Conconi FT Holdings Ltd. v. Edmonton-West R.V. Park & Campground Inc., 2010 ABQB 812

Court of Queen ’ s Bench of Alberta Citation: Conconi FT Holdings Ltd. v. Edmonton-West R.V. Park & Campground Inc., 2010 ABQB 812 Date: 20101216 Docket: 0903 09526 Registry: Edmonton Between: Conconi FT Holdings Ltd. Plaintiff - and - Edmonton-West R.V. Park & Campground Inc. Defendant _______________________________________________________ Memorandum of Decision of L.A. Smart, Master in Chambers _______________________________________________________ Background [ 1 ] This foreclosure action was commenced in May, 2008.

A Consent Order Nisi/Order for Sale was granted on August 19, 2008 with the redemption period expiring February 14, 2009. The subject property was to be listed at the expiry of the redemption period at $14 million being in the market value in the Affidavit of Value dated June 19, 2008 filed by the Plaintiff. [ 2 ] It does not appear that the property was ever listed for the $14 million. The Plaintiff obtained an updated appraisal dated May 25, 2009 and applied for a reduction of the list price being the market value in that Affidavit of Value of $9,300,000. A Consent

Order reducing the list price was granted June 14, 2009. [ 3 ] On September 29, 2009 the list price was reduced by Order to $7,600,000 based on the opinion of the Judicial Listing Agent. The Plaintiff subsequently filed an Affidavit of Value giving a market value of $7,300,000 at November 9, 2009. Discussion [ 4 ] The Plaintiff now proposes to purchase the property (a “Rice Order”) for $5,442,000 being the market value set out in yet another appraisal dated March 25, 2010. [ 5 ] The Defendant resists the application relying on the Alberta Court of Appeal decision of the Yorkshire Trust Company v.

Armwest Development Ltd. (1985) 1985 ABCA 225 (CanLII) , 41 Alta L.R (2d) 1 , 66 A.R. 93 . Justice Kerans at paragraph 3 and 4 in the Memorandum of Judgment delivered from the bench stated the following: 3 This situation produces a problem for the practice, and we are asked to give some direction. In King Art [Can. Permanent Trust Co. v. King Art Dev. Ltd. , 1984 ABCA 182 (CanLII) , 32 Alta. L.R. (2d) 1 , [1984] 4 W.W.R. 587 , 12 D.L.R. (4 th ) 161 , 54 A.R. 172 ] we said that it is the duty of the judge who makes a Rice order to fix a fair value of the land because it is not an arm’s length transaction.

In so stating, we did not contemplate that a mortgagee could seek approval for sale to itself at first one price and then another and so on until finally its offer and the market price are in accord. It would be an abuse of process so to “ride the market”. We think that a mortgagee, in the absence of special circumstances, should only apply once for a Rice order. If that application is not in the form of an application for the approval of a sale for a price “to be fixed by the Court”, then, if the court does not approve the proposed sale price, the court should nevertheless fix the fair value.

That value would then be res judicata as between the mortgagee and the mortgagor. We make such an order here. 4. The next question which arises is this: When a judgment makes a valuation for the purposes of a Rice order in the face of a fluctuating market, at what point in time should the valuation be fixed? We think that the just answer is to say that the valuation should be that on the day when the mortgagee was first entitled to apply for such an order, or the day when such an order is indeed obtained, whichever is the higher.

It is common ground here that the mortgagee was first entitled to apply in early 1983. The valuation day is then, and not at the time of the application for the order nisi as found by the learned chambers judge. [ 6 ] There is ample evidence of declining value, indeed from $14 million to $5,442,000. Defendant’s counsel says that is sufficient for the Court to dismiss the Plaintiff’s application. Notwithstanding Yorkshire Trust neither the Defendant’s nor the Plaintiff’s counsel were prepared to argue what the fair price should be in the circumstances.

Plaintiff’s counsel argues that the application is for $5,442,000 and takes the position that if the offer is not acceptable, I should simply dismiss the application. [ 7 ] When I pointed out the Court of Appeals direction Defendant’s counsel then provided argument regarding material calculation errors in the latest appraisal saying that whatever the fair price might be the Court should not rely on this flawed valuation when making its finding.

Furthermore, most certainly in light of the errors, the Court must not set the fair value at $5,442,000. [ 8 ] It strikes me that the numerous valuations, the Consent Order Nisi/Order for Sale, and the Consent Order to reduce the list price are all factors the Court must consider when setting a fair price. These factors may be particularly germane to the point in time when the mortgagee was first entitled to apply for such an Order. I’m simply not prepared to embark on such analysis without argument from the parties.

Noting the flaws in the most recent Affidavit of Value alone, I can properly say that the Court is not prepared to accept the Plaintiff’s proposal and that application is dismissed. Nonetheless the Plaintiff will not be permitted to “ride the market”. As a consequence of this decision the Plaintiff cannot make further proposals and is now restricted to bringing forward an application to set the fair price only. [ 9 ] I’m of the view since neither party was properly prepared to argue this motion that they shall each bear their own costs.

Heard on the 6 th day of October, 2010. Dated at the City of Edmonton, Alberta this 16 th day of December, 2010. L.A. Smart M.C.C.Q.B.A. Appearances: Stuart Weatherill Emery Jamieson LLP agent for Vickers Hendrix LLP Counsel for the Plaintiff Barry Basaraba McGee Richard Counsel for the Defendant - Edmonton-West R.V. Park & Campground Inc. Neil Fenna Ritchie Mill Law Office for D. Dickson - prior encumbrancer Crista Osualdini McLennan Ross LLP for T. Tornberg - prior encumbrancer Mr and Mrs. Denis Kresier - prior encumbrancer Mr. Eaton and Mrs. Evans - prior encumbrancer