CANADIAN IMPERIAL BANK OF COMMERCE PLAINTIFF - v. -, 2023 SKKB 220

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 220 Date: 2023 10 18 Docket: KBG-SA-00425-2023 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: CANADIAN IMPERIAL BANK OF COMMERCE PLAINTIFF - and - LISA MARIE KNIGHT DEFENDANT Counsel: Andrew M. Kroczynski for the plaintiff No one appearing for the defendant ___________________________________________________________________________ FIAT DANYLIUK J.

October 18, 2023 ___________________________________________________________________________ Introduction [ 1 ] The plaintiff [CIBC] applies for an order nisi for foreclosure. CIBC neither sought nor obtained leave to commence an action for relief that included judicial sale. Leave was only obtained for the remedy of foreclosure. The evidence before this Court is that there is substantial equity in the property, equity which will be lost forever to the defendant [Ms. Knight] if CIBC simply takes title to this land.

The question is whether in these circumstances the Court may order judicial sale. [ 2 ] For the reasons set out below I have determined the Court does have such jurisdiction, and should exercise same in this case.

Facts [ 3 ] This action and application concern a residential condominium property located in Saskatoon. Ms. Knight purchased her condo in 2014. To do so she borrowed $238,121.77 from CIBC, repayment of which was secured by a mortgage registered against the condo. This was what is termed a “purchase money mortgage”; that is, all the money advanced to Ms. Knight by CIBC was for the purpose of allowing Ms. Knight to buy the condo. [ 4 ] Ms. Knight fell into default under the CIBC mortgage. In May 2023 CIBC began proceedings against Ms.

Knight and on August 3, 2023 CIBC obtained leave to commence its action against her, as required by statute. [ 5 ] This is a crucial juncture in the history of this matter. Because it was a purchase money mortgage CIBC only sought leave to commence an action for the remedy of foreclosure, and for costs. This is clearly and unequivocally set out in CIBC’s application for leave, said application dated April 24, 2023. [ 6 ] CIBC’s statement of claim was issued August 9, 2023. That statement of claim contains some interesting features. At para. 5 CIBC stated: 5.

Leave to commence this action was granted under the provisions of The Land Contracts (Actions) Act, 2018 on August 3, 2023, and the nature of the remedy which by the leave granted is permitted to be sought in this action is: (

a) Foreclosure. (

b) Costs as may be recoverable pursuant to the subject Mortgage and permitted by law, or by Order of this Honourable Court. [ 7 ] Notwithstanding this acknowledgment at the end of its statement of claim CIBC set out the relief sought, as follows: The Plaintiff claims the following relief, namely: (

a) Foreclosure; (

b) Sale of the Mortgaged land; (

c) Possession of the Mortgaged land; (

d) The recovery of any monies payable under the Mortgage, where applicable; (

e) The costs of proceeding on a solicitor-and-client basis; and (

f) Such further and other relief as this Honourable Court may deem just. [ 8 ] The prayer for relief at the end of CIBC’s statement of claim is clearly at odds with both para. 5 thereof and the order sought and granted at the leave stage. [ 9 ] The statement of claim was served on Ms. Knight and in due course she was noted for default of defence, on September 6, 2023. Ms. Knight has been non-participatory throughout this proceeding. [ 10 ] On October 4, 2023 CIBC applied without notice for an order nisi for foreclosure. That application came before me on an ex parte basis.

On October 5 th I rendered the following short fiat: The mortgagee should explain why the Court should not order judicial sale. I appreciate the bank did not seek leave for that remedy but this does not preclude the Court from ordering it. There appears to be up to $40,000 of equity, resulting in something of a windfall for the bank. Further material is to be filed and this matter returned to my attention. [ 11 ] CIBC did not file further material as directed.

Instead, a letter dated October 12, 2023 was faxed to the Court: Further to the Fiat of the Honourable Justice Danyliuk dated October 5, 2023, an Order Nisi for Foreclosure is sought on the basis that, as identified in Justice Danyliuk’s Fiat, foreclosure is the only relief that the Bank obtained leave for, and due to the fact that the Mortgage which is the subject matter of this action is entirely purchase money in nature. Please place this information before Justice Danyliuk and advise of the outcome accordingly. [ 12 ] This letter contained no real explanation.

The fact that no leave for judicial sale was sought was already in the October 5 th fiat and was patently obvious from the Court file. Regurgitation of that fiat was of absolutely no assistance. The clear import of the fiat was that some $40,000 of equity that (facially at least) properly belonged to Ms.

Knight was going to end up in CIBC’s coffers, and no explanation had been provided as to why the Court should countenance that result. [ 13 ] As I sniff this file I find the scents of unjust enrichment and a creditor taking undue advantage of a debtor are melding in the air. [ 14 ] With CIBC’s counsel failing to provide any meaningful assistance and merely repeating the obvious, I was left to conduct my own inquiry. I did so.

