Royal Bank of Canada v. Bondar, 2011 ABQB 147

Court of Queen ’ s Bench of Alberta Citation: Royal Bank of Canada v. Bondar, 2011 ABQB 147 Date: 20110307 Docket: 0903 07902 Registry: Edmonton Between: Royal Bank of Canada Plaintiff - and - Michael Joel Bondar and Michael J. Bondar Professional Corporation Defendants _______________________________________________________ Memorandum of Decision of L.A. Smart, Master in Chambers _______________________________________________________ Background [ 1 ] The Plaintiff Royal Bank of Canada (Royal Bank) applies for

summary judgment as to liability only as against the Defendants Michael Joel Bondar and Michael J. Bondar Professional Corporation (collectively Bondar) with the question of quantum to go to assessment. Almost $800,000 was advanced on four separate mortgages for condominium units in Camrose, Alberta. Bondar was retained as legal counsel for the Royal Bank and also acted on behalf of the mortgagors. [ 2 ] In each case Bondar registered the Royal Bank’s mortgage on title subject to a Notice of Health Hazard Registration

registered in 2004 some three years before the mortgages were registered. Each of the notices set out the conditions that contravened the Housing Regulation pursuant to

section 66 of the Public Health Act, c. P-37, RSA 2000, and directed that the property be vacated and not reoccupied until the conditions were remedied. In Bondar’s reports to the Royal Bank he identifies the Health Notices and indicates that they are “to be discharged”. Funds were advanced by Bondar to the mortgagors without holdback. Plaintiff’s Position [ 3 ] Subsequently it was determined that the mortgaged properties have a market value well below the amounts advanced by the Royal Bank. The properties remain vacant and uninhabited.

The Royal Bank argues that no reasonably competent real estate lawyer would have advanced the proceeds of the mortgages in the face of the obvious, substantial, and detrimental encumbrance registered on the titles. Defendant’s Position [ 4 ] Counsel for Bondar says that in all four instances the Royal Bank agreed to make loans based on its own due diligence prior to the involvement of Bondar. It satisfied itself that each had the appropriate market value to support each of the mortgage loans.

On cross-examination the Royal Bank’s representative acknowledged that Bondar was not retained for advice regarding the value or quality of the properties nor did they look to him for any business advice. It was acknowledged that if the Health Notices were discharged the Royal Bank would have no further complaint with Bondar.

The Royal Bank’s witness had no knowledge as to whether any of the bank employees handling the loans were aware of the state of title when valuations by the bank were undertaken. [ 5 ] There is no evidence that the conditions set out in the Health Notices existed when Bondar was retained nor is there any evidence that the conditions set out in the Health Notices still exist. The Affidavits of Value used in support of this application are based on external inspections only and therefore provide no assistance in determining the actual condition of the interior of the buildings.

Discussion [ 6 ] The Plaintiff says we are dealing with a simple question of damages as Bondar is clearly liable for the diminution in value for not discharging the Health Notice. There is no denial Bondar breached his obligation but the diminution in value in the units does not necessarily flow from that. The appraisal evidence says that values, as instructed, were determined “assuming that all the damage has been fixed, all improvements meet code and that the East Central Health Board has removed the notice of health hazard registration”.

Despite these assumptions values are less than half the amount advanced under the mortgages. With that in mind can it be said the loss suffered by the plaintiff was caused by the Bondar’s breach of contract, his negligence or perhaps some other cause, for example, the general decline in market values during 2007. The appraisers say they only obtained limited access but peering through the windows disclosed new cabinetry, carpet, linoleum, light fixtures, faucets, hood fans, appliances and painted wood closet doors and trim.

No one can say whether the conditions or any of them that existed at the time the Notice was registered, now exist. The appraisers boldly state that if the Health Notices are not removed the properties have no value but none say nor apparently can they say what it will take to rectify the problems or if they can be rectified at all. Decision [ 7 ] The Plaintiff is quite correct in saying that much of any trial will address the question of damages.

In my view, however, there remain issues of causation which are inextricably entwined with the determination of damage creating sufficient complexity to warrant a trial of all of the issues. Accordingly, the application for

summary judgment is dismissed. Heard on the 16 th day of September, 2010. Dated at the City of Edmonton, Alberta this 7th day of March, 2011.

L.A. Smart M.C.C.Q.B.A. Appearances: Schuyler Wensel, Q.C. Witten LLP for the Plaintiff Stuart Weatherill Emery Jamieson LLP for the Defendants