FIRST NATIONAL FINANCIAL GP CORPORATION PLAINTIFF (DEFENDANT BY COUNTERCLAIM) - v. –, 2022 SKKB 273

KING ’S BENCH FOR SASKATCHEWAN Citation: 2022 SKKB 273 Date: 2022 12 1 6 Docket: QBG-RG-01111-2020 Judicial Centre: Regina BETWEEN: FIRST NATIONAL FINANCIAL GP CORPORATION PLAINTIFF (DEFENDANT BY COUNTERCLAIM) - and – LISA MAYER and JUDITH PAHL DEFENDANTS (PLAINTIFFS BY COUNTERCLAIM) Counsel: Michael W. Marshal for the plaintiff Sterling G. McLean for the defendants JUDGMENT ROBERTSON J. December 16, 2022 INTRODUCTION [ 1 ] This decision addresses an application for

summary judgment and to strike a counterclaim for failing to disclose a genuine issue requiring trial. For the following reasons, the application is granted. The plaintiff shall have judgment and the defendants’ counterclaim is dismissed.

BACKGROUND [ 2 ] The parties each filed affidavits for this application: by First National Financial GP Corporation [First National]: • Affidavit of Paul Kutarna sworn June 8, 2022 [Kutarna Affidavit]; • Affidavit of Jared M.

Adams sworn June 14, 2022 [Adams Affidavit]; and • Affidavit of Danny Sougaris sworn June 8, 2022 [Sougaris Affidavit]. by Lisa Mayer and Judith Pahl [Owners]: • Affidavit of Judith Sharon Pahl sworn August 8, 2022 [Pahl Affidavit]. [ 3 ] From these materials and the court file, the following facts are established. [ 4 ] The property in question is located in the Rural Municipality of Dufferin No. 190 and civically described as 325 Windsor Drive, Highwood Beach, Saskatchewan [Property].

The Property is comprised of two adjacent parcels legally described as: Block/Parcel D, Plan No 75R35353 Extension 0 [Parcel D] and Block/Parcel J, Plan No 101857079 Extension 0 [Parcel J] [ 5 ] Parcel D and Parcel J are not tied, however, an inground pool is situation on both parcels, impeding any separate transfer of the parcels. (Parcels may be “tied” together so that they cannot be transferred separately: see The Planning and Development Act, 2007 , SS 2007, c P-13.2, ss. 122(1) (ii) and 128(4) (c)(iii).

This may be necessary, for example, where zoning requirements would not allow development of one parcel without the other). [ 6 ] The Owners purchased the Property in 2009, obtaining mortgage financing from First National. [ 7 ] The mortgage agreement referred to Parcel D only and was registered against Parcel D only. [ 8 ] The Owners stopped making mortgage payments in March 2018 and left the Property. [ 9 ] First National took possession of the Property in April 2018 after the Owners had vacated the Property. The Owners have not since attempted to use or re-occupy the Property.

First National has since maintained the Property, including paying property taxes on both Parcel D and Parcel J. [ 10 ] First National took steps to commence a foreclosure action. Before application for leave to commence the foreclosure action was heard, the Owners voluntarily transferred title to Parcel D to First National. First National then discontinued the foreclosure action on October 3, 2018. [ 11 ] In 2019, First National was planning to sell the Property to a third party.

In the course of the sale transaction, First National discovered that it had title to Parcel D only, thus frustrating the proposed sale. [ 12 ] First National asked the Owners to voluntarily transfer Parcel J to First National. The Owners’ response was to offer to transfer title to Parcel J, valued at $8,000, if First National would pay them $100,000 or half of the total sale proceeds of the Property. This counteroffer was declined. [ 13 ] In 2020, First National commissioned a survey of Parcel D by Saskatchewan land surveyor Jared Adams.

