Canadian Imperial Bank of Commerce Petitioner And: Neville Charles Grigg Kimberly Joanne Grigg Agenda Office Interiors Inc. Agenda Management Inc. Respondents, 2017 BCSC 1711

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Canadian Imperial Bank of Commerce v. Grigg, 2017 BCSC 1711 Date: 20170726 Docket: 16-3114 Registry: Victoria Between: Canadian Imperial Bank of Commerce Petitioner And: Neville Charles Grigg Kimberly Joanne Grigg Agenda Office Interiors Inc. Agenda Management Inc. Respondents Before: The Honourable Mr. Justice Johnston Oral Reasons for Judgment (In Chambers) Counsel for the Petitioner appearing by teleconference: J.B. Ross Counsel for the Respondents: P.F. Waller M. Schryver, Articled Student Place and Date of Hearing: Victoria, B.C.

July 17, 2017 Place and Date of Judgment: Victoria, B.C. July 26, 2017 [ 1 ] THE COURT: The Canadian Imperial Bank of Commerce (“CIBC”) seeks an order nisi of foreclosure against property owned by Mr. and Ms. Grigg. They also seek judgment against Mr. and Ms. Grigg, as well as against two companies controlled by the Griggs, Agenda Office Interiors Incorporated, which I will call Agenda Office, and Agenda Management Incorporated, which I will call Agenda Management. [ 2 ] Mr. and Ms. Grigg respond to the petition by seeking an order that the matter be converted to an action and referred to the trial list.

The argument made by counsel concentrated on whether there are triable issues, bona fide triable issues, particularly with respect to the Griggs' argument that there is a bona fide triable issue as to whether they owe any money to the CIBC. [ 3 ] The mortgage in question was granted by Mr. and Ms. Grigg on November 5, 2012. It is in the standard form. It states that the principal amount secured by the mortgage will not exceed $200,000. It provides that it is payable on demand and is said to secure a current or running account.

The standard mortgage terms as filed, I gather, in the Land Title Office, apply to the mortgage. [ 4 ] One of the standard terms attached to the mortgage in the materials includes a definition of indebtedness, which is said to include, and I quote, "the aggregate of all present and future indebtedness and liabilities of the mortgagor to the bank". [ 5 ] Part of the factual matrix with respect to the issue to be decided arises from a September 24, 2015, agreement whereby CIBC and Agenda Office agreed to credit facilities to include a revolving line of credit as well as term facilities.

The agreement provides for security in the form of an unlimited guarantee from each of Mr. and Ms. Grigg. The agreement requires that Mr. Grigg's guarantee be secured by a collateral mortgage in the amount of $200,000 registered against the Griggs' home. There is no reference to security for Ms. Grigg's guarantee in that credit document. [ 6 ] I say that because the collateral mortgage clause in the loan facility or loan document is stated to be for the above guarantee, and only Mr.

Grigg's guarantee appears above that collateral mortgage clause in the document. [ 7 ] On the other hand, the collateral mortgage is stated in the document to be a present and future collateral mortgage held in support of both unlimited liability guarantees held from Neville Grigg and Kimberly Grigg. So there appears to be a dichotomy or a tension within the document itself. Whether the mortgage requirement is confined to Mr. Grigg's guarantee as the "above guarantee", or meant to secure Ms. Grigg's guarantee that is provided for before the provision with respect to the mortgage, is an open question, in my view.

[ 8 ] The document requires Ms. Grigg to provide a certificate of independent legal advice. That document goes on to state, and I quote: This Letter supersedes and replaces all prior discussions, letters and agreements (if any) describing the terms and conditions of Facilities contained in this Letter. This Letter does not however serve to operate as a novation.

To the extent necessary, CIBC reserves all of its rights in respect of any Security that has been granted to secure your obligations with respect to the Facilities. [ 9 ] So this credit agreement then purports to both supersede and replace prior agreements. But because it does not operate as a novation, according to its terms, it is not a substitute for prior agreements. [ 10 ] It is hard to reconcile those two concepts, that is, replacement without substitution. [ 11 ] Neither Mr. nor Ms. Grigg appears to have signed a fresh guarantee in September 2015.

