Patrick Street Holdings Ltd. First Plaintiff / FIRST DEFENDANT BY COUNTERCLAIM And: Paul Madden Second Plaintiff / SECOND DEFENDANT BY COUNTERCLAIM And: 11368 NL Inc. Defendant / PLAINTIFF BY COUNTERCLAIM, 2021 NLSC 29

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Patrick Street Holdings Ltd. v. 11368 NL Inc. , 2021 NLSC 29 Date : March 05, 2021 Docket : 202001G3955 Between: Patrick Street Holdings Ltd. First Plaintiff / FIRST DEFENDANT BY COUNTERCLAIM And: Paul Madden Second Plaintiff / SECOND DEFENDANT BY COUNTERCLAIM And: 11368 NL Inc. Defendant / PLAINTIFF BY COUNTERCLAIM Before: Justice Garrett A. Handrigan Place of Hearing: St. John’s, Newfoundland and Labrador Date of Hearing: February 24, 2021

Summary: Patrick Street Holdings and 11368 NL Inc. have been involved in ongoing litigation over real estate development at Kenmount Terrace in

St. John’s, NL for many years. This litigation included several Originating Applications, as well as a number of Interlocutory Applications. Presently there are three Interlocutory Applications and one Statement of Claim before the Court. Patrick Street Holdings brought two of the Interlocutory Applications and 11368 NL Inc., the other. Patrick Street Holdings filed a third Interlocutory Application asking Handrigan, J. to recuse himself from hearing the other three Interlocutory Applications. Handrigan, J. agreed.

He found that a reasonable, fair-minded, informed person may have a reasoned suspicion that he would not have an open and impartial mind if he heard the three Interlocutory Applications now pending and declined to do so. Appearances: Thomas W. Fraize, Q.C. Appearing on behalf of the Plaintiffs and the First and Second Defendants by Counterclaim Sarah J. Clarke Appearing on behalf of the Defendant and the Plaintiff by Counterclaim Authorities Cited: CASES CONSIDERED: Roberts v. R. , 2003 SCC 45 ; Cook v. Patrick Street Holdings Ltd. , 2017 NLTD(G) 167; Patrick Street Holdings Ltd. v.

Cook , 2019 NLCA 69 STATUTES CONSIDERED: Fraudulent Conveyances Act , R.S.N.L. 1990, c. F-24 ; Judgment Enforcement Act , S.N.L. 1996, c. J-1.1 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D ; Judgement Enforcement Regulations, 1999 , N.L.R. 102/99 OTHER: Government of Canada, Canadian Judicial Council, Ethical Principles for Judges , online: <http://publications.gc.ca/site/eng/9.687133/ publication.html> REASONS FOR JUDGMENT Handrigan, J. : INTRODUCTION [ 1 ] On July 28, 2020, Patrick Street Holdings Limited and Paul Madden (“Patrick Street Holdings”, includes Mr.

Madden, unless context shows otherwise) sued 11368 NL Inc. for $13,060,672.80 (Court File No. 202001G3955, to which I will refer in these reasons as the “2020 Action”). In its statement of claim, Patrick Street Holdings alleges that 11368 NL Inc. signed a guarantee on April 4, 2014, for $10,072,818.50 that third parties related to 11368 NL Inc. owed under a mortgage to others, including Patrick Street Holdings. [ 2 ] On September 4, 2020, 11368 NL Inc. defended the claim and counterclaimed against Patrick Street Holdings.

In its defence, 11368 NL Inc. denies it owes the monies Patrick Street Holdings claims from it, or any amount at all. In its counterclaim, 11368 NL Inc. says that Patrick Street Holdings failed to properly account for property that it took from 11368 NL Inc. in 2016 through a pre-emptive power of sale the same year; for various reasons but, in particular, that Patrick Street Holdings did not allow 11368 NL Inc. a reasonable time to obtain financing to pay its mortgage debt.

