Court of Queen ’ s Bench of Alberta Citation: Alberta Treasury Branches v Cam Holdings LP, 2016 ABQB 33 Date: 20160121 Docket: 1503 09941 Registry: Edmonton Between: Alberta Treasury Branches Applicant - and - Cam Holdings LP and Cam GP Inc., G.L.M. Industries LP and G.L.M. Industries Inc. Respondents _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] In this special chambers application, relying on ss. 26(1) and 23(1) of the Sale of Goods Act , Husky Oil asks the court for a declaration that it is the owner of 12 oil storage tanks. Three of the tanks had been bought by Husky from the manufacturer G.L.M. Industries; nine of the tanks had originally been manufactured by G.L.M. for FoGo Energy, and thereafter sold by FoGo to Husky.

All 12 of the tanks had been continuously stored on G.L.M. property from the date of their manufacture; the three original Husky tanks were stored at the vast G.L.M. yard at Nisku, Alberta and the nine original FoGo tanks were stored at the vast G.L.M. yard at Battleford, Saskatchewan. All 12 tanks were sold by G.L.M. to Calroc Industries, which bought them at prices far below what Husky had paid for them.

[2] Husky Oil adds that it is industry practice to store purchased tanks on the manufacturer’s property, and that, because of itsprincipal’s experience, Calroc knew, or should have known, of that practice. [3] Husky asks the court to declare that Calroc is not a person of good faith without notice of the previous sale as required unders. 26(1) of the Sale of Goods Act. [4] Husky also asks the court to declare that s. 23(1), rather than s. 26(1), of the Sale of Goods Act applies to the FoGo situationbecause Husky did not authorize G.L.M. to sell the FoGo tanks. [5] In relation to the three originally Husky-owned tanks and s. 26(1) of the Act, Calroc responds that constructive notice of apotential problem is not the equivalent of actual knowledge of a problem. [6] In relation to the nine originally FoGo-owned tanks and s. 23 of the Act, Calroc responds that s. 26 of the Act is clearlyintended to deal with the situation which arose here, where the original manufacturer of the tanks remained in possession of them, andthat s. 26 should apply to both the Nisku and the Battleford situations. [7] In the circumstances here, s. 26 of the Act, rather than s. 23, applies to the analysis of the ownership of the “FoGo” tanks:that

section was intended to deal with the situation here where the original owner and manufacturer was left as a bailee in possession byboth the first purchaser and the second purchaser of the tanks. In the alternative, Calroc has no title to those tanks because G.L.M. had notitle to pass on. [8] On the s. 26 analysis, although Calroc has proved that it did not have the equivalent of actual knowledge that G.L.M. did nothave title to the tanks. Calroc has not proved that it was a purchaser “in good faith and without notice of the previous sales”.

On thecontrary, the evidence establishes, in the circumstances, Calroc had sufficient notice of the possibility that G.L.M. did not have title tothe tanks that it acted recklessly, and thereby lost the benefit of s. 26(1). [9] In the result, Husky has proved its entitlement to the 12 tanks Cases and authority cited [10] By Husky Oil: Saskatchewan Sale of Goods Act, R.S.S. 1978, c.S-1; Coutinho & Ferrostaal GmbH v Tracomex (Canada)Ltd., 2015 BCSC 787; Canada (Attorney General) v Sjoquist, 2014 SKQB 66; Bartin Pipe & Piling Supply Ltd. v Epscan IndustriesLtd., 2004 ABCA 52, leave to appeal denied 2004 S.C.C.A.

No. 203; Radius Credit Union Ltd. v Royal Bank, 2009 SKCA 36; Cora vAdwokat, 2005 CarswellOnt 6. [11] By Calroc Industries Ltd.: Sale of Goods Act, RSA 2000 c. S-2; Bartin Pipe & Piling Supply Ltd. v Epscan IndustriesLtd., 2004 ABCA 52; Battle River Dodge Chrysler

(1994) Ltd. v Vulcan Chev Olds Geo Ltd., 1999 ABQB 153; General Motors Acceptance Corp. of Canada v Mahfouz (1984), 1984 ABCA 285 , 14 DLR (4th) 437, 1984 CarswellAlta 426 (Alta CA);Witting v Tauber, 2006 ABQB 23; R v Vinokurov, 2001 ABCA 113. [12] By the court: Hryniak v Mauldin 2014 SCC 7; Stella Psarakis Professional Corp. v Gonnsen 2015 ONSC 25; AlbertaTreasury Branches v Elaborate Homes Ltd. 2014 ABQB 350, appeal dismissed sub nom Alco Industrial Inc. vPricewaterhousecoopers Inc. 29 April 2015, appeal number 1403-0168AC; R. v Sansregret (SCC), [1985] 1 S.C.R.570; R. v Briscoe 2010 SCC 13; Cumberbatch v Toronto (City) 2015 ONSC 4859; Stevenson v First Nations University of Canada2015 SKQB 122 ; Carriere Industrial Supply Ltd. v Toronto Dominion Bank 2014 ONSC 6489Gray v Smith [2013] EWHC 4136(Comm); Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd. [2011] EWCA Civ 347. 1.

Background

a) Factual background [13] Husky Oil Operations Limited has, over the past 15 years, purchased tanks from G.L.M. Industries, often making acquisitionsof several million dollars in a given year. [14] Calroc Industries is a broker; it is in the business of buying and selling equipment, inter alia, new and used oil storage tanks.The president of Calroc is Dan Echino. A majority of the shares of Calroc Industries is owned by Corlac (sic) Resources Ltd. DanEchino is the sole voting shareholder of Corlac.

Corlac had been in the business of manufacturing and selling tanks in much the sameway as G.L.M. [15] Husky bought three tanks from G.L.M. in 2008; it paid G.L.M. $61,600.00 apiece for the 750 bbl tanks, for a total of$194,040.00. The tanks remained at the G.L.M. site from the date of manufacture. One of Husky’s oil and gas projects and constructionmanager swears: 6. (

c) As moving tanks from site to site is a costly and time consuming endeavor, the arrangement entered into by Husky and G.L.M.contemplated Husky leaving the manufactured tanks at the G.L.M. manufacturing facilities until Husky had a specific location (where)the tanks would be used. This avoided the necessity of moving the tanks twice – first to Husky’s holding yard, and then to the actual siteat which the tanks would be used. (

d) Historically, G.L.M. never charged Husky for the storage of the tanks left on site at G.L.M. (insert from para. 18 of the same affidavit: On September 8, 2014, Mr. Stinson of G.L.M. advised Husky that Husky’s tanks needed to bemoved out, and that “there are a number of ways of dealing with this, just need to know who to talk to about moving them out”. DavidEvans of Husky responded to Mr. Stinson that he would pass on G.L.M.’s request to Husky’s asset recovery group. There was no furthercommunication with G.L.M. with respect to removal of the 2008 tanks.)

