Nov 18, 2014

Summary of Loewen v. Superior Acceptance Corp.

Loewen v. Superior Acceptance Corp. Ltd., 1997 CanLII 2062 (BC SC)

Defendant had a PMSI in the Plaintiff's truck. Plaintiff defaulted and the Defendant seized the vehicle. Plaintiff alleges that the seizure was wrongful and in breach of contract. P defaulted in November/ December 1995 and Jan 1996. In Feb 1996, P met with a representative of D to discuss the status of the loans and they rewrote the terms of the loan agreement, but kept the PMSI in the truck. P informed D that they were going to try and sell the truck. In April 1996, D seized the asset. D left a notice with P's mom saying that the acceleration clause was in triggered and $11k was due in one month to redeem or the truck would be sold. P did not agree to the terms of the redemption and the truck was sold for $9500. Was P in default under the SA? Was D justified in seizing the truck w/o providing the P with reasonable notice? Did P suffer any damages from the seizure?

Issue One: the test for the triggering of an acceleration clause is an objective one : it requires the SP to act in good faith and have commercially reasonable grounds for believing the collateral is in jeopardy before acceleration. No commercially reasonable grounds for acceleration since there was no default in the rewritten loan. Therefore, D had no authority to seize the truck.

Issue Two: Court still addresses the second issue despite his finding above. Lister principle: unless the security is in immediate peril, the debtor should always have some notice in which to secure the default. This principle applies to Part V of the PPSA and if it didn't, it would require express language by the legislature to exclude the requirement of reasonable notice to a debtor. D did not provide reasonable notice to P here.

Issue Three: Damages are relegated to that which is reasonably foreseeable. Therefore, the down payment, tax, payments, and improvements are all reasonably foreseeable damages. Exemplary damages can be available when the SP knew it had no right of entry and seizure under its security to remove the property. This was the case here: the branch manager of D could have simply called P to see if and why they intended to sell the truck. P is awarded a small exemplary damage and costs.