AGF Trust Company v. Mcleod, 2011 ABQB 711

Court of Queen ’ s Bench of Alberta Citation: AGF Trust Company v. Mcleod, 2011 ABQB 711 Date: 20111117 Docket: 0901 18345 Registry: Calgary Between: AGF Trust Company Plaintiff - and - Sandford G. Mcleod and Judith A. Mcleod Defendants _______________________________________________________ Memorandum of Decision of J.B. Hanebury, Master in Chambers _______________________________________________________ [ 1 ] This application raises the question of the effect of the filing of a satisfaction piece. [ 2 ] The second mortgagee paid out the first mortgagee, AGF, in the course of AGF’s foreclosure action.

The second mortgagee now brings an application to determine the correct amount of the mortgage indebtedness of AGF. It asks for a direction that AGF repay to the second mortgagee any amount which it may have overpaid AGF. [ 3 ] AGF obtained an order nisi/order for sale on April 14, 2010. Attached to the order was a statement of mortgage indebtedness

[3] AGF obtained an order nisi/order for sale on April 14, 2010. Attached to the order was a statement of mortgage indebtednessshowing a principal balance of $755,528.42 and interest of $13,929.92. The order nisi was granted for the total, $769,458.34. The ordernisi declared that this sum was owing as of March 29, 2010, plus the plaintiff’s cost to be taxed.

It provided, in the next paragraph, thatupon someone paying said sum and “costs of the plaintiff... together with any other sums which the plaintiff shall pay to protect itssecurity, with interest on all such sums from (sic) the date of payment” the plaintiff is to execute a discharge or transfer of the mortgagesecurity. [4] In April, 2011, the second mortgagee, apparently in its own foreclosure action, sold the property. It asked for a statement topay out the first mortgage at which point AGF added to the mortgage late payment charges of $5157.75 and a “sundry balance” of$1519.95.

These charges were not included in the order nisi/order for sale and as a result the solicitor for the second mortgagee requesteddetails. [5] The details provided were, in the opinion of the second mortgagee, insufficient, and it requested further details pursuant to adirection of the court. The second mortgagee says AGF provided the same material yet again and it was insufficient to ascertain thepropriety of the charges, other than the $1004.10 paid for property taxes which had been included in the sundry balance. [6] A review by the court of the information provided reveals that it is far from clear.

The late payment interest charges shownon the statement are all prior to the order nisi and were, or should have been, included in the order. The amount now claimed as a latepayment charge is a lump sum which is shown as owing as at the date of discharge in April, 2011. The source of this $5157.75 is notevident. It may be the payout penalty for the early repayment of a mortgage, which the courts have held is not allowed when a mortgageis in foreclosure: Patrician Land Corporation v.

Dillingham Construction (1986) 1985 ABCA 91 , 65 A.R. 220 (C.A.). [7] The matter of the liability to pay these charges came before me for determination. [8] At that point I raised the question of whether or not I had any ability to consider the matter as a satisfaction of judgmentpiece had been filed by AGF at the request of the second mortgagee. That request was made when the funds were forwarded to pay outAGF. The parties took opposing positions on that question and they were asked to provide case law on the issue.

ANALYSIS [9] Counsel for AGF makes three arguments: the finality of the order nisi; the effect of rule 9.14, and, the effect of the trustconditions imposed upon her. Finality of Order Nisi [10] First counsel for AGF argues that the order nisi/order for sale is a judgment and the court therefore cannot entertain anymotion. I assume what she means is that no motion can be entertained to adjust the amount outstanding. [11] She is correct that the order nisi/order for sale is a judgment: Ensign Estate v. Hart [1988] A.J. No. 54 (Alta.

C.A.).However, this case does not assist AGF as it states that AGF can only receive what it is entitled to pursuant to the order nisi in payout ofits mortgage. Therefore, relying on this case, there is no entitlement to the alleged late charges and other fees. In other words, AGF mayhave failed to abide by an order of this Court if it demanded a sum that was not allowed pursuant to the order nisi. Rule 9.14 [12] Next she argues that rule 9.14 is inapplicable.

That rule provides that the court, after an order or judgment has been entered,may make any further order that is required if it does not require the original judgment or order to be varied and the further order isneeded to provide a remedy to which a party is entitled in connection with the order or judgment.

[ 13 ] The commentary on this rule found in Stevenson and Cote, The Annotated Rules of Court, is relied upon by AGF. It states that the general rule is that one cannot vary a judgment once entered, however Rule 9.14 provides a narrow exception. Further directions are allowed provided they do not vary the judgment, but merely supplement it, or work it out, or allow the court to clarify the effect of its earlier judgment. In short, Rule 9.14 cannot support an application to reconsider and vary a judgment previously pronounced [ 14 ] The case of Saxton v.

Melchor Developments Ltd., (unreported) Court of Appeal No. 9603 – 0026, October 14, 1997, was provided by AGF. In that case the court considered the predecessor rule, rule 330.

Although little detail is provided in the decision, the Court of Appeal appears to determine that, after the filing of the consent judgment, the court could not rule on the question of the release of a party who was not included in the original action. [ 15 ] That case is distinguishable on its facts from those before this court, where the question is how much must be paid to satisfy a court order. [ 16 ] As I read the commentary in rule 9.14 it supports the court’s ability to determine the amount required to pay out the first mortgage pursuant to the order nisi/order for sale.

