Arthur Bischoff RRSP Plan No, 2017 ABQB 748

Court of Queen’s Bench of Alberta Citation: Arthur Bischoff RRSP Plan No 7856 v McCargar, 2017 ABQB 748 Date: 20171206 Docket: 1603 02474; 1603 14903 Registry: Edmonton

Court File No. 1603 02474 Between: Olympia Trust Company in trust for Arthur Bischoff RRSP Plan No. 7856, Olympia Trust Company in trust for Fern Bischoff RRSP Plan No. 7857, Olympia Trust Company in trust for John Toma RRSP Plan No. 90387, Olympia Trust Company in trust for Patricia Ferrier RRSP No. 8622 and 1632648 Alberta Ltd.

Plaintiffs/Respondents - and - Donald McCargar Defendant/Appellant - and - Court File No. 1603 14903 Between: Royal Bank of Canada Plaintiff/Respondent - and - Donald McCargar also known as Don McCargar also known as Donald Walter McCargar Defendant/Appellant _______________________________________________________ Reasons for Decision of the Honourable Mr. Justice K.P. Feehan

_______________________________________________________ I. Introduction [ 1 ] I deliver these Reasons orally for the benefit of advising the parties of my determination on a timely basis. In doing so, I reserve my right to edit these Reasons to correct grammar, spelling and sentence construction, but not to change matters of substance or conclusion. I also reserve my right to issue supplementary written or oral reasons to address matters that I may have missed, forgotten or inadequately addressed. II.

Overview [ 2 ] Two appeals from decisions of two Masters were heard together by agreement of counsel before me in special chambers. The appellant in each instance is Donald McCargar. The respondent on the first appeal is Olympia Trust Company, and the respondent on the second appeal is Royal Bank of Canada. [ 3 ] Olympia Trust Company is a second mortgagee and Royal Bank of Canada is a first mortgagee on residential property against the following lands: Plan 4643KS Lot 1 Containing 1.1 hectares (2.72 acres) more or less Excepting thereout: Hectares (Acres) more or less

A) Plan 0729397 – Road 0.027 0.067 Excepting thereout all mines and minerals [ 4 ] Both Olympia Trust and Royal Bank moved to foreclose on this property, the Olympia Trust Statement of Claim filed on February 10, 2016 and the Royal Bank Statement of Claim filed on August 23, 2016. There have been no payments made on the Olympia Trust second mortgage since June 2015 and no payments made on the Royal Bank first mortgage since January 2016. Additionally, the Royal Bank has paid the taxes on the property since that date. III. The Appeals [ 5 ] The Olympia Trust appeal by Mr.

McCargar is from the Order of Master Schlosser dated November 30, 2016, filed December 19, 2016, and the Royal Bank appeal is from the Order of Master Schulz dated October 3, 2017, filed October 5, 2017. [ 6 ] In the Olympia Trust matter, Master Schlosser ordered that the mortgaged lands, pursuant to a Redemption Order of Master Smart dated April 20, 2016, be listed for sale with a listing price of $5,650,000.

The redemption date at that time was October 20, 2016. [ 7 ] In the Royal Bank matter, Master Schulz ordered that the mortgaged lands be listed for sale pursuant to a Redemption Order granted by Master Smart on February 1, 2017 for $3,900,000. The redemption period at that time was September 21, 2017. [ 8 ] Mr. McCargar seeks to have both Orders set aside. [ 9 ] Mr. McCargar seeks a further redemption period of one year or a stay of one year, and after the expiration of that year, the issue of listing price to be determined following a one day trial of that issue. IV.

Standard of Review [ 10 ] Alberta Rules of Court 6.14(3) provides that an appeal from a Master’s order is an appeal on the record, but may be based on additional relevant and material evidence. The standard of review on an appeal from a Master is correctness: Bahcheli v Yorkton Securities Inc , 2012 ABCA 166 [2012] AJ No 540 at paras 3 , 30. V. History of the Olympia Trust Action [ 11 ] The Olympia action commenced first and has an exhaustive history. [ 12 ] The Statement of Claim in the Olympia action was filed February 10, 2016 and Mr.

