Bank of Nova Scotia v Dorrance Vincent Sock, 2024 NBKB 13 (CanLII)
Citation : Bank of Nova Scotia v Dorrance Vincent Sock, 2024 NBKB 013
IN THE COURT OF KING’S BENCH OF NEW BRUNSWICK
TRIAL DIVISION
JUDICIAL DISTRICT OF MONCTON
MM-213-2023
BETWEEN:
BANK OF NOVA SCOTIA
APPLICANT,
-and-
DORRANCE VINCENT SOCK
RESPONDENT
DECISION
BEFORE: Justice Maya Hamou
AT: Moncton, New Brunswick
DATE OF HEARING: January 11, 2024
DATE OF DECISION: January 18, 2024
APPEARANCES: I. Andrew Rankin, counsel appearing on behalf of Bank of Nova Scotia
Dorrance Vincent Sock, not in attendance
Introduction
1. This matter concerns an Application for an Order to ensure the protection of a bank’s interest in the collateral pursuant to paragraph 63(2)(e) of the Personal Property Security Act, SNB 1993, c P-7.1. Further, it addresses rights of repossession on a Reserve pursuant to subsection 89(2) of the Indian Act, RSC 1985, c I-15 and the jurisdiction of the Court to order the assistance of sheriffs in the seizure of personal property absent a judgment or statutory or legislative authority.
Facts
Factual Background
2. The Applicant, the Bank of Nova Scotia (“BNS”) entered a contractual sales contract with the Respondent, Dorrance Vincent Sock on March 22, 2017, for a Forest River Hemisphere 356 QB trailer (the “Trailer”). BNS’s security interest in the Trailer was registered under the Personal Property Security Act.
3. Sock defaulted on their obligations under the conditional sales contract and their account went into arrears.
4. BNS attempted to enforce its rights under the contract, including the right to seize the Trailer upon default. When Sock did not cooperate, BNS started the repossession process under the Personal Property Security Act.
5. BNS served Sock with a Notice of Intention to Enforce Security (January 17, 2023, and March 10, 2023) and a Notice of Intention to Dispose of Collateral (February 2, 2023, and March 10, 2023).
6. Sock continues to maintain control over the Trailer and the account remains in arrears.
7. The Trailer remains at Sock’s property on Elsipogtog First Nation, which is a Reserve by application of subsection 2(1) of the Indian Act, RSC 1985, c I-5. Sock is a member of the Elsipogtog First Nation.
2 (1) In this Act,
Indian means a person who pursuant to this Act is registered as an Indian or is entitled to be registered as an Indian; (Indien)
reserve
(a) means a tract of land, the legal title to which is vested in Her Majesty, that has been set apart by Her Majesty for the use and benefit of a band, and
(b) except in subsection 18(2), sections 20 to 25, 28, 37, 38, 42, 44, 46, 48 to 51 and 58 to 60 and the regulations made under any of those provisions, includes designated lands; (réserve)
Procedural Background
8. BNS seek by way of Application (Rule 16.04(e) of the Rules of Court of New Brunswick, NB Reg 82-73) and pursuant to subsection 63(2) of the Personal Property Security Act seeks an Order from the Court to assist in the recovery of the Trailer and to ensure the protection of its interest in the Trailer. BNS seeks a determination of rights in an Agreement considering a Federal statute and a Provincial statute, namely the Indian Act and the Personal Property Security Act. Further
16.04 By Notice of Application
Subject to Rule 16.04.1, when an Act or rule authorizes an application or motion to the court without requiring the institution of an action, a Notice of Application (Form 16D) may be used and, in addition thereto, a proceeding may be so commenced where the relief claimed is
[…]
(e) for a determination of rights which depend upon the interpretation of a deed, will, contract or other instrument, or upon the interpretation of a statute, order-in-council, regulation, local government by-law or resolution,
[…]
Supervisory powers of the Court
63(2) On application by a debtor, a creditor of a debtor, a secured party, a sheriff or any person with an interest in the collateral, the Court may
(a) make any order, including a binding declaration of a right and injunctive relief, that is necessary to ensure compliance with this Part or sections 17, 36, 37 and 38,
(b) give directions to any person regarding the exercise of rights or the discharge of obligations under this Part or sections 17, 36, 37 and 38,
(c) relieve a person from compliance with the requirements of this Part or sections 17, 36, 37 and 38,
(d) stay enforcement of rights provided in this Part or sections 17, 36, 37 and 38, or
(e) make any order necessary to ensure protection of the collateral or of the interest of any person in the collateral.
