Canada Trust Company v Molsberry, 2016 ABQB 38

Court of Queen ’ s Bench of Alberta Citation: Canada Trust Company v Molsberry, 2016 ABQB 38 Date: 20160119 Docket: 1301 09896 Registry: Calgary Between: The Canada Trust Company Trustee: Self-Directed Retirement Savings Plan of Shelley Barclay Plan # 09-F230S Respondent - and - Clark Molsberry Appellant Corrected judgment: A corrigendum was issued on February 8, 2016; the corrections have been made to the text and the corrigendum is appended to this judgment.

Corrected judgment: A corrigendum was issued on January 20, 2016; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice K.D. Yamauchi _______________________________________________________

Appeal from the Judgment by J Mason, Master in Chambers Dated the 15 th day of January, 2015 I. Introduction and Background [ 1 ] The Appellant Clinton Clark Molsberry appeals an order that Master Mason granted on January 5, 2015, and filed on March 13, 2015, as well as Master Mason’s final order for foreclosure that she granted on March 6, 2015, and filed on March 13, 2015. [ 2 ] The Respondent The Canada Trust Company (“Canada Trust”) is the trust company managing the mortgage in a self- directed registered retirement savings plan of Shelley Barclay. [ 3 ] Mr Molsberry was, at all material times, the owner of the property legally described as: FIRST PLAN IRRICANA 7911198 BLOCK NINETEEN

(19) LOT SEVEN

(7) EXCEPTING THEREOUT ALL MINES AND MINERALS SECOND PLAN IRRICANA 7911198 BLOCK NINETEEN

(19) WEST HALF OF LOT EIGHT

(8) EXCEPTING THEREOUT ALL MINES AND MINERALS (the “Property”) [ 4 ] Mr Molsberry granted a mortgage in favour of Canada Trust, secured against the Property (the “Mortgage”). The Mortgage was dated February 11, 2010, and registered in the South Alberta Land Titles Office on February 17, 2010, as instrument number101 047 169. The Mortgage secured the repayment of $89,000, plus interest at the rate of 10% calculated semi-annually and not in advance. Interest was payable before and after maturity. [ 5 ] The Mortgage required Mr Molsberry monthly to pay interest only and no principal payments.

He did not make the monthly interest payments, and Canada Trust made no demand for the monthly interest payments. In fact, there was no expectation by either party that Mr Molsberry would make the monthly interest payments. [ 6 ] On September 24, 2010, the parties signed an amending agreement to the Mortgage (the “Amending Agreement”). The Amending Agreement required Mr Molsberry to make a lump sum payment and to add the interest arrears to the principal of the Mortgage. The Amending Agreement was never registered at the Land Titles Office.

Mr Molsberry made the lump sum payment of $2,500 on September 24, 2010. [ 7 ] On May 2, 2013, the Town of Irricana registered a tax notification on title to the Property and sent notice to Canada Trust. Mr Molsberry stated to this Court that he probably also received a copy of the tax notification. [ 8 ] Canada Trust filed the statement of claim in the within action on August 20, 2013, and paid the outstanding taxes of $3,944.89 on April 10, 2014. [ 9 ] Mr Molsberry sought

summary dismissal of Canada Trust’s claim, arguing that Canada Trust’s claim fell outside the period set forth in the Limitations Act , RSA 200, c L-12 (“ Limitations Act ”). Canada Trust cross-applied for a final order for foreclosure. Master Mason dismissed Mr Molsberry’s application and adjourned Canada Trust’s cross-application, with conditions. Those conditions were not fulfilled, so she granted the final order for foreclosure. II. Grounds for Appeal [ 10 ] Mr Molsberry’s grounds for appeal are not entirely clear.

This Court will, however, attempt to articulate them by paraphrasing them. [ 11 ] The first relates to what Ms Molsberry describes as being a “false document” that Canada Trust presented to the Master. The background to this issue is that Shelley Barclay, whose retirement savings plan monies were used to fund the Mortgage, deposed in the affidavit that she swore on March 24, 2014, as follows: 3.

The mortgage consisted of the terms registered at the Land Titles office as registration #101 047 169, which is attached as Exhibit “A”. [ 12 ] In her later affidavit that she swore on December 23, 2014, she said the following: 1. I confirm the contents of my affidavit of March 24, 2014, except that the mortgage attached therein must have been a file

copy and the correct one as registered at land titles is in the Defendant’s affidavit.