McCargar was noted in default on March 30, 2016. [ 13 ] On April 20, 2016, Master Smart issued a Redemption Order with a redemption period of six months pursuant to s 41(1)(

b) of the Law of Property Act , RSA 2000, c L-7. He adjourned the issue of judicial listing to September 14, 2016 and that was again adjourned by consent to September 27, 2016.

[ 14 ] On September 27, 2016, Olympia Trust provided an Affidavit of Value showing a value of $3,900,000 for this property. On that date, Master Schulz adjourned the matter to November 24, 2016 to allow Mr. McCargar to obtain his own valuation. That return date was again adjourned by consent to November 30, 2016. [ 15 ] On November 15, 2016, Mr. McCargar provided a valuation of $5,633,000 if the property was completed, but $5,589,670 “as is”. [ 16 ] On November 30, 2016, Master Schlosser granted an order listing the property at $5,650,000 but directed Olympia Trust to hold the matter for two weeks to allow Mr.

McCargar to obtain counsel. [ 17 ] On December 6, 2016, Mr. McCargar brought an application to extend the redemption period, which application was returnable on December 13, 2016. [ 18 ] On December 13, 2016, Master Schlosser refused an extension of the redemption period; and the Order of November 30, 2016 was entered on December 19, 2016. It is that Order from which the appeal on the Olympia Trust matter is taken.

That Notice of Appeal was filed December 15, 2016. [ 19 ] On December 15, 2016, given the appeal of Master Schlosser’s order, Justice Little granted a stay without notice to Olympia Trust to January 3, 2017. On January 3, 2017, Justice Manderscheid granted a further stay without notice to January 17, 2017. [ 20 ] On January 17, 2017, Justice Bokenfohr directed the matter to special chambers for September 21, 2017 and directed Mr. McCargar to apply for a further stay of the Order of Master Schlosser on notice. [ 21 ] On January 18, 2017, Mr.

McCargar applied for a further stay, returnable January 24, 2017, which application was adjourned to February 2, 2017. [ 22 ] On February 2, 2017, Justice Bokenfohr refused a further stay of the Order of Master Schlosser. [ 23 ] Mr. McCargar applied on February 3, 2017 for an Order that Olympia Trust was in civil contempt with respect to the stay orders of December 15, 2016 and January 3, 2017. He also applied on February 7, 2017 for a re-hearing of the Redemption Order of Master Smart of April 20, 2016. [ 24 ] On February 23, 2017, Justice Nielsen dismissed Mr. McCargar’s civil contempt application, with costs.

On the same date, February 23, 2017, Master Smart dismissed the request for a re-hearing of his Order of April 20, 2016, with costs. [ 25 ] On February 23, 2017, an appeal was taken from the Order of Justice Nielsen. [ 26 ] On March 29, 2017, Master Schulz extended the listing for the property for 90 days and reduced the listing price from $5,650,000 to $4,500,000. On July 20, 2017, Master Smart again extended the listing for 90 days and dismissed a cross-application of Mr.

McCargar contesting the Court’s jurisdiction. [ 27 ] The current payout to Olympia Trust on the second mortgage is approximately $710,000, plus indemnity costs and interest. VI.

History of the Royal Bank Action [ 28 ] The Royal Bank of Canada filed a Statement of Claim on August 23, 2016. [ 29 ] On February 1, 2017, Master Smart granted a Redemption Order with a redemption date of September 21, 2017, and required the matter to be returned to court on October 3, 2017 to set a list price. [ 30 ] On October 3, 2017, Master Schulz set the list price at $3,900,000 to be listed for a period of 90 days, to begin once the listing in the Olympia Trust action had ended.

She also ordered that the Royal Bank appoint Denis Rowley as the listing agent, as he had previously listed the property in the Olympia Trust action. [ 31 ] A stay application in this action was denied by Justice Belzil on November 7, 2017. [ 32 ] There have been no offers on this property to date. [ 33 ] The amount said to be owing to Royal Bank in its action is $2,623,848.30 as at October 3, 2017, plus indemnity costs and interest. [ 34 ] The total amounts currently owing on the first and second mortgages is therefore $3,334,000 plus indemnity costs and interest. VII.

The Affidavits of Value [ 35 ] There have been significant differences in the valuation of this property. [ 36 ] On December 31, 2014, Bourgeois & Company Ltd. valued the property at $5,100,000 “as complete”. [ 37 ] On September 27, 2016, Olympia Trust’s Affidavit of Value was $3,900,000.

