r v. Hopper et al., 2014 NBCA 16

COURT OF APPEAL OF NEW BRUNSWICK 17-13-CA DAVID HOPPER APPELLANT DAVID HOPPER APPELANT - and - - et - STEPHEN HOPPER, TANYA HOPPER, MICHAEL TINGLEY and MELISSA PATTEN RESPONDENTS STEPHEN HOPPER, TANYA HOPPER, MICHAEL TINGLEY et MELISSA PATTEN INTIMÉS Hopper v. Hopper et al., 2014 NBCA 16 Hopper c.

Hopper et autres, 2014 NBCA 16 CORAM: The Honourable Justice Robertson The Honourable Justice Bell The Honourable Justice Green CORAM : l’honorable juge Robertson l’honorable juge Bell l’honorable juge Green Appeal from a decision of the Court of Queen's Bench: January 9, 2013 Appel d'une décision de la Cour du Banc de la Reine : le 9 janvier 2013 History of Case: Historique de la cause : Decision under appeal: 2013 NBQB 13 Décision frappée d’appel : 2013 NBBR 13 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: October 10, 2013 Appel entendu : Le 10 octobre 2013 Judgment rendered: April 3, 2014 Jugement rendu : le 3 avril 2014

Reasons for judgment by: The Honourable Justice Robertson Motifs de jugement : l’honorable juge Robertson Concurred in by: The Honourable Justice Bell The Honourable Justice Green Souscrivent aux motifs : l’honorable juge Bell l’honorable juge Green Counsel at hearing: For the appellant: Andrew J. Valeri For the respondents Stephen Hopper and Tanya Hopper: Ian Girard Melissa Patten appeared on her own behalf No one appeared for the Estate of Michael Tingley Avocats à l’audience : Pour l’appelant : Andrew J.

Valeri Pour les intimés Stephen Hopper et Tanya Hopper : Ian Girard Melissa Patten a comparu en son nom Personne n’a comparu pour la succession de Michael Tingley THE COURT The appeal is dismissed. LA COUR L’appel est rejeté. The judgment of the Court was delivered by ROBERTSON, J.A. [ 1 ] The appellant, David Hopper, loaned the four respondents $350,000 to pursue a business venture that ultimately failed. The respondents consented to judgment for $364,875, but the order was subject to a condition that stayed enforcement for two years.

The condition directed the respondents to list the property for sale in the hope they could sell the business’s principal asset, a convenience store property, thereby eliminating or substantially reducing the amount of the debt. However, none of the respondents took steps to effect a sale within the prescribed period. Thereafter, two of the respondents, Michael Tingley and Melissa Patten (the “Tingleys”), brought a motion seeking an order that the judgment against them be “deemed satisfied and discharged”.

The motion judge granted an order which the appellant maintains has the legal effect of granting the relief sought. In reaching his decision, the motion judge took into consideration a constellation of salient facts, including the following.

[ 2 ] First, the other two respondents and judgment debtors, Stephen Hopper and his wife Tanya Hopper, are the appellant’s son and daughter-in-law. Second, the father and son had effective control over the property to the exclusion of the Tingleys. Third, the appellant father acquired the convenience store property at a tax sale for the amount of the arrears ($66,000) and now wishes to seize and sell the Tingley’s home.

Fourth, there is no evidence the appellant has taken steps to recover on the judgment from his son and daughter-in-law. [ 3 ] In certain respects, the most difficult aspect of this case is to unravel the underlying facts which embrace two actions and several motions decided over the last six years. To the ligation history must be added an appeal that was decided in this Court in 2011.

As well, there is an underlying issue that was not raised below or pursued in this Court: Did the motion judge possess the jurisdiction to extinguish a debt (and discharge a judgment) because of non-compliance with a related court order? In that regard, I appreciate that the respondent, Melissa Patten, is appearing on her own behalf and her husband, Michael Tingley, is deceased. While the respondents, Stephen and Tanya Hopper, are represented by counsel, they have simply endorsed the position which David Hopper, as appellant, advances before this Court.

In the circumstances, I must assume, without deciding, the answer to the question posed is “yes”. This leaves for consideration the question of whether the motion judge erred in granting the relief sought. [ 4 ] I empathize with the motion judge when he observed: “It is difficult for the Court to find a fair and just solution given the facts and evidence before this Court”. In my respectful view, the motion judge did not err in deciding as he did. His factual findings and the inferences drawn warrant deference under the review standard of palpable and overriding error.