The Plaintiff was the trust company managing the mortgage in a self directed RRSP of Shelley Barclay. [ 13 ] Mr Molsberry then goes on to argue that mortgage to which Ms Barclay referred in her March 24, 2014 affidavit correlates with the Amending Agreement, and says that that mortgage attached to Ms Barclay’s March 24, 2014 affidavit was “an altered version of the original mortgage.” He argues that the Master should have “questioned” the authenticity of the “false document.” [ 14 ] The Master found as follows: This amending agreement appears to have been drafted based on an earlier and draft version of the mortgage that was not ultimately registered.

Mr. Molsberry makes much of these two forms of mortgage, but Ms. Barclay deposes that she erroneously attached this mortgage form to her first affidavit, and agrees that the mortgage registered against title and described above is the correct form of mortgage entered into between the parties. Nothing turns on the differences between the documents, in any event, under the particular circumstances.

Transcript of Proceedings, January 15, 2015, p 26, ll 5-11. [ 15 ] Second, Mr Molsberry argues that the Master’s characterization of his evidence under cross-examination that “he was not expected to make any monthly interest payments” is incorrect and, in particular, he argues with the Master’s context of the “expected.” By this, he means that Canada Trust “expected” to receive interest payments, but he did not have the financial wherewithal to pay them, and that both parties knew this. [ 16 ] Third, Mr Molsberry raises an issue concerning his arrangement with Brett Barclay, Ms Barclay’s husband.

The Master did not consider this arrangement to be relevant and said, “The first problem with this defense is it is not pled”: Transcript of Proceedings, January 15, 2015, p 28, l 12.

Mr Molsberry argues that he did not plead this, as his arrangement was necessary to put his defense into context, and that it was relevant to his argument concerning the Limitations Act and the “fraudulent documents,” being the mortgage attached to Ms Barclay’s March 24, 2014 affidavit. [ 17 ] Finally, the final order for foreclosure directs the Registrar of Land Titles to cancel the existing certificate of title to the Property and “issue a new Certificate of Title in the name of the Plaintiff Shelley Barclay...” Mr Molsberry argues that this is an “error of fact or law” as the Plaintiff is Canada Trust. [ 18 ] During oral argument before this Court, he also challenged the appraisal on which the Master relied in granting the foreclosure order.

That appraisal showed the Property as having a value of $16,000. Mr Molberry argues that this appraisal is “fraudulent,” as the Property is worth far more than $16,000. III. Discussion [ 19 ] This Court will deal with each of the grounds of appeal, but it will first articulate the standard of review that it will apply to its analysis. A.

Standard of Review [ 20 ] In Kulaga v First National Financial GP Corp , 2014 ABQB 400 at para 13 , McCarthy J said the following in relation to the standard of review in an appeal from a Master: Both parties have identified that the standard of review for an appeal of a Master’s decision is correctness, based on Bahcheli v Yorkton Securities Inc ., 2012 ABCA 166 at para 30 : “In my view, the standard of review on appeal from a Master to a judge, on all issues, is still correctness.” Additionally, an appeal from a Master’s decision pursuant to Rule 6.14 of the Rules of Cour t, Alta Reg 124/2010 , is a hearing de novo , as found by Justice Bensler in P.

Burns Resources Limited v Locke, Stock & Barrel Company Ltd. , 2013 ABQB 129 : “An appeal from a Master’s decision is a de novo hearing and the standard of review is one of correctness . . .

The Judge may exercise any discretion anew and substitute their own views for that of the Master.” [ 21 ] It should also be noted that Alberta Rules of Court , Alta Reg 124/2010, rr 6.14(3) and (4) provide as follows: 6.14(3) An appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and may also be based on additional evidence that is, in the opinion of the judge hearing the appeal, relevant and material. 6.14(4) The record of proceedings is (

a) the application before the master, (

b) affidavits and other evidence filed by the parties respecting the application before the master, (

c) any transcript of proceedings before the master, which must be ordered and paid for by the appellant, unless the Court determines, or the parties agree, that transcripts are not needed, and (

d) the master’s judgment or order and any written reasons given for the decision. B. The “False Document”

[ 22 ] This Court finds that the Master’s analysis and conclusion were entirely correct. What was before her was a foreclosure action based on the Mortgage, as amended by the Amending Agreement. The “false document” was not the document on which the foreclosure was based. Mr Molsberry admits as much, as it was his affidavit that attached a copy of the Mortgage. C.

