas J. Lloy, for the defendant.

This application was heard on November 30 and December 1, 1995, at Sydney, Nova Scotia, before MacAdam, J., of the Nova Scotia Supreme Court, who delivered the following decision on April 3, 1996.