The Saskatchewan Land Surveyor’s Real Property Report dated March 16, 2020 shows the house on Parcel D, but the in-ground swimming pool on both Parcel D and Parcel J. [ 14 ] On June 30, 2020, First National commenced this action. [ 15 ] The following chronology of events is established by the affidavit evidence and court file: 2009 October 19 Donovan Pahl and Lisa Marie Mayer offer to purchase the Property from Sandra Smith for $280,000: Pahl Affidavit, Exhibit A; and Sougaris Affidavit, paras. 2-4 and Exhibit “A”. (Judith Sharon Pahl later substituted for Donovan Pahl in offer to purchase: Pahl Affidavit, para. 4).

November 26 Owners sign mortgage agreement with First National for loan of $274,379 [Mortgage Agreement]: Pahl Affidavit, paras. 5-6 and Exhibit “B”; Sougaris Affidavit, para. 5. December 1 First National advances mortgage funds of $266,139.27 to Owners’ lawyer: Pahl Affidavit, at Exhibit “E”. Owners’ lawyer tenders trust cheque for $266,139.27 to vendor’s lawyer in payment for Property: Pahl Affidavit, at Exhibit “E”. December 2 Titles to Parcels D and J transferred to Owners (First National mortgage for $274,379 registered against Parcel D only):

Pahl Affidavit, at paras. 7-8 and Exhibits “C” and “D”; Sougaris Affidavit, at para. 8. 2018 March 23 Owners’ last mortgage payment of $597.46 to First National for outstanding mortgage loan: Pahl Affidavit, para. 17; Sougaris Affidavit, para. 11. April 27 First National secures Property: Sougaris Affidavit, para. 12 and Exhibit “L”. July 4 First National files application without notice seeking appointment for hearing of an application for leave to commence a foreclosure action: QBG-RG-01926-2018; Sougaris Affidavit, para. 13.

July 12 McMurtry J. grants First National appointment for leave to commence action against Owners in QBG-RG-01926-2018 [Foreclosure Action]: Pahl Affidavit, para. 28. August 8 Owners offer to voluntarily transfer title to Parcel D to First National: Pahl Affidavit, para. 22 and Exhibit “H”; Sougaris Affidavit, paras. 13-14. August 9 Kalmakoff J. (as he then was) adjourns leave application sine die : court file (Foreclosure Action) . September 27 Parcel D transferred to First National: Pahl Affidavit, paras. 25-26 and Exhibits “K” and “L”; Sougaris Affidavit, para. 14 and Exhibits “M” and “N”.

October 3 First National files notice of discontinuance on Foreclosure Action: Pahl Affidavit, para. 28 and Exhibit “N”; Sougaris Affidavit, para. 15 and Exhibit “O”; and court file (Foreclosure Action) . 2019 August First National discovers title to Parcel J in name of Owners during sale negotiations with third party: Sougaris Affidavit, para. 16. September 25 Appraisal of Parcel J estimates value at $8,000: Sougaris Affidavit, para. 17 and Exhibit “Q” Appraisal by Rowan Henry. 2020 March 16 Saskatchewan Land Surveyor’s Real Property Report of Parcel D: Adams Affidavit, Exhibit “A”.

June 30 First National files statement of claim: court file. October 20 Owners file statement of defence and counterclaim: court file. 2022 June 27 First National files notice of application for

summary judgment: court file. December 2 Hearing of application by Robertson J. with decision reserved: court file. ISSUES [ 16 ] The notice of application filed June 27, 2022 seeks the following relief: 1. An order granting

summary judgment in favour of the Plaintiff, First National Financial rectifying the mortgage dated November 28, 2009 between the Plaintiff and the Defendants (the “Mortgage”) and the transfer authorization dated September 10, 2018 (the “Transfer Authorization”). 2. An order transferring the following lands to the Plaintiff: Title: 138545567 Surface Parcel #15000369 Blk/Par J Plan No 101857079 Extension 3. An order striking the counterclaim of the Defendants, or in the alternative, granting

summary judgment dismissing the counterclaim of the Defendants. 4. Costs. [ 17 ] The application raises the following issues: 1. Is the application appropriate for

summary judgment? 2. If so, should the application be granted, in whole or in part, or dismissed? 3. Should costs be awarded?