In particular, there was sufficient evidence of what can best be described as “passive collusion” between David and Stephen Hopper. On the facts, the failure of the son to comply with the Court Order falls equally on the shoulders of the father, and there is a rational explanation for the Tingleys’ failure to comply with the court order. As well, the underlying facts present a case of potential “unjust enrichment” that would have driven the motion judge to decide as he did.

Needless to say, this case is all about the facts. [ 5 ] As mentioned, the appellant David Hopper is the father of the respondent Stephen Hopper who is married to the respondent Tanya Hopper. The other respondents are Michael Tingley (since deceased) and his wife Melissa Patten (hereafter the “Tingleys” or “Melissa Tingley”). The two couples decided to jointly construct and operate a convenience and video rental store business with the financial assistance of David Hopper.

Initially, the $350,000 loan to the two couples was unsecured, with title to the convenience store land being held in the name of Stephen Hopper and Melissa Tingley. As it should happen, the two couples also built homes on contiguous lots. However, title to the Tingley lot was held in the name of Stephen and Tanya Hopper. Subsequently, collateral mortgages were placed on the properties in favour of David Hopper with a view to securing the loan. [ 6 ] The business did not flourish and neither did the friendship. Soon thereafter, David Hopper sued to recover his investment from the four respondents.

Stephen and Tanya Hopper did not defend the action, thereby permitting judgment to be taken against them. The Tingleys defended. They also started their own action against Stephen and Tanya Hopper with a view to establishing a binding oral contract to convey to the Tingleys the residential home in which they were living. David Hopper was also made a party to this action because of the collateral mortgage placed on the property. In the interim, he was attempting to realize on the debt through his collateral mortgages.

On June 19, 2009, the Tingleys were granted an order staying the Order for Seizure and Sale “until judgment in the two actions had been ‘delivered’ or until ‘further order’ of the Court”. [ 7 ] With respect to David Hopper’s action, and prior to trial, the trial judge granted judgment, on consent, as against the Tingleys for $350,000 plus costs of $14,875 and subject to certain conditions. The Consent Order is dated October 15, 2009.

The Order directs the registration of the judgment against the convenience store property and that the property be listed for sale with Re/Max for $450,000, plus HST, with the listing to expire on December 14, 2009. The Order directed the listing contract to be signed by Stephen and Tanya Hopper, together with Melissa Tingley. Provision is also made for payment of a real estate commission of 12%. Finally, the Order provides that if a binding agreement of purchase and sale was not entered into at the listing price, before December 14, 2009, Mr.

Hopper was free to pursue his remedies with respect to the registered judgment. [ 8 ] Soon after the Consent Order was signed, the convenience store property was listed for sale with Re/Max in Saint John, even though the property in question is situate in Salisbury, a community just outside Moncton. In her third supplemental affidavit, Melissa Tingley states that she and Mr. Hopper’s lawyer, Rod Gillis, Q.C., approached a Re/Max agent for the purpose of listing the property. The agent was not interested in the listing as he did not want to get involved in a dispute between the Tingleys and Hoppers. Mr.

Gillis then informed Ms. Tingley that he knew of another agent that “could take care of it”. The property was listed on the Saint John Multiple Listing Service from October 27, 2009, until December 31, 2009. A for sale sign was placed on the property. It is also common ground that the only person to sign the listing agreement was Stephen Hopper. In fact, the property did not sell and, according to the realtor, the property was not relisted with him or any other realtor through the Multiple Listing Service. [ 9 ] Both actions were heard together on January 19, 2010.

With respect to the Tingleys’ action the trial judge concluded there was an unwritten but enforceable agreement that the residential property in which they were living would be conveyed to them. It is of significance that the Tingleys had spent between $250,000 and $300,000 constructing a residence on land which belonged to Stephen and Tanya Hopper. However, the trial judge also held that Stephen and Tanya Hopper were still owed

$20,000 and that that amount would have to be paid before title to the property could be transferred. Further, the trial judge also granted a stay order which prevented David Hopper from realizing on the debt by seizing and selling the Tingley residence. That stay was to remain in place until there was compliance with the order the motion judge was about to grant in regard to Mr. Hopper’s action (discussed below). David Hopper appealed the “Tingley” decision to this Court in the hope of having the stay set aside.

