Digest of the Week - Flaws in Notice to Guarantors on Repossession

Digest of the Week - Flaws in Notice to Guarantors on Repossession

VFS Canada Inc. v. Shas Tut Contracting Ltd.



British Columbia Supreme Court
2015 CarswellBC 3206; 2015 BCSC 2015


Personal property security > Remedies > Sale or realization > Notice > Effect on action for deficiency Vendor sold excavator to purchaser pursuant to contract guaranteed by A, G, and H Ltd. (collectively, guarantors) — Vendor assigned contract to plaintiff — When purchaser failed to make payments due under contract, plaintiff repossessed excavator under Personal Property Security Act (PPSA) — Plaintiff purported to send notices of sale (notices) to guarantors as required by PPSA — Plaintiff sold excavator to vendor for $85,000, leaving deficiency of $120,905.96 owing under guarantees — Plaintiff commenced action against guarantors claiming $120,905.96 — Plaintiff brought application for summary judgment — Application granted — Judgment was granted against G and H Ltd. in reduced amount of $105,905.96 based on flaws in notices; judgment was granted against A as claimed because he did not oppose application — Notice was not sent to G's residential address as required by s. 72(1) of PPSA, but rather to H Ltd.'s address — It would not have been commercially unreasonable for plaintiff to have confirmed where G actually resided — Plaintiff could not rely on address on guarantee signed by G as being G's personal address, as that address was typed, was not indicated as being G's personal address, and was same as H Ltd.'s address — Further, notices were deficient because they did not set out date, time or place of public auction as required by s. 59(7)(h) of PPSA, notwithstanding that plaintiff pursued sale by public auction — Details of auction were required despite fact that excavator was ultimately was sold by private sale rather than at auction — Flaws in notices affected ability of G and H Ltd. to protect their interest in excavator — G might have paid competitive amount or encouraged another bidder to do so — Vendor resold excavator for $145,000, and deducting cost of repairs, storage, and sale from this amount, net proceeds available for reduction of debt was likely in order of $100,000 — Insofar as sale was for $85,000, G and H Ltd.'s deficiency should therefore be reduced by $15,000.
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