TD Auto Finance (Canada) Inc v. Yan, 2015 ABCA 114
“Thee unique circumstances of this case put the interpretation of s. 28(1)(a) of the PPSA and implied consent to dealings of secured collateral, squarely in front of the Court of Appeal. Given the minimal amount of case law on this issue, this decision will have significance in Alberta and other jurisdictions with similarly worded personal property legislation.
Section 28 of the PPSA codifies the rule of nemo dat. It also carves out exceptions to the rule that allow title in secured collateral to pass without a security interest attached. These exceptions are designed to efficiently facilitate the buying and selling of goods that may be subject to security interests.
The situation giving rise to this case may have also identified a legislative hole in the PPSA. There are no provisions in the PPSA specifically dealing with tampered serial numbered goods. Typically, the expectation from doing a search in the registry for a serial numbered good is that the result will identify any attached security interests. When that search cannot be relied on, due to a counterfeit serial number, the PPSA leaves no recourse to purchasers relying on these incorrect search results.
The Respondent was the very definition of a bona fide purchaser for value. He went beyond what most purchasers would have in performing due diligence. It was a situation where the Respondent would never have been able to learn of the Appellant’s security interest by running a search on the viewable VIN. The Court of Appeal made it clear that based on the PPSA, the risk of loss in this situation will be borne by the purchaser. The secured creditor will always be able to follow the collateral into the hands of subsequent purchasers, absent express or implied consent to the transaction.”
Counsel Comments provided by Bobby S. Randhawa, Counsel for the Respondent