[ 38 ] On November 14, 2016, Royal Bank’s Affidavit of Value was $3,400,000. [ 39 ] On November 15, 2016, Mr. McCargar’s Affidavit of Value was $5,589,670 “as is” / $5,633,000 “as complete”. [ 40 ] On February 1, 2017, the Royal Bank provided an Affidavit of Value at $3,400,000. [ 41 ] On March 16, 2017, the realtor, Mr. Rowley, conducted a market analysis advising that the realistic sale price was $3,900,000. [ 42 ] On March 24, 2017, Mr. McCargar’s second Affidavit was the same as his first, $5,589,670 “as is” / $5,633,000 “as complete”. VIII.

Listing Prices [ 43 ] The property listings have also been at widely varied numbers. [ 44 ] Mr. McCargar first listed this property on the market in January 2016 at $7,500,000. At that listing price, there were no offers to purchase. [ 45 ] The first listing of the property pursuant to the Order of Master Schlosser of November 30, 2016 was at $5,650,000.

Again, this attracted no offers to purchase. [ 46 ] On March 29, 2017, pursuant to the Order of Master Schulz, the property was listed at $4,500,000, again without any offers to purchase. [ 47 ] On October 3, 2017, the property was re-listed on Order of Master Schulz at $3,900,000, and that is the current listing price. Currently, there have been no offers to purchase at that list price. IX. Redemption Period [ 48 ] The first Redemption Order was dated April 20, 2016. As of today’s date, there has effectively been a period of redemption, therefore, of 19 months. Mr.

McCargar retains the equity of redemption until sale of the property and accepted by the Court. X. The Law [ 49 ] The Law of Property Act contains the following relevant provisions: Redemption time 41(1) The time to be fixed for redemption by the order nisi in an action for foreclosure...shall, ... (

b) in the case of land other than farm land, be 6 months from the date of the granting of the order.

(2) In an action coming under subsection (1), the Court on application may decrease or extend the period of redemption having regard to the following circumstances: ... (

b) when the action is in respect of a security on land other than farm land, (

i) the ability of the debtor to pay, (ii) the value of the land including the improvements made on it, (iii) whether the land has been abandoned, (iv) the nature, extent and value of the security held by the creditor, (

v) the earning capacity of the debtor, and (vi) whether the debtor’s failure to pay was due to temporary or permanent unemployment or other conditions beyond the control of the debtor. [ 50 ] The law with respect to extension of redemption periods is set out thoroughly in Mortgage Actions in Alberta , Francis C.R. Price and Marguerite J. Trussler [1985] at p 192: In Webmor Fin. Services Ltd. v. James M. Drummond Hldg. Ltd. , the Court reviewed the authorities relating to the postponement of the day fixed for redemption.

The two determining factors are that there must be ample security and that the mortgagor must have a reasonable probability of obtaining, within a short time, the money with which to pay the mortgage debt. An extension to try to find a

purchaser will not be granted. The applicant must show that he has been active in endeavouring to obtain the money necessary to redeem and that by reason of some unforeseeable circumstance he was not able to redeem within the time fixed for payment. An extension is not granted as of right. However, once the two determining factors have been satisfied the Court leans towards indulgence. The position of subsequent encumbrancers is also to be given consideration.

Where there are subsequent encumbrances well able to pay, a substantial extension will not be granted, on the basis that the plaintiff is entitled to his money. Subsequent extension can be obtained, although there must be evidence of unexpected delay in getting the money and a strong probability that it will be paid. ... Section 44(3) cannot be used as an indirect way of appealing the redemption period given at the order nisi. It is necessary that circumstances be shown which would make an extension equitable and that they are not merely the same circumstances that existed at the order nisi. [ 51 ] Mr.

McCargar says that he has ability to pay these mortgages and that he has equity in other properties of approximately $40,000,000 in total. He says that he has run into difficulties with a development in Squamish, British Columbia, he is in litigation with the Municipality of Squamish, and the Municipality is attempting to expropriate his property. I was advised by counsel for Mr. McCargar that he has now received a certificate for the expropriation hearing and it will be heard in British Columbia on December 4, 2017.

