Van Camp v. Chrome Horse Motorcycle Inc., 2011 ABQB 485

Court of Queen ’ s Bench of Alberta Citation: Van Camp v.

Chrome Horse Motorcycle Inc., 2011 ABQB 485 Date: 20110726 Docket: 0503 17706, 0903 09288 Registry: Edmonton Between: 0503 17706 Robert Van Camp and Jeanette Van Camp Plaintiffs - and - Chrome Horse Motorcycle Inc., Maurice Moreau, Mark Semrau Carrying on Business as SI Financial Ltd., SI Financial Ltd., and Laurentian Bank of Canada Defendants - AND - Between: 0903 09288 The Laurentian Bank of Canada Plaintiff - and - Robert Van Camp and Jeanette Van Camp Defendants - and- Robert Van Camp and Jeanette Van Camp Plaintiffs by Counterclaim - and - The Laurentian Bank of Canada Defendant by Counterclaim _______________________________________________________

Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] The papers were signed in February 2005. Riding season was months away. It was Bonspiel time in Medicine Hat. [ 2 ] The Van Camps attended the Edmonton motorcycle show in January of 2005 and wanted to purchase two motorcycles from the Defendant, Chrome Horse Motorcycle Inc. The Plaintiffs went to the Chrome Horse shop in Medicine Hat. They told a representative of the Defendant they would require financing. [ 3 ] The Defendant, Semrau, arranged financing.

He sent a package of materials to the Plaintiffs consisting of Sales Agreements for two motorcycles, and financing contracts with the Laurentian Bank of Canada. [ 4 ] The Plaintiffs executed the Sales Agreements and the Financing Agreements. They returned this package to Chrome Horse, to Mr. Semrau ’ s attention. The Plaintiffs kept copies of the documentation. The Laurentian Bank of Canada advanced funds to Chrome Horse in the amount of $76,006.98, in early March, representing the combined price of the two motorcycles. [ 5 ] The motorcycles had not been constructed at the time of the sale.

They were to have been built up from pre-manufactured parts. Moreau told Mr. Van Camp that it would take six to eight weeks for delivery. They were intended for the 2005 riding season. [ 6 ] Mr. Van Camp made further attendances at the Chrome Horse shop in Medicine Hat but was given the run around. On his last visit Moreau denied responsibility to Mr. Van Camp and told him he would drag this out as long as possible. In September, the Van Camps retained counsel and made a formal demand for the motorcycles. When the motorcycles were not produced, the Van Camps purported to terminate the agreements for non-delivery.

The Laurentian Bank was notified and the Bank sent a demand to Chrome Horse for return of the funds. [ 7 ] The Financing Agreements were to be repaid by automatic withdrawals from the account of a company owned by Mr. Van Camp. The withdrawals were taken automatically. Despite the demands and purported terminations, funds continued to be withdrawn until a total of $37,496.96 had been paid; approximately the cost of one of the motorcycles. [ 8 ] Chrome Horse or Moreau were crooks. They kept the money but never provided the motorcycles. Now there is nothing to recover. The cross applications for

summary judgment brought by the Van Camps and the Laurentian Bank really come down to a question of ‘ which of two innocent parties should bear the consequences of the defaults and defalcations of Chrome Horse or Moreau. ’ [ 9 ] The failure of the dealer to deliver motorcycles does not absolve the Van Camps from their obligation to repay the Bank in accordance with the terms of the Financing Agreements. [ 10 ] Both Purchase Agreements provided for cancellation in the event that the dealer failed to deliver the motorcycles within a reasonable time. Laurentian Bank is not a party to this agreement. Furthermore, the Bank is, to some extent, shielded from the omissions

or defaults of the dealer by clause 10 of the Financing Agreement. [ 11 ] None of the parties made an argument based on non-existence of the goods, or s. 20 of the Sale of Goods Act, presumably because the intention of the parties is sufficiently clear from the documents.

While these arguments might effect the position of the Van Camps with respect to the dealer they would not effect their position with respect to the Bank. [ 12 ] Each of the Financing Agreements total $55,306.80, which includes principal, finance charges and interest at 7.99%, to be paid over 120 months. [ 13 ] However, there is a mitigating factor arising on the evidence that significantly affects the result. It is preferable to deal with each of the motorcycles separately.

I “ Chrome Horse Pro-Street ” [ 14 ] The sale document describes this motorcycle as a new 2005 model, serial number: “ 2C9PM22245MO59001. ” [ 15 ] The financing document contains the same serial number and description. Funds were advanced by the Bank to the dealer in early March and a number of payments were made by the Van Camps, or on their behalf. [ 16 ] The Van Camps have argued failure of consideration because they never received this motorcycle; however, they did receive title. The decided cases distinguish between use, or possession and title. Title is the crucial element. ( Rowland v.

