2014
Consumer Protection Act, 2002 (CPA)-Application of 2/3rds Rule
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The following information is prepared for information purposes only. It is not intended to express a legal opinion. In all cases where you require a legal opinion, it is recommended that you contact a lawyer. Should you have any questions or comments relating to this material, please contact Peter Balsdon at your convenience.
A used car dealer sells a vehicle for the sum of $10,000.00. The purchaser decides to accept the dealers offer to finance the purchase. After paying $7,500.00 of the amount owing the purchaser defaults on the payment and the dealer seeks to retake possession of the vehicle.
The CPA, s.25(1) forbids such repossession if 2/3rds, or more is paid except by leave of the Superior Court of Justice. In other words the dealer would require a Court Order to recover the vehicle. But what if a third party is providing the financing for the purchase of this vehicle? In order to answer that question you must reference Regulation 17/05 which attaches to the CPA along with the definition of credit agreement, supplier credit agreement and fixed credit as they appear in Part VII of the CPA. Regulation 17/05, s.11(2), refers to the distinction between the vehicle dealer and vehicle financing. Under s.11(2)(a), Part VII of the CPA (credit agreements) applies to financing and Part IV is deemed not to apply. So third party financing is allowed to repossess if there is default during the last 1/3 of the deal. It would appear that s.11(2) of the Regulation is giving rights to the dealer under s.11(2)(a) and then taking them away under s.11(2)(b) if the dealer was both providing the product and financing same.
