January 2011

A fallible tool

By Marie-Sophie Marceau Lawyer

The Register of personal and movable real rights (RDPRM - Le registre des droits personnels et réels mobiliers) is a provincial catalogue that helps users determine whether movable property items, including road vehicles, are free of debt or have been given as security. The register therefore constitutes a tool for people seeking to purchase or finance a movable right and verify whether it is free of debt. However, the register is not perfect and vigilance is key when purchasing an item such as a used vehicle, for example.

Driven by an affirmative slogan (Pour ne pas acheter les dettes des autres, consultez toujours le RDPRM!), the recent campaign to promote the register gives the impression that a simple check guards against unfortunate surprises. In reality, though creditors are obligated to register their rights with the RDPRM to ensure their enforceability, certain rights are protected under law even if they are not published. The rights listed in the registers held by other Canadian provinces, though enforceable in Québec under section 3104 of the Civil Code of Québec, could be overlooked by even an informed consumer looking up the item in the RDPRM.

The case of BMW Canada Inc. v. Florin (BMW Canada Inc. v. Florin, 2010 QCCQ 9781; affirmed on appeal, 2010 QCCA 2082) perfectly illustrates the issue: a used car acquired by a second owner was seized because of the original owner's failure to pay for the vehicle, which had originally been sold through an instalment sale - a layaway plan in which the seller, BMW Canada Inc., kept ownership of the property until the sale price was paid in full. Because the original owner had stopped reimbursing the loan when the car was sold to the second owner, the new buyer had actually purchased a car belonging to BMW Canada Inc., even though the buyer had consulted the register prior to completing the transaction. The issue lies in the fact that the car was registered in Ontario and listed in the Ontario registry as the property of BMW Canada Inc. prior to being sold in Québec. This information was published in the RDPRM - apparently on the same day that it was published in the Ontarian registry - but was not listed at the time the second buyer consulted the listing. Because there are no references from one registry to the next, the second buyer, who had only checked the registry in Québec, was not aware of the property right in Ontario. Even though the second buyer invoked good faith to quash the seizure, the Court ruled that the buyer had been negligent in limiting the search to Québec, especially since the buyer knew that the vehicle had been registered in Ontario.

The moral of the story is that RDPRM is a useful and effective tool that should never take precedence over the good judgement of the buyer, who must make all of the appropriate verifications and consult other provincial registries whenever necessary.