Divall [1923] 2 K.B. 500 (English Court of Appeal) . [ 17 ] In this case, the effect of the documentation is to pass title to the ‘ Pro-Street ’ to the Van Camps when the funds were advanced. The Van Camps got title to this motorcycle even though they never got possession of the motorcycle itself. Since title is the crucial element of ownership, the obligation to repay the Bank is not impaired by the dealer ’ s default. II “ Chrome Horse Street ” [ 18 ] This portion of the claim presents a number of difficulties.

The documentation is in the same form but it was altered after it left the hands of the Van Camps. [ 19 ] The sale documentation intended to convey title to a new 2005 Chrome Horse Street motorcycle with a serial number of “ 2C9CM22225MO59001. ” [ 20 ] The financing documentation originally contained the same serial number (as indicated on the original documents retained by the Van Camps) but it was subsequently altered to read “ 2C9CM222 1 5M059001". There are what appear to be initials under the alterations. [ 21 ] The Van Camps also complained that what purports to be Mrs.

Van Camp ’ s signature was added to the bottom of the Financing Agreements but nothing turns on this. We do not know when the document was altered or by whom. Nobody will admit it. [ 22 ] There is evidence of a NVIS form bearing the VIN number 2C9CM22215M059001, which would match the serial number on the altered financing agreement.

[ 23 ] There is also an insurance Cover Note, expressed to be effective March 1, 2005, purporting to insure a “ Chrome Horse Pro- Street VIN number 2C9PM22245M059001" and a Chrome Horse “ Street Cobra ” VIN number 2C9CM22225M059001. These serial numbers match the original sale documentation. Laurentian Bank is named as the loss payee. The Van Camps deny requesting or obtaining this insurance. It was obtained at an agency they say that they have never dealt with. [ 24 ] The net result of all of this was that a Chrome Horse Pro-Street was purchased, financed and insured.

A Chrome Horse ‘ Street ’ bearing the serial number 2C9CM22225M059001, was intended to be purchased by the Van Camps. Someone tried to insure it (even though it was mis-described as a ‘ Chrome Horse Street Cobra ’ ). However, someone altered the financing agreement (possibly to match the NVIS form). On the face of the documents, Laurentian Bank financed a different motorcycle than the one the Van Camps agreed to purchase.

Accordingly, there was a total failure of consideration with respect to the “ Chrome Horse Street. ” The Van Camps got neither title nor possession of this motorcycle and they do not have to pay for it. [ 25 ] To look at it another way, the Bank ’ s claim against the Van Camps for this second motorcycle fails for want of proof that the second motorcycle purchased by the Van Camps was financed by the Bank. The Bank cannot blame the Van Camps because Moreau or Chrome Horse took, or misapplied their money. Semrau [ 26 ] Mr. Semrau was a finance broker for MLS Holding Ltd. which contracted to SI Financial Ltd.

There are various claims made against him based on breaches of the Fair Trading Act, RSA 2000, c-F-2, or actual misrepresentation. The main complaint appears to boil down to the allegation that Mr. Semrau knew that the Van Camps had not received delivery of the motorcycles. Delivery is expressed to have been February 20, 2005. However, the Van Camps knew that the motorcycles had not been delivered when the documents were signed and they did not expect delivery for six to eight weeks. [ 27 ] It is difficult to find Mr.

Semrau any more culpable than the Plaintiffs themselves for representing that the motorcycles were delivered when they were not. I do not see any breaches of the Fair Trading Act . Further if Mr. Semrau were is indeed an agent of a disclosed principal, it is difficult to see how he should be identified with the acts or omissions of Moreau and Chrome Horse and suffer exposure individually. [ 28 ] Accordingly, the

Summary Judgment application against Semrau fails on the merits. Conclusion [ 29 ] Based on the above: 1. Laurentian Bank is given judgment against the Van Camps for the balance of the amount owing for the Chrome Horse Pro Street less the amount actually paid ($55,306.80 - $37,496.96) with the appropriate interest; 2. The Bank ’ s claim for

Summary Judgment against the Van Camps with respect to the second motorcycle (the ‘ Chrome Horse Street ’ ) is dismissed. 3. The Van Camps are awarded judgment against the Defendants, Chrome Horse and Moreau in the amount of $55,306.80, plus interest pursuant to the Judgment Interest Act. 4. The Van Camps ’ claim against Semrau is dismissed with costs. 5. The residual costs issues as between the Van Camps and the Laurentian Bank is complicated by the fact that there are two

actions. However, given the divided success, it is my view that these parties should bear their own costs of the application and the actions. If the parties are unable to agree about costs, cost may be spoken to. [ 30 ] The parties may pick up their original documents. Heard on the 16 th day of June, 2011. Dated at the City of Edmonton, Alberta this 26 th day of July, 2011. W. S. Schlosser M.C.C.Q.B.A. Appearances: Darren Bieganek Duncan & Craig for the Van Camps Terrence Warner Miller Thomson LLP for the Laurentian Bank of Canada Bryce Farrell Niblock & Company for SI Financial Ltd. and Mr. Semrau