Issues [15] The issues in this application are: 1. What is the general law pertaining to this situation? 2. Should judicial sale be ordered? 3. What cost order should be made at this stage? Analysis 1. What is the general law pertaining to this situation? [16] Generally in Saskatchewan, creditors taking realization proceedings against land seek leave for all the remediesthat are available. This is a cautious approach.

CIBC’s prayer for relief in its statement of claim reflects this practice, even in the face ofnot seeking leave to obtain some of the remedies it claims therein, and even in the face of para. 5 of its own claim. [17] From counsel’s letter, it appears CIBC’s position is that not having sought leave for judicial sale CIBC cannotnow claim it and – presumably – the Court cannot order it. That is not a position I can adopt. [18] This Court is a court of superior jurisdiction. As such, it has inherent jurisdiction and jurisdiction over a widevariety of matters dating back to English law. One such matter is sale.

Authority to order a judicially-supervised sale within mortgagerealization proceedings flows from s. 48 of the Chancery Procedure Amendment Act (UK), 1852 (UK) 15 & 16 Vict, c 86. This originaljurisdiction was carried forward under numerous pieces of legislation including The King’s Bench Act, SS 2023, c 28. This legislationsuperseded The Queen’s Bench Act, 1998, SS 1998, c Q-1.01 (rep), with the death of Queen Elizabeth and the ascension of King Charles.Section 10-2 of The King’s Bench Act confirms this Court’s jurisdiction under the laws of England as of 1870, as amended by subsequentstatutes.

Section 10-3 confirms this is a court of equity as well as law and that the laws of equity prevail. All of this goes to the generaljurisdiction of this Court. [19]

Section 10-20(1) of The King’s Bench Act is important to the case at hand. It provides for a relatively widejurisdiction regarding orders for sale of land: 10-20(1) In an action or matter relating to real property, if it appears necessary or expedient that the real property or any part of the realproperty should be sold: (

a) a judge may order the real property or part of the real property to be sold; and (

b) any party bound by the order who is in possession of the real property or in receipt of the rents and profits of the real property shalldeliver up that possession or receipt to the purchaser or to any other person directed by the order. [20] The overall historical context is thoroughly reviewed in Saskatoon Credit Union Ltd. v Goertz, (SK CA), [1989] 3 WWR 244 (Sask CA), I adopt that case and incorporate same into these reasons. [21] Finally, this historical and legislative jurisdiction is confirmed and expanded in Rule 10-46 of The Queen’sBench Rules.

Again, this rule confers a broad as opposed to narrow ability to sell land: 10-46(1) If in any cause or matter relating to real property the Court considers it necessary or expedient that all or any part of the realproperty should be sold, the Court may order the real property to be sold. [22] Saskatchewan law holds many cases on point. The power to direct a judicial sale and fashion the terms of anorder nisi is quite broad.

In Industrial Development Bank v Lees (1970), (SK CA), 14 DLR (3d) 612 (QL) (Sask CA), itwas held that this Court may, at any time prior to the final order for foreclosure, order judicial sale. Chief Justice Culliton reviewed thelegal history of such orders and at para. 23 stated: [23] In my opinion the power of sale so conferred upon the courts, both of the Northwest Territories, and of the province, was such thatit gave to these courts the right, in foreclosure proceedings, to make an order for sale whenever the court deemed it necessary orexpedient to do so, notwithstanding that an order nisi had been issued.

This, too, was the opinion expressed by Rimmer, L.M. in J. I.Case Co. v. Preston, supra [(1909), 12 WLR 12]. MacDonald, J. in McLean v. Badger, supra [ (SK KB), [1925] 4 DLR1021 (Sask KB)], also held that such a right of sale existed at common law. These judgments, in my opinion, affirmed the properpractice, and the practice which has been followed in this province since its inception.

Thus, in my respectful view, that was the law inthe Northwest Territories, at least since 1893, and has been the law of Saskatchewan since the province was created. [Emphasis added] [23] There have been cases specifically dealing with the situation where, as here, the land value exceeds the amountof the mortgage debt.

In Montreal Trust Co. of Canada v Olympia & York Developments Ltd. (Administrator of) (1998), 19 RPR (3d)111 (Ont Ct J), it was held that where the value of mortgaged lands exceeds the mortgagee’s claim and a windfall would accrue to themortgagee upon a foreclosure, a judicial sale should be ordered. That case was expressly adopted in St. Gregor Credit Union Ltd. vZimmer, 2004 SKQB 75 at para 15, 247 Sask R 230. Also see Leroy Credit Union Ltd. v Schroeder, 2006 SKQB 98. [24] This is the general legal framework pertaining to the present application, which I have considered and applied. 2.

