Tuesday, 29 January 2013

US Dealer’s Repossession of Car in Canada Okayed

In a recent case before the Alberta Court of Appeal,  Houle v BMW Financial Services, a couple who had bought a car in the United States and took it with them when they moved to Alberta sued after the American dealer repossessed the car in Canada.  The Court upheld a decision dismissing their  action for an order cancelling and reversing the seizure of the BMW car.  They had bought it in California under an installment sales contract, then had fallen twelve months behind on the payments.  After several months of inquiries and searching, the U.S. dealer found the car in Alberta and, through an affiliated Ontario company, re-possessed the car.  The owners then proposed to pay the arrears to get the car back, but the defendant refused. The car’s owners made much of the fact a non-party had seized the car, presumably hoping for a ruling that only a party to the car sale transaction can seize back the car, and that that party would not be permitted to enforce a U.S. transaction across the border in Canada. 
The facts presented legal issues of two kinds:  the substantive issues (did the U.S. dealer have the right to refuse payment of the arrears,  seize and keep the car , or did the owners have the right to pay those arrears and regain the car?) and the procedural issues (what requirements apply to the seizure?)
The contract had a choice of law clause: the law of California governs substantive matters and the law of the place of seizure  governs procedural matters.  This is the same as what the Alberta conflict of laws rules provide. 
The need to prove the content of the foreign (California) law as a fact can potentially be a difficulty in cases of this size, given the cost of bringing in an expert or other witness to testify on California law.  Here, neither side did so; instead, a copy of the relevant excerpt of the California Civil Code was given to the Court, and both sides argued from that,  probably  in order to minimize costs.  The court applied the presumption of similarity:  it presumed, in the absence of evidence to the contrary, that California law (including their principles of statutory interpretation) is the same as Alberta law.  The court found the defendant had a right to seize and re-sell the car.
The governing law as to procedure is the domestic law; the law of Alberta says that if the owner is in default, the manner of seizure is irrelevant and does not provide a ground for attacking the seizure or sale.  The court had little to say about the fact the search and seizure was directed from outside Canada, without the knowledge or consent of Canadian authorities  – apparently that  was of no consequence for the court.
Evidently, the Canada – U.S. border is not itself a big obstacle to a foreign party’s enforcement of a security interest, in Alberta at least. 


  1. These people fall 12 months back on their car payment and they want to sue the dealership!?!? ONE YEAR of knowingly blowing off a payment that they know they are responsible for and then leaving for another country while hoping and praying that they would become immune to American repossession laws. Sad and pathetic. What is wrong with people? Where does this ridiculous sense of entitlement come from? Anyway, great article and thanks for being here. I came across some related info that I found useful also: http://creditletters.eu.pn/help-my-car-was-repoed/

  2. Repossession law is kind for saving the house or any kind of property, if you file a bankruptcy. So Repossession law help at the bankruptcy time without losing your home or any property.
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  4. I will say that the border issues between Canada and the USA have escalated badly. They don't appear to be returning to any sense of normalcy yet, and it's been over a year.

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  5. For those interested on learning about how to stop a repossession see Stop Car Repossession

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