[ 3 ] In a Case Management Order filed November 19, 2020, the Chief Justice of this Court appointed me “Case Management Judge” of the 2020 Action under Rule 18A.01(

b) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D . In particular, he instructed me “to give direction to the procedure to govern the future course of the proceeding”. Patrick Street Holdings’ 2020 Action has already spawned two Interlocutory Applications that are pending before me. Patrick Street Holdings filed both applications. Meanwhile, 11368 NL Inc. also filed an Interlocutory Application, arising from other proceedings between these parties, all of which are related to the subject matter of the 2020 Action.

I will provide particulars of the other proceedings later in these reasons. [ 4 ] On January 28, 2021, Patrick Street Holdings filed another Interlocutory Application (the third in the 2020 Action) asking me to “recuse/disqualify [my]self from hearing” the other three Interlocutory Applications. Patrick Street Holdings says that its recusal application “…is not based on actual bias but…on [a] reasonable apprehension of bias/impartiality” (paragraph 32 of its Interlocutory Application).

It further asserts “…that there is a reasonable apprehension of potential lack of open mindedness and/or impartiality and therefore, Justice Handrigan should respectfully disqualify/recuse himself from hearing the aforementioned Applications” (paragraph 40). [ 5 ] I will not set out the reasons why Patrick Street Holdings apprehends my “potential lack of open mindedness and/or impartiality” at this point; but their “apprehended” reasons will be readily apparent as I set out the background to this matter.

It is appropriate for me to hear and decide the recusal application first, since it will decide if I should hear the others. The Issue [ 6 ] Patrick Street Holdings’ application raises this issue: [ 7 ] Should I recuse myself from hearing the three pending Interlocutory Applications because there is a reasoned suspicion that I will not have an open and impartial mind when I do? The Law Texts [ 8 ] The Canadian Judicial Council publishes Ethical Principles for Judges to “…ensure that judges and the public alike are aware of the principles by which judges should be guided in their personal and professional lives”.

Principle #1, in

Chapter 2, Judicial Independence reads: “1. Judges must exercise their judicial functions independently and free of extraneous influence”. [ 9 ] If a party raises a question about a judge’s impartiality, the Council recommends that he assess his ability to continue this way: “If the judge concludes that no reasonable, fair minded and informed person, considering the matter, would have a reasoned suspicion of a lack of impartiality, the matter should proceed before the judge. If the conclusion is the opposite, the judge should not sit” ( Ethical Principles for Judges ,

Chapter 6, Conflicts of Interest , paragraph E.15). Case Law [ 10 ] In Roberts v. R. , 2003 SCC 45 , the Campbell River and Cape Mudge Indian Bands asked the Supreme Court of Canada to vacate one of its unanimous judgments. The Indian Bands claimed that there was a reasonable apprehension that Binnie, J., then of the Court and the Justice who wrote the decision, was biased.

They based their claim on Binnie, J.’s involvement in other litigation 17 years earlier, before he was a member of the Court, and when he was Associate Deputy Minister of Justice in the Government of Canada. [ 11 ] The Court dismissed the motion to vacate the judgment. It said that “…no reasonable apprehension of bias is established, and that Binnie J. was not disqualified in these appeals” ( Roberts , paragraph 91 ).

The Court considered these factors: • The litigation that Binnie, J. was involved in previously was not Roberts. • A long time had passed since Binnie, J. was involved in the prior litigation. • Binnie, J.’s role in the prior litigation was “…of a limited supervisory and administrative nature” ( Roberts , paragraph 82 ). • Binnie, J. did not remember being involved in the prior litigation. • While Binnie, J. was kept informed of developments in the prior litigation, others carried the action. • The prior litigation was but one of thousands of files that Binnie, J. was responsible for while he was Associate Deputy Minister of Justice in the Government of Canada. [ 12 ] The Court summed up its reasons this way: …[W]e are convinced that the reasonable person, viewing the matter realistically, would not come to the conclusion that the limited administrative and supervisory role played by Binnie J. in this file, over 15 years ago, affected his ability, even unconsciously, to remain impartial in these appeals. ( Roberts , paragraph 90 ) [ 13 ] This is the law I will apply to the issue I stated above.

