The appeal concerned whether a lender could structure a business loan to an on-reserve borrower as a two-step conditional sale transaction in order to obtain effective security over existing chattels situated on reserve.
The court held that the arrangement was merely notional, with no real sale or repurchase, and amounted to an impermissible attempt to circumvent the protection in s. 89(1) of the Indian Act.
Because the transaction was a pure fiction rather than a genuine sale in which rights remained in the seller, it did not fall within s. 89(2).
The appeal from the conversion judgment was dismissed with fixed costs.