[18] The issue of whether the application should be granted requires assessment of both First National’s application forrectification of the 2009 mortgage registration and 2018 transfer documents and the Owners’ counterclaim for damages for defamation. ANALYSIS Suitable for determination by

summary judgment [19] The notice of application in para. 18 cites Rules 7-2 to 7-8 of The Queen’s Bench Rules, which provide for

summaryjudgment. [20]

Part 7 of The Queen’s Bench Rules provides procedures for resolving claims without a full trial. Division 2 of

Part 7provides for

summary judgment. This alternative procedure is consistent with the foundational rules, the purpose of which is stated inRule 1-3(1) as intending “to provide a means by which claims can be justly resolved in or by a court process in a timely and costeffective way.” [21] The Supreme Court of Canada, in Hryniak v Mauldin, 2014 SCC 7 at para 5, [2014] 1 SCR 87 [Hryniak], endorsed thesummary judgment procedure, recognizing that it promotes “fair access to the affordable, timely and just adjudication of claims.” AsKarakatsanis J. wrote in Hryniak at para 4: 4 … In my view, a trial is not required if a

summary judgment motion can achieve a fair and just adjudication, if it provides aprocess that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, moreexpeditious and less expensive means to achieve a just result than going to trial. [22] Subject to appeal,

summary judgment is final, no different from judgment after trial. Rule 7-5(1) of The Queen’s BenchRules requires the court to be “satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or … the partiesagree to have all or part of the claim determined by

summary judgment and the Court is satisfied that it is appropriate to grant

summaryjudgment.” [23] In Casbohm v Winacott Spring Western Star Trucks, 2019 SKQB 44 at para 10, [2019] 9 WWR 714, Kalmakoff J. (ashe then was) cautioned that, even if the parties agree that a matter should be determined this way, the court must independently assesswhether the

summary judgment process is appropriate and “must not be applied in a fashion which compromises the fairness of theprocedure or the justness of the outcome.” [24] It is preferable, on an application for

summary judgment, to have agreed facts to provide a factual basis for theapplication and framework for argument. However, where the application relies solely on affidavit evidence, Rule 7-5(2) allows thecourt, “in determining … whether there is a genuine issue requiring trial”, some discretion in: 7-5(2) … (b) … (

i) weighing the evidence; (ii) evaluating the credibility of a deponent; [and] (iii) drawing any reasonable inference from the evidence. [25] But if essential facts are disputed, then trial may be necessary, so that the trial judge can make necessary findings offact, which may require assessments of credibility and reliability. [26] The chronology of events set out above records what happened. It should be apparent from the referenced affidavits thatthe parties agree upon much of what happened. The documents attached as exhibits to the affidavits also provide contemporaneousrecords about what happened.

So although there is no statement of agreed facts, the necessary factual foundation exists for

summaryjudgment. [27] The Pahl Affidavit at para. 38 provides a form of denial to the claimed common mistake: 38. I deny that we made a mistake in the preparation, registration or reporting on the mortgage or with respect to the application forforeclosure of the said mortgage and that we have made no representation of any material facts to First National Financial GPCorporation. [28] This is a carefully worded statement. Parties on

summary judgment are obliged to put their best foot forward, includingclear statements of fact. [29] In Deren v SaskPower, 2017 SKCA 104 at para 93, Caldwell JA. for the Court of Appeal wrote about the shifting onuson

summary judgment and the risk taken by the responding party if they fail to counter the applicant’s evidence: [93] When a party applying for

summary judgment has adduced evidence sufficient to make out its claims or defences prima facie, theresponding party, whether plaintiff or defendant, will run the risk of losing on the application if it does not adduce evidence that puts theapplying party’s evidence, and thereby its success on its claims or defences, into question: Peter Ballantyne Cree Nation v Canada, 2016SKCA 124 at para 31, 485 Sask R 162.

