Hoyt (Bankrupt), Re,

• Jurisdiction: New Brunswick
• Neutral Citation: 2006 NBQB 225
• Citation: (2006), 298 N.B.R.(2d) 326 (QB Reg.),2006 NBQB 225,298 NBR(2d) 326,(2006), 298 NBR(2d) 326 (QB Reg),298 N.B.R.(2d) 326
• Date: 10 May 2006
• Court: Court of Queen's Bench of New Brunswick (Canada)

Hoyt (Bankrupt), Re (2006), 298 N.B.R.(2d) 326 (QB Reg.);

    298 R.N.-B.(2e) 326; 775 A.P.R. 326

MLB headnote and full text

Sommaire et texte intégral

[English language version only]

[Version en langue anglaise seulement]

Temp. Cite: [2006] N.B.R.(2d) TBEd. JN.035

Renvoi temp.: [2006] N.B.R.(2d) TBEd. JN.035

In The Matter Of the Bankruptcy of Edward Russell Hoyt

(12224; 2006 NBQB 225; 2006 NBBR 225)

Indexed As: Hoyt (Bankrupt), Re

Répertorié: Hoyt (Bankrupt), Re

New Brunswick Court of Queen's Bench

In Bankruptcy and Insolvency

Bray, Registrar

June 26, 2006.

Summary:

Résumé:

A lessor did not perfect its interest in a leased vehicle under the Personal Property Security Act. The lessee made an assignment in bankruptcy. The trustee in bankruptcy sent a 30 day notice to prove security to the lessor. The lessor seized the vehicle. The trustee applied to have the vehicle returned to the bankrupt.

A Registrar of the New Brunswick Court of Queen's Bench, In Bankruptcy and Insolvency, ordered that the lessor surrender the vehicle to the trustee or, if the vehicle was no longer available, tender an amount equivalent to its fair market value at the date of bankruptcy.

Bankruptcy - Topic 431

Property of bankrupt - Property leased by bankrupt - A lessor did not perfect its interest in a leased vehicle under the Personal Property Security Act (PPSA) - The lessee made a bankruptcy assignment - The trustee in bankruptcy sent a notice to prove security to the lessor - The lessor seized the vehicle - The trustee applied to have the vehicle returned to the bankrupt - A Registrar of the New Brunswick Court of Queen's Bench, In Bankruptcy and Insolvency, held that the unperfected lease constituted a purchase money security interest under the PPSA - Pursuant to s. 16(3) of the Bankruptcy and Insolvency Act (BIA), which required the trustee to take possession of all the bankrupt's property, the trustee acquired an interest sufficient to benefit from the PPSA's priority provisions - The trustee had priority over security interests (PPSA, s. 20(2)(a)) - However, the bankrupt was not entitled to the vehicle's return because the vehicle, being subject to a purchase money security interest, was not an exempt asset (PPSA, s. 58(7)) - Further, the Nova Scotia Court of Appeal's reasoning in VW Credit Canada Inc. v. Roberts (Bankrupt) was persuasive - In that case, which involved similar facts, it was determined that the bankrupt's possessory interest was insufficient to prevent seizure by the lessor prior to the bankruptcy and the BIA did not bring about an exemption where none existed before the assignment - The court ordered that the lessor surrender the vehicle to the trustee or, if the vehicle was unavailable, tender an amount equivalent to its fair market value at the date of bankruptcy.

Bankruptcy - Topic 483

Property of bankrupt - Exemptions or exclusions - Property exempt from seizure under provincial laws - [See Bankruptcy - Topic 431 ].

Bankruptcy - Topic 3652.1

Creditors - General - Priorities - Unperfected or unregistered security interest v. trustee - [See Bankruptcy - Topic 431 ].

Bankruptcy - Topic 3666

Creditors - General - Property claims - Method of commencement - A lessor did not perfect its interest in a leased vehicle under the Personal Property Security Act - The lessee made an assignment in bankruptcy - The trustee in bankruptcy sent a notice to prove security to the lessor - The lessor seized the vehicle - The trustee applied to have the vehicle returned to the bankrupt - A Registrar of the New Brunswick Court of Queen's Bench, In Bankruptcy and Insolvency, in ordering that the vehicle be surrendered to the trustee, stated that if the lessor believed that it had ownership, it should have availed itself of the remedies offered by the Bankruptcy and Insolvency Act (the BIA) - The plea of ignorance by the lessor's representative was not a mitigating factor where he was an experienced businessman representing an established corporation that had been put on notice and had access to legal counsel - The lessor's conduct violated the BIA and could not be condoned whatever the merits of its position on the substantive issue - See paragraphs 21 to 24.

Creditors and Debtors - Topic 2105

Seizure or attachment of debtors' property - General - Invalid seizures - [See Bankruptcy - Topic 3666 ].

Personal Property - Topic 6063

Security interests - Registration - General - Requirement of registration - [See Bankruptcy - Topic 431 ].

Personal Property - Topic 6214

Security interests - Priorities - Trustee in bankruptcy - [See Bankruptcy - Topic 431 ].

Personal Property - Topic 6290

Security interests - Seizure - Procedure - General - [See Bankruptcy - Topic 3666 ].

Biens personnels - Cote 6063

Sûretés - Enregistrement, généralités - Obligation d'enregistrer - [Voir Personal Property - Topic 6063 ].

Biens personnels - Cote 6214

Sûretés - Priorités - Syndic de faillite - [Voir Personal Property - Topic 6214 ].

Biens personnels - Cote 6290

Sûretés - Saisie - Procédure - Généralités -[Voir Personal Property - Topic 6290 ].

Créanciers et débiteurs - Cote 2105

Saisie des biens du débiteur - Généralités - Saisies invalides [Voir Creditors and Debtors - Topic 2105 ].

Faillite - Cote 431

Biens du failli - Biens particuliers - Biens loués par le failli - [Voir Bankruptcy - Topic 431 ].

Faillite - Cote 483

Biens du failli - Exemptions ou exclusions - Biens exempts de saisie en vertu de lois provinciales - [Voir Bankruptcy - Topic 483 ].

Faillite - Cote 3652.1

Créanciers - Généralités - Priorités - Sûreté imparfaite ou non enregistrée, ou syndic - [Voir Bankruptcy - Topic 3652.1 ].

Faillite - Cote 3666

Créanciers - Généralités - Réclamations de biens - Méthode de présentation - [Voir Bankruptcy - Topic 3666 ].

Cases Noticed:

Sullivan (Bankrupt), Re (2004), 276 N.B.R.(2d) 112; 724 A.P.R. 112; 2004 NBQB 373 (Bktcy.), refd to. [para. 21].

Wilson Fuel Co. v. Allan Marshall & Associates Inc. - see/voir Sullivan (Bankrupt), Re.

Doran (Bankrupt), Re (2006), 243 N.S.R.(2d) 139; 772 A.P.R. 139; 2006 NSSC 123 (Bktcy. Registrar), refd to. [para. 31].

VW Credit Canada Inc. v. Roberts (Bankrupt) (2001), 192 N.S.R.(2d) 79; 599 A.P.R. 79 (C.A.), consd. [para. 32].

Counsel:

Robert W. Powell, trustee;

Peter Dykeman, Delta Motors Ltd.

This application was heard on May 10, 2006, by Bray, Registrar, of the New Brunswick Court of Queen's Bench, Trial Division, In Bankruptcy and Insolvency, who delivered the following decision on June 26, 2006.