I turn now to analyze that issue, starting with the background to it. Analysis Background

[ 14 ] In 2015, 11368 NL Inc. owned land in Kenmount Terrace, a new residential subdivision in the west end of St. John’s, NL. 11368 NL Inc. gave a mortgage over some of the land to PMC Holdings Ltd. in April 2014 to secure money that PMC Holdings provided to 11368 NL Inc. to develop the subdivision. PMC Holdings assigned its mortgage to Patrick Street Holdings in March 2016.

Patrick Street Holdings completed power of sale proceedings against the property between July 2016 and September 2016, after 11368 NL Inc. defaulted on the mortgage. [ 15 ] Patrick Street Holdings bought in at the power of sale and acquired the property.

It paid, at least nominally, $11,400,000.00 for the property in the power of sale proceedings and applied the purchase price against some of the subsequent mortgages, liens and directions to pay that were registered against it. [ 16 ] Other charges on the title included a mechanics’ lien that J-3 Consulting & Excavation Ltd. registered against the property in December 2015, and two mortgages that John Cook registered against it in July 2016.

Patrick Street Holdings provided J-3 Consulting and John Cook an accounting of the sale proceeds in October 2016 and claimed that funds from the power of sale did not cover the J-3 Consulting lien and the John Cook mortgages; and Patrick Street Holdings refused to pay them. [ 17 ] J-3 Consulting and John Cook started proceedings against Patrick Street Holdings, each filing originating applications in November 2016 (File No’s 201601G6654 and 201601G6652 respectively), asking for orders that Patrick Street Holdings provide a more detailed accounting of how it distributed the proceeds of the power of sale and directing Patrick Street Holdings to pay the J-3 Consulting lien and the John Cook mortgages.

They also asked for their costs. [ 18 ] J-3 Consulting and John Cook claimed that their charges on the Kenmount Terrace properties ranked in priority to other charges that Patrick Street Holdings elected to pay from the proceeds of the power of sale. I heard their applications and examined the priorities affecting 11368 NL Inc.’s Kenmount Terrace properties when Patrick Street Holdings executed power of sale against them in 2016. [ 19 ] I filed my decision in Cook v. Patrick Street Holdings Ltd. , 2017 NLTD(G) 167, on October 3, 2017.

In the result, I declared that John Cook’s mortgage and J-3 Consulting’s mechanics’ lien ranked prior to the mortgage by which Patrick Street Holdings exercised the power of sale. I ordered Patrick Street Holdings to pay $96,919.47 to J-3 Consulting and $63,983.60 to John Cook, which I am told Patrick Street Holdings did, but only after it unsuccessfully appealed my decision to our Court of Appeal. [ 20 ] In Patrick Street Holdings Ltd. v.

Cook , 2019 NLCA 69 , the Court of Appeal upheld my decision and accepted that Patrick Street Holdings could not claim it was due $4,000,000 from 11368 NL Inc. before it paid J-3 Consulting’s mechanics lien and John Cook’s mortgage. [ 21 ] Subsequently, 11368 NL Inc. filed an Interlocutory Application, asking for orders that Patrick Street Holdings Limited pay $168,237.82 plus interest to a Deanna Cheeke and $3,976,707.72 plus interest to 11368 NL Inc. from the proceeds Patrick Street Holdings received when it sold properties in Kenmount Terrace. 11368 NL Inc. claimed that it was entitled to any surplus funds that resulted when Patrick Street Holdings exercised its power of sale on September 19, 2016, and transferred the Kenmount Terrace properties to itself. [ 22 ] I allowed 11368 NL Inc.’s Interlocutory Application on July 16, 2020 and ordered Patrick Street Holdings to pay Deanna Cheeke $150,000, together with interest at the contract rate of 18% per annum, starting February 23, 2016.

