2011 QCCQ 1272, 2011 QCCQ 1272

Avantage concessionnaire Scotia inc. c. Cadorette 2011 QCCQ 1272 COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL Civil Division No: 500-22-173742-100 DATE: February 16, 2011 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ AVANTAGE CONCESSIONNAIRE SCOTIA INC. Plaintiff vs.

ANDRÉ CADORETTE Defendant ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Avantage Concessionnaire Scotia Inc. ("Scotia") as sub-assignee of the rights of the vendor of an automobile under an instalment sale (P-2) sues the purchaser André Cadorette in order to be declared owner pursuant to articles 138 to 141 C.P.A. [1] [ 2 ] The rights of the merchant, Longueuil Suzuki Automobile were assigned at the time of sale to Banque HSBC Canada ("HSBC"), the consumer, Mr Cadorette intervening to receive copy of the assignment.

His bi-weekly payments were made by banking arrangement directly to HSBC from the outset, September 29, 2006. [ 3 ] HSBC assigned to Scotia its rights in the instalment sale as part of a universality on July 29, 2008 (P-1). The pre-authorised payments were transferred to Scotia and the payments continued until October 30, 2009 (P-5). [ 4 ] Mr Cadorette became aware that the payments were being made to Scotia while perusing his bank statements.

In November, he spoke to Scotia and discontinued the pre-authorised payments. [ 5 ] Between January 18 and April 13, he made several payments to Scotia in person at its offices totalling $1,351.98. Imputing these payments against the debts in the order of their accrual, a statement (P-8) shows Mr Cadorette to be in default from mid-February 2010. [ 6 ] At the time of the service of the prior notice pursuant to

article 138 C.P.A. [2] (P-4) an amount of $1,466.82 was in arrears, although the default is stated more advantageously to the debtor in the prior notice as $1,286.82, an amount arrived at through monthly rather than bi-weekly calculations. [ 7 ] Mr Cadorette did not remedy the default with 30 days, and the seizure before judgment was not opposed. [ 8 ] The Plaintiff has therefore proved the essential elements of its case : the instalment sale, the initial assignment and notification, the subsequent assignment and the debtor's acquiescence, the default, the service of the prior notice, and the failure to remedy the default.

THE DEFENCE [ 9 ] The "oral" defence leaves much to be desired from a formal point of view. There are grounds, "Motifs de défense (art. 151.5 C.p.c.)" but, as the "GESTION DE TEMPS" form doesn't provide for them, no conclusions. These grounds read as follows: Illegal repossession of the vehicle. Defendant wished for the case to go to mediation before the Court before the seizure.

Misrepresentations regarding number of payments by HSBC and Scotia Dealer Advantage. No threats to stop paying. [ 10 ] At the hearing, the Defendant testified that the salesman whom he dealt with at the dealer assured him that, after he had paid 75% of the "sticker price" he would be allowed to refinance the balance on less onerous terms. Mr Cadorette states that he verified this information with HSBC.

No parameters were discussed, but Mr Cadorette asserts that he believed that, around the time the total payments made (capital and interest) would reach 75% of the price of the automobile ($23,799.50), as opposed to the total obligation, including interest ($34,200.60), he would communicate with HSBC and work out a new deal on interest and term. [ 11 ] The Court permitted this testimony, which clearly contradicts the writing, (P-2) in application of

article 263 C.P.A.: Notwithstanding

article 2863 of the Civil Code, a consumer, when exercising a right provided by this Act, may make proof by testimony, even to contradict or vary the terms of a writing, to establish that this Act has not been complied with. [ 12 ] The consumer was seeking a recourse under the CPA: the sanction of the nullity of the repossession procedure, and hoping to demonstrate that the merchant had not complied with the CPA, by making a false representation [3] about the rights and privileges associated with the financing terms under the instalment sale. [ 13 ] The Defendant maintains that, because he was entitled to renegotiate the loan, and Scotia refused to discuss the matter with him, he could suspend payment on the loan, and ultimately obtain redress, in these legal proceedings, by recovering the possession of the vehicle, the balance of price being forfeited by the Plaintiff because of its fault. [ 14 ] He also made much of the fact that Scotia failed to provide him with page 3 of the contract, which was missing in the copy sent to him at this request. [ 15 ] Finally, he bases his defence of the notion that Scotia did not act honourably with him, not accepting his version of the promise made to him and not justifying its refusal to renegotiate with him.

