Roynat Inc. v. Acadia Hotels Ltd., 2013 BCSC 726

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Roynat Inc. v. Acadia Hotels Ltd., 2013 BCSC 726 Date: 20130426 Docket: 06 1148 Registry: Victoria Between: Roynat Inc. Petitioner And: Acadia Hotels Ltd., Park Hotel (Edmonton) Ltd., Duncan Hunter Morrison, Z-H Import-Export Corporation, Beryl Mary Arthur, Willcrea Holdings Ltd., I.P.I. Investments Corporation, Coast Capital Savings Credit Union, Samuel Owen, Yates Financial Corporation, Gordon David Shaw, Gerald Bryan Sauder, 679724 B.C.

Ltd., Evelyn Sherle Shaw, Rebecca Mary Shaw, Gary Morrison, Vicki Morrison, Brigitte Jennifer Ann Rahn, Thomas John Erskine, Shirley Muriel Erskine, Dann Henry Koller, Wrought’n Art & Innovative Iron Inc., Elizabeth Ann Johnson, T.L.G. Investments Ltd., Simm Enterprises Ltd., Eugene Blonder, Patricia Blonder, Buenos Restaurants Inc., John Henry Austin, Liza Kassianni Austin, Joan Craig Deans Peggs, Barry Lawrence Denluck, Gaye Anne Corbett, Lawrence Russell Hobson, Valerie Hobson, James Robert Ogmundson, Marlene Maria Perez, 0703275 B.C. Ltd., L.

Wergeland Construction Ltd., Rick Wallace, Slegg Construction Materials Ltd. Respondents Before: Master McCallum Reasons for Decision Counsel for the Respondents: Acadia Hotels Ltd., Duncan Hunter Morrison and Park Hotel (Edmonton) Ltd.: J. S. Waldie Counsel for the Respondents, Gordon David Shaw, Gerald Bryan Sauder, Evelyn Sherle Shaw, Rebecca Mary Shaw, Brigitte Jennifer Ann Rahn, Thomas John Erskine, Shirley Muriel Erskine, Dann Henry Koller, Elizabeth Ann Johnson, T.L.G.

Investments Ltd., Simm Enterprises Ltd., Eugene Blonder, Patricia Blonder, John Henry Austin, Liza Kassianni Austin, Joan Craig Deans Peggs, Barry Lawrence Denluck, Gaye Anne Corbett, Lawrence Russell Hobson, Valerie Hobson, James Robert Ogmundson, Marlene Maria Perez: D. L. Armstrong Counsel for the Respondent, Gary Morrison: M. J. Watson Place and Date of Hearing: Victoria, B.C. March 25, 2013 Place and Date of Judgment: Victoria, B.C.

April 26, 2013 [ 1 ] Acadia Hotels Ltd., a company owned by Duncan Morrison (“Duncan”), borrowed money from Roynat Inc. and others including Duncan’s brother Gary Morrison (“Gary”) and a group of lenders referred to as the “Shaw Group”. The loans were secured by mortgages on real property. The loans went into default, Roynat foreclosed and the property was ultimately sold in this foreclosure proceeding. [ 2 ] Roynat’s loan was repaid in full and the distribution of the surplus proceeds of sale was the subject of this hearing.

That is so because when the court made an order approving the sale it directed a reference to the registrar with respect to the disbursement of those funds. Those interested in the proceeds for the purposes of this hearing are Gary and the Shaw Group. [ 3 ] Gary had a mortgage on the property ranking in priority ahead of the Shaw Group mortgages. The Shaw Group says Gary’s

mortgage is unenforceable because of the provisions of the Limitation Act , R.S.B.C. 1996, c. 226 , and that the proceeds ought to go to it. Gary says the issue of mortgage enforceability is not for the registrar to decide and the issue ought to be referred to the court for determination. [ 4 ] The order referring this issue to the registrar says at paragraph 6: 6.

