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Securities - Debtor Notice. 1758704 Ontario Inc. v. Priest
In 1758704 Ontario Inc. v. Priest (Ont CA, 2021) the Court of Appeal consider the principle that the common law requires notice to the debtor before security can be realized:The Principle in Lister v. Dunlop
[46] The trial judge did not consider the position advanced by the appellants on the common law obligation to give notice to a debtor before seizing secured assets. This principle was adopted in Canada in R.E. Lister Ltd. v. Dunlop Canada Ltd., 1982 CanLII 19 (SCC), [1982] 1 S.C.R. 726. Writing for the Court, Estey J. said, at p. 746:The rule has long been that enunciated in Massey v. Sladen (1868), L.R. 4 Ex. 13 at 19, 38 L.J. Ex. 34: the debtor must be given "some notice on which he might reasonably expect to be able to act". The application of this simple proposition will depend upon all the facts and circumstances in each case. Failure to give such reasonable notice places the debtor under economic, but nonetheless real duress, often as real as physical duress to the person, and no doubt explains the eagerness of the courts to construe debt-evidencing or creating documents as including in all cases the requirement of reasonable notice for payment. [47] See also Royal Bank of Canada v. W. Got & Associates Electric Ltd., 1999 CanLII 714 (SCC), [1999] 3 S.C.R. 408, at p. 417, where it is applied in a debt collection action that shares some similarities with this case.
[48] In Kavcar Investments Ltd. v. Aetna Financial Services Ltd. (1989), 1989 CanLII 4274 (ON CA), 70 O.R. (2d) 225 (C.A.), this court applied and clarified the Lister principle. McKinlay J.A. wrote that it applies, “regardless of the wording of the security document” (at p. 228) and that “[r]easonable time must be given by the creditor, whether or not asked for by the debtor” (at p. 235). See also Waldron v. Royal Bank (1991), 1991 CanLII 5710 (BC CA), 53 B.C.L.R. (2d) 294 (B.C.C.A.), at p. 7, per Lambert J.A.
[49] In Kavcar and Got Electric, both courts considered what constitutes reasonable notice in the circumstances. However, it is not necessary to address that issue in this case because, as discussed below, no notice was given at all.
[50] The Lister principle has been embedded in Canadian debtor-creditor law for decades. This reality is important when considering the reach and effect of the PPSA. The respondents submit that it has been ousted by the PPSA. Even if I were to accept the respondents’ interpretation of s. 63(7) of that Act, there is no basis to conclude that the Legislature intended to extinguish the Lister v. Dunlop line of authority: Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, 41 B.C.L.R. (6th) 1, at para. 39; Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157, at para. 39. In Goodyear Tire & Rubber Co. of Canada Ltd. v. T. Eaton Co. Ltd., 1956 CanLII 2 (SCC), [1956] S.C.R. 610, at p. 614, Fauteux J. (as he then was) wrote, “a Legislature is not presumed to depart from the general system of the law without expressing its intentions to do so with irresistible clearness, failing which the law remains undisturbed.”
[51] In my view, the Lister v. Dunlop line of cases remains undisturbed by the PPSA.
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