ANALYSIS [ 16 ] In law, it would be a valid defence to the revindication (repossession under the CPA) to assert that the merchant had not followed articles 142 and 138 C.P.A., in a case where at least one-half of the amount of the total obligation (and of the down payments if any) had been paid by the consumer. [4] [ 17 ] Mr Cadorette's defence is different: that the failure to renegotiate the instalment sale at the milestone of 75% of payment, as he understands it, is a fault that he can set up as a defence to the merchant's recourses. [ 18 ] The Consumer Protection Act is very broad with respect to remedies:

article 272 makes that clear. [ 19 ] But the defence lacks coherence: at the point in time when Mr Cadorette interrupted his regular payments, he had made 81 payments of $187.92 for a total of $15,221.52 or 44%. When we take into account the other amounts paid on an irregular basis, he had paid $16,573.50, or 48.46%. This is slightly short of the threshold for the application of

article 142 CPA. [ 20 ]

Article 138 C.P.A. did not apply, even disregarding additional interest accruing because of default. [ 21 ] The sum of $16,573.50 represents 69.6% of the "sticker price", $23,799.50 [5] [ 22 ] Even if the Defendant could establish the 75% agreement, he would have to have reached approximately $18,000 of payments ($17,849.63, to be more precise) before claiming that he was entitled to pay a lesser amount than the stipulated $187.92 per two-week interval. [ 23 ] The discussions with the dealer and HSBC, as recounted by the Defendant, are not very precise.

There is no indication of how the new payments would be ascertained, what criteria of credit-worthiness would be applied, such as income levels, the existence of other debts etc. It is not possible to derive a clear contractual intent from such imprecise evidentiary indications. [ 24 ] The notion of applying all payments, capital and interest, as a percentage of the sale value, as opposed to the total obligation, sale price plus cost of financing, is also dubious. [ 25 ] As well as being implausible, the allegation is unsupported by any writing, commencement of proof, or corroborative evidence.

The Court permitted the Defendant to reopen the hearing to prove, through the playing of an audiotape of a conversation, that an employee of Scotia had admitted the existence of the practice of renegotiating the terms at the 75% milestone.

The passage heard was, in fact, a reference to the possibility of a settlement of the claim by paying 75% of the disputed amount, not a reference to a 75% milestone as a point of renegotiation of interest and term. [ 26 ] While the Defendant may, subjectively, be convinced of the allegation he makes, the evidence is not of sufficient value to establish a case on the balance of probabilities. The Defendant's credibility as a witness was also negatively effected at times in his testimony.

When asked to admit an email he apparently sent that Scotia had recovered from its system (P-6), despite it having been deleted, he took the position that he could not, because Scotia, being in bad faith, had probably altered or falsified it. [ 27 ] Yet, the email, despite changes in format and graphics, is characteristic of Mr Cadorette's manner of communicating and its content is entirely consistent with the testimony of Mr Cadorette about his communication with Scotia. [ 28 ] While it might have been appropriate to assert that passages from the text were missing or deleted in the file recovery process,

the Defendant could have refrained from implying improper conduct on the part of Scotia unless he could identify, in the document itself, some basis for that. Thus, the lack of good judgment on the part of the Defendant was apparent to the undersigned in observing his conduct as a witness and this had a negative impact on his credibility. [ 29 ] Finally, the Defendant's position, that he could pay, but had chosen not to pay in order to bring about a negotiation, detracted from his case from the point of view of the equity of the situation.

There was no tender, (articles 1573 and following C.C.Q.) not even of a lesser amount that the Defendant would have asserted as a fair amount if interest was reduced, nor had the Defendant opted to pay under protest and claim back the amounts that he considered an overpayment. [ 30 ] These approaches, if he had adopted one of them, would have shown capacity to pay, and would have enhanced the Plaintiff's case by proving payment rather than the default that is evident from his refusal to pay.

The capacity to pay is not really the point; when a creditor's right are in issue, payment is the relevant fact. [ 31 ] The Defendant's assertion that the Court should return the vehicle, and cancel the debt is untenable: that would be quite disproportionate to the Defendant's alleged prejudice, equal to the relatively small advantage he would have had on a reduction of interest, at a point where he had paid a substantial portion of the capital value of the debt.

FOR THESE REASONS, THE COURT: GRANTS the motion; DECLARES valid the seizure before judgement effected in the present case; DECLARES the Plaintiff sole owner of the automobile described as: - a 2007, Suzuki SX4, serial number JS2YA413X75100187; THE WHOLE, with costs. __________________________________ DAVID L. CAMERON, J.C.Q. Mtre François Joubert SAVOIE JOUBERT, s.e.n.c. Attorneys for the Plaintiff André Cadorette Defendant Date of hearing: February 10, 2011