An Ontario car dealer purchased a vehicle originally from Québec and sold it to an Ontario wholesaler.
At the time, a finance company had an unregistered security interest in the vehicle under Québec law, which it registered 12 days later.
Under the Civil Code of Québec, this registration was retroactive.
The finance company sued the Ontario purchasers to enforce its security interest.
The trial judge found for the finance company, holding that the purchasers' presumed good faith was rebutted by their failure to act with due diligence.
The Court of Appeal dismissed the purchasers' appeal, determining that the standard of review for foreign law is correctness, and agreeing that the purchasers' failure to take prudent steps to verify title rebutted the presumption of good faith under Québec law.