9. The requests of BNS are two-fold. First, BNS seeks an Order requiring Sock to allow BNS access to Sock’s property to repossess the Trailer considering the Trailer on Reserve. Secondly, BNS seeks an Order that the Sheriffs assist with the repossession if required.
Issues
10. Can BNS recover the Trailer on a Reserve per subsection 89(2) of the Indian Act? What is the scope of permitted repossession rights on a Reserve?
11. Can the Court order the sheriffs to participate in the repossession of the Trailer?
Analysis
Right to Repossess on Reserve
12. The interaction of the Indian Act and the Personal Property Security Act creates a unique legislative framework that governs security interests in the personal property of First Nations people on a Reserve.
13. Section 58(2)(a) of the Personal Property Security Act allows the secured creditor to take possession of collateral or enforce a security agreement as permitted by law. This provision allows the secured creditor to seize the collateral without the assistance of the courts.
Right to take possession of collateral and enforce security interest
58(2) Subject to subsection (3) to (7), sections 36, 37 and 38, the Bankruptcy and Insolvency Act (Canada) and any other Act or rule of law requiring a secured party to give prior notice of the intention to enforce a security interest, if the debtor is in default under a security agreement,
(a) the secured party has, unless otherwise agreed, the right to take possession of the collateral or otherwise enforce the security interest by any method permitted by law.
(b) if the collateral is goods of a kind that cannot be readily moved from the debtor’s premises or of a kind for which adequate storage facilities are not readily available, the secured party may seize or repossess the collateral without removing it from the debtor’s premises in any manner by which a sheriff acting under an order for seizure and sale may seize without removal, if the secured party’s interest is perfected by registration under section 25,
[…]
14. Additionally, subsection 89(2) of the Indian Act provides that notwithstanding where personal property is on reserve, repossession rights pursuant to a conditional sales agreement may be exercised.
Conditional sales
89(2) A person who sells to a band or a member of a band a chattel under an agreement whereby the right of property or right of possession thereto remains wholly or in part in the seller may exercise his rights under the agreement notwithstanding that the chattel is situated on a reserve.
15. As argued by BNS, the rights of secured creditors under a conditional sales contract with security held on reserve has been upheld by courts across Canada, namely in McDiarmid Lumber Ltd. v God’s Lake First Nation, 2006 SCC 58, Mitchell v Peguis Indian Band, [1990] SCR 2 85, Indian Agricultural Program of Ontario v Hill, 2002 ONSC 4835, R v Bernard (1991), 1991 CanLII 2647 (NB KB), 118 NBR (2s) 361.
16. Justice Riordon in R v Bernard, 1991 CanLII 2647, in paragraph 20 described the Court’s ability to issue an Interim Order for Possession by application of Rule 44 of the Rules of Court.
[20] Under s. 89(2) of the Indian Act a person who sells to an Indian purchaser under a conditional sales agreement, retains his right to the property under the terms of the conditional sale contract. An assignee of the seller also retains his right to the property. If there is default in a term of the contract and the conditional seller is entitled to possession, he may request an interim order for possession under rule 44 of the Rules of Court. If such an application is made and an order is granted for recovery of personal property, a sheriff acting under the authority of such an order is entitled to enter upon an Indian Reserve and execute the order. Provincial laws of general application apply on an Indian Reserve except to the extent that they are inconsistent with the Indian Act. There is nothing in the Indian Act that I am aware of that prohibits the executing of an order of the court for recovery of possession of personal property as a result of a default of payment under the terms of a conditional sale contract. The provisions of s. 89(2) of the Indian Act provide that property sold to an Indian, where the right of property or possession remains in the seller, may be repossessed by the seller and he may exercise his rights notwithstanding that the chattel is situated on the reserve. Surely a person who obtains a Court Order to exercise his right to repossession of personal property under the terms of a conditional sale contract, would not as a result preclude his right to repossession as permitted by s. 89(2) of the Indian Act.