To do this, the responding party, whether defendant or plaintiff, must adduce persuasive,admissible evidence establishing that there are triable questions of fact or credibility on an issue that underpins the success of theapplying party’s claims or defences. In this way, the responding party bears the evidentiary burden of showing one or more of itsdefences or claims has “a real chance of success”: Hercules Managements Ltd. v Ernest & Young, (SCC), [1997] 2SCR 165 at para 15; Guarantee Co. of North America v Gordon Capital Corp., (SCC), [1999] 3 SCR 423 at

para 27; Crystalline Investments Ltd. v Domgroup Ltd., 2004 SCC 3 at para 6, [2004] 1 SCR 60. [30] In Bercovici v Palmer (1966), (SK CA), 59 DLR (2d) 513 (Sask CA) [Bercovici], Culliton C.J.S. forthe Court of Appeal wrote: [9] Smith v. Hemeon, (NS SC), [1953] 4 DLR 157 (N.S.), was an action for rectification. MacDonald, J., in theapplication of the principles propounded in Hart v.

Boutilier, supra, [(1916), (SCC), 56 DLR 620 (SCC)] had this tosay at p. 161: “Here there is no evidence other than the testimony of the plaintiff; for the defendant neither took the stand nor introduced any evidence.In such a case as this one must make up his mind definitely as to the credibility of the plaintiff as a witness, remembering that the issue isnot merely as to the plaintiff’s intention, but also as to the defendant’s. Whilst a plaintiff cannot testify as to the intention of thedefendant as such, his testimony may well make clear what the subject of the transaction was.

In this case the plaintiff has satisfied methat the negotiations between the parties and the oral agreement they reached related to the Red Lot and to it alone. Very germane to sucha case is consideration of the subsequent conduct of the parties: cf. Hart v. Boutilier, supra; Armstrong v. Wright (1930) (NB KB), 2 MPR 309 (N.B.), and Belding v.

McRae (1947), (NB KB), 20 MPR 325 (N.B.).” [The italics aremine.] [10] With the views so expressed by MacDonald, J., I am in complete agreement. [11] There was, as would be expected, a denial by the appellant of the evidence given by the respondent, as to what was the realcontract between the parties. The learned trial judge, in satisfying himself beyond any reasonable doubt that the appellant did in truthenter into the agreement as alleged by the respondent, looked to certain documentary evidence and to the consideration arising from theconduct of the parties. This he was entitled to do.

In my opinion, the learned trial judge properly stated and applied the law, and as hisfindings of fact cannot be disturbed, the appeal will be dismissed with costs. [Emphasis in original] [31] Having regard to the purpose of Rule 7 and the foundational rules, in particular Rule 1-3, I am satisfied that the disputemay be resolved without a full trial. The application for

summary judgment is suitable for hearing. I will therefore address theapplication on its merits. Court’s jurisdiction [32] Neither the statement of claim nor the notice of application cite authority for the substantive relief sought ofrectification. The notice of application in para. 18 cites Rules 7-2 to 7-8, which provide for

summary judgment. [33] The Queen’s Bench Rules are procedural. They do not create rights to substantive relief. So the first question is whetherthe court has jurisdiction to grant the relief sought. [34] The Court of Queen’s Bench is a superior court established under

Part VII (ss. 96-101) of the Constitution Act, 1867(UK), 30 & 31 Vict, c 3, reprinted in RSC 1985, App II, No 5. As such, it has inherent jurisdiction. [35] The Queen’s Bench Act, 1998, SS 1998, c Q-1.01 codify some of the court’s authority.

Section 52 recognizes the court’sequitable jurisdiction: Rules of equity prevail 52(1) The court shall administer concurrently all rules of equity and the common law.

(2) Where a rule of equity conflicts with a rule of common law, the rule of equity prevails. [36] Rectification, as explained below, is an equitable remedy, so it is within the court’s jurisdiction. Law of Rectification [37] First National, in its brief, relies upon the equitable remedy of rectification.

Rectification is intended to fix (rectify)mistakes by correcting the written contract or implementation document to reflect either: 1) the common intention of the parties at thetime of the agreement, known as mutual or common mistake; or 2) the intention of one party, known as unilateral mistake, where theother party is trying to take advantage of the mistake in circumstances that are tantamount to fraud. [38] The doctrine of rectification is summarized by Gerald Fridman, The Law of Contract in Canada, 6th ed (Toronto:Carswell, 2011) at 773-774: …The essence of rectification is to bring the document which was expressed or intended to be in pursuance of a prior agreement intoharmony with that prior agreement.

