Patry v. General Motors Acceptance Corp. of Canada Ltd., (1998) 74 O.T.C. 181 (GD)

• Judge: MacKenzie, J.
• Court: Ontario Court of Justice General Division (Canada)
• Case Date: September 11, 1998
• Jurisdiction: Ontario
• Citations: (1998), 74 O.T.C. 181 (GD)

Patry v. GMAC (1998), 74 O.T.C. 181 (GD)

MLB headnote and full text

Temp. Cite: [1998] O.T.C. TBEd. SE.131

Gaston Patry (plaintiff) v. General Motors Acceptance Corporation of Canada Limited (defendant)

(C26597/93)

Indexed As: Patry v. General Motors Acceptance Corp. of Canada Ltd.

Ontario Court of Justice

General Division

MacKenzie, J.

September 11, 1998.

Summary:

The plaintiff owned a 32 foot motor cruiser (the original boat). The plaintiff entered into arrangements with a boat dealer to obtain a substitute boat. Pursuant to these arrangements, the original boat came into the possession and thus the inventory of the boat dealer and the plaintiff acquired title to the substitute boat. The boat dealer executed and delivered a chattel mortgage in favour of the defendant (GMAC) for $73,700. The chattel mortgage was given by the boat dealer as part security for its line of credit and loans. The plaintiff was not aware that the boat dealer had given a chattel mortgage on the original boat. The defendant was not aware at the time of receiving the chattel mortgage that the plaintiff had any ownership rights in the original boat. The boat dealer defaulted in its obligations to the defendant and the defendant realized on its security from the boat dealer, including the chattel mortgage. The defendant through its agent sold the original boat for $40,500, resulting in a deficiency. The plaintiff sued the defendant for damages for conversion of the original boat.

The Ontario Court (General Division) held that the transaction between the plaintiff and the boat dealer relating to the original boat was a true consignment arrangement, and not a consignment by way of, or intended as, security. The boat dealer was, at the time of giving the chattel mortgage, a mercantile agent within the meaning of the Factors Act. However, the defendant was unable to rely on the protection afforded under s. 2(1) of the Factors Act because the defendant was unable to show that it was acting in good faith when it obtained the chattel mortgage. The defendant was therefore liable for conversion of the original boat.

Evidence - Topic 6605

Parol evidence rule - Interpretation of a legal act - Admissibility of parol evidence - See paragraphs 8 to 14.

Sale of Goods - Topic 3197

Transfer or loss of title to third parties - Statutory power of sale - Consignment - What constitutes - See paragraphs 6 to 20.

Sale of Goods - Topic 3198

Transfer or loss of title to third parties - Statutory power of sale - Mercantile agent - What constitutes - See paragraphs 21 to 25.

Torts - Topic 3093

Trespass - Trespass to goods - Conversion - What constitutes conversion - See paragraphs 1 to 35.

Cases Noticed:

Candev Financial Services Ltd. v. Klein, [1994] O.J. No. 1946 (Gen. Div.), refd to. [para. 9].

Corey Developments Inc. v. Eastbridge Developments (Waterloo) Ltd. (1997), 34 O.T.C. 301; 34 O.R.(3d) 73 (Gen. Div.), refd to. [para. 11].

Allis-Chalmers Credit Corp. of Canada v. Leon's Manufacturing Co., [1983] 4 W.W.R. 230; 45 A.R. 175 (C.A.), refd to. [para. 23].

Third Generation Realty Limited v. Twigg Holdings Limited, [1992] O.J. No. 1011 (Gen. Div.), refd to. [para. 30].

Statutes Noticed:

Factors Act, R.S.O. 1990, c. F-1, sect. 1(1), sect. 1(2), sect. 2(1) [para. 22].

Authors and Works Noticed:

Fridman, The Sale of Goods in Canada (4th Ed.), pp. 128 to 134 [para. 23].

Counsel:

M. Alter, for the plaintiff;

E. Hyer, for the defendant.

This matter was heard before MacKenzie, J., of the Ontario Court (General Division), who delivered the following decision on September 11, 1998.