It indicates that the court is not in fact varying its judgment, but merely deciding its effect. In my view, the question before this court could come within rule 9.14 if the action is still extant. Effect of Trust Conditions [ 17 ] AGF’s counsel relies on one more argument. She argues that the plaintiff’s mortgage was discharged and the action was satisfied by trust conditions imposed by the solicitor for the second mortgagee.

A review of the correspondence between the parties indicates that counsel for the second mortgagee sent the balance requested by AGF on the trust condition that AGF’s counsel would provide a registerable discharge of the mortgage and a filed discontinuance of action and satisfaction piece. The letter goes on to state that: We note late payment charges of $5157.75 and sundry balance owed $1519.85 on the enclosed AGF ...statement for discharge purposes dated April 7, 2011. We will require full details of these charges. The said charges were not outlined in the order nisi/order for sale granted by Master R.B.

Waller on April 14, 2010. Therefore, the enclosed funds are sent under protest and our client reserves the right to bring a court application or any other necessary steps, if the aforementioned extra payment charges are not properly due to your clients under the foreclosure action or by way of law. [ 18 ] Counsel for AGF responded advising that AGF had confirmed that the late payment charge of $5157.75 was late payment interest and the sundry balance was property taxes and $515.75 in administration fees related to her client’s collection file.

She ultimately provided a filed satisfaction of judgment piece and a filed discharge of the certificate of lis pendens, as required pursuant to the trust conditions imposed upon her. [ 19 ] Counsel for AGF adds that, in any event, if I have the jurisdiction to consider this application, 223356 Alberta Ltd. v. Mutual Life Insurance Company of New York, [1988] A. J. Number 1116 (Master), supports AGF’s entitlement to the so-called late interest charges.

The facts in that case are very different [1] than those before this court, and the only point of interest in that case is the comment that once there is a discontinuance of an action, the action is gone. [ 20 ] In support of her argument that compliance with these trust conditions ended the matter, counsel for AGF relies on Manufacturers Life Insurance Co. v. Mehra , [1982] A. J. Number 331 (Master). In that case Master Funduk discussed at some length the meaning of an order nisi.

He stated that “an unimpeached judgment can be brought to ‘an end’ only by full satisfaction, partial satisfaction which is accepted by the judgment creditor in lieu of full satisfaction, or by becoming statute barred.” Although this was not the ratio in the case, it raises the real issue before this court: Can this court further consider the matter after a satisfaction of judgment piece has been filed?

[ 21 ] The second mortgagee says that the court can further consider the matter. He relied on Karaha Bodas Company, L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara 2010 ABQB 172 , aff’d 2011 ABCA 291 , to argue that the requested discontinuance of action and satisfaction piece did not act to end the action. In that case Clackson J. considered whether an action could be continued notwithstanding a discontinuance and satisfaction piece being filed by the plaintiff. In that case, as here, the defendant wished to continue the action.

Fraud was an issue in relation to the granting of an arbitral award which underpinned the cause of action in Alberta. [ 22 ] Clackson J. held that a discretion exists to allow the action to continue even after the filing of a satisfaction piece.

He said that the principled exercise of this discretion turns upon fairness which requires consideration of certain factors: whether a right, litigation right or cause of action is lost by cessation of the proceeding; whether the lost right or action is moot; whether the lost right or action can be resolved in some other forum; whether the alternative forum is an appropriate form; and whether it is appropriate to compel the plaintiff to continue to litigate an action it no longer wishes to pursue.

He held in that case that he would not exercise his discretion to allow the action to continue. [ 23 ] In this case the second mortagee’s counsel required AGF’s counsel to provide a filed discontinuance and satisfaction of judgment piece and a filed discharge of the certificate of lis pendens . He could have sought a partial satisfaction leaving outstanding the issues between the parties, or an unfiled copy of the satisfaction piece to be retained until the matter was resolved by the court.

By demanding that a discontinuance of action and a satisfaction piece be filed he indicated his agreement to the end of the action and accepted that he would rely on other means, such as the discussions of counsel, or a court application outside the original action, to sort out the issue of what should properly be paid. [ 24 ] Counsel for the second mortgagee now asks this court to continue the litigation. There is no allegation of fraud. This is not a situation where the court should exercise its limited discretion. The second mortgagee got what it requested, a filed satisfaction piece and the end of the action.

Had it not done so, I am satisfied that the court could have considered this matter. However, it can no longer apply in this action for the return of the disputed funds. [ 25 ] I am awarding no costs of this application to either party. In my view counsel should have found a way to properly bring this matter before the court for adjudication. They have a responsibility under rule 1.2 to do so. Alternately they could have resolved it in a professional way between counsel.

Heard on the 07 th day of July, 2011 Further argument filed July 25 th , September 30 th , 2011 Dated at the City of Calgary, Alberta this 17 th day of November, 2011. J.B. Hanebury M.C.C.Q.B.A. Appearances:

Gloria A. Vinci Vinci Phillips for the Plaintiff Michael J. Dorchik Hoffman Dorchik LLP for the Defendants [1] In that case the lender had twice commenced foreclosure actions and in both cases discontinued. At a subsequent date, ie. after the foreclosure had been discontinued, the borrower asked to pay out the loan and the lender included the payout penalty. The borrower and lender then negotiated a sum for the payout penalty which the borrower paid, under protest. In that instance there was no court order setting the amount to be paid to discharge the mortgage. The parties were free to negotiate.