. . .but in November 2014, G.L.M. proposed a form of contract which contemplated that for new tank orders, tanks would only be stored for free for 60 days from completion of manufacture and thereafter storage would be charged. . . . 9.

I am aware from discussions with other entities carrying on business similar to the Husky Operations that the arrangements for manufacture, storage and delivery of tanks as outlined . . . above, was an industry standard, in that most entities conducting such business entered into similar arrangements with G.L.M. and other tank manufacturers. [ 16 ] On June 26, 2015, G.L.M. sold these three tanks to Calroc for $20,800.00 apiece. [ 17 ] In the spring of 2014, Husky was approached by FoGo Energy with respect to the possible sale to Husky of nine 1000 bbl tanks which FoGo had purchased from G.L.M. in 2012 and had stored since manufacture in the G.L.M. yard at Battleford.

The same Husky manager who provided the sworn evidence in para. 15 above swears: “I am informed by Mr. Cochrane of FoGo, and do verily believe that FoGo’s arrangements with G.L.M. were very similar to those described in paragraph 6 above.” Husky asserts that G.L.M. was, or should have been, aware of the intended sale by FoGo to Husky because Husky had required FoGo to obtain material specifications for the tanks from G.L.M.; the required information was provided by G.L.M. to FoGo on May 1, 2014, and FoGo forwarded that information to Husky.

Husky asserts that it understands that, during this exchange between FoGo and G.L.M., there was a discussion to the effect that G.L.M. may start charging storage fees for tanks left on site. However, Husky asserts that it is informed by FoGo that FoGo never received an invoice from G.L.M. for storage fees. On August 1, 2014, Husky purchased the FoGo tanks from FoGo. It paid $42,000.00 per tank, plus 5% GST and 5% Saskatchewan PST, for a total of $415,800.00. The tanks were not moved by FoGo from the G.L.M. yard after the sale to Husky.

Husky asserts that it never received any request or demand from G.L.M. to remove the tanks it had bought from FoGo or any invoice for storage of those tanks. [ 18 ] On April 9, 2015, G.L.M. sold those “FoGo” tanks to Calroc Industries for $ 20,800.00 apiece. [ 19 ] Husky asserts that all of the tanks with which this application is concerned are unique tanks rather than stock tanks.

None of the tanks were registered in the Personal Property Registry. [ 20 ] The Husky engineer who provided the affidavit evidence referred to in para. 15 gave the following evidence when cross- examined on her affidavit: Q You indicate in your paragraphs 23 and 24 in your affidavit, based on the price that Calroc paid for the tanks, you indicate that Mr. Echino or his company should have known that they were purchasing tanks for below market value.

How do you assess market value for a broker or a company like Calroc when Husky has -- doesn't deal with them to sell off its inventory, doesn't sell its inventory itself to third parties or for rental or for flipping or otherwise? A So I would assess market value as to what we would purchase -- I mean, Husky's got a reasonable buying power. So what we would purchase tanks at from a manufacturer, I would consider that to be market value. Q When there's no market for it, when the economy is bad, when the oil prices are low, you think that that's - -that what? A Well, there's still a market value in steel.

So if you look at the price of steel versus the -- and the U.S. dollar exchange, actually the market value on tanks -- and I'd have to confirm this because the price of steel and the U.S. dollar has gone up -- Canadian market value of these tanks I don't believe would have changed significantly. So we've been purchasing other pieces of equipment and haven't seen significant price drops based on the market value because of the U.S. dollar. So a lot of the steel for tanks comes out of the U.S.

And because of that price -- obviously the Canadian dollar has dropped – the market value of these tanks hasn't changed that significantly. Q Right. You're aware, though, that -- from listening to this questioning and from reviewing the affidavits that Calroc purchased 40 tanks in February of 2015 for around the same price for per tank that it purchased the April 2015 9 tanks for. Right? A Correct. I can't really comment on what GLM was offering those tanks for knowing that they were in financial distress.

I mean, I think that puts people in an awkward position, and they may be doing things, like they said - - like Mr. Echino said, to recover cash, to recover some sort of value. So do I consider that to be fair market value? No, because I don't think that's a common occurrence in the industry for that to happen. Q But that's not what you've done with -- you have no idea what the- - who was interested in purchasing tanks in February of 2015 from GLM and whether or not they looked for bidders or otherwise; they just -- you have no idea what they did.

A Well, we had been out for a bid with GLM in late fall of 2014, early 2015, and we knew the price that we were purchasing GLM tanks for was $55,000 or $56,000, so that was a recent bid that we had to be able to compare. And we would have (gone) to other manufacturers at that time. Q I'm talking about in February of 2015 when they were offering these 40 tanks. You have no idea who they offered these tanks to, what other parties were willing to pay for the tanks versus what Calroc paid for the tanks. You have no information in that regard. A I don't have information in that regard.

I do have information that we had just gone out to bid with GLM, so I knew what the price of a 1,000-barrel tank was new from GLM at that time. [ 21 ] Calroc swears that it does not go to the yard where tanks are stored to mark them when it purchases tanks. [ 22 ] With respect to the tanks in question on this application, Calroc swears that it purchased the tanks at a fair price given the

state of the economy and the prevailing market, and given that it knew G.L.M. was in financial distress and presumed that G.L.M. wished to clear its yard of old and cancelled inventory. Calroc knew that the age of manufacture of the tanks was from between 2004 to 2014. It stated that, in late 2014, it was first approached by G.L.M. about the purchase of one small tank. Then, in early 2015, G.L.M. offered 40 tanks at once.

Calroc says that they took this as an indication that G.L.M. wanted to divest itself of some inventory. [ 23 ] Calroc swears that it has never had any adverse experiences with, or concerns about, G.L.M.'s ownership of stock tanks it has sold to Calroc.

Calroc also swears that, as a broker of equipment, when Calroc bought tanks it moved them off the property where the tanks were stored "within one or two months"; there is no evidence that it has ever paid storage to G.L.M. [ 24 ] In March, 2015, G.L.M. contacted Calroc with the following information: Hey guys, I've found another nine tanks in Battleford where the storage fees are worth more than the tanks and the customer isn't going to pay, looking to sell if you're interested. They're all identical, the order was for 12, only three were ever picked up.