Interest Payments [ 23 ] The foundation for her finding that Mr Molsberry’s Limitations Act argument failed is that neither he nor the mortgagee “expected to make any monthly interest payments or repay the mortgage loan in full until the land was developed and sold or he otherwise came into some money”: Transcript of Proceedings, January 15, 2015, p 26, ll 33-37. In fact, the reason she dismissed Mr Molsberry’s application was because of the tax notification, which jeopardized the mortgagee’s security.

The foreclosure action was commenced 3 months after the mortgagee learned of the tax notification. [ 24 ] Said differently, using the wording of section 3(1) of the Limitations Act, Canada Trust sought a remedial order within 2 years after the date on which it first knew, or in the circumstances ought to have known, (

i) that the injury for which it sought a remedial order had occurred, (ii) that the injury was attributable to Mr Molsberry’s conduct in not paying the taxes, and (iii) that the injury, assuming liability on Mr Molsberry’s part warrants bringing a proceeding. [ 25 ] The fact that Mr Molsberry was not paying interest was not the reason for the potential injury to Canada Trust. It was his failure to pay the taxes.

In fact, but for the tax notification, it appears that Canada Trust was content to let things continue. [ 26 ] This Court is not entirely clear of the argument that Mr Molsberry makes in this regard concerning the word “expected.” In fact, during his questioning, Mr Molsberry acknowledged that it was never the “intention” that he was going to pay the interest. As well, Ms Barclay deposed that she had no “expectation” of receiving interest payments.

Mr Molsberry’s argument concerning the word “expected” is an unsubstantiated semantic argument. [ 27 ] Accordingly, the Master was correct in her analysis regarding the interest payments. D. The “Arrangment” [ 28 ] Even if Mr Molsberry’s explanation of the “arrangement” he had with Mr Barclay was necessary to put the “false document” and his Limitations Act argument into a context, this Court fails to see how it is relevant to the foreclosure action involving the Mortgage.

If there was some type of written forbearance agreement, this argument might hold more weight. [ 29 ] There is no written agreement between Mr Molsberry and Mr Barclay involving the property. Even if there were an “arrangement” such arrangement would breach the Statute of Frauds:

An Act for the prevention of frauds and perjuries (UK) , 29 Charles II, c 3 (1677), which requires agreements involving land to be in writing and signed by the party to be sued. Besides, Mr Barclay is not even a party to this action. [ 30 ] The Master was correct in not considering the “arrangement” as being relevant to the case before her. E. Issuance of Title [ 31 ] Canada Trust is the trustee who manages Ms Barclay’s self-directed registered retirement savings plan. It was her money that funded the Mortgage; not Canada Trust’s.

Despite this, Canada Trust has advised this Court that it has corrected this, and that title issued in the name of Canada Trust. F. Appraisal [ 32 ] The Master gave Mr Molsberry an opportunity to file an updated appraisal, before she rendered her final order for foreclosure. This was one of the conditions the Master imposed before she would grant the final order for foreclosure. This would give Mr Molsberry an opportunity to challenge the propriety and accuracy of the $16,000 appraisal. He did not. Why?

He stated to this Court that he did not feel that any appraisal would show that the value of the Property was greater than the amount he owed on the Mortgage. Accordingly, he did not see the value in obtaining a further appraisal. [ 33 ] Thus, what was before the Master was the appraisal on which she based her decision. It was the only evidence that was before her. She was quite correct in using that appraisal to ground her decision. IV. Conclusion [ 34 ] For the foregoing reasons, Ms Molsberry’s appeal is dismissed. Heard on the 8 th day of January, 2016.

Dated at the City of Calgary, Alberta this 19 th day of January, 2016. K.D. Yamauchi J.C.Q.B.A. Appearances: Todd Wytrychowski Horne Wytrychowski for the Respondent Clark Molsberry Self-Represented Litigant for the Appellant _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Mr. Justice K.D.

Yamauchi _______________________________________________________ P 2, para 1 changing the date on the second line from January 5, 2015 to read January 15, 2015. _______________________________________________________ Corrigendum of the Memorandum of Decision of The Honourable Mr. Justice K.D. Yamauchi _______________________________________________________ Removing the (RSP) from the Respondent’s name in the Style of Cause.

Removing “Clinton” from the Applicant’s name in the Style of Cause. Changing the year date in the first para in the third line from 2016 to 2015.