It deals with the situation where, contracting parties having reduced into writing the agreementreached by their negotiations, some mistake was made in the wording of the final, written contract, altering the effect, in whole or in part,of the contract.

What the court does is to alter the document, in accordance with the evidence, and then enforce the document as changed.Rectification is not used to vary the intentions of the parties, but to correct the situation where the parties have settled upon certain termsbut have written them down incorrectly. … [39] In Performance Industries Ltd. v Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 SCR 678, the SupremeCourt of Canada held that although mutual mistake was the most common ground for rectification, it could also be granted for unilateralmistake, provided certain demanding preconditions were met, including that at the time the agreement was made, the other party knew of

the mistake and fraudulently stayed silent to take advantage of the mistake. [40] In Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, [2016] 2 SCR 720, the Supreme Court ruled thatrectification is only available where a written instrument has incorrectly recorded the parties’ prior agreement. It is not available toretroactively change the agreement. Brown J. wrote for the majority at paras. 12-16: A.

General Principles and Operation of Rectification [12] If by mistake a legal instrument does not accord with the true agreement it was intended to record – because a term has beenomitted, an unwanted term included, or a term incorrectly expresses the parties’ agreement – a court may exercise its equitablejurisdiction to rectify the instrument so as to make it accord with the parties’ true agreement.

Alternatively put, rectification allows acourt to achieve correspondence between the parties’ agreement and the substance of a legal instrument intended to record thatagreement, when there is a discrepancy between the two.

Its purpose is to give effect to the parties’ true intentions, rather than to anerroneous transcription of those true intentions (Swan and Adamski, at §8.229 [Angela Swan & Jakub Adamski, Canadian ContractLaw, 3d ed (Markham: LexisNexis, 2012]). [13] Because rectification allows courts to rewrite what the parties had originally intended to be the final expression of theiragreement, it is “a potent remedy” (Snell’s Equity (33rd ed. 2015) [John McGhee, Snell’s Equity, 33d ed (London: Sweet & Maxwell,2012], by J. McGhee, at pp. 417-18). It must, as this Court has repeatedly stated (Shafron v.

KRG Insurance Brokers (Western) Inc., 2009SCC 6, [2009] 1 S.C.R. 157, at para. 56, citing Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19,[2002] 1 S.C.R. 678, at para. 31), be used “with great caution”, since a “relaxed approach to rectification as a substitute for due diligenceat the time a document is signed would undermine the confidence of the commercial world in written contracts”: Performance Industries,at para. 31.

It bears reiterating that rectification is limited solely to cases where a written instrument has incorrectly recorded the parties’antecedent agreement (Swan and Adamski, at §8.229). It is not concerned with mistakes merely in the making of that antecedentagreement: E. Peel, The Law of Contract (14th ed. 2015), at para. 8-059; Mackenzie v. Coulson (1869), L.R. 8 Eq. 368, at p. 375(“Courts of Equity do not rectify contracts; they may and do rectify instruments”).

In short, rectification is unavailable where the basisfor seeking it is that one or both of the parties wish to amend not the instrument recording their agreement, but the agreement itself. Moreto the point of this appeal, and as this Court said in Performance Industries (at para. 31), “[t]he court’s task in a rectification case is . . . torestore the parties to their original bargain, not to rectify a belatedly recognized error of judgment by one party or the other”. [14] Beyond these general guides, the nature of the mistake must be accounted for: Swan and Adamski, at §8.233.

Two types of errormay support a grant of rectification. The first arises when both parties subscribe to an instrument under a common mistake that itaccurately records the terms of their antecedent agreement. In such a case, an order for rectification is predicated upon the applicantshowing that the parties had reached a prior agreement whose terms are definite and ascertainable; that the agreement was still effectivewhen the instrument was executed; that the instrument fails to record accurately that prior agreement; and that, if rectified as proposed,the instrument would carry out the agreement: Ship M. F.