I also ordered that Patrick Street Holdings pay 11368 NL Inc. $4,080,961.94, the balance of the surplus that Patrick Street Holdings realized on the power of sale of the Kenmount Terrace properties, less what I ordered it to pay to Deanna Cheeke. [ 23 ] On July 23, 2020, 11368 NL Inc. filed a Notice of Judgment against Patrick Street Holdings at No. 940557 of the Registry of Deeds for this Province.

The Notice dated July 16, 2020, the same date as my decision, says it is intended to “…provide Notice of the aforesaid Judgment to parties seeking an interest in property or land owned by Patrick Street Holdings and/or Paul Madden as it intends to initiate enforcement of the same as soon as practicable” (See Notice of Judgment, dated July 16, 2020, attached as Tab 11, Volume 1 of 2, for Interlocutory Application to Vacate, filed December 4, 2020). 11368 NL Inc. also attached a copy of my reasons for judgment to the Notice. [ 24 ] Additionally, on August 26, 2020, 11368 NL Inc. filed a Notice of Lis Pendens against Paul Madden, in the Registry of Deeds for the Province of Newfoundland and Labrador.

This Notice is dated August 25, 2020, and applies to numerous properties in Kenmount Terrace, St. John’s, NL. It says that it is intended to show that 11368 NL Inc. “claims an interest in…[those properties] and by this Notice it is intended that persons dealing with…[those properties] be informed and aware of this claim” (See Notice of Lis Pendens dated August 25, 2020, attached as Tab 12, Volume 2 of 2, for Interlocutory Application to Vacate, filed November 23, 2020). [ 25 ] In the Notice of Lis Pendens , 11368 NL Inc. also states that its “pending litigation” against Mr.

Madden is grounded in the “… Fraudulent Conveyances Act , R.S.N.L. 1990, c. F-24 and/or the Judgment Enforcement Act , S.N.L. 1996, c. J-1.1 ”; and that 11368 NL Inc. “…claims an interest in the lands and premises of…[Paul J.

Madden, in Kenmount Terrace]”. [ 26 ] Patrick Street Holdings filed a Notice of Appeal on August 14, 2020, asking the Court of Appeal to “reverse, rescind or vary” my July 16, 2020 decision and to find that “…the accounting and analysis provided by the Appellant [Patrick Street Holdings of the distribution of the proceeds of the mortgage by which Patrick Street Holdings exercised power of sale over Kenmount Terrace] was correct…and there were insufficient funds to pay the Respondent [11368 NL Inc.]” (Paragraph 32 of the Notice of Appeal, dated August 14, 2020, and filed on the same date).

Patrick Street Holdings’ appeal has not been heard as yet, and I do not know if the Court of Appeal has set a date to hear it. [ 27 ] In the meantime, as I noted above, Patrick Street Holdings started another action on July 28, 2020. I provided some particulars of that action earlier in these reasons and note it here as the “2020 Action”. I will discuss that action in more detail later in these reasons, as the context dictates. [ 28 ] I noted earlier that Patrick Street Holdings filed two Interlocutory Applications in the 2020 Action. It asks for an order granting

pre-judgment attachment under the Judgment Enforcement Act and the Judgement Enforcement Regulations, 1999 , N.L.R. 102/99 against 11368 NL Inc.

In this application, Patrick Street Holdings says, amongst other things, that “…if 11368 NL Inc. receives the payment [of $4,080,961.94 that I ordered it to pay to 11368 NL Inc.]…these funds will be disbursed such that there will be no known assets that could be used to satisfy a Judgment in favor of Patrick Street Holdings and Paul Madden against 11368 NL Inc. …[in the 2020 action]” (Interlocutory Application filed October 20, 2020, paragraph 24). [ 29 ] Patrick Street Holdings wants the pre-judgment attachment to bind all of 11368 NL Inc.’s “…exigible property including the attachment of the property of Patrick Street Holdings Limited under Justice Handrigan’s Order that was filed on July 16, 2020” (Interlocutory Application filed October 20, 2020, paragraph 29(a)).