Should judicial sale be ordered?

[ 25 ] CIBC and its counsel chose the evidence to be submitted on its application. In the affidavit of Rosana Salama (a bank official) sworn September 21, 2023 the amounts owing as of September 11, 2023 were: - The mortgage arrears were sworn to be $29,173.86. - The total owing was sworn to be $199,292.98 of which $191,922.94 was principal. - Interest accrued at 2.82% per annum. [ 26 ] The deponent also swore the value of the subject land to be between $220,000 and $240,000, based on a drive- by appraisal from September 2022.

Thus on CIBC’s own evidence there could be from $20,000 to $40,000 of equity in favour of the mortgagor. [ 27 ] CIBC proposes to see all the equity in the property vest in the bank through completion of a foreclosure. Despite affording CIBC a full opportunity to provide additional material, CIBC opted only to file counsel’s letter which reiterated the findings made in my first fiat. CIBC did not deal with any of the legal principles set out in this decision or the cases on point.

CIBC essentially told the Court it had decided to seek foreclosure only, and the Court should simply grant the order nisi for foreclosure. [ 28 ] I must follow the established legal principles governing judicial sale. By CIBC’s own evidence there is equity in this property. CIBC has no rightful claim to any equity above its mortgage debt plus allowable fees and costs. Justice and equity demand that a genuine attempt to preserve this equity for the mortgagor should be made. I am not prepared to grant the requested order nisi for foreclosure. I am prepared to grant an order nisi for sale by real estate listing. 3.

What cost order should be made at this stage? [ 29 ] I appreciate Ms. Knight has not participated in this action. However, CIBC and its counsel provided a response to this Court’s inquiry that was, in a word, underwhelming. I would have expected a brief to be filed, and perhaps even a supplemental affidavit explaining the situation from the bank’s perspective. What I received was nothing close to that, and what I received was of no assistance at all in resolving this issue. [ 30 ] The Foundational Rules should be referenced by counsel, and in particular Rules 1-2(2), 1-3 and 1-4.

These rules bind parties but also counsel. I note Rule 1-3(3)(

c) certainly applies. [ 31 ] I have also considered

Part 11 of The Queen’s Bench Rules. This confers a plenary jurisdiction on the Court to assess costs. In particular I have considered CIBC’s application for order nisi for foreclosure in the context of Rule 11-1(4)(a), (g), (i), (

j) and (k). CIBC was unsuccessful in that it sought but did not obtain an order nisi for foreclosure. CIBC did not consider the preservation of any equity for the debtor. CIBC offered no assistance to the Court and chose to make no meaningful submissions when provided with an opportunity to do so. [ 32 ] Counsel have a duty to assist the Court in a meaningful way.

It is not for counsel to merely dump a thorny legal problem onto a judge’s lap and say “Here, you figure it out.” It is not for counsel to ignore or avoid a direct inquiry from the Bench, particularly where the subject of that inquiry involves fairness, equity, and potential prejudice to a party. For guidance in this regard one need look no further than the Law Society of Saskatchewan, Code of Professional Conduct . In

section 5.1-1, Commentary 6, this is said: [6] When opposing interests are not represented, for example, in without notice or uncontested matters or in other situations in which the full proof and argument inherent in the adversarial system cannot be achieved, the lawyer must take particular care to be accurate, candid and comprehensive in presenting the client’s case so as to ensure that the tribunal is not misled. [ 33 ] In the very unique circumstances of this case I have decided to make a costs order against CIBC.

In some respects it may be symbolic but the message sent is important: mortgagees cannot act as they wish, with impunity. Their counsel must bear in mind they are officers of this Court and are not mere mouthpieces or debt collectors. [ 34 ] I therefore award costs of this application in the sum of $500 against CIBC payable in any event of the cause and payable forthwith, by applying that sum against the mortgage debt effective as of the date hereof.

Conclusion [ 35 ] CIBC’s application for an order nisi for foreclosure is hereby dismissed. [ 36 ] CIBC is granted an order nisi for sale by real estate listing and within 14 days of the date hereof shall submit a draft order for my consideration. The redemption period shall be 21 days. The draft order nisi shall set the initial reserve bid at $230,000 with a reasonable provision for reduction of same. The draft order nisi shall name an independent selling officer.

The amounts owing shall reflect the adjustment required by the costs ordered in this fiat. [ 37 ] Costs of this application in the sum of $500 are awarded against CIBC payable in any event of the cause and payable forthwith, by applying that sum against the mortgage debt effective as of the date hereof. J. R.W. DANYLIUK