Whalen v. Pointe Anne Quarries Ltd. (1921), (SCC), 63S.C.R. 109, at p. 126; McInnes, at p. 820 [Mitchell McInnes, The Canadian Law of Unjust Enrichment and Restitution (Markham:LexisNesix, 2014)]; Snell’s Equity, at p. 424; Hanbury and Martin Modern Equity (20th ed. 2015), by J. Glister and J. Lee, at pp. 848-49; Hart v.

Boutilier (1916), (SCC), 56 D.L.R. 620 (S.C.C.), at p. 622. [15] In Performance Industries (at para. 31) and again in Shafron [2009 SCC 6, [2009] 1 SCR 157] (at para. 53), this Court affirmedthat rectification is also available where the claimed mistake is unilateral — either because the instrument formalizes a unilateral act(such as the creation of a trust), or where (as in Performance Industries and Shafron) the instrument was intended to record an agreementbetween parties, but one party says that the instrument does not accurately do so, while the other party says it does.

In PerformanceIndustries (at para. 31), “certain demanding preconditions” were added to rectify a putative unilateral mistake: specifically, that theparty resisting rectification knew or ought to have known about the mistake; and that permitting that party to take advantage of themistake would amount to “fraud or the equivalent of fraud” (para. 38). [Emphasis in original] [41] Rectification has been applied in Saskatchewan to remedy mistakes in transfer of real property. [42] In Bercovici v Palmer, [1965] SJ No 105 (QL) (Sask QB), aff’d Bercovici, MacPherson J. granted rectification of aconveyancing contract to remove certain land from the contract on the basis that he was “satisfied beyond any fair and reasonable doubtthat the property … was not intended by either of the parties to be included in their transaction.” (para. 12). [43] In Red’s Camps

(71) Ltd. v Red’s Camp Ltd., La Ronge Aviation Services Ltd., Campling and Campling (1983), (SK KB), 27 Sask R 293 (QB), aff’d (1986), (SK CA), 53 Sask R 114 (Sask CA), Gerein J. grantedrectification to amend the description of land in an agreement for sale, writing at para. 20: [20] In

summary, I find that the evidence is strong, clear and convincing that it was the intention of all the parties that the plaintiff wasto purchase and receive the residence and the land on which it was located. As well I am satisfied beyond any doubt that the writtenagreement dated April 20, 1972, mistakenly failed to include the land on which the residence was located and therefore failed to containthe intentions of the parties.

Therefore, the said agreement must be rectified and amended. [44] In Bank of Montreal v Gilchrist, [1991] SJ No 77 (QL) (Sask QB) [Gilchrist], MacLean J. granted rectification of amortgage to add title to certain lands that were intended to be subject to the mortgage. [45] In Nardi v Canadian Imperial Bank of Commerce (1996), (SK KB), 150 Sask R 204 (QB), Noble J.granted rectification of a mortgage document to correct an error regarding the identity of a party who had made a promissory note. [46] In Henderson v Knogler, 2009 SKQB 96 at paras 47-50, 330 Sask R 256, aff’d 2010 SKCA 119, 362 Sask R 118, SmithJ. granted rectification of lakefront lots created by plan of subdivision where the lot dimensions were different from what was intended.In Henderson v Knogler, 2011 SKQB 399, 386 Sask R 1, Smith J. subsequently made an order to give effect to the rectification by

waiving the owner’s consent usually required for registration of plan of subdivision. [47] Legal maxims are used to express equitable principles. Two maxims that have application to these facts are: Verbaintentioni, non e contra, debent inservire, meaning “Equity looks at the intent and not the form”; and nihil facit error nominis cum decorpore constat, meaning “an error in the name is nothing when there is certainty as to the thing”. (William T. Hughes & A.E.L.

Leckie,The Law Restated (self-published, 1915) at 90 and 197). [48] Finally, although not a rectification case, I note my decision in Scotia Mortgage Corporation v Labonte, 2022 SKQB130 in which I granted amendment to add a parcel of land omitted from the statement of claim in a foreclosure action where the omissioncontinued through to the final order of foreclosure.