As I understand its request, Patrick Street Holdings is looking to attach the $4,080,961.94 that I ordered it to pay to 11368 NL Inc., although it has not actually paid those monies to 11368 NL Inc. as yet. [ 30 ] Patrick Street Holdings also wants an order staying the enforcement of 11368 NL Inc.’s judgment for $4,080,961.94 pending its appeal of my decision and the conclusion of its 2020 Action. It appears that Patrick Street Holdings is anticipating one or two favourable outcomes: it succeeds in the 2020 Action or it succeeds in appealing my July 16, 2020 judgment.

Only if it fails in both, does it seem that it will consider paying what I decided it now owes to 11368 NL Inc. [ 31 ] In its other Interlocutory Application, dated November 23, 2020, and filed December 1, 2020, Patrick Street Holdings seeks orders vacating the Notice of Judgment (registered July 23, 2020) and the Notice of Lis Pendens (registered August 26, 2020) that 11368 NL Inc. registered in the Registry of Deeds for the Province after I filed my judgment on July 16, 2020, ordering Patrick Street Holdings to pay 11368 NL Inc. $4,080,961.94. [ 32 ] To support its further application, Patrick Street Holdings offers as its reason for setting aside both notices that “[t]he existence of the Notice of Lis Pendens and Notice of Judgment…is adversely affecting Paul Madden’s use of the land” (Interlocutory Application, filed by Patrick Street Holdings on December 1, 2020). [ 33 ] On March 17, 2020, Patrick Street Holdings transferred 45 parcels of land in Kenmount Terrace to Paul Madden by deed of conveyance of the same date.

The deed states the consideration for the sale as $4,000,000, the same amount that 11368 NL Inc. claimed Patrick Street Holdings owed to it, and which I ordered Patrick Street Holdings to pay to 11368 NL Inc. in my judgment on July 16, 2020. Mr. Madden registered the deed at the Registry of Deeds for this Province on March 18, 2020. [ 34 ] 11368 NL Inc. also filed an Interlocutory Application, not in the 2020 Action as Patrick Street Holdings did, but in the Originating Applications that John Cook and J-3 Consulting brought against Patrick Street Holdings and Paul Madden.

It asks for orders that the conveyance of the Kenmount Terrace properties from Patrick Street Holdings to Paul J. Madden be declared a fraudulent transaction by s. 170 of the Judgment Enforcement Act and further that monies owing to Deanne Cheeke and 11368 NL Inc. rank in priority to a mortgage between Paul J. Madden and Patrick Street Holdings. [ 35 ] Those then are the three applications that Patrick Street Holdings thinks I should recuse myself from hearing; and this is the background to the recusal application.

Discussion [ 36 ] I quoted from the CJC’s Ethical Principles for Judges earlier in these reasons when I set out the inquiry that a judge should make when a party challenges his impartiality. The CJC’s statement, provides the basis of that inquiry. I paraphrase it here, to state the issue more directly for my purposes: Would any reasonable, fair minded and informed person, considering the three Interlocutory Applications now pending have a reasoned suspicion that I would not be impartial if I hear them? [ 37 ] Let me break that inquiry out into these components and treat of them separately: 1.

What should a reasonable, fair minded and informed person know of the Interlocutory Applications? 2. With that knowledge, would that person have a reasoned suspicion that I would not be impartial to judge them? 1. Knowledge of the Interlocutory Applications [ 38 ] As I noted above, Patrick Street Holdings filed a Statement of Claim in this Court on July 28, 2020.