Drawings attached. [ 25 ] The principal of Calroc gave the following evidence when cross-examined on his affidavit: Q When did Calroc first become aware of GLM's financial distress? A I think that the wording is not maybe the correct way to do it, but one of the individuals that's a friend of mine is a partner with the lady that owns GLM, which I've never met. But they're partners in another company called Tervita. And by talking to him, my understanding is that his company is in distress, this Tervita company.

And knowing that the owner of GLM is this lady that is a partner with him in Tervita, and knowing that the economy- - the orders have just about stopped at that time as oil was dropping and knowing that they approached me about a big sale. Typically nobody sells a lot of tanks out of their inventory unless they really need the money. Q So you reached the conclusion that they were in some financial problems as at February when you saw the list of 40 tanks?

A And then laying off all the -- the tank factories were all laying off people like crazy, and they were all phoning me because they know I'm a broker, and I buy a lot of tanks. So they're all phoning me with cut-rate prices and if I could give them some orders that they would discount, brand-new manufactured tanks. So I knew it was across the whole industry. Everyone was getting into distress. And it continues today. Q Were you -- when were you first aware that MNP Ltd., who later became a receiver, were onsite at GLM on a regular basis?

A I don't really know the exact date, but it was after our second purchase of tanks. And I remember Brian Kientz telling me this. And then soon after was when they approached us about buying some more tanks. Q All right. A But I never really touched base with the receiver on a personal level until after the trucks were unloaded. Q In paragraph 10 of your affidavit, you reference that prior to June 26, 2015, and then you reference with the knowledge of MNP. So presumably before June 26, 2015, you were aware of MNP’s presence? A Okay, correct. Q Correct? A Correct. . . . Q MR.

RUSSELL: Now, sir, when you bought any of the tanks -- and I'm talking collectively the 40 tanks, the 9 tanks, and basically all of the tanks that are shown on the invoices in Exhibits B, C, and D -- did you ask for any assurances from GLM that any creditor of GLM with a security interest in these tanks was fine with allowing the sale to go through to Calroc? A I've been buying tanks since 1990, and I don't think I've ever done that once unless I was buying it from a broker of dubious character, which sometimes happens. But from a reputable manufacturer like GLM, I wouldn't even think to ask them.

Plus on their invoice, they even state on it that the tank stays on their property until paid in full. Q Did you do any searches or cause anybody to do any searches at Personal Property Registry to see what encumbrances might be registered against any of these tanks? A In my 25 years, I've never done that once against a manufacturer. Q But you knew at least by the time of the third sale that they were in financial difficulty; and, in fact, you suspected it at the time of the first sale? A Still didn't matter to me. I was buying their new inventory. It's just something that's just not done.

Q While the tanks were left in the possession of GLM, did you carry insurance on them or do you know? A I don't know, and I would probably guess not.

Q Did you ever ask GLM if they carried insurance on them? A In my 25 years, I've never heard of a tank getting damaged in storage. Q I assume the answer was no? A Correct. [ 26 ] When asked if Calroc knew, or at least suspected, that G.L.M. was in financial difficulty, when it bought the tanks, Mr. Echino’s response was: Q. But you knew at least by the time of the third sale that they were in financial difficulty; and, in fact, you suspected it at the time of the first sale? A. Still didn’t matter to me. I was buying their new inventory.

It’s just something that’s just not done. [ 27 ] In relation to the FoGo tanks, Calroc knew that those tanks were owned by someone other than G.L.M., but chose to make no further inquiries. Q. Did it surprise you that someone could run up storage fees to such an extent that it made a sale at 20,800? A. To be honest, I never even paid attention to that. I was just buying from a large - one of the oldest tank manufacturers and one of the most reputable, the most high quality tanks. Of all the manufacturers in Alberta, GLM has the reputation as number 1. So I’m buying it from them.

I really don’t care what their reasoning to sell them is. If they need cash, if they got no storage room, or if somebody owes them money, or someone hasn’t paid, it wasn’t up to me to ask. I was buying from General Motors. . . . Q. Well, except if Mr. Weins is saying to you that the nine tanks have an associated storage fee worth more than the tanks that would surely indicate to you that some third party was involved? A. Again, Chevrolet is selling me something. I’m not going to get into the details of why they’re selling it. I just knew I smelled a good deal, and I had the trucks to move it.

And I have the resources to sell them. [ 28 ] On July 3, 2015, G.L.M. was placed in receivership.

b) Legislative background [ 29 ] The sections of the Alberta Sale of Goods Act which potentially apply are:

Interpretation 2(1) A thing is deemed to be done “in good faith” within the meaning of this Act when it is in fact done honestly whether it is done negligently or not. Transfer of Title Sale by person not owner 23(1) Subject to this Act, if goods are sold by a person who is not the owner of them and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had unless the owner of the goods is by the owner’s conduct precluded from denying the seller’s authority to sell.

(2) Nothing in this Act affects (

a) the Factors Act or any enactment enabling the apparent owner of goods to dispose of them as if the apparent owner were the true owner of them, (

b) the validity of any contract or sale under any special common law or statutory power of sale or under the order of a court of competent jurisdiction. . . .

Possession of goods after sale 26(1) When a person who has sold goods continues or is in possession of the goods or of the documents of title to the goods, the delivery or transfer by that person or by a mercantile agent acting for that person of the goods or documents of title under any sale, pledge or other disposition thereof, to any person receiving them in good faith and without notice of the previous sale has the same effect as if the person making the delivery or transfer were expressly authorized by the owner of the goods to make it. (2) Subsection (1) does not apply to a sale, pledge or other disposition of goods or of documents of title to goods, other than negotiable documents of title to goods, that is out of the ordinary course of business of the person having sold the goods where, prior to the sale, pledge or disposition, the interest of the owner is registered in the Personal Property Registry in accordance with the regulations made under the Personal Property Security Act, and

Part 4 of that Act applies, with the necessary modifications, to that registration.

[ 30 ] The provisions of the Saskatchewan Sale of Goods Act are to the same effect. 2.

Finding the facts: even on the basis of this evidence, some of which is hearsay, it is possible to determine facts for the purposes of the application [ 31 ] Because this is a chambers application for what amounts to final relief, and in light of the encouragement provided by the Supreme Court of Canada in Hryniak to make civil litigation less costly and less protracted by making fair assessments of the evidence where possible, the court concludes that: - it is not disputed that G.L.M. was not a mercantile agent; - historically, G.L.M. had a good reputation in the industry.