He was not successful: see 2011 NBCA 37 , 370 N.B.R. (2d) 355 (per Turnbull J.A.), appealing 2010 NBQB 53 . [ 10 ] With respect to David Hopper’s action against the Tingleys, the trial judge continued the stay in regard to the consent judgment for $364,875. As there was appraisal evidence before the trial judge that the property’s value prior to completion of construction was $574,000, it was believed a sale could extinguish the debt, in which case there would be no need to seize and sell the Tingley’s residence to satisfy Mr. Hopper’s judgment.

If the sale brought in less than $364,875, the deficiency was to be apportioned equally between the two couples. The trial judge held that reasonable time should be given to sell the convenience store property, and having regard to the economy, the listing period should be fixed at two years.

The trial judge made the following order: The store property is to continue to be listed with an approved real estate agent with the goal that the property be sold within two years from the date of David Hopper obtaining judgment against Michael and Melissa Tingley. [para. 53] [ 11 ] The reasons for decision of the trial judge are dated February 19, 2010. In one of her affidavits, Melissa Tingley states that no one contacted her after February 19 with respect to listing the property for sale.

In another affidavit she explains that both she and Michael had been charged with criminal offences and were subject to a “No Contact Order” that proscribed contact with all three Hoppers. In the case of Michael Tingley, the order was not lifted until December 15, 2011, and in the case of Melissa Tingley not until May 25, 2010. The court order helps to explain the apparent lack of communication between the two couples over the relevant years. [ 12 ] As it should happen, the property was not listed for sale as required under the Court Order of February 19, 2010, nor were the property taxes being paid.

As of June 16, 2011, the tax arrears amounted to $65,000. On July 16, 2011, Melissa Tingley learned, through her solicitor, of a pending tax sale which, in fact, occurred on July 18, 2011. The purchaser was David Hopper and the auction price paid was $66,000. The Tingleys also learned that the property taxes on their residence had not been paid. Recall that title to the residential lot remained in the name of the Stephen and Tanya Hopper until the $20,000 was paid. The tax arrears amounted to $38,000. The Tingleys paid that amount in order to avoid the pending tax sale.

The Province then provided the Tingleys with a deed of title in trust. [ 13 ] On May 7, 2012, the Tingleys brought a motion seeking various relief including an order that the judgment in favour of David Hopper be “deemed satisfied and discharged”. Without the discharge, Mr. Hopper could have proceeded to enforce his judgment or collateral mortgage by forcing a sale of the Tingley’s residential property.

The timing of the motion coincided with the expiration of the two year listing, specified in the Court Order of February 19, 2010. [ 14 ] The motion judge, who was also the trial judge in the underlying actions, made critical findings of fact. His main findings are as follows. First, he held the intent and purpose of the Consent Order was not followed and that steps were taken by David and Stephen Hopper that would appear to be in defiance of that Order. Second, he held there was evidence to support the view that the value of the store property exceeded the amount owing to David Hopper.

Third, he held both Stephen Hopper and Michael Tingley were “equally” responsible for any debts associated with the convenience store. Finally, the motion judge held: In my view, this constant battle between these two families must at least be brought to a conclusion as it relates to Melissa Tingley, Stephen Hopper and David Hopper. The Court will never know what price might have been achieved for the store if the consent order had been followed. It is quite possible that the total judgment of $364,875.00 could have been satisfied. But due to the conduct of Stephen and David Hopper, we will never know.

For their conduct, I believe Stephen Hopper and David Hopper must bear full responsibility. [para. 23] [ 15 ] Following the motion hearing, formal judgment was entered. The appellant, David Hopper, interprets that formal judgment as effectively extinguishing the consent judgment obtained against the Tingleys for $364,875. If the debt is extinguished, it follows that the collateral mortgages are no longer enforceable. [ 16 ] As noted at the outset, the appellant’s

interpretation of the motion judge’s order brings into play a legal issue that was not raised below or pursued in this Court: Did the motion judge possess the jurisdiction to extinguish a debt because of non-compliance with a related court order? Another option would have been to set aside the judgment or, alternatively, to have granted a permanent stay. In any event, the answer to the question posed would bring into play the principles surrounding the

inherent jurisdiction (powers) of superior courts and their ability, for example, to prevent abuses of the judicial process and steps beingtaken that would render judicial proceedings inefficacious. In Bremer Vulkan Schiffbau und Maschinenfabrik v. South India ShippingCorp. Ltd., [1981] A.C. 909 (H.L.[E]), it was Lord Diplock who described the court’s inherent jurisdiction as a general power to controlits own procedure thereby preventing it from being used to achieve an injustice. The lead decisions of the Supreme Court are CollegeHousing Co-operative Ltd. v.

