DATE: 20030919
DOCKET: C40069
COURT OF APPEAL FOR ONTARIO
RE:
JOE KAAK, DIANNE KAAK and JOE KAAK AND DIANNE KAAK OPERATING UNDER THE NAME OF J & D FARMS (Applicants)(Respondents) – and – BANK OF MONTREAL, DELOITTE & TOUCHE INC. and FINANCE CANADA INC. (Respondents)(Appellants)
BEFORE:
LABROSSE, DOHERTY and WEILER JJ.A.
COUNSEL:
Tony Van Klink
for the appellants
Thomas J. Corbett
for the respondents
HEARD & ENDORSED:
September 18, 2003
On appeal from a judgment of Justice Edward R. Browne of the Superior Court of Justice dated May 5, 2003.
A P P E A L B O O K E N D O R S E M E N T
[1] The appellant raises two grounds of appeal:
Whether the transaction created a security interest; and
Whether the applications judge ought to have directed the trial of an issue.
[2] Browne J. rejected the Bank’s position that the real nature of the transaction created a security interest and that it was a loan respecting the 400 cows and a conditional sale of 159 cows. He held, instead, that the substance of the transaction was an option to purchase. An option does not create a security interest. A security interest as defined in the relevant portion of s. 1(1) of the Personal Property and Security Act R.S.O. 1990, c.8.c.10 as “... an interest in the personal property that secured payment or performance of an obligation...” An option is a right; it is not a payment or an obligation.
[3] With respect to the second ground of appeal, the trial judge followed the procedure that the parties agreed he should follow and we are not prepared to review that procedural issue.
[4] The appeal is dismissed. Costs to the respondent fixed in the amount of $7,000 all inclusive.