Arbutus Leasing Ltd. v Vibas (Red Deer Sizzling and Restaurant), 2013 ABQB 577

Court of Queen ’ s Bench of Alberta Citation: Arbutus Leasing Ltd. v Vibas (Red Deer Sizzling and Restaurant), 2013 ABQB 577 Date: 20131003 Docket: 1203 12700 Registry: Edmonton Between: Arbutus Leasing Ltd. Plaintiff - and - Reynaldo P. Vibas, Reynaldo P. Vibas operating as Red Deer Sizzling and Restaurant and Caroline P. Vibas Defendants _ ________________________________________ ______________ Memorandum of Decision of the Honourable Mr. Justice B.R.

Burrows _________________________________________ ______________ [ 1 ] Reynaldo and Caroline Vibas appeal from an order of the Master granted July 25, 2013, requiring them to cooperate with the listing realtor in relation to the sale of their residence pursuant to a Redemption and Listing Order granted by a Master on November 29,

2012. [ 2 ] The Redemption and Listing Order gave the Vibases until May 29, 2013 to pay the outstanding debt of $15,776.34 plus costs on a solicitor and client basis. Failing payment, the property, the Vibases’ home, was to be listed for sale. [ 3 ] The debt arose pursuant to an agreement for the lease of equipment for use by the Vibases in a restaurant they opened in Red Deer in August 2011 and which they closed in February 2012. The lease called for 30 monthly payments of $877.40 each. The agreement included a charge against the Vibases’ residence as security for amounts owing under the lease.

Arbutus took proceedings pursuant to that charge when the Vibases defaulted. The agreement called for them to pay interest on past due rental payments and any other amount due to Arbutus at the rate of 36% per annum, and liquidated damages described as the present value of the 30 monthly lease payments calculated on the basis of an interest rate of 6% per annum. [ 4 ] The Vibases filed a Statement of Defence to Arbutus’ Statement of Claim. Arbutus applied for

summary judgment and it was in the context of that application that the Redemption and Listing Order was granted. [ 5 ] The Vibases paid $15,000 on January 18, 2013. According to the calculations of Arbutus’ solicitor dated January 21, 2013, this left a balance owing of $4818.66 ($776.34 on the principal amount of the judgment, $25.64 interest to January 18, and $4016.88 “legal costs to date”). [ 6 ] Evidence at the application for the Redemption and Listing Order indicated that the home which was charged as security had a value in the region of $385,000 and the judicial listing was ordered at that price.

The title indicates there are two mortgages prior to the Arbutus’ charge, the original principal amounts of which total $316,049. It appears that the Vibases’ equity in the property is in the vicinity of $69,000. [ 7 ] On February 25, 2013, Arbutus’ solicitor advised the Vibases that if they paid a further $4500 within 21 days Arbutus would accept that amount in full payment. The solicitor advised that Arbutus did not want to sell the Vibases’ home. [ 8 ] Ms. Vibas deposes that before the 21 days expired, she called Arbutus’ solicitor and asked for a discount because the Vibases could not afford to pay $4500.

On May 31, 2013, the solicitor wrote to the Vibases offering to accept $4100 within 30 days (that is by June 30). If payment was not received Arbutus would proceed to enforce its claim for the full amount. Ms. Vibas deposes that she called the solicitor and asked, in a voice mail message, that Arbutus accept $3000 or $3500 by installments. She also deposes that she advised the solicitor that the Vibases would be out of the country between the first week of July and July 24. She deposes that she did not receive any response. [ 9 ] Arbutus has filed no evidence responding to Ms.

Vibas’ evidence that she advised the solicitor that they would be out of the country between those dates. [ 10 ] On July 11, 2013, Arbutus’ solicitor instructed the listing of the property pursuant to the Redemption and Listing Order. The listing realtor tried unsuccessfully 5 times between July 11 and July 15 to contact Ms. Vibas to arrange for access to the property.

On July 15 the solicitor wrote to the Vibases encouraging them to cooperate and advising that failure to do so would likely result in an application for their eviction. [ 11 ] The Notice of Application relating to the order now under appeal was filed July 17, 2013.

The notice indicated that the order sought would be one evicting the Vibases from their residence for failing to cooperate with the listing realtor. [ 12 ] The Notice of Application was served by leaving it at the door at the address for service given by the Vibases in their Statement of Defence. [ 13 ] At the application for the order now appealed, the solicitor with whom Ms. Vibas swore she left the message about their intended absence, appeared and advised the Master: We posted notice of this application on July 18 to the premises. We delivered by courier.

