



COURT OF APPEAL FOR ONTARIO

CITATION:  Correia v. Smith, 2015 ONCA 743

DATE: 20151105

DOCKET: C60185

Feldman, Lauwers and Benotto JJ.A.

BETWEEN

Jose A. Correia a.k.a. Joe E. Correia and 1664478
    Ontario Inc.

Applicants (Respondents)

and

Bradly Capen Smith c.o.b.a. Smith Trucking and
6395287
    Canada Incorporated c.o.b.a. Canadian Diesel Services

Respondents (Appellant)

Matthew R. Todd, for the appellant 6395287 Canada
    Incorporated c.o.b.a. Canadian Diesel Services

Kowlasar Misir, for the respondents

Heard: October 26, 2015

On appeal from the order of Justice K. W. Whitaker of the
    Superior Court of Justice, dated February 10, 2015, noted as 2015 ONSC 915.

ENDORSEMENT

[1]

In this application under the
Repair and Storage Liens Act,
t
he application judge awarded the
    respondent damages for breach of a lease agreement and the improper sale of the
    respondents vehicle by the appellant, Canadian Diesel. For the reasons that
    follow, the appeal is allowed and the application dismissed.

[2]

Section 15 of the Act, sets out the obligatory contents of the notice of
    intention to sell an article that must be given by the lienholder. The Act does
    not prescribe the form of the notice. The application judge found that Canadian
    Diesels notice was deficient for three reasons: it lacked a statement about
    redemption; it did not mention to whom payment was to be made required by s. 15(3)(e);
    and it provided no particulars of the private or public sale required by s.
    15(3)(f).

[3]

However, in our view, the notice did contain a statement about
    redemption in the sentence: Smith Trucking may regain possession of the
    vehicle upon payment, in certified funds, of the amount of $18,318.77, plus any
    additional storage charges.  The Act requires that the notice contain a
    statement of the name of the person to whom payment may be paid.  The notice
    was on the letterhead of Canadian Diesel Services, which was the person to
    whom payment may be made. The notice was sent by a named representative of
    Canadian Diesel. The notice complied with s. 15(3)(e) of the Act.

[4]

Section 15(3)(f) of the Act provides that the notice must contain a
    statement of the date, time and place of any public sale at which the article
    is to be sold, or the date after which any private sale of the article is being
    made. Canadian Diesels notice contained the following:

Should payment of the applicable sum not be received by
    Canadian Diesel Services within twenty-five (25) days of the date of this
    letter, we will have no alternative but to offer the vehicle for sale in order to
    recover the amount owing to us.

[5]

The application judge found that the notice was deficient in failing to provide
    particulars of the private or public sale, but this finding misapprehended the evidence.
    The notice advised that there would be a private sale after 25 days. This
    constituted full compliance with the statutory requirement.

[6]

The application judge also found that the notice had not been properly
    served on the respondents: the applicant never received any notice of the pending
    sale. However, the clear evidence is that notice was properly served on the
    respondent by registered mail, as required by s. 27 of the Act.  Although it
    was returned by Canada Post, the Act deemed notice to have been effective, and
    counsel for the respondent conceded in argument that the deeming provision of
    the Act was not rebuttable.

[7]

In any event, a representative of Canadian Diesel attended at Mr.
    Correias house, at the very address to which the notice had been sent, and
    fully informed him of the situation in January 2014, well before the truck was
    sold in March.

[8]

The application judge found, alternatively, that Canadian Diesel had
    waived the served notice: after the notices were mailed, the parties entered
    into a compromise agreement ... by entering into another agreement, CD had
    waived its right to rely on the notice and taking further action to sell the
    truck. In our view, the compromise was not completed, and did not amount to a
    waiver of the original notice that would compel Canadian Diesel to start the
    process over again. The evidence is that Mr. Smith (the lessee of the truck)
    came to Canadian Diesel with cash to pay for the repairs at the compromised
    value, but the truck would not start and he left with the money. This is not a
    case like
McKennas Warehouse and Distribution Centre Inc. v. General
    Exhibition Corp
. (1998)
84 A.C.W.S. (3d) 577
, [1998] O.J. No. 5106
    (Gen. Div.), where the lienholder entered into an agreement to compromise the
    amount of the lien, was fully paid, and then attempted to execute on the lien
    in any event.

[9]

The truck sat in the yard from September 2013 to late January 2014 while
    Canadian Diesel awaited payment. The evidence shows that by that time the
    trucks ECM unit was no longer operational. The respondents argue that
    Canadian Diesel had an obligation to keep the truck in good repair and not
    permit it to deteriorate while in storage, consistent with Canadian Diesels
    duty under s. 28(1) of the Act to use reasonable care, custody and
    preservation of the article.    However, there is no authority for the proposition
    that Canadian Diesel had an obligation to keep the truck operative over the
    many months that it sat in the yard because the repairs remained unpaid.

[10]

The
    respondent argues that the sale price was too low, since the truck was sold as
    is, when it was no longer operational. The application judge stated only: I
    find that the sale of the truck was not commercially reasonable contrary to the
Act
. He gave no reasons for this finding.

[11]

The
    evidence is that Canadian Diesel sold the truck for $30,000 on March 10, 2014. 
    The evidence establishes that the sale price was not improvident. The appellant
    filed two appraisal reports in evidence before the application judge. One set the
    trucks estimated value for the unit as is in the $30,000 range, and the
    retail value with the safety inspection and an E test should be in the $40,000
    range. The second report stated that the value of the unit in its current
    non-running condition is at $32,000 plus applicable taxes, and, with bid range
    values on a running condition Unit with Annual Safety Certificate at $35,000 to
    $36,000 range, depending on Market Conditions at the time of sale. The
    respondents evidence was that the truck was eventually offered for sale by Canadian
    Diesels purchaser for $48,000, but there is no evidence regarding the actual
    sale price or what repairs the purchaser might have made to the truck to ready
    it for resale.

[12]

The
    respondent argues that the appellant had an obligation to repair the truck
    before offering it for sale, and relies on an expansive understanding of the
    commercially reasonable standard, citing
Melrose v. Halloway Holdings
    Ltd.(c.o.b. Valiant Mini Storage)
(2005),
30 C.C.L.T. (3d) 245
,
[2005] O.J. No. 102 (S.C.)
, at para. 37. However,
Melrose
does not go so far as to oblige a lienholder to effect
    repairs, and the respondents counsel was unable to point to any other
    authority that stood for that proposition.

[13]

In
    view of the several errors identified above that were made by the application
    judge, and the fact that this case was argued on an entirely documentary record,
    this court is in as good a position as the application judge to resolve the
    issue, and ought to do so under s. 134 of the
Courts of Justice Act
:
Katsigiannis
    v. Kottick-Katsigiannis
(2001),
55 O.R.
    (3d) 456,
[2001] O.J. No. 1598
    (C.A.)
at paras. 30-31. On this basis, we allow the appeal and
    dismiss the application with costs.  It is unnecessary to address the
    appellants arguments about changes in the draft judgment that went beyond the
    application judges endorsement.

[14]

The
    appellant is entitled to costs in the agreed amount of $6,000, and is also
    entitled to costs of the original application in the amount of $7,000.

K.
    Feldman J.A.

P.
    Lauwers J.A.

M.L.
    Benotto J.A.