I called this claim the “2020 Action” and I did so simply to distinguish it from the other proceedings, both originating and interlocutory, in which Patrick Street Holdings and 11368 NL Inc. have been engaged for the last five years, or longer. [ 39 ] In the 2020 Action, Patrick Street Holdings asks this Court to order 11368 NL Inc. to pay it fixed damages of $13,060,672.80.

It also asks for an order in the alternative, allowing Patrick Street Holdings to set off the $4,080,961.94 that I ordered Patrick Street Holdings to pay to 11368 NL Inc. on July 16, 2020 against the $13,060,677.80. [ 40 ] Thus, if I find that 11368 NL Inc. must pay Patrick Street Holdings $13,060,672.80 because of the 2020 action and the Court of Appeal does not overturn my July 16, 2020 judgment, Patrick Street Holdings will not have to pay $4,080,961.94 to 11368 NL Inc.; 11368 NL Inc. will simply have to pay Patrick Street Holdings that much less, or, to do the math: $13,060,677.80 - $4,080,961.94, or $8,979,715.86. [ 41 ] Patrick Street Holdings’ 2020 Action is based in part on a guarantee that it says 11368 NL Inc. gave on April 4, 2014, to

support a mortgage that companies related to 11368 NL Inc. gave to Patrick Street Holdings (and other of its related companies) on July 22, 2013. Patrick Street Holdings also says that 11368 NL Inc. gave it a collateral mortgage on April 20, 2016, to support the guarantee it signed on July 22, 2013. [ 42 ] Patrick Street Holdings also alleges that 11368 NL Inc. owes $13,060,673.80, both by its guarantee and by its collateral mortgage (in support of the guarantee), all of which relate back to a mortgage that companies related to 11368 NL Inc. gave to companies related to Patrick Street Holdings on July 22, 2013.

In effect, and according to Patrick Street Holdings, parties related to 11368 NL Inc. gave it a mortgage first, 11368 NL Inc. guaranteed that mortgage and then 11368 NL Inc. gave it a mortgage in support of its guarantee.

It is also appropriate to note that the mortgage, guarantee and (subsequent) mortgage, and all issues between Patrick Street Holdings and 11368 NL Inc. relate to the development of the Kenmount Terrace properties. [ 43 ] The collateral mortgage for up to $4,000,000 that 11368 NL Inc. gave to Patrick Street Holdings was central to the dispute between Patrick Street Holdings and 11368 NL Inc. in the accounting that Patrick Street Holdings provided when it exercised power of sale over and acquired the Kenmount Terrace lots on September 16, 2016.

Patrick Street Holdings claimed that 11368 NL Inc. owed it that amount, but I disallowed it when I filed my judgment in Cook v. Patrick Street Holdings on October 3, 2017. [ 44 ] I explained why in these two paragraphs from the judgment: [61] Patrick Street Holdings allowed $4,000,000.00, which is the face amount of the mortgage and $5,000.00 to register it. J-3 Consulting and John Cook both submit that I should not consider this mortgage because no new money was advanced to the Kenmount Terrace Subdivision under it.

For its part, 11368 NL Inc. submitted that Patrick Street Holdings failed to complete any analysis of the actual amount, if any, owing under the mortgage. [62] 11368 NL Inc. says this mortgage simply acted as collateral security up to $4,000,000.00 for a guarantee dated April 4, 2014 that 11368 NL Inc. gave on behalf of companies related to 11368 NL Inc. to secure $10,072,818.52 that the related companies owed to Patrick Street Holdings.

In 11368 NL’s estimation, no money or a lesser amount than $4,000,000.00 may actually be owing under the mortgage. 11368 NL Inc. says Patrick Street Holdings should have done a proper analysis if it wished to include any amount from this mortgage to be paid from the power of sale proceedings. I accept this analysis and make no allowance for this mortgage in the accounting. [Emphasis added] [ 45 ] The Court of Appeal deferred to my finding on this issue in Patrick Street Holdings Ltd. v.

