Caplink Financial Corporation v. Petra Corp., 2011 ABQB 388

Court of Queen ’ s Bench of Alberta Citation: Caplink Financial Corporation v. Petra Corp., 2011 ABQB 388 Date: 20110620 Docket: 0903 01331 Registry: Edmonton Between: Caplink Financial Corporation Plaintiff - and - Petra Corp. and Daniel Matthews Corns Defendants _______________________________________________________ Memorandum of Decision of W. S. Schlosser, Master in Chambers _______________________________________________________ [ 1 ] Two parcels of land were sold by a creditor, Caplink Financial Corporation. The funds were paid into Court pursuant to an Order of Master Smart dated September 23, 2010.

Caplink was paid out. The learned Master ordered that the balance of funds could be paid out to other creditors upon application by the interested party and further Order of the Court. [ 2 ] The next creditor on the list, Scott Ryan Cummings, applies for the funds. The application is opposed by a subsequent creditor, Steinke & Company Realty Ltd. The applicant’s claim is based on a Promissory Note secured by an encumbrance registered against the land.

[ 3 ] In MCAP Service Corporation v. 973632 Alberta Ltd. , 2011 CarswellAlta 127 , 2011 ABQB 36 , Master Laycock held: 34 In order to succeed on this application, Gaastra must show an entitlement to the funds. It is not sufficient merely to show that he had a charge upon the lands; it is necessary for him to show that he had an enforceable claim when his charge was removed from the land. The sale order effectively extinguished Gaastra’s right to enforce his debts against the land. His claim is then limited to the amount of surplus money paid into court.

The entitlement of the interested parties to the fund is determined by the rights of the parties at the date of the sale order. There is no real time limit fixed for applying to determine the entitlement to the surplus funds. (emphasis added) [ 4 ] Steinke & Company Realty argues that the applicant did not have an enforceable claim at the date of the sale order or, alternately, that there are disputed and contentious matters of fact and issues of credibility that would prevent the Applicant’s claim from being dealt with summarily. Steinke & Company Realty Ltd.’s first objection is based on the Limitations Act .

They argue that the Applicant was out of time to make a claim at the date of the Order. [ 5 ] The issues are as follows: 1. Can a competing creditor, other than a Defendant, raise the Limitations Act? [ 6 ] The Applicant has not taken issue with this point. In my view, a competing creditor can raise the Limitations Act , for the reasons set out in Toronto Dominion Bank v. Letendre , 2011 ABQB 369 . 2. Is there a triable limitations issue? [ 7 ] This question requires some analysis. [ 8 ] The basis for the Applicant’s claim is a Demand Promissory Note in the sum of $222,000.00 dated February 23, 2006.

The Note is expressed to be due three months after it was made, “on or before May 23, 2006". The land that was sold to create the surplus is pledged as security. [ 9 ] The debtor also promised to pay interest at $849.32 per month, until such time as the Note was paid in full. A

schedule provided by the Applicant sets out the payment history. The following payments were made: (a) $6,000.00, February 7, 2007; (b) $8,000.00 April 24, 2007; (c) $16,000.00 August 17, 2007; (d) $13,000.00 April 29, 2008; (e) $10,000.00 March 6, 2009. [ 10 ] The

schedule shows that all of these payments were credited to interest. The sum of these payments takes the interest current to March 23, 2011. A demand for the principal was made in writing on March 12, 2010. At March 12, 2010 there was a credit balance for interest in the amount of $11,752.64.

[ 11 ] Despite the fact the instrument in issue is a “Promissory Note” it is not necessary to get into the somewhat arcane law of negotiable instruments to deal with the limitation issue. We are dealing here with the original parties. There are no endorsers (etc). There are apparently no issues about demand or presentment. In the circumstance, the action can be treated as an action in debt. The Note is evidence of the debt. [ 12 ] The March 12, 2010 demand left it open to the Applicant to bring an action until March 2012.

Given the history of this loan and the fact that interest remains current, there was no injury that warranted proceedings until there was a default in the payment of principal following the demand. Accordingly, the Applicant was within time to bring an action on September 21, 2010 when the Order creating surplus was made. There are no obvious limitations issues that would preclude the Applicant’s claim, or require a trial. 3. Matters of Fact [ 13 ] The Respondent has raised a number of issues which it argues are contentious and disputed matters of fact which would either preclude

summary disposal of the Applicant’s claim or require that the matter go to trial. [ 14 ] I have read the evidence on file, including the examination of the Applicant on his Affidavit. The only significant issue appears to be the amount of the debt. It is not clear, for example, that the full $222,000 was advanced. [ 15 ] There is evidence that $200,000 was advanced. There may have been further advances beyond the initial $200,000 but there is some doubt about whether these further advances relate to this transaction, or other dealings between the Applicant and the debtor.

Disposition [ 16 ] $225,662.72 was paid into Court. The evidence supports a provable claim by the Applicant as at September 23, 2010. In my view, a trial is not required with respect to any of the issues raised in the application. [ 17 ] The application of Scott Ryan Cummings is allowed subject to proof of the amount of the claim. This may require an accounting and further application before any money is paid out of Court, if the parties are unable to agree. Heard on the 5 th day of May, 2011. Dated at the City of Edmonton, Alberta this 20 th day of June, 2011. W. S. Schlosser M.C.C.Q.B.A.

Appearances: Randolph Langley Henning Byrne for the Applicant Kari Sejr Bishop & McKenzie for the Respondent