17. Similarly, this Court can grant an Order pursuant to subsection 63(2) of the Personal Property Security Act to recover and to protect the security interest of a secured creditor on Reserve.
18. In this case, Sock purchased a Trailer under a conditional sales agreement and defaulted under the terms of the Agreement. Section 1 of the Agreement specified the conditional sale nature of the Agreement.
Subject to the terms and conditions in this Agreement, you grant us a security interest in the following property, and any attachments, accessions, repairs or replacement part or other equipment placed on the property from time to time (“property”) as security for the repayment of all amounts you owe use from time to time under this Agreement and any amendments to this Agreement. When you pay us what you owe us under this Agreement in full, our interest in the property will come to an end.
19. BNS complied with notice requirements and may enforce its right to repossess in accordance with subsection 58(2) of the Personal Property Security Act. Sock has refused to grant BNS or its bailiff access to the Trailer and has indicated they are not willing to return the Trailer. The Trailer is located behind vehicles and behind a fence, on jack stands.
20. Considering these facts, BNS may obtain an Order pursuant to paragraphs 63(2)(a) and (e) of the Personal Property Security Act to repossess and protect its interest in the trailer. As highlighted by case law, subsection 89(2) of the Indian Act does not prevent the issuance of such an Order.
Scope of Repossession Rights on Reserve
21. BNS must contend with section 30 of the Indian Act which governs trespass on reserve. Should a peaceful and cooperative repossession of the Trailer be opposed, section 30 of the Indian Act may become an important consideration.
Penalty for trespass
30 A person who trespasses on a reserve is guilty of an offence and liable on summary conviction to a fine not exceeding fifty dollars or to imprisonment for a term not exceeding one month or to both.
22. The Supreme Court of Canada in McDiarmid Lumber Ltd. v God’s Lake First Nation, 2006 SCC 58 addressed sections 89 and 90 of the Indian Act. While not addressing subsection 89(2) of the Indian Act specifically, the Supreme Court of Canada recognized that First Nations debtors cannot rely on the provisions of the Indian Act as a means of interfering with the right of a non-First Nations creditor to seize collateral situated on Reserve.
23. As a parallel to the rights of a secured creditor to recover collateral, the Ontario Court of Appeal, in R v Doucette, 1960 CanLII 138 addressed the scope of the authority. The Court dealt with bailiffs who entered a premises to repossess personal property. Faced with resistance, the bailiff assaulted the owner to gain access to the personal property. The Court upheld the conviction and noted that even if a person enters a premise lawfully for the purpose of resuming possession of property, they become a trespasser if they subsequently abuse their authority.
24. Thus, in this case, the recovery of the Trailer on Reserve is permitted and presumptively does not constitute trespass, so long as the specific conduct or action of BNS or its bailiff is authorised by law or Order of the Court.
Authority to Direct Assistance of Sheriff
25. Secondly, BNS seeks an Order that the Sheriffs assist with the repossession if required. More particularly, BNS seeks a provision for the following.
Sheriff Services shall assist the Bank of Nova Scotia in repossessing the Trailer in the event the Respondent fails to surrender the Trailer to the Bank of Nova Scotia within the terms of this Order, or otherwise attempts to interfere with the Bank of Nova Scotia or its bailiff’s attempts at repossessing the Trailer.
26. In the present matter, BNS has availed itself of the provisions of the Personal Property Security Act which allow creditors the right to seize collateral without instituting legal proceedings or without obtaining a Court Order. BNS now turns to the Court for assistance in the execution of its self-help remedies in accordance with paragraph 63(2)(e) of the Personal Property Security Act.
27. BNS relies upon paragraph 63(2)(e) of the Personal Property Security Act and relies upon the decision of Justice Riordon in R. v Bernard to justify the involvement of the sheriffs.
28. While paragraph 63(2)(e) of the Personal Property Security Act allows the Court to make any order necessary to ensure the protection of collateral, I am not satisfied that the Court can direct the sheriffs to assist in a repossession absent a statutory or regulatory processes engaging their intervention. Further, Justice Riordon’s reference to the sheriffs in R. v Bernard arose from the enforcement of an Order for Interim Recovery of Personal Property pursuant to Rule 44 of the Rules of Court of New Brunswick. This rule is replete with references to sheriffs and outlines the role of sheriffs in the interim recovery of personal property.
