Debt buyer Canaccede Credit LP suffers significant setback in Guelph Small Claims Court today

In a cramped Motions Court in the bowels of the Guelph Small Claims Court, London, Ontario-based debt buyer Canaccede Credit LP suffered a significant legal setback this morning when two of its lawsuits against a consumer totalling $43,000.00 were thrown out by the Motions Court Judge.

The Defendant, an intelligent, likable, entrepreneur from the Collingwood area, was represented in court today by consumer lawyer Mark Silverthorn. Today the Defendant's counsel brought a motion to strike the Plaintiff's Claim in two separate lawsuits involving debts which Canaccede Credit LP's pleadings state were originally owned by The Bank of Nova Scotia.

Counsel for the Defendant argued that Canaccede Credit LP was carrying on business in Ontario as a debt buyer without being registered as a collection agency in contravention of subsection 4(1) of the Ontario Collection and Debt Settlement Services Act. At the end of the motion the Motions Court Judge struck the Plaintiff's Claim stating that since Canaccede Credit LP was operating as an unregistered collection agency in contravention of the Ontario Collection and Debt Settlement Services Act it was not entitled to bring a lawsuit in Ontario Small Claims Court.

Counsel for the Defendant also argued that Canaccede Credit LP's two lawsuits should be thrown out because it could not prove that there had been an absolute assignment of the Scotiabank accounts which were the subject matter of these two lawsuits due to Canaccede Credit LP's failure to produce a contractual document proving that 100 percent of Scotiabank's interest in the debts in question had been assigned. The Motions Court Judge ruled that, in both lawsuits, the Plaintiff's Claim against the Defendant ought to be dismissed because it had not produced sufficient documentation to prove that there had been an absolute assignment, and, therefore Canaccede Credit LP should not able to sue the Defendant in its own name.

Since the Defendant was successful with its pre-trial motion the Motions Court Judge may award the Defendant costs. Counsel for the Plaintiff Canaccede Credit LP will make written submissions to the Motions Court Judge regarding costs followed by written submissions by the Defendant's lawyer, Mark Silverthorn.

Canaccede Credit LP has the right to appeal today's Motions Court ruling

Canaccede Credit LP has the right to appeal today's decision in Motions Court in SC1800000397 and SC1800000398 in Guelph Small Claims Court. If Canaccede Credit LP chooses to appeal today's decision there is no guarantee that it will be successful.

Outstanding complaint with the Ontario Government

On May 24, 2019, the Defendant in these two lawsuits made a written online complaint to the Ontario Protection Branch, Ministry of Government and Consumer Services, alleging that Canaccede Credit LP was carrying on business in Ontario as an unregistered collection agency in contravention of Ontario law. Defendant's counsel Mark Silverthorn has sent a copy of the Defendant's complaint to Shane Gallagher, Registrar, Payday Lending and Debt Recovery, Ontario Ministry of Government and Consumer Services.

The impact of today's decision on Canaccede Credit LP and its affiliates

The $64,000 question is the impact of today's Motions Court decision on not only Canaccede Credit LP but also its affiliate, Canaccede Financial Group.

The requirement that debt purchasers be registered as a collection agency under the Ontario Collection and Debt Settlement Services Act came into force on January 1, 2018. Accordingly, it would appear that today's Motions Court decision, if not overturned on appeal, raises serious questions about the legality of collection activities, lawsuits commenced, and judgments obtained by Canaccede Credit LP where it contravened the January 1, 2018 requirement to obtain a collection agency registration under the Act. Some consumers may wish to seek legal advice in connection with the merits of bringing a motion to set aside a default judgment obtained by Canaccede Credit LP.

Canaccede Credit LP's potential exposure arising from today's Motions Court decision may not be limited to Ontario. The Ontario Collection and Debt Settlement Services Act is unique in that it is the only provincial statute regulating the conduct of collection agencies where it applies where either the debtor or the collection agency reside in Ontario. Section 2 of the Ontario Collection and Debt Settlement Services Act reads as follows:

Accordingly, unless today's Motions Court decision is overturned on appeal, consumers residing outside Ontario may attack the legality of collection activities, lawsuits commenced and judgments obtained by Canaccede Credit LP where the January 1, 2018 requirement to be registered as a collection agency under the Ontario Collection and Debt Settlement Services Act has been contravened.

The impact of today's Motions Court decision on Canaccede Financial Group

Canaccede Credit LP is an affiliate of Canaccede Financial Group. Canaccede Financial Group describes its business operations on its "Abouts Us" page on the firm's website, canaccede.com as follows:

The effect of today's Motions Court decision in Guelph Small Claims Court on the Canaccede Financial Group is unclear. The Ontario Government maintains an online database listing every entity which is registered as a collection agency in Ontario. As of today's date, there are 183 firms which are listed on this online registry and only one includes the name "Canaccede", Canaccede International Management Ltd.

Today a Guelph Motions Court Judge ruled that Canaccede Credit LP was carrying on business as an unregistered collection agency in contravention of the Ontario Collection and Debt Settlement Services Act. A reasonable person might ask if there are any additional affiliates of Canaccede Financial Group which are not registered as a collection agency and ought to be?

Broader implications of today's Motions Court ruling on all debt buyers

It is possible that today's Motions Court ruling may be used in the future by consumers sued over purchased debt to frustrate or defeat debt purchasers' lawsuits.

Today's Motion Court ruling may be used by some consumers as a template to successfully argue that there has not been an absolute assignment of the debt which is the subject matter of litigation because the debt buyer has not disclosed unredacted copies of any and all documents necessary to prove that one hundred percent of the original owner's interest has been transferred when the debt was sold.

Contact Mark Silverthorn for more information

If you would like to learn more information about debt buyers and the challenges debt buyers face recovering monies from consumers you are welcome to contact consumer lawyer Mark Silverthorn at (519) 987-3270 for a free 10-minute telephone consultation. Alternatively, you can send him an e-mail at markasilverthorn@gmail.com.

ABOUT THE AUTHOR

The author, Mark Silverthorn, worked for twelve years as a collection lawyer for four of the ten largest collection agencies operating in Canada. He subsequently had an epiphany after which he changed sides and began representing consumers struggling with debt. He is the author of The Wolf At The Door: What To Do When Collection Agencies Come Calling (2010), published by McClelland & Stewart. Mark is routinely consulted by the media on issues concerning consumer debt, bill collectors, and the Canadian debt relief industry. Mark Silverthorn practices law and his law practice, silverthornlaw.ca, focuses on helping individuals across Canada struggling with debt.