In coming to this conclusion, I rely on the evidence of Calroc, which was not undermined by Husky; - G.L.M. had not, historically, asked the purchasers of its oil storage tanks for storage fees if the purchasers left the paid-for tanks on G.L.M. property.

In coming to this conclusion, I rely on: the sworn evidence from Husky; the fact that it would be reasonable for G.L.M. to treat tank purchasers differently from tank brokers at least in part because of the different business objectives of those two classes of customers; the fact that both FoGo and Husky reported discussions with G.L.M. in 2014 about the possible charge of rental fees in the future; - G.L.M. never made a demand for storage fees from either Husky or FoGo.

In coming to this conclusion, I have relied on the following: the sworn evidence of Husky’s officer; the evidence of Calroc that not even it, and not even as late as late spring 2015, had paid storage fees to G.L.M; - the tanks in question on this application were not “stock” tanks but were in fact unique tanks which were manufactured according to specifications provided by the purchasers; in this decision, they will be referred to as “unique” tanks.

In coming to this conclusion, I have relied on the following: although Calroc refers to the tanks as stock tanks, on several occasions its principal refers to the fact that at least some of the tanks which it purchased in late 2014/early 2015 from G.L.M. were unique tanks, (for example in the context that Calroc was taking a greater risk in purchasing them than it would have in the case of stock tanks); the fact that there were plans for all of the tanks initially purchased by FoGo (which plans are a feature of unique tanks but not of stock tanks); and, the three tanks initially purchased by Husky were no longer an industry standard; - it was not a common practice in the industry to register purchased oil tanks in the PPR. 3.

Ascertaining the law: a purposive

interpretation of the Sale of Goods Act in light of the case law requires that, in this case, s. 26 of the Act – rather than s. 23 - apply to the sale of the nine former FoGo tanks and that s. 26(1) requires an absence of gross negligence or recklessness [ 32 ] As the parties have both noted, our Court of Appeal’s decision in Bartin Pipe guides the

interpretation to be given to the provisions of the Sale of Goods Act in question.

a) Section 26 applies to the FoGo tanks transaction [ 33 ] Husky correctly observes that, in the circumstances here, s. 26(1) of the Sale of Goods Act does not facially govern the sale by G.L.M. to Calroc of the “FoGo” tanks because FoGo was not in possession of the tanks when it sold them to Husky. Understandably, Husky concludes that s. 23(1) of the Act applies to the “FoGo” transaction. However, the purposive

interpretation of the Act leads to a different conclusion. [ 34 ] Bartin Pipe said: 17 Section 27(1) is one of the provisions in the Act where a buyer may acquire better title better than the seller's. The purpose of s. 27(1) was described by Denning L.J. in Bishopsgate Motor Finance Corporation, Limited v. Transport Brakes, Limited, [1949] 1 K.B. 323 at 336-7 : In the development of our law, two principles have striven for mastery. The first is for the protection of property: no one can give a better title than he himself possesses.

The second is for the protection of commercial transactions: the person who takes in good faith and for value without notice should get a good title. The first principle has held sway for a long time, but it has been modified by the common law itself and by statute so as to meet the needs of our own times. . . . 20 The English Court of Appeal similarly has emphasized that the possession of the goods is what is significant, not the contractual relationship between the buyer and seller. In Worcester Works Finance Ltd. v. Cooden Engineering Co.

Ltd., [1972] 1 Q.B. 210 , Denning M.R. stated at 217: It does not matter what private arrangement may be made by the seller with the purchaser - such as whether the seller remains bailee or trespasser, or whether he is lawfully in possession or not. It is sufficient if he remains continuously in possession of the goods that he has sold to the purchaser.

If so, he can pass a good title to a bona fide third person, and the original purchaser will be ousted. [ 35 ] What is important in this case is that G.L.M. was a bailee in possession, that is, G.L.M. was in possession of the tanks with the consent of the owner of the tanks. That is what distinguishes the situation here from all the nemo dat situations where a person in possession of goods, without title, cannot give onward good title to the goods.

The situation here is not, therefore, comparable to that of a person in possession of a car (without ownership or documents of ownership of the car) who purports to sell the car to another person.

[ 36 ] Even at that, it may not be in every situation where a person without title is in possession of goods with the consent of the owner of those goods that the equitable approach articulated in s. 26(1) of the Sale of Goods Act would apply. However, I agree with Calroc that the provisions of s. 26(1) do apply in the situation here. In the FoGo situation, GLM was a bailee in possession for FoGo and a bailee in possession for Husky. By leaving the tanks it had purchased from FoGo in the manufacturer’s yard, Husky endorsed FoGo’s decision to leave purchased goods with the vendor.

When the goods in question - which are heavy goods, uniquely manufactured by the original vendor - are left in new condition in the manufacturer’s possession by both the first purchaser and by the second purchaser, the purchasers together have put into place a fact situation which s. 26(1) was intended to address. [ 37 ] In the result, in the situation here, the equivalent to s. 26(1) of Alberta’s Sale of Goods Act in Saskatchewan applies to the FoGo tanks rather than s. 23(1) of the Act.

We must therefore turn to that analysis to determine the parties’ entitlement to the tanks. [ 38 ] If I have erroneously applied the s. 26 analysis to the “FoGo” tanks, then s. 23(1) of the Act applies. In that event, Husky has good title to the nine “FoGo” tanks: G.L.M. could not give good title to Calroc because G.L.M. had no title to the tanks.

b) The “good faith without notice” required in s. 26 excuses negligence but not excuse gross negligence/ recklessness [ 39 ] An analysis of the wording of the Act begins with a reminder of the obvious burden: the party claiming that it was acting bona fide , i.e. in good faith and without notice, has the burden of proving it; see, for example, Stella Psarakis at para. 21. [ 40 ] The analysis must also begin with an assessment of the actual wording of the statute; s. 2(1) refers only to “negligently”.

To put it another way, the statute itself does not explicitly excuse gross negligence, recklessness or wilful blindness, all of which concepts are well known to the law, all of which go beyond mere negligence, and all of which might have been explicitly addressed in the statute. [ 41 ] For the reasons which follow, I have concluded that, in order to obtain the benefit of s. 26(1) of the Act, the party in the position of Calroc must prove that it did not act recklessly or in a grossly negligent fashion. [ 42 ] In analyzing what kind of negligence is excused by s. 26(1), I begin by observing that English courts have recently emphasized that even commercial transactions may be affected by constructive notice. see, for example, Sinclair Investments , at paras. 97-101 and its reference to informal notifications of claims.