29. The self-help remedies of the Personal Property Security Act do not directly engage the involvement of the sheriffs in efforts to recover personal property. The assistance of the sheriffs to recover personal property is specifically provided for in Rule 61 and Rule 44 of the Rules of Court of New Brunswick. For example,
a. Judgment in an action for possession followed by a Motion for an Order for Possession of Personal Property (Rule 61 of the Rules of Court of New Brunswick) would result in the assistance of the sheriffs to take possession of the personal property.
b. Following the filing of an Action and Motion for an Interim Recovery of Personal Property (Rule 44.01 of the Rules of Court of New Brunswick as reference in R. v Bernard) would result in the assistance of the sheriffs to take possession of the personal property.
30. In addition, legislation may engage the involvement of the sheriffs, such as the Enforcement of Money Judgments Act, SNB 2013, c 32 which outlines the participation of sheriffs to enforce a judgment.
31. In this case, BNS does not have a judgment but rather a statutory right to repossess the Trailer. Therefore, the Court concludes that the intervention of the sheriffs cannot be ordered by the Court in the enforcement of a self-help remedy under the Personal Property Security Act.
Costs
32. BNS was required to file an Application to obtain an Order of the Court to recover the Trailer. These procedural steps were made necessary by Sock’s efforts to thwart recovery of the Trailer by BNS. Considering Rule 59.08(c) of the Rules of Court, BNS may recover $1000 in costs.
disposition
33. The Application is partially allowed with $1000 in costs.
34. The Court directs the issuance of the following Order.
WHEREAS the Bank of Nova Scotia and Dorrance Vincent Sock entered into a conditional sales credit agreement (“Agreement”) for the financing of a Forest River Hemisphere 356 QB 2016 trailer (“Trailer”) on March 22, 2017.
AND WHEREAS Dorrance Vincent Sock defaulted on their obligations under the Agreement.
AND WHEREAS the Trailer is on an Indian Reserve and is not readily accessible.
AND WHEREAS Dorrance Vincent Sock has refused to surrender the Trailer.
AND WHEREAS the Bank of Nova Scotia has provided the Dorrance Vincent Sock with all necessary notices of intention to enforce and dispose of the Trailer pursuant to the Personal Property Security Act, SNB 1993, c P-7.1.
AND UPON reviewing the Application filed by the Bank of Nova Scotia on September 11, 2023.
AND UPON reading the Affidavit of Stephon Mark, sworn September 12, 2023.
AND UPON hearing counsel, I. Andrew Rankin, on behalf of the Bank of Nova Scotia.
AND WHEREAS the Court is satisfied the Bank of Nova Scotia is entitled to possession of the Trailer pursuant to the Personal Property Security Act.
IT IS ORDERED pursuant to paragraph 63(2)(a) and (e) of the Personal Property Security Act that:
a. Dorrance Vincent Sock surrender the Trailer to the Bank of Nova Scotia.
b. Dorrance Vincent Sock furnish the Bank of Nova Scotia and its bailiff with particulars as to the location of the Trailer if it is no longer on the property.
c. Dorrance Vincent Sock grant the Bank of Nova Scotia and its bailiff access to the premise where the Trailer is located to identify, secure, remove and take possession of the Trailer, including that the Bank of Nova Scotia and its bailiff may cut locks, move fencing, move vehicles, and move obstacles currently preventing the repossession of the Trailer.
d. The Bank of Nova Scotia and its bailiff are permitted to repossess the Trailer if Dorrance Vincent Sock does not surrender the Trailer immediately.
e. Dorrance Vincent Sock is prohibited from disposing, alienating, encumbering, selling or otherwise assigning the Trailer before it can be repossessed by the Bank of Nova Scotia.
f. The Bank of Nova Scotia is entitled to $1000 in costs from Dorrance Vincent Sock.
DATED at Moncton, New Brunswick, this 18th day of January 2024.
________________________________________
Justice Maya Hamou
Court of King’s Bench of New Brunswick