It was delivered to the premises on July 18 so they must know about it. So we sent it by two different ways. [ 14 ] Neither the materials filed on the application (there were two affidavits) nor the solicitor in his representations to the Master as recorded in the transcript indicated that more than 95% of the debt had been paid and what was outstanding was interest and costs for which no bill had been prepared and no assessment had been undertaken. Neither made any reference to the amount claimed to be outstanding. [ 15 ] Ms. Vibas deposes that they did not know of the application.

On their return home on July 24 they found a For Sale sign on their property. They learned of the application and the order appealed in the following days. [ 16 ] On July 31, the Vibases paid a further $1100. On August 6 Arbutus’ solicitor acknowledged receipt of that amount but indicated they would continue with the foreclosure proceedings until “the claim is paid in full”. They did not advise how much further payment was required. [ 17 ] On August 8 the Vibases filed this appeal returnable August 16. [ 18 ] On August 16 they paid a further $3718.66.

Therefore as of that date, they had paid the full amount which Arbutus’ solicitor had, to that date, advised them to pay. [ 19 ] On August 16 A.D. MacLeod J. adjourned the appeal to September 12 and stayed the judicial listing pending the appeal. [ 20 ] On August 26, having previously advised the Vibases that costs to the end of January stood at $4016.88 and the Vibases

having paid that amount 10 days earlier, the solicitor wrote to the Vibases advising that they still owed $5804.17 calculated as follows: Judgment as of November 19, 2012 $15,776.34 Plus interest to August 26, 2013 32.57 Plus realtor’s reasonable expenses/comp 1,500.00 Less payment received to date 19,818.66 Plus legal costs to date 8,313.92 [ 21 ] A draft bill of costs was attached to the letter.

Nothing is attached to indicate how the $1500 for the realtor was justified, or that it has been paid. [ 22 ] On the hearing of the appeal, counsel for Arbutus undertook to treat the stay as continuing until my decision is released. [ 23 ] The Redemption and Listing Order awarded costs of the action on a solicitor and own client full indemnity basis.

The order provided that the costs “shall be assessed on an ex parte basis where the defendants did not oppose the application for this order, or where the defendants have approved the amount of the costs sought, otherwise the plaintiff shall have such costs assessed pursuant to Rule 10.37”. The amount of costs up to the end of January claimed by Arbutus was $4016.88. The Vibases paid that amount. In my view the question of costs of the action is no longer extant. The Vibases have by their action in paying what was demanded should be taken as having approved the amount of costs sought.

There are no further costs to pay under the Redemption and Listing Order. [ 24 ] Since the hearing of this application I have received a letter from Arbutus’ counsel advising that an appointment for the assessment of costs “with respect to this action” has been scheduled for October 10, 2013. Ms. Vibas has been sent a copy of this letter. In my view, as noted, the issue of costs of the action is closed.

The proposed assessment appointment is unnecessary. [ 25 ] The only remaining issue appears to be the costs ordered in the order under appeal. [ 26 ] My understanding of the circumstances described above leaves me with several concerns. [ 27 ] I am concerned that on the unanswered evidence before me, it appears that the Master was advised that the Vibases “must know” of the application when, according to the uncontradicted evidence, the solicitor who so advised the Master, had been told that they were out of the country.

I appreciate that service was probably effective anyway given that it was at the address for service. I also appreciate that the Vibases had been given no assurance that Arbutus would delay proceedings until they returned.

However, on the unanswered evidence before me, the Master was under a misconception as to the likelihood that the Vibases knew of the application when he made the order. [ 28 ] I am also concerned that the Master appears not to have been told that 95% of the debt had been paid and that all that was outstanding was costs, for which no bill had been prepared and no assessment conducted. [ 29 ] I am also concerned that the Master was not told that by the solicitor that he had been told the Vibases were out of the country – again accepting the evidence that the solicitor was told that since he has filed no contrary evidence. [ 30 ] I am further concerned that further costs in excess of $4000 are claimed for essentially one ex parte application – especially when the costs for all steps prior to that were about $4000. [ 31 ] I am further concerned that it is suggested that the Vibases should pay the “reasonable expenses/compensation” for the realtor when the realtor’s efforts were made when, on the uncontradicted evidence, the Vibases were out of the country and the instructing solicitor knew it. [ 32 ] In my view an order requiring the Vibases to cooperate with the realtor should not have been made.

I expect it would not have been made had the Master been made aware of the matters I have indicated above. [ 33 ] I allow the appeal. [ 34 ] In my view there is no further debt owed to Arbutus by the Vibases. The listing should be cancelled. [ 35 ] The Vibases shall have costs of $1000 plus disbursements. Heard on the 12 th day of September 2013. Dated at the City of Edmonton, Alberta this 3 rd day of October 2013.

B.R. Burrows J.C.Q.B.A. Appearances: Coralie Mohr for the Plaintiff The Defendants appeared without counsel.