This theme is further developed by the English Commercial Court in Gray : The test for notice 132. There is a perceived tension between notice as understood by commercial lawyers and equity lawyers. It is commonly said that the doctrine of constructive notice has no place in "commercial transactions", a proposition rejected by Millett J (as he then was) in Macmillan Inc v Bishopsgate (No. 3) [1995] 1 WLR 978 at pp. 1000-1001 .

Whilst, at paragraph 7-047 of Benjamin's Sale of Goods (8th Edition) the authors submit that in the context of the Factors Act and of the Sale of Goods Act , "notice" of a fact prima facie means actual knowledge of that fact, reference is made to the dictum of Lord Tenterden in Evans v Trueman (1830) 1 Moody & R 10 at p. 12 to the following effect: "A person may have knowledge of a fact either by direct communication, or by being aware of the circumstances which must lead a reasonable man applying his mind to them, and judging from them, to the conclusion that the fact is so.

Knowledge acquired in either of these ways is enough, I think, to exclude a party from the benefit of the provisions of this statute: a slight suspicion, I think, will not." This dictum has subsequently been judicially approved but it is now established that suspicion in the mind of a person, and the means of knowledge in his power wilfully disregarded, would amount to notice. The main problem, as explained in Benjamin, is the extent to which the courts will adopt an objective approach to the question of notice by reference to the "reasonable man".

The paragraph goes on to say that the doctrine of constructive notice does not normally apply to commercial transactions and there is no general duty on the buyer of goods in an ordinary commercial transaction to make enquiries as to the right of the seller to dispose of the goods . Nevertheless, it is appropriate that the court should apply an objective test to determine whether, in the circumstances of the sale, the buyer as a reasonable man, must have known of the agent's want of authority (or defect in title) or must have had suspicions and wilfully shut his eyes to the means of knowledge available to him.

It is a question of fact and degree. . . . 134. The Master of the Rolls further cited Millett J in an addendum to his judgment in Macmillan where he said that unless and until someone was alerted to the possibility of wrong doing, he was entitled to proceed on the assumption that he was dealing with an honest man. "In order to establish constructive notice it is necessary to prove that the facts known to the defendant made it imperative for him to seek an explanation, because in the absence of an explanation it was obvious that the transaction was probably improper." 135.

The supposed tension between commercial and equity lawyers is, in my judgment, essentially put to rest in Snell's Equity (32nd edition) at paragraph 4-035 where the following passage appears under the sub-heading "COMMERCIAL TRANSACTIONS NOT INVOLVING LAND." "It is commonly said that the doctrine of constructive notice has no place in "commercial transactions". … But the question whether a recipient of property is fixed with constructive notice of an equitable interest should not depend simply on whether the transaction may be characterised as "commercial".

The better approach may be to ask if there is a recognised practice of making inquiries as to the transferor's title in transactions of this sort. In many transactions that may broadly be called "commercial" that practice may be non-existent or minimal. The overriding need is for speed and finality. It would be inappropriate to introduce the demanding standard of inquiry expected of a purchaser buying unregistered land. It would be difficult to fix a person in such a transaction with constructive notice because the threshold of knowledge necessary to raise an obligation of inquiry is set so high.

The person might not be put on enquiry unless he knew facts which pointed so clearly to the equitable interest affecting the payment that he would have actual notice of it at any event."

136. Lindley LJ in Manchester Trust (ibid) at p. 545 stated that "in commercial transactions possession is everything and there is no timeto investigate title". This is a key feature of many commercial transactions and in the present case, the ordinary practice of dealers andcustomers in purchase of cars of this kind must be borne in mind. Investigation of title to the car is not common on the evidence beforeme, where purchasers accept delivery from a dealer in possession of the car with the delivery of the car and transfer of possession with abill of sale or invoice as the norm. 137.

The authors of that textbook also state that it has long been settled that in the actual or constructive notice which an agent has (e.g. apurchaser's solicitor) is normally imputed to his principal if obtained by the agent in the same transaction and coming to him as agent. 138.

I was also referred to the decision of the Court of Appeal in BCCI (Overseas) Ltd v Akindele [2001] CH 347, where Nourse LJreferred to the judgments of Lindley LJ in Manchester Trust v Furness [1895] 2 QB 539 at 545 and of Richardson J in the New ZealandCourt of Appeal decision in Westpac Banking Corporation v Savin [1995] 2 NZR 41 at page 53. In both these decisions, caution wasexpressed in relation to the application of the doctrine of constructive notice in commercial transactions. In Akindele the test was laiddown for "knowing receipt" of trust property which had been received in breach of trust.

Whereas dishonesty was a prerequisite for acase of knowing assistance, the state of knowledge required for imposition of a constructive trust on the basis of "knowing receipt" wasonly such as made it unconscionable for him to obtain the benefit of the receipt. [43] This decision reminds us, on the one hand, of the need to apply the notion of negligence cautiously in commercialtransactions: "in commercial transactions possession is everything and there is no time to investigate title" On the other hand, however,even in a commercial transaction, there may not be an over-riding need for speed and finality.

Thus, even in a commercial situation, if aparty knows certain facts which require an explanation, it is "imperative . . .to seek an explanation". The decision also reminds us that, inevery application of the principles of constructive notice, the specific circumstances require scrutiny: therefore, the court must look bothat the ordinary practice in the situation – including the need for speed - and at the particular experience and expertise of the buyer. [44] With this general background in mind, we can return to the development of the concept of notice in Canadian civil law.

In thecontext with which we are concerned, the concept of notice is inextricably intertwined with the framework of negligence. The amount ofnotice one is given of the potential existence of a set of facts before one’s subsequent actions - without taking that set of facts intoaccount – determines the place where one’s actions lie on the spectrum between negligence and actual knowledge. [45] Understandably, courts have wrestled more prominently with that assessment in criminal matters where knowledge is anessential element of a crime.

In those situations, if an accused does not have actual knowledge, in light of the burden to prove theelements of a crime beyond a reasonable doubt, it is not surprising that the jurisprudence has concluded that an accused must be provenbeyond a reasonable doubt to have had the equivalent of actual knowledge. That degree of constructive notice has been described as“wilful blindness”. The courts which have developed those standards have made it clear that the criminal test of wilful blindness may notbe appropriate in every area of civil law.