He says that is why he has been unable to pay these mortgages to date. [ 52 ] Counsel for Olympia Trust and the Royal Bank say that ability to pay must be demonstrated, and no payments have been made on the mortgages or for taxes with respect to the Olympia Trust second mortgage since June 2015, and with respect to the Royal Bank first mortgage since January 2016. Effectively, no payments have been made for almost two years in one instance and for two and a half years in the other. [ 53 ] Mr.

McCargar also says that he values this land at $7,500,000, although it is clear that this property has been on the market since January 2016 and there have been no offers to purchase at that price, or at the reduced prices of $5,650,000, $4,500,000 or $3,900,000. Counsel for Olympia Trust says that the mortgages on this property are in jeopardy at $3,400,000, at which point there will be no equity left in the property for Mr. McCargar. [ 54 ] Mr. McCargar says that his inability to pay is only temporary, because of the property difficulties that he is experiencing in Squamish, British Columbia.

Counsel for Olympia Trust and the Royal Bank point out Mr. McCargar has been in litigation with the Municipality of Squamish since August 24, 2016, and expropriation proceedings commenced on July 10, 2017.They say that the failures to pay reach back to mid-2015 and early 2016. [ 55 ] Mr. McCargar says that he falls within the provisions of s 41(2)(

b) of the Law of Property Act . Counsel for Olympia Trust and the Royal Bank say he does not. I agree with counsel for Olympia Trust and the Royal Bank. XI. Jurisdiction of the Master [ 56 ] Counsel for Mr. McCargar argues that Master Schulz had no jurisdiction to make the Order from which the Royal Bank appeal has been taken because there was a significant dispute on a fact: the valuation of the property. Counsel for Mr. McCargar pointed to s 9(3)(

b) of the Court of Queen’s Bench Act , RSA 2000, c C-31 which provides that the power of and the jurisdiction exercisable by a Master in chambers does not include the determination of disputed or contentious questions of fact, unless the parties agree to the disposition of the questions in chambers on affidavit evidence, and without the trial of an issue or the hearing of oral evidence. [ 57 ] Counsel for the Royal Bank says that the Master routinely issues orders of this nature after being presented with competing valuations.

He says that generally the Master sets the listing price at the higher valuation and lets the market determine the actual value of the property. In this case, that is exactly what has occurred with respect to the continuing listing and re-listing of the property at lesser amounts. [ 58 ] I read s 9(3)(

b) of the Court of Queen’s Bench Act only to address adjudicative facts in issue, not competing opinions with respect to valuation. XII. Conclusion [ 59 ] In coming to a conclusion on this matter, I have reviewed all of the pleadings and orders in this matter, and all of the affidavits of Donald McCargar filed December 6, 2016; January 13, 2017; October 2, 2017; and October 30, 2017; [ 60 ] I also heard argument by all counsel on November 29, 2017 and in particular, with respect to the provisions of s 41(2) of the Law of Property Act . I conclude, based upon all of the above, that the two appeals of Mr.

McCargar should be dismissed, and the Orders of Master Schlosser of November 30, 2016, filed December 19, 2016, and of Master Schulz of October 3, 2017, filed October 5, 2017 should be upheld as correct. [ 61 ] The current situation, therefore, is that the property shall continue to be listed at $3,900,000 and the Court ordered redemption period expired on September 21, 2017. XIII. Costs [ 62 ] Both the Olympia Trust and Royal Bank mortgages provide that all costs in these foreclosure proceedings shall be on an

indemnity basis. I have been provided no information on which I could interfere with those contractual provisions on the basis of the equitable law on oppression. I therefore award indemnity costs in the Olympia Trust action on an indemnity basis for all steps taken from and including January 17, 2017 for attendances by counsel in both the Olympia Trust and Royal Bank actions. I award indemnity costs in the Royal Bank action for all steps taken from and including October 31, 2017. Heard on the 29 th day of November, 2017. Delivered Orally at the City of Edmonton, Alberta on the 30 th day of November, 2017.

Dated at the City of Edmonton, Alberta this 6 th day of December, 2017. K.P. Feehan J.C.Q.B.A. Appearances: Darlene M. St. Jean Triune Law for the Defendant/Appellant Craig S. Lupul Stillman LLP for the Plaintiffs/Respondents, Olympia Trust Company and 1632648 Alberta Ltd. Kalen Lumsden Witten LLP for the Plaintiff/Respondent, Royal Bank of Canada