Baxter Student Housing Ltd., (SCC), [1976] 2 S.C.R. 475, [1975] S.C.J. No. 84 (QL);MacMillan Bloedel Ltd. v. Simpson, (SCC), [1995] 4 S.C.R. 725, [1995] S.C.J. No. 101 (QL) and R. v. Caron, 2011SCC 5, [2011] 1 S.C.R. 78. The last two cases made extensive reference the seminal

article of I.H. Jacob, “The Inherent Jurisdiction ofthe Court” (1970) 23 Curr. Legal Probs. 23 (see also K. Mason, “The Inherent Jurisdiction of the Court” (1983) 57 Queensland LawJournal 449). [17] Turning to the appellant’s arguments on appeal, there are many. For ease of analysis, I havegrouped them under one of two umbrellas. The first hinges on the fact that David Hopper was under no legal obligation to list for sale theconvenience store property and, therefore, he could not be found in breach of the Court Order of February 19, 2010. Second, the fact thatMr.

Hopper bought the property though the tax sale should be of no concern to the law. He did so in accordance with the law and at aprice that must be deemed equal to the property’s fair market value. I shall deal with each of the umbrella issues in the order stated.

Ihasten to note that the respondents, Stephen and Tanya Hopper, endorse the position which David Hopper advances on this appeal. [18] Having regard to the Court Order of October 15, 2009, and the extension order of February 19,2010, it is clear the obligation to list the convenience store property was placed on the two persons in whom legal title was vested(Stephen Hopper and Melissa Patten), and not the appellant, David Hopper. The record does not explain why Tanya Hopper was alsorequired to sign the listing, but not Melissa Tingley.

In any event, it is common ground that the only person who signed the originallisting was Stephen Hopper. However, that did not affect the validity of the listing contract. The failure to have all owners of a propertysign the listing is more of a concern when an offer to purchase is received and the signatures of all are required. At the same time, therecord on appeal reveals why Melissa Patten’s participation was limited.

Neither she nor her husband had access to the property andthere was a “No Contact Order” in force as between the Tingleys and the Hoppers at the time the property should have been relisted. [19] What is crucial to this case is the fact the listing agreement was arranged by David Hopper’slawyer, not Stephen’s. The inference which the motion judge obviously drew is that David Hopper was the one who assumedresponsibility for the listing and the one with actual control over the property.

What is equally telling is the lack of evidence to suggestthat David Hopper was also actively pursuing his son and daughter-in-law with respect to realizing on their portion of the debt. In one ofher affidavits, Melissa Patten states that, to her knowledge, David Hopper has not proceeded against Stephen and Tanya Hopper. Therecord on appeal does not disclose a responding affidavit. Recall also that Stephen and Tanya Hopper allowed judgment on the debt to betaken by default.

As well, the affidavit evidence of Melissa Patten alleges that Stephen Hopper allowed his father to remove $50,000worth of equipment, including built-in walk-in coolers, during the period the property was to have been listed. In his respondingaffidavit, David Hopper stated that his son Stephen had given him permission to remove the items prior to the granting of the ConsentOrder and that the cooler units were sold for $10,000.

Despite the conflicting affidavits, it is still proper to draw the inference that controlof the property rested with David and Stephen Hopper and not the Tingleys. [20] It has to be asked why Stephen Hopper failed to relist the property for sale in accordance withthe order of February 19, 2010. His response is telling: “I was never contacted by anyone about renewal of the “Listing Agreement”. Inaddition, Mr. Hopper stated: “I live next door to the building. The “For Sale” sign stayed on the property until the tax sale. I assumed thelisting had continued.” The same question must be asked of Melissa Patten.

