Royal Bank of Canada v. Melvax Properties Inc., 2011 ABQB 167

Court of Queen ’ s Bench of Alberta Citation: Royal Bank of Canada v. Melvax Properties Inc., 2011 ABQB 167 Date: 20110315 Docket: 1003 16924 Registry: Edmonton Between: Royal Bank of Canada Plaintiff - and - Melvax Properties Inc. Defendant _______________________________________________________ Endorsement of the Honourable Madam Justice J.B. Veit _______________________________________________________ [ 1 ] Mr.

Brekkan opposes the receiver’s application to disclaim his sales contract relating to the purchase of a unit in a condominium complex being constructed by Melvax Properties Inc. prior to that company going into receivership and to return his deposit. Mr. Brekkan, whose deposit totalled $2,500.00, asserts that he has been assured by his realtor that the “current market value, upon completion” of his unit “will be approximately $178,000.00" compared to the $115,000.00 purchase price of the unit. [ 2 ] Mr. Brekkan’s objection is denied. [ 3 ] The court obviously has the power to deny the receiver’s application.

The receiver’s obligation when determining whether it

will affirm or disclaim a contract includes the obligation to have regard to equitable considerations: see, for example, New Skeena Forest Products Inc. v Kitwanga Lumber Co. Ltd. 2004 BCSC 1818 , [2004] B.C.J. No. 3009 . The issue here is whether the court’s discretion to deny the receiver’s application should be exercised in the circumstances here. [ 4 ] In addition to the technical problem with the affidavit presented on Mr. Brekkan’s behalf (the affidavit being sworn by a student-at-law in the firm which represents Mr.

Brekkan, and is therefore not capable of being the subject of questioning), and the substantive problem relating to the opinion of the value of the unit (the opinion relates to the value at some uncertain future date in as yet uncertain circumstances), Mr. Brekkan faces three additional problems: [ 5 ] First, the weight of investor judgment is against him. All of the other investors in the project consent to the receiver’s proposal. A purposive

interpretation of the BIA requires the court to acknowledge that the BIA is business-oriented legislation which respects business judgments on matters relating to financings, etc. and which only allows the court to interfere with business judgments where the law or equity would interfere with a business judgment. Here, all of the other investors who made down payments on the project, and whose investments total $75,000.00, in comparison to Mr.

Brekkan’s $2,500.00, are in favour of the receiver’s proposal, deeming it to be the best way in the circumstances to put an end to what they describe as a long and painful saga. [ 6 ] Second, he has not established that he will necessarily suffer a loss if the receiver’s application is allowed. Indeed, he may have a claim against the Melvax estate: see, for example, North American Steamships Ltd. (Re) 2007 BSCS 267 , [2007] B.C.J.

No. 390 , at para. 16 . [ 7 ] Lastly, the order made in this matter on October 8, 2010, pursuant to s. 13(2) of the Judicature Act and s. 243 of the Bankruptcy and Insolvency Act specifically authorized the receiver to disclaim contracts, see s. 3(

c) of the order, and such authority is well established in the law. [ 8 ] For those reasons, his objection is denied. Heard on the 14 th day of March, 2011. Dated at the City of Edmonton, Alberta this 14 th day of March, 2011. “J.B. Veit” J.B. Veit J.C.Q.B.A. Appearances: Lorena K. Harris, Fraser Milner Casgrain LLP, on behalf of the Receiver

Tiffany L. Dueck, Student-at-Law, Philip G. Lister Professional Corporation, on behalf of Donald Brekkan Mark D. Tims, Q.C., Tims & Company, on behalf of 16 investors