The review of case law in that decision show the court’s equitable jurisdiction anddiscretion in foreclosure proceedings to correct mistakes where neither party is prejudiced unduly. [49] From this review, I conclude that to succeed on an application for rectification, the applicant has the onus to prove on abalance of probabilities: 1. an original agreement (meeting of minds on essential terms) between the parties; 2. that there was a mistake made when the original agreement was reduced to writing or in the implementation documents; and 3. that either: (

a) it was a mutual mistake by both parties; or (

b) it was a unilateral mistake by one party and the other party stayed silent so as to take advantage of the mistake in circumstancesthat are equivalent to fraud. [50] Because rectification is an equitable remedy, even if these requirements are established, the court retains a discretion asto whether to grant relief. In deciding whether to exercise its discretion, the court will try to do what is fair, having regard to all of thecircumstances. Relevant evidence [51] I will next review the legal requirements against the facts of this case.

In deciding whether rectification is appropriate,the court is entitled to consider “all evidence, parole and otherwise, of the parties’ intentions, subsequent as well as antecedent to thewritten document”: see Mackey v Goebel and Goebel (1983), (SK KB), 25 Sask R 316 (QB) at para 14. Was there an agreement? [52] There was an agreement in 2009 between the parties to borrow monies intended for the purchase of real property to besecured against the real property by mortgage. There was an agreement in 2018 for transfer of real property to forestall foreclosureproceedings.

Was there a mistake? [53] First National’s contention is that there was a mistake in the omission of Parcel J from the Mortgage Agreement:Sougaris Affidavit at paras. 7 and 10. [54] I accept that this was a mistake. That mistake then carried forward in subsequent documents, which resulted in theomission of Parcel J from the transfer documents during the voluntary transfer of Parcel D in 2018. Simply put, once the original mistakewas made, no one noticed that the Property was comprised of two parcels – D and J, and not just D.

I also accept it was only discoveredin 2019, when First National was about to sell the Property to a third party. [55] In finding mutual mistake, I considered the following facts:

a) The Property was developed and used as a single property. Parcels D and J are not physically or visually separate, such as byfencing at the boundary (see Kutarna Affidavit).

b) The only driveway entrance to the Property was and is onto Parcel D. Although adjacent Parcel J also fronts on Windsor Drive,there was and is no road access onto Parcel J. A ditch runs along the road right-of-way between Parcel J and the road (see KutarnaAffidavit).

c) The in-ground pool is situated on both Parcel D and J, showing that the Property was used as a single property (see KutarnaAffidavit; and Adams Affidavit, Exhibit “A” Saskatchewan Land Surveyor’s Real Property Report).

d) There is no separate civic address for Parcel J (see Kutarna Affidavit).

e) The Owners acquired the Property from the previous owners as a single property in 2009. That sale was listed as a single propertyunder the civic address of 352 Windsor Drive.

f) The 2009 purchase price of $280,000 was for the entire Property and did not distinguish between Parcels D and J.

g) The mortgage financing of $274,379 was for the full purchase price.

h) The Owners did not personally prepare any of the critical documents. The 2009 Mortgage Agreement and transfer authorizationswere prepared by their lawyers. The 2018 transfer documents were prepared by First National’s lawyers. There is no evidence that the

Owners ever gave instructions that the Property should be treated as two separate parcels, so as to keep Parcel J separate from Parcel D.

i) After ceasing to make mortgage payments, the Owners vacated the Property in 2018. They have not returned to nor re-occupied Parcel J.

j) The Property has since been maintained by First National.

k) First National has paid the property taxes on both Parcel D and Parcel J. [ 56 ] On these facts, I am satisfied that First National, in agreeing to mortgage financing, intended to secure its loan against the Property, including both Parcels D and J. First National, as a prudent lender, would not do otherwise. Mutual or Common Mistake [ 57 ] I am also satisfied that this was the common intention of the Owners.

I find that they signed the documents put before them, both with the 2009 Mortgage Agreement and the 2018 transfer documents, in the belief they were dealing with a single property. [ 58 ] The omission of Parcel J from the mortgage registration was an innocent oversight unintended by either party. This finding is consistent with para. 38 of the Pahl Affidavit. That being the case, rectification to correct this common mistake is warranted to ensure that the documents correspond to the original intent of the contracting parties. This also provides a fair result, consistent with the purpose of equity.