Each of them had signed a guarantee in early 2014 in identical terms, and those guarantees each had guaranteed the debts of Agenda Office. Agenda Office's debt certified in each guarantee as the debts and liabilities that the customer has incurred or may incur with CIBC. [ 12 ] Fortunately, the law concerning whether or not to refer a matter brought by petition to the trial list was thoroughly canvassed by Madam Justice Fitzpatrick in Griffin v. 0904713 B.C. Ltd ., 2013 BCSC 273 .

From that decision, I take the following principles: first, the question for the court is whether there is a bona fide triable issue that cannot be determined by reference to the documents and that would affect the outcome of the proceedings. That is from paragraph 30. [ 13 ] Next, a bona fide triable issue arises when the evidence discloses a dispute as to fact or law that creates a reasonable doubt or suggests there is a defence that deserves to be tried. That is at paragraph 31, citing the decision in Boffo Developments. [ 14 ] Next, there is a tendency to convert a

summary process into a full trial where serious and disputed questions of fact or law are raised. That is at paragraph 31, as well, again citing Boffo . [ 15 ] Next, the evidentiary threshold in an application to refer a

summary proceeding to trial is very low. That is at paragraph 32. [ 16 ] Next, specifically in foreclosure proceedings, an order nisi will not be granted in

summary chambers proceedings unless it is manifestly clear that there is no bona fide triable issue as to whether the petitioner is entitled to the remedy it seeks. That is from paragraph 33. [ 17 ] Next, the onus of showing there is no bona fide triable issue is on the petitioner. That is from paragraph 34. [ 18 ] Next, in deciding whether to refer a

summary proceeding to the trial list, the court is not entitled to weigh the evidence or undertake a detailed examination of the merits. That is at paragraph 35. [ 19 ] Next, the bona fide triable issue must relate to a true defence, not a counterclaim or a setoff, at paragraph 36. [ 20 ] Next, true defences would include an objection to jurisdiction or a denial of the petitioner's allegations or, if the petitioner's allegations are true, they disclose no cause of action or, if the petitioner's allegations are true, there are facts that provide a legal justification for the respondents' conduct.

Those true defence principles were extracted from Royal Bank v. Rizkalla , a decision of then Madam Justice McLachlin from 1984. [ 21 ] Finally, from Griffin, this principle: the asserted bona fide triable issue must go to the foundation of the mortgage, calling into question its validity, the ability of the mortgagee to claim foreclosure under the mortgage, or some real question as to the amount owing under the mortgage. [ 22 ] In this application, the respondents, Mr. and Ms. Grigg, raised as a true defence that no money is owing under the mortgage.

That is the second of the true defences or traverse, as listed earlier. [ 23 ] As I understand it, Mr. and Ms. Grigg raise these questions on the basis that, while they may have granted a mortgage to the petitioner, it was to secure their personal guarantees of the debt of Agenda Office under a 2012 credit agreement.

But that agreement was replaced in 2015, although the 2015 agreement was not a novation or substitution for the earlier agreement or agreements, again the tension between a replaced or substituted document. [ 24 ] Bearing in mind the onus here and the very low threshold, in my view, the banking documents alone raise a bona fide triable issue with respect to the enforceability of the mortgage which predated the credit agreement said to be the current basis of the debt claimed. Whether Ms.

Grigg has remained bound by that mortgage may depend on whether the most recent credit agreement can replace earlier agreements without acting in substitution, a question that I do not think can or should be decided in the relatively

summary environment of petition proceedings. [ 25 ] The foreclosure petition is therefore referred to the trial list. While it may not be necessary, it seems logical that the petition with necessary amendments stand as the notice of civil claim, and the response to petition, with necessary amendments, stand as the response to civil claim. [ 26 ] I have not heard sufficient argument to decide comfortably whether the petition should be heard together with or immediately before or after the action brought by Mr. and Ms. Grigg against the bank.

I expect counsel may be able to reach an agreement on that issue but, if not, that application is adjourned generally and may be set down for argument. [ 27 ] Unless there is a very good reason to the contrary, my inclination is costs should be in the cause. [ 28 ] Anything arising, counsel?

[ 29 ] MR. WALLER: No, My Lord. [ 30 ] THE COURT: From Vancouver? [ 31 ] MR. ROSS: No, My Lord, thank you. [ 32 ] THE COURT: We will adjourn. “R.T.C. Johnston, J.” The Honourable Mr. Justice Johnston