Bancorp Growth Mortgage Fund Ltd. v. Lithium Developments Ltd., 2010 ABQB 757

Court of Queen ’ s Bench of Alberta Citation: Bancorp Growth Mortgage Fund Ltd. v. Lithium Developments Ltd., 2010 ABQB 757 Date: 20101130 Docket: 1003 04564 Registry: Edmonton Between: Bancorp Growth Mortgage Fund Ltd. Plaintiff - and - Lithium Developments Ltd., Royal Canadian Development Inc., Jonathan St. Arnaud, Kurtis Paull, Marc St. Arnaud, Ivor Langford, Eddo Cancian, Time Developments Ltd., and Langford Electric Ltd. Defendants _______________________________________________________ Memorandum of Decision of W.

Breitkreuz, Master in Chambers _______________________________________________________ [ 1 ] This is an application by the plaintiff against the defendant, Kurtis Paull only, for judgment on a personal guarantee executed by Mr. Paull and all of the other defendants except for Lithium Developments Ltd. and Royal Canadian Development Inc., the owner and transferee, respectively of the property for which mortgage security had been granted to the plaintiff, and guaranteed by all of the other defendants including Kurtis Paull. All the other defendants were noted in default.

I do not know what the status of the proceedings against them is. [ 2 ] Mr. Paull filed a defence including:

“That the Plaintiff failed to give him proper notice of demand as required by the Guarantee prior to commencing recovery proceedings. The Plaintiff’s failure to give proper notice of demand is a material breach of the Guarantee.” [ 3 ] There are other defences which I disposed of at the

summary judgment application, and requested briefs on the question of notice. [ 4 ] The guarantee contains a clause that provides that no action will be commenced until demand for payment has been made. Then it provides for pre-paid postage deemed to have been received by the guarantor on the third day after the posting of such demand. [ 5 ] There is evidence from the plaintiff that service of demand was attempted but that the process server returned the documents to be served with the comment “moved, need new address”.

There is also evidence from the plaintiff to the effect that on the same day Canadian Western Bank through its Calgary solicitors served the defendant with its first mortgage proceedings and a guarantee on the defendant Paull at that address, on March 4, 2010. [ 6 ] I am not prepared to accept the service of the Canadian Western Bank proceedings on its mortgage and demand for payment on the personal guarantee in its favour as sufficient service of demand for payment of this plaintiff’s guarantee. [ 7 ] But that is by no means a complete answer to the defendant’s defence based on no demand for payment served on him.

There are a number of cases on this point, reviewed and commented upon by Mr. Justice Graesser in Dushenski v. Lymer , 2010 ABQB 605 . He cites a number of cases which I will not repeat here, for authority that a statement of claim can be treated as a demand for payment. In that case a promissory note provided that it is payable within 90 days of demand. The cause of action did not accrue until 90 days after demand had expired. The argument was rejected based on the authorities reviewed and adopted. [ 8 ] The defendant also argued that he is entitled to a reasonable time period after notice according to Lister v.

Dunlop 1982 CanLII 19 (SCC) , [1982] 1 SCR 726 . I have considered that defence but it is also rejected. The defendant was served with the statement of claim on July 28, 2010 and the application was heard on September 17, 2010. In addition, for the purposes of notice that the defendant will be called upon to make good on the guarantee, I cannot ignore entirely the fact that the Canadian Western Bank proceedings were served on him on March 4, 2010.

A combination of those two service dates satisfies me that the defendant had some time to make arrangements to honour the subject guarantee. [ 9 ] I am mindful of the fact that at the application the defendant argued that the land has been listed at 3.4 million dollars and that a sale at that price would yield approximately $230,000.00 against the debt, which at this stage is $284,000.00. I am reasonably certain that if a sale had occurred between the date of the application and the date of this decision, counsel would have informed me.

Not having heard from counsel in the past two and half months, I think I can safely assume that no sale has at this date occurred. If I am wrong in that, or if a sale is imminent, counsel may approach me on notice for a stay of either all or part of this judgment pending the closing of the sale. [ 10 ] The plaintiff is entitled to costs. I have examined the guarantee to see if the plaintiff has included a solicitor-client costs provision but have not been able to find one. It would appear that the plaintiff is restricted to

schedule C costs under the appropriate column in the Rules of Court. The column may need to be determined according to whether a portion of the guarantee has been satisfied under paragraph 9. Failing agreement, the parties may speak to me by conference call within 30 days after the date of this decision. Heard on the 17 th day of September, 2010. Dated at the City of Edmonton, Alberta this 29 th day of November, 2010.

W. Breitkreuz M.C.C.Q.B.A. Appearances: Paul Messner Witten LLP for the Plaintiff Lanny James Biamonte Cairo & Shortreed LLP for the Defendants