Unilateral Mistake [ 59 ] The Owners argued that the omission of Parcel J was not a mutual or common mistake. In other words, the Owners were always aware of the omission, but chose to stay silent so as to keep Parcel J unencumbered by the mortgage and then to retain title to Parcel J when they voluntarily transferred Parcel D. [ 60 ] The Owners’ claim is not credible. If they knew all along that they had separate title to Parcel J and intended to keep it after the transfer of Parcel D, why did they abandon Parcel J?

And why would they then allow First National to pay the property taxes on Parcel J from 2018 to the present? The fact is that the Owners never asserted ownership of Parcel J until after they were told of the mistake by First National. And even then, they took no meaningful steps to assert ownership. For these reasons, I reject the Owners’ claim. [ 61 ] The facts of this case are similar to those in Gilchrist in which MacLean J. wrote: I am convinced he and his wife intended, from the outset, to give the N.W. of 9 as security for their loan.

I am convinced too that it was only when the Gilchrist’s learned of the Bank’s mistake that they began to case about for ways to improve their position.

In view of the foregoing, I have no need to deal with the Bank’s alternative claim for rectification on the basis of unilateral mistake. [ 62 ] But even if I accepted that the Owners knew that the mortgage was registered against Parcel D only and they had retained clear title to Parcel J after transfer of Parcel D, then the second avenue for rectification would apply, since taking advantage of First National’s ignorance in these circumstances would be the equivalent of fraud. [ 63 ] It is unknown exactly how the mistake was made.

It could have originated in the mortgage instructions from First National to the lawyer who prepared the Mortgage Agreement and registration or with that lawyer. Either way, it was a mistake which no one caught at the time. If it had been detected then, it would have been corrected. [ 64 ] The lawyer was presumably retained by the Owners, so acting on their behalf. As such, the Owners should not be allowed to take advantage of their agent’s error. [ 65 ] Even if I am mistaken as to common mistake, I would still grant the application under the alternative basis of unilateral mistake.

Counterclaim for damages from defamation [ 66 ] The Owners did not press their counterclaim in argument. While not withdrawing the counterclaim, neither did they argue for it, admitting there was no proof of damages from the alleged wrong. [ 67 ] The wrong is not fully identified. The statement of defence and counterclaim at para. 28 seeks damages “for the damage to their credit ratings”. First National suggests and I agree that the claim appears to be defamation by reporting of the mortgage default to the Credit Bureau of Canada. [ 68 ] The reporting is admitted by First National.

But the Owners also admit the fact of the mortgage default. The Owners quibble about whether the default was properly reported as a foreclosure action, since leave to commence a foreclosure action was never granted. First National discontinued its application for leave to commence foreclosure action after the voluntary transfer of title. But what mattered was the default – that the Owners had stopped making payments on the mortgage loan – which the Owners admit. [ 69 ] Truth is usually a defence in a defamation action. There is no evidence of malicious intent.

The reporting of the default was accurate and routine business. I conclude that there is no genuine issue to be tried. The counterclaim cannot succeed and must be dismissed. Costs

[ 70 ] Rule 11-1 of The Queen’s Bench Rules provides guidance on award of costs. Generally, the successful party is entitled to costs. First National asked for costs on Column 2 of the tariff of costs which it estimated at $6,000 or $6,500. The Owners asked that no costs be awarded if they were unsuccessful. [ 71 ] Rule 11-4(

a) reminds us that success is only one factor to be considered in the exercise of discretion as to costs. While the conduct of the Owners is open to criticism in some respects, it should not be forgotten that they had no responsibility for the original mistake that cascaded on down through to the 2018 transfer of Parcel D only. And the Owners were lay people, while First National is a sophisticated party doing business for profit. [ 72 ] I have therefore decided to reduce the cost award that would otherwise be payable under the tariff of costs.

I therefore fix costs payable by the Owners to First National at $1,500 payable forthwith. Draft Order [ 73 ] The draft order filed with the application may issue, except for amendment of para. 4 to conform with the award of costs. . J. D.N. ROBERTSON