Cook : [62] In the present case, the Applications Judge did not find that there was sufficient evidence to conclude that 11368 NL as guarantor was liable to make payment at the time of the sale. The mere fact that the registration cost of the mortgage reflected a value of $4,000,000 is not determinative of the amount actually owing under the mortgage. [63] The Applications Judge’s conclusion that the amount owing was not established, and that therefore the mortgage should be disallowed from the accounting, is entitled to deference on appeal.

As there is no basis before the Court to warrant appellate intervention, I would uphold the decision of the Applications Judge in finding that there should be no payment under the $4,000,000 mortgage in priority to the J-3 Consulting lien or the Cook mortgages. [ 46 ] Subsequent to the Court of Appeal’s decision, 11368 NL Inc. filed an Interlocutory Application asking for an order that Patrick Street Holdings pay to it the surplus on the power of sale. I heard this application on June 24, 2020.

I filed my decision on July 16, 2020 and ordered Patrick Street Holdings to pay the surplus to 11368 NL Inc., less the amount that I ordered it to pay to Deanna Cheeke. [ 47 ] Central to my decision to order Patrick Street Holdings to pay the surplus to 11368 NL Inc. was my finding that Patrick Street Holdings was not allowed to claim any part of the surplus because of the $4,000,000 collateral mortgage.

This is from my discussion of that issue in my July 16, 2020 judgment: [24] Again, as I noted earlier, I deducted the $4,000,000 that Patrick Street Holdings claimed through the collateral mortgage in its accounting of the power of sale because Patrick Street Holdings provided no analysis of what amount, if any, may have been owing to it under the collateral mortgage.

White, J.A. accepted my conclusion and ended his discussion of the issue this way: The Applications Judge’s conclusion that the amount owing was not established, and that therefore the mortgage should be disallowed from the accounting, is entitled to deference on appeal. As there is no basis before the Court to warrant appellate intervention, I would uphold the decision of the Applications Judge in finding that there should be no payment under the $4,000,000 mortgage in priority to the J-3 Consulting lien or the Cook mortgages. ( Patrick Street Holdings Ltd. v.

Cook , paragraph 63 ) [25] I have been shown nothing to cause me to change my mind on this issue; and I accept White, J.A.’s affirmation of the conclusion I stated on the $4,000,000 mortgage amount in the reasons I filed on the Originating Application. [ 48 ] On August 14, 2020, Patrick Street Holdings filed a Notice of Appeal from this decision. The Notice is replete with references

to my finding that the $4,000,000 collateral mortgage did not rank in priority to any claim that Patrick Street Holdings had on the surplus from the power of sale. For example, Paragraph 2(

a) of the Notice of Appeal reads, in part: 2)

a) THAT the Learned Trial Judge erred in law and/or fact in not allowing the Mortgage by the Respondent to the Appellant, Madden’s Limited, P & P Holdings Limited and Paul Madden, which was registered for $4,000,000, not to be in priority to any claim by the Respondent [11368 NL Inc.] to the surplus. [ 49 ] As I noted, I believe that the Court of Appeal has not heard Patrick Street Holdings’ appeal as yet; nor may it even have set a date to do so. [ 50 ] Patrick Street Holdings filed an Interlocutory Application on December 1, 2020, seeking orders vacating a Notice of Judgment 11368 NL Inc. filed on July 23, 2020, as well as vacating the Notice of Lis Pendens 11368 NL Inc. filed on August 15, 2020.

The efficacy of the $4,000,000 collateral mortgage that 11368 NL Inc. gave to Patrick Street Holdings on April 20, 2016 is critical to this Interlocutory Application. It is also critical to Patrick Street Holdings’ Interlocutory Application to set aside the Notice of Judgment and to the 2020 Action that Patrick Street Holdings initiated against 11368 NL Inc. on July 28, 2020. [ 51 ] Finally, 11368 NL Inc. in its Interlocutory Application, asks for a declaration that money owing to it from the surplus on the power of sale, ranks in priority to a mortgage between Paul J.