Failing the agreement of the parties with respect to the disbursement of the funds held in trust by Jones Emery, there will be a reference to the Registrar on July 11, 2006, or such other date as counsel may agree, to determine the amount owing on the charges subsequent to the Petitioner’s mortgages. [ 5 ] The amount held in trust by Jones Emery is approximately $543,000. Gary’s loan, as secured by the mortgage, was originally for US$109,000 as at December 1997.

By the date of the hearing, Gary calculated the balance owing to be approximately US$847,000, plus additional amounts for legal fees incurred. [ 6 ] I received evidence from Gary Morrison, Duncan Morrison, Maria Hernandez and David Shaw. Most of the controversial evidence involved, directly or indirectly, is the issue of the enforceability of the mortgage. There was no real issue taken with the calculation of the amounts owing on Gary’s mortgage or the mortgages of the Shaw Group. [ 7 ] If Gary’s mortgage is enforceable, the amount owing to him exceeds the available funds.

If Gary’s mortgage is unenforceable, the amount owing to the Shaw Group exceeds the available funds. The question that arises is the role of the registrar in that determination. [ 8 ] There is no doubt that the jurisdiction of the registrar is derived from the order that directs the reference. In this case, the order directs a determination of the amount owing on subsequent charges.

The order does not direct the registrar to conduct an inquiry into the enforceability of Gary’s mortgage and it is arguable that, even had it done so, the registrar might not have jurisdiction to enter upon such an inquiry. [ 9 ] The case at bar is indistinguishable from Moore v. Expansion Holdings Ltd. [1994] B.C.J. No. 1796 . In that case, the chambers judge made an order for a reference to the registrar in a foreclosure proceeding to find the amount due on a mortgage.

In his reasons, the chambers judge adverted to the real issue being a suggestion that there was an agreement as to the maximum amount owing on the mortgage. The order made no reference to that issue. [ 10 ] The registrar in Moore heard evidence on that point and made a report and recommendations. The chambers judge confirmed his recommendations. The Court of Appeal allowed an appeal holding that the order directing the reference did not permit the registrar to make recommendations. Southin J.

A., commencing at paragraph 29, said: 29 If Hutchison J.'s order had contained a provision such as "and this Court further orders that the registrar shall conduct an inquiry into whether the plaintiff is bound to accept the sum of $100,000.00 in discharge of her mortgage" we should have to ask ourselves whether that is the sort of issue which falls within Rule 50(5)(b), or upon which an inquiry can be ordered under Rule 32(1). 30 But that is not what this order says and all that the master had the right to do, acting as the district registrar, was what the court said he was to do.

He was, therefore, right when he said he had no jurisdiction, although I am uncertain whether he so concluded because of the deficiency of the order or for some other reason. 31 This case is one more example of an order causing difficulty for litigants where it does not reflect the reasons for judgment. An order is not something to be dashed off as if it were of no moment, but if counsel or the master had appreciated the deficiency in this order, an application might have been made under the slip rule to amend it.

Had such an application been made, it is at least possible that someone might have asked whether the issue was one which could properly be sent to a registrar. 32 What is left, therefore, is the ordinary common form order under Rule 50(5)(b). In my opinion, such an order does not extend to an issue such as this in which one party asserts that events have happened which deprive the other of the right to rely on the written terms of the instrument. 33 Since the common form order does not so extend, then it provides no foundation for the master, acting as district registrar, to make any recommendations.

Both Rule 50(5)(

b) and Rule 32 require an order of the court for either the master or a registrar to conduct any proceedings, whether the proceedings are to result in a recommendation or a certificate. [ 11 ] In the result in Moore , the court ordered a trial of the collateral issue upon which the registrar had made recommendations finding he had no authority to do so. [ 12 ] In these circumstances, given that the real issue appears to me to be the enforceability of Gary’s mortgage and not the “amount owing on the charges subsequent to the Petitioner’s mortgages”, I decline to make a report and recommendations.

The parties will be left to find the proper procedural vehicle to resolve the issue of the enforceability of Gary’s mortgage. [ 13 ] Gary raised the issue of the registrar’s jurisdiction and succeeded on that point. Gary should have his costs of this hearing as against the Shaw Group on Scale B. “W. McCallum” Master W. McCallum