Her response is plausible: “…because a Realtor’s sign wason the store property, I was under the impression that the store property was listed for sale in accordance with the [court orders].” [21] In my respectful view, the inferences drawn by the motion judge and the implicit finding ofpassive collusion between father and son, warrant deference. This conclusion is reinforced when consideration is given to the factssurrounding the tax sale in which David Hopper acquired the convenience store property for $66,000. Mr.

Hopper now argues themotion judge erred in assuming that the convenience store property had a fair market value greater than the price paid at the tax auction. Mr. Hopper insists that the auction price is a “fair” indicator of market value and, accordingly, he did not receive a benefit to thedetriment of the Tingleys (“unjust enrichment”). In any event, Mr. Hopper claims he bought in at the tax sale as an independent thirdparty who acquired title to the property free of all “encumbrances” in accordance with s. 14 of the Real Property Tax Act, R.S.N.B. 1973,c. R-2.

The appellant’s arguments must be measured against the motion judge’s finding that had the property been listed in accordancewith the Court Orders, and a buyer found, the debt owing to the appellant might have been extinguished or reduced substantially. [22] Parenthetically, the record on appeal is silent with respect to matters that would normallyinform the legal analysis. The record does not disclose the person or persons to whom the annual tax bill for the convenience storeproperty was being sent and their mailing address (the Hoppers, the Tingleys or to the store).

There is no ready explanation as to why theproperty taxes were allowed to fall into arrears and there is no indication of the property’s assessed value at the time of the tax sale. Aswell, the appellant, David Hopper, does not reveal how he learned of the pending tax sale. His son, Stephen Hopper, does not explainwhether he knew the property taxes were in arrears and, if so, whether he took any steps to address the accumulation of arrears. If hewere unaware of the tax problem, why was his father aware of it?

With respect to the Tingleys affidavit evidence, it is Melissa Pattenwho states she first learned of the tax sale a few days prior thereto. All of this supports the inference that the failure to list the property

for sale in accordance with the Court Order and the extension of February 19, 2010, and the failure to pay property taxes was a convenient way of obtaining title to the convenience store property. At the same time, the right to pursue payment of the Tingleys’ share of the $364,875 debt, by proceeding to bring about a forced sale of their residence, remained intact. [ 23 ] There is a relatively short response to the contention the price paid at a tax auction must be deemed a sale at fair market value.

According to the spirit of the tax legislation, the assessed value equals the fair market value of the property, at least in the eyes of the Government and for purposes of raising revenue. There is no evidence before us of the property’s assessed value. But it is unreasonable to infer that a property with an appraised value of $574,000 in 2006 is now reduced to a value of $66,000 because someone went to an auction sale and placed a bid for the amount of the outstanding property taxes.

The same may be said of the Tingleys’ residence which they were able to acquire for the amount of the tax arrears ($38,000) even though they had expended between $250,000 and $300,000 constructing a residence on a lot owned by Stephen and Tanya Hopper. [ 24 ] There is a valid reason why the Province allows property to sell for the amount of the tax arrears. It is not in the business of owning and maintaining properties.

Hence, it is possible for buyers to make a “windfall” subject to the right of the former owners to regain title within the redemption period specified in the legislation and subject to payment of costs and expenses incurred by the new owners. In

summary, and with great respect, the argument that a property’s fair market value equals the amount of property taxes which are in arrears has no support, and one need only turn to the provisions of the Real Property Tax Act to reach that conclusion. [ 25 ] In

summary, the fact that David and Stephen Hopper exercised effective control over the convenience store property and the fact it was not listed for sale in accordance with the earlier court order provided the trial judge with a justification for preventing David Hopper from realizing on his debt. The fact that he was able to acquire the property through a tax sale, conducted under the Real Property Tax Act , for the amount of the tax arrears, further motivated the trial judge to decide as he did. The inference that David Hopper was enriched at the expense of the Tingleys was a reasonable one.

Based on the arguments presented to this Court, and having regard to the underlying facts and the trial judge’s reasons for decision, I have not been persuaded he made a palpable and overriding error in deciding as he did. Accordingly, I would dismiss the appeal. __________________________ J.T. ROBERTSON, J.A. WE CONCUR: ___________________________ B. RICHARD BELL, J.A. ____________________________ BRADLEY V. GREEN, J. A.