This warning is emphasized by the Supreme Court of Canada in Sansregret: 16 The concept of recklessness as a basis for criminal liability has been the subject of much discussion. Negligence, the failure to takereasonable care, is a creature of the civil law and is not generally a concept having a place in determining criminal liability. Nevertheless,it is frequently confused with recklessness in the criminal sense and care should be taken to separate the two concepts. Negligence istested by the objective standard of the reasonable man. A departure from his accustomed sober behaviour by

an act or omission whichreveals less than reasonable care will [page582] involve liability at civil law but forms no basis for the imposition of criminal penalties.In accordance with well-established principles for the determination of criminal liability, recklessness, to form a part of the criminalmens rea, must have an element of the subjective. It is found in the attitude of one who, aware that there is danger that his conduct couldbring about the result prohibited by the criminal law, nevertheless persists, despite the risk. It is, in other words, the conduct of one whosees the risk and who takes the chance.

It is in this sense that the term 'recklessness' is used in the criminal law and it is clearly distinctfrom the concept of civil negligence. [46] The distinction between the civil law concept of negligence and the criminal law concepts of recklessness and wilful blindnesswere further explored by the S.C.C. in Briscoe: 20 In essence, Mr. Briscoe argues that wilful blindness is but a heightened form of recklessness which is inconsistent with the veryhigh mens rea standard for murder under s. 229(

a) of the Criminal Code. He argues further that allowing fault for murder, as either aprincipal or party, to be established by wilful blindness could run afoul of the principle that "subjective foresight of death" is theminimum standard of fault for murder under s. 7 of the Canadian Charter of Rights and Freedoms: R. v. Martineau, (SCC), [1990] 2 S.C.R. 633, at p. 645. The Court of Appeal rejected these arguments and, in my view, rightly so.

As I will explain,wilful blindness, correctly delineated, is distinct from recklessness and involves no departure from the subjective inquiry into theaccused's state of mind which must be undertaken to establish an aider or abettor's knowledge. 21 Wilful blindness does not define the mens rea required for particular offences. Rather, it can substitute for actual knowledgewhenever knowledge is a component of the mens rea.

The doctrine of wilful blindness imputes knowledge to an accused whose suspicionis aroused to the point where he or she sees the need for further inquiries, but deliberately chooses not to make those inquiries. SeeSansregret v. The Queen, (SCC), [1985] 1 S.C.R. 570, and R. v.

Jorgensen, (SCC), [1995] 4 S.C.R. 55.As Sopinka J. succinctly put it in Jorgensen (at para. 103), "[a] finding of wilful blindness involves an affirmative answer to the question:Did the accused shut his eyes because he knew or strongly suspected that looking would fix him with knowledge?" 22 Courts and commentators have consistently emphasized that wilful blindness is distinct from recklessness. The emphasis bearsrepeating.

As the Court explained in Sansregret (at p. 584): ... while recklessness involves knowledge of a danger or risk and persistence in a course of conduct which creates a risk that theprohibited result will occur, wilful blindness arises where a person who has become aware of the need for some inquiry declines to makethe inquiry because he does not wish to know the truth. He would prefer to remain ignorant.

The culpability in recklessness is justified byconsciousness of the risk and by proceeding in the face of it, while in wilful blindness it is justified by the accused's fault in deliberatelyfailing to inquire when he knows there is reason for inquiry. [Emphasis added.]

23 It is important to keep the concepts of recklessness and wilful blindness separate. Glanville Williams explains the key restriction onthe doctrine: The rule that wilful blindness is equivalent to knowledge is essential, and is found throughout the criminal law. It is, at the same time, anunstable rule, because judges are apt to forget its very limited scope. A court can properly find wilful blindness only where it can almostbe said that the defendant actually knew.

He suspected the fact; he realised its probability; but he refrained from obtaining the finalconfirmation because he wanted in the event to be able to deny knowledge. This, and this alone, is wilful blindness. It requires in effect afinding that the defendant intended to cheat the administration of justice.

Any wider definition would make the doctrine of wilfulblindness indistinguishable from the civil doctrine of negligence in not obtaining knowledge. [Emphasis added.] (Criminal Law: The General Part (2nd ed. 1961), at p. 159 (cited in Sansregret at p. 586.) 24 Professor Don Stuart makes the useful observation that the expression "deliberate ignorance" seems more descriptive than "wilfulblindness", as it connotes "an actual process of suppressing a suspicion".

Properly understood in this way, "the concept of wilfulblindness is of narrow scope and involves no departure from the subjective focus on the workings of the accused's mind" (CanadianCriminal Law: A Treatise (5th ed. 2007), at p. 241).

While a failure to inquire may be evidence of recklessness or criminal negligence, asfor example, where a failure to inquire is a marked departure from the conduct expected of a reasonable person, wilful blindness is notsimply a failure to inquire but, to repeat Professor Stuart's words, "deliberate ignorance". [47] The commercial ramifications of the concepts of wilful blindness on the one hand and recklessness on the other werereferenced by our Court of Appeal in Bartin Pipe which is referred to by both parties, even though the result of that decision was to giveto the party who is in the position of Calroc good title to contested goods.

Presumably Husky relies on Bartin Pipe because of thepotential difference between wilful blindness and recklessness which did not have to be determined in that case: 28 To the extent that the trial judge equated wilful blindness to a reckless failure to make inquiry, he erred in law. It is clear in thecriminal context that wilful blindness is distinct from recklessness. As the Supreme Court of Canada recently stated in R. v. Williams,[2003] S.C.J.

No. 41, 2003 SCC 41: Wilful blindness is distinct from recklessness because, while recklessness involves knowledge of a danger or risk and persistence in acourse of conduct which creates a risk that the prohibited result will occur, wilful blindness arises where a person who has become awareof the need for some inquiry declines to make the inquiry because he does not wish to know the truth. He would prefer to remainignorant. (Sansregret v.

The Queen, (SCC), [1985] 1 S.C.R. 570, at p. 584, per McIntyre J.) 29 In this appeal, the distinction between wilful blindness and recklessness in the civil context need not be determined, nor thesignificance of such distinction. Whether or not the trial judge misstated the law regarding recklessness, he correctly stated that actingnegligently or naively does not constitute wilful blindness.

However, in applying the law, the trial judge erred. [Emphasis added] [48] Because of my finding of fact – discussed below – that Calroc did not, on the evidence here, have the equivalent of actualknowledge that G.L.M. had no title to the tanks in question, this is a case foreseen by our Court of Appeal in which it is necessary todetermine if there is a distinction between wilful blindness and recklessness and, if there is, the significance of that distinction. [49] I have concluded that there is a distinction between the two concepts: wilful blindness includes an element of intentionality,whereas recklessness consists only of gross, or very great, negligence.