Madden and Patrick Street Holdings on the same property. [ 52 ] This then takes me back to the first part of this inquiry: What would a reasonable, fair minded and informed person know of the Interlocutory Applications?

Let me summarize what it is that person would know this way: • 11368 NL Inc. gave a collateral mortgage to Patrick Street Holdings in April 2016 for up to $4,000,000 to secure a guarantee that others related to 11368 NL Inc. gave to Patrick Street Holdings. • Patrick Street Holdings included the face amount of the collateral mortgage in its accounting of the proceeds of the power of sale. • I disallowed the $4,000,000 from the accounting. • I awarded 11368 NL Inc. the surplus from the power of sale, largely represented by the $4,000,000 face amount of the collateral mortgage. • Patrick Street Holdings is appealing the award to the Court of Appeal. • The appeal has not been heard as yet, nor does it appear that it has been set for hearing. • The efficacy of the collateral mortgage for up to $4,000,000 is a central aspect of Patrick Street Holdings’ Interlocutory Applications to set aside the Notice of Judgment and the Notice of Lis Pendens and for Pre-Judgment attachment in its 2020 Action. • The efficacy of the same collateral mortgage is also a central aspect of

Part 2 of 11368 NL Inc.’s Interlocutory Application, by which 11368 NL Inc. seeks a declaration that the monies owing to it from the surplus on the power of sale, ranks in priority to a mortgage between Paul J. Madden and Patrick Street Holdings on the same property. 2. Reasoned Suspicion of Lack of Impartiality [ 53 ] I turn now to the other part of this inquiry: With that knowledge, would a reasonable, fair-minded and informed person have a reasoned suspicion of my lack of impartiality to judge the Interlocutory Applications?

Quite candidly, I say, yes. [ 54 ] The efficacy of the collateral mortgage is critical to outcomes of those applications. On two previous occasions, October 3, 2017, and July 16, 2020, I declared that the collateral mortgage ranked behind 11368 NL Inc. in priority for the distribution of the surplus from the power of sale. The Court of Appeal accepted my finding in the first instance. But I cannot rely on that affirmation to negate or even nullify the perception that I might do the same again if I hear the Interlocutory Applications.

If nothing else, I may actually be constrained by two precedents of my own making. [ 55 ] The issue is not whether I am right or wrong in my findings, but whether I appear to have acted impartially when I make them. I will not risk the possibility that I will be seen not to have acted impartially. In the result, I agree with Patrick Street Holdings that there may be a reasonable suspicion that I will not have an open and impartial mind when I hear the Interlocutory Applications and decline to do so. I recuse myself from these matters. Costs [ 56 ] The costs of this application are in the cause

Summary and Disposition [ 57 ] Patrick Street Holdings and 11368 NL Inc. have been involved in ongoing litigation over real estate development at Kenmount Terrace in St. John’s, NL for many years. This litigation included several Originating Applications, as well as a number of Interlocutory Applications. Presently there are three Interlocutory Applications and one Statement of Claim before the Court. Patrick Street Holdings brought two of the Interlocutory Applications and 11368 NL Inc., the other.

Patrick Street Holdings filed a third Interlocutory Application asking Handrigan, J. to recuse himself from hearing the other three Interlocutory Applications. [ 58 ] Handrigan, J. agreed. He found that a reasonable, fair-minded, informed person may have a reasoned suspicion that he would not have an open and impartial mind if he heard the three Interlocutory Applications now pending and declined to do so.

Order [ 59 ] In the result, I order that: 1. I recuse myself from hearing the three Interlocutory Applications, pending from Patrick Street Holdings and 11368 NL Inc. 2. Costs are in the cause. _____________________________ Garrett A. Handrigan Justice