The significance of the distinction is that even though a buyer canprove that it did not have the equivalent of actual knowledge of a defect in title from a seller, it will only benefit from the provisions of s.26(1) of the Act, or its equivalent in other Canadian jurisdictions, if it is able to also prove that it did not act recklessly in failing toinvestigate the actual facts of the situation. [50] In coming to this conclusion, I note first the reasons of my colleague Nielsen J. in Elaborate Homes: 35 Black's Law Dictionary, 9th ed (St Paul, MN: West, 2009) defines gross negligence as, inter alia: A conscious, voluntary act or omission in reckless disregard of a legal duty and of the consequences to another party, who may typicallyrecover exemplary damages. ...As it originally appeared, this was very great negligence, or the want of even slight or scant care.

It has been described as a failure toexercise even that care which a careless person would use.

Several courts, however, dissatisfied with a term so nebulous...have construedgross negligence as requiring wilful, wanton, or reckless misconduct, or such utter lack of all care as will be evidence thereof...But it isstill true that most courts consider that 'gross negligence' falls short of a reckless disregard of the consequences, and differs from ordinarynegligence only in degree, and not in kind... 36 The Dictionary of Canadian Law, 4th ed (Scarborough, Ont: Thomson Carswell, 2011) provides the following definition: Conduct in which if there is not conscious wrongdoing, there is a very marked departure from the standard by which responsible andcompetent people...habitually govern themselves...a high or serious degree of negligence... 37 The Supreme Court of Canada has considered these terms in the context of tort litigation.

In McCulloch v Murray,(SCC), [1942] SCR 141 at 145, [1942] SCJ No 7, Duff C.J. observed: ... All these phrases, gross negligence, wilful misconduct, wanton misconduct, imply conduct in which, if there is not conscious wrongdoing, there is a very marked departure from the standards by which responsible and competent people in charge of motor cars habituallygovern themselves. ...

[Emphasis added] [51] As is noted in Carriere, Black’s Law Dictionary has come to define recklessness in civil law as: 85 For the purposes of this claim and the claim of deceit addressed below, the definition of "recklessness" is important. "Recklessness"is defined in Black's Law Dictionary (7th Ed.) (St. Paul, Minn., 1999) in the following terms: Conduct whereby the actor does not desire harmful consequence but nonetheless foresees the possibility and consciously takes the risk.Recklessness involves a greater degree of fault than negligence but a lesser degree of fault than intentional wrongdoing. 2.

The state ofmind in which a person does not care about the consequences of his or her action. [Emphasis added] [52] I adopt the definition given in the Dictionary as a useful

summary of the current state of Canadian law. [53] The reliability of that definition can be assessed by the substance which is given to the notion of “gross negligence” inCanadian civil law; as is noted, for example, in Cumberbatch, at paras. 73 ff, that notion continues to be a live concept in our law:Indeed, emphasis on greater than ordinary negligence has a long history not only in the area of municipal law but in many areas ofcommercial law such as the sale of goods and the responsibility of a bankruptcy trustee.

Although “gross negligence” is often translatedas “very great negligence”, case law also reminds us that the notion has a variable content, depending on the situation: see, for example,Stevenson: That said, this language must be given a meaning. It must be interpreted in light of the entire contract, and the surroundingcircumstances. The parties submit, and I agree, that the case law relating to the meaning of the phrase "gross negligence" in legislation isof assistance in this context.

In McCulloch v Murray, (SCC), [1942] SCR 141, p 145 [McCulloch], Duff C.J.commented as follows in relation to Nova Scotia legislation which permitted claims by gratuitous passengers only if the accident wascaused "by the gross negligence or wilful and wanton misconduct of the owner or operator": I am, myself, unable to agree with the view that you may not have a case in which the jury could properly find the defendant guilty ofgross negligence while refusing to find him guilty of wilful or wanton misconduct.

All these phrases, gross negligence, wilfulmisconduct, wanton misconduct, imply conduct in which, if there is not conscious wrong doing, there is a very marked departure fromthe standards by which responsible and competent people in charge of motor cars habitually govern themselves. Subject to that, I think itis entirely a question of fact for the jury whether conduct falls within the category of gross negligence, or wilful misconduct, or wantonmisconduct.

These words, after all, are very plain English words, not difficult of application by a jury whose minds are not confused bytoo much verbal analysis. (emphasis added) 35 The "marked departure" test was referred to with approval in Walker v Coates Estate, (SCC), [1968] SCR 599[Walker] and by Wagner J. (dissenting in part) in Peracomo Inc. v TELUS Communications Co., 2014 SCC 29, [2014] 1 SCR 621.Kirkpatrick J. relied on both McCulloch and Walker in Doern v Phillips Estate, (BC SC), [1995] 4 WWR 1 (BC SC),where he considered a similar provision in the British Columbia Police Act, SBC 1988, c 53 (since rep).

He also commented as follows: 83 The definition of "gross negligence" was also discussed in the context of "gratuitous passenger" cases in Ogilvie v. Donkin, (BC CA), [1949] 1 W.W.R. 439 (B.C.C.A.). O'Halloran, J.A. held, at p. 441: ...a rational test for deciding whether negligence is "gross" (within the meaning of the gratuitous passenger section) is the magnitude ofthe foreseeable risks in the particular circumstances.

The failure to take care develops into gross negligence within the meaning of the statute, when it must be plain the magnitude of therisks involved are such that, if more than ordinary care is not taken, a mishap is likely to occur in which loss of life, serious injury orgrave damage is almost inevitable. In light of these

definitions, it is apparent that the definition is not rigid, but rather reflects the degree to which the conduct falls belowthe appropriate standard of care. Therefore, in situations where the standard of care is very high, as in the example of O'Halloran J.A., thestandard for gross negligence is arguably anything less than ordinary care, whereas particularly egregious conduct may be requiredwhere the standard of care is low or the risks very minor. . . . 37 In the result, the case law confirms that it is appropriate to tread carefully in attempting to define "gross negligence".

As Duff C.J.noted in McCulloch, the question of whether there has been gross negligence turns on the facts. However, the "marked departure" fromthe standard of care approach -- whether the behaviour is described in those or other words -- is well established, and can be readilyadapted to this case. In my view, "gross negligence of duty" should be interpreted to mean that Mr.

Stevenson could only be dismissedfor cause if he was guilty of conduct which represented a marked departure from the standards of performance and conduct he wasrequired to meet as a result of his employment as Vice-President, Administration. 38 The question is one of degree. The relevant considerations would properly include not only the extent to which he failed to complywith the duty at issue, but the potential impact of that failure, which in turns affects the standard of performance or conduct that appliesto the actions at issue. The fact that Mr.

Stevenson was a senior employee in a position of leadership and trust must inform this analysis.Further, it follows from this approach that not every act of gross negligence by Mr. Stevenson would, taken alone, necessarily constitutecause within the meaning of para. 6. A single failure to seek an approval or carry out a task in circumstances where there was little or nopotential to undermine Mr. Stevenson's ability to serve as Vice-President would not constitute cause.

The nature and extent of the breach,and the number of breaches, are relevant considerations. [54] The emphasis on the contextual nature of the definition of gross negligence is perhaps the main thrust of Stevenson.

[ 55 ] In

summary on this issue, I conclude that, in the context of the

interpretation of s. 26(1) of the Sale of Goods Act , there are three possible degrees of negligence, mere negligence, gross negligence/recklessness and wilful blindness, and, that only mere negligence is excused. To put this in another way, a person who claims the benefit of s. 26(1) of the Act must prove that it did not act recklessly or in a grossly negligent fashion. 4. Application of the principles to the facts here [ 56 ] Based on the foregoing analysis, the question that must be asked here is: Has Calroc proved that when it bought the 12 tanks from G.L.M., it was not acting recklessly?

I have come to the conclusion that Calroc has not met that burden; on the contrary, the evidence establishes that Calroc was acting recklessly.

Therefore, Calroc does not have the benefit of s. 26(1) of the Act, and Husky has proven its entitlement to a declaration of ownership of the 12 tanks. [ 57 ] In coming to the decision that Calroc was acting recklessly, I have taken the following into account: - I accept that Calroc has proved that it did not act in wilful blindness: it has shown that it did not deliberately act to cheat the system by intentionally buying tanks which it essentially knew G.L.M. had no right to sell. - Calroc cannot rely on the fact that G.L.M.’s invoices state that the tanks are to remain on G.L.M.’s property until paid for: Calroc knew that fully paid tanks remained on G.L.M. property until the purchaser of the tanks had a specific use for the tanks. - Calroc knew that the tanks which it bought were not, in fact, “new inventory”; on the contrary, it knew that these tanks had been manufactured between 2004 and 2014. - Calroc knew that oil tank manufacturing companies like G.L.M. sometimes built stock tanks.

Those tanks would have been stored as inventory on G.L.M. property. It would not have been negligence for Calroc to have bought stock tanks from G.L.M. - Calroc knew that companies which bought unique tanks from G.L.M. were allowed to store the paid-for tanks on G.L.M. property until the purchaser had need for the tank in a special location. It would have been negligent for Calroc to buy unique tanks from G.L.M. when Calroc knew that they could have been fully-paid tanks which were merely being stored on G.L.M. property.

Calroc couldn’t check the PPR, but it could have made inquiries from G.L.M. about why a unique tank was available for sale by G.L.M. [ 58 ] Up to this point, Calroc’s failure to make inquiries was, at the most, merely negligent. What made Calroc’s actions grossly negligent, or reckless, are the following additional facts: - there was no need for speed or urgency and finality in relation to these transactions: the tanks themselves were not mobile and the first approach from G.L.M. to Calroc occurred in late 2014, with the last sale occurring on June 26, 2015.

Nor did Calroc have any immediate buyers for the tanks. - Calroc was buying these “in new condition” tanks at considerably less than half the then current retail cost. In coming to this conclusion, I rely on Husky’s evidence of retail value of the tanks in the spring of 2015 and on Calroc’s own estimate that it was paying 50 cents on the dollar. - Calroc suspected that, in the spring of 2015, G.L.M. was in financial difficulty. Even if G.L.M. had had a reputation as the General Motors of the oil tank industry, at the time it purchased these tanks, there was no longer any ability to rely on that reputation.

Tellingly, when asked why, suspecting that G.L.M. was in financial difficulty, Calroc didn’t make inquiries about the tanks it was buying, Mr. Echino said: “Still didn’t matter to me. I was buying their new inventory. It’s just something that just not done”. Calroc knew, on the one hand, that the situation with respect to G.L.M.’s reputation had changed and also knew that it was not buying new inventory from G.L.M.

Moreover, Calroc knew that MNP, which often acts as a receiver, was on the G.L.M. premises frequently at least during the last part of June, 2015. - Because Calroc suspected that G.L.M. was in financial difficulties, because it knew that it was common practice in the industry for a buyer from G.L.M. to store the paid-for tanks on G.L.M. property, and because it knew that it was the practice in the industry not to register this type of tank in the PPR, the magnitude of the risk which Calroc was taking when it went ahead with the purchases without making any inquiries was the serious risk that through either shambolic record keeping which might arise when a major manufacturer is in financial trouble, or, worse, through evil intent on G.L.M.’s part, G.L.M. might offer for sale tanks which it was not authorized to sell. - Calroc knew that G.L.M. had no storage problem because it had “vast” storage yards at both Nisku and Battleford. - Calroc was told that the nine FoGo tanks came to be within G.L.M.’s power to sell because the owner of the relatively newly manufactured tanks had not paid storage on them, and knowing that even it – as a broker - did not pay storage on tanks that it bought, Calroc made no inquiries about the amount of the outstanding storage charges or the name of the purchaser who had allegedly failed to pay the storage charges, or any other questions about G.L.M.’s authority to sell the tanks.

As Calroc candidly admitted, it “paid no attention” to the issue of G.L.M.’s authority to sell the tanks. [ 59 ] In other words, even though this was a commercial situation, in looking at all of the information that was available to Calroc, I have concluded that it would be unconscionable for Calroc to obtain the benefit of the tanks when its position as a victim of G.L.M. is compared with the situation of Husky as a victim of G.L.M. [ 60 ] Finally, I must emphasize that the s. 26(1) analysis may apply only to the three tanks which Husky originally bought from G.L.M., which tanks clearly come within that section.

Either the nine “FoGo” tanks also come within that section, and Calroc has also failed to meet its burden in relation to those tanks, or the “FoGo” tanks come within s. 23(1), and Calroc acquired no title to those tanks because G.L.M. had no title to pass on. 5. Costs

[ 61 ] If the parties are not agreed on costs, I may be spoken to within 30 days of the release of this decision. Heard on the 18 th day of December, 2015. Dated at the City of Edmonton, Alberta this 21 st day of January, 2016. J.B. Veit J.C.Q.B.A. Appearances: Charles P. Russell, QC, McLennan Ross LLP for Husky Oil William B. Hembroff, Bennett Jones LLP for Calroc Industries