Morin v. Royal Bank of Canada, 2023 NSCA 26

Nova Scotia Court of Appeal Citation: Morin v. Royal Bank of Canada , 2023 NSCA 26 Date: 20230406 Docket: CA 512840 Registry: Halifax Between: Alain Francois Morin Appellant v. Royal Bank of Canada and Petra G.A. Kamstra Respondents Judge: The Honourable Chief Justice Michael J. Wood Appeal Heard: February 2, 2023, in Halifax, Nova Scotia Subject: Foreclosure – Deficiency Judgment

Summary: RBC filed a Notice of Motion for deficiency judgment within the required 6 month period following the foreclosure sale. Contrary to Practice Memorandum #1 they used a solicitor’s affidavit rather than one from the mortgagee. There were other procedural deficiencies including failure to serve the motion materials on the defendant Morin at the time of filing. The hearing did not take place for two years by which time Morin had the materials and a mortgagee’s affidavit was filed by RBC.

Morin opposed the motion alleging non-compliance with the Rules , inadmissible hearsay evidence relied on by RBC and improper assessment of the property value. The hearing judge struck out some of the evidence filed by Morin as improper hearsay and opinion but did not respond to Morin’s criticism of the RBC evidence. Deficiency judgment was awarded based on an appraisal filed by RBC. Issues:

(1) Was the procedure unfair?

(2) Did the hearing judge err by relying on hearsay evidence from RBC?

(3) Did the judge err in the calculation of the amount of the deficiency? Result: The procedure followed by RBC did not comply with the Rules and Practice Memorandum in some respects but these deficiencies were ultimately rectified. Morin had a fair opportunity to present his arguments. The judge should have responded expressly to the Morin arguments on admissibility; however, the RBC evidence could have been used for purposes of assessing the reasonableness of the third party sale price which is the value to be used in the deficiency calculation.

Although the deficiency was calculated using the appraised value rather than sale price, this resulted in a judgment that was $15,000 more favourable to Morin. There was no palpable and overriding error in the calculation. Appeal dismissed without costs. This information sheet does not form part of the court’s judgment. Quotes must be from the judgment, not this cover sheet. The full court judgment consists of 16 pages.

Nova Scotia Court of Appeal Citation: Morin v. Royal Bank of Canada , 2023 NSCA 26 Date: 20230406 Docket: CA 512840 Registry: Halifax Between: Alain Francois Morin Appellant v. Royal Bank of Canada and Petra G.A. Kamstra Respondents Judges: Wood, C.J.N.S.; Bryson and Beaton, JJ.A. Appeal Heard: February 2, 2023, in Halifax, Nova Scotia Held: Appeal dismissed, per reasons for judgment of Wood, C.J.N.S.; Bryson and Beaton, JJ.A. concurring Counsel: Alain Francois Morin, appellant in person Joshua J.

Santimaw and Luke Godin, for the respondent Royal Bank of Canada Reasons for Judgment: [ 1 ] In Nova Scotia the process for realizing on a defaulted mortgage by way of foreclosure is found in Civil Procedure Rule 72 and Practice Memorandum #1 . [ 2 ] In this matter, the Royal Bank of Canada (“RBC”) commenced a foreclosure action against Alain Francois Morin and Petra G. Kamstra in relation to a mortgage on property located in Aylesford East, Kings County, Nova Scotia (“the Property”). RBC was the highest bidder at the foreclosure sale and subsequently resold the Property.

Ultimately, Justice Kevin Coady of the Nova Scotia Supreme Court allowed the RBC motion for deficiency judgment against Mr. Morin and Ms. Kamstra in the amount of $62,585.24 plus costs. [ 3 ] Mr. Morin appeals the deficiency judgment decision on multiple grounds including failure of RBC to comply with the Civil Procedure Rules , reliance on inadmissible evidence, abuse of process, and judicial bias. [ 4 ] The decision to award a deficiency judgment is discretionary. I am satisfied that, despite some deficiencies in the process, the circumstances in this case do not justify setting aside the RBC judgment.

History of the Deficiency Judgment Motion [ 5 ] Mr. Morin and Ms. Kamstra entered into a collateral mortgage with RBC in April 2012 securing a maximum of $266,000. At the time, RBC had an appraisal valuing the Property at this amount. [ 6 ] In February 2017, Mr. Morin conveyed his interest in the Property to Ms. Kamstra. In 2018, he advised RBC of the transfer and provided his contact information in Alberta, where he resided. He informed RBC that he would accept service of any documents by email.

The mortgage went into default, and on September 13, 2018 RBC commenced the foreclosure proceeding. [ 7 ] In accordance with his request, the Notice of Action was served on Mr. Morin by email. Neither defendant filed a defence, and an Order for Foreclosure, Sale and Possession was issued on December 11, 2018. [ 8 ] The public foreclosure sale took place on February 8, 2019 and RBC was the highest bidder. RBC listed the Property for sale with Royal LePage Atlantic on August 14, 2019 at a price of $143,000. An offer of $122,000 was received on August 23, 2019 and RBC countered at $130,000.

This was accepted and the transaction closed on September 20, 2019. [ 9 ] On August 16, 2019, RBC filed a Notice of Motion for deficiency judgment pursuant to Rule 72.12. The hearing date was September 17, 2019 at 9:30 a.m. The evidence in support of the motion was the affidavit of counsel for RBC, Mr. Luke C. Godin. Mr. Godin’s affidavit attached, as exhibits, various court issued documents as well as an appraisal of the Property prepared by Rebekah Wetmore dated July 19, 2019 (“the Wetmore appraisal”), a comparative market analysis prepared by Laurie-Lee Cooke of Royal LePage

Atlantic dated August 13, 2019 (“the Cooke market analysis”) and a brokerage agreement with a list price for the Property of $143,000. [ 10 ] The Wetmore appraisal said the Property was worth $130,000 in its current condition and $145,000 if it was cleaned. The Cooke market analysis compared the Property to the sales of similar homes in the vicinity and opined it was worth between $130,000 and $135,000. It recommended listing the Property for sale at $139,000. [ 11 ] Mr. Morin was aware there was a six-month time period within which a motion for deficiency judgment was to be filed.

He arranged to have an acquaintance attend the Prothonotary’s office in Halifax on August 28, 2019 to see if a motion had been filed. That person viewed the court files and made copies of some of the motion documents which he forwarded to Mr. Morin by email. [ 12 ] Although Mr. Morin was aware RBC was making a motion for deficiency judgment, the documents had not been delivered to him as required by the Civil Procedure Rules . On August 30, 2019, Mr. Morin sent an email to counsel for RBC demanding service by email in accordance with the agreed procedure.

He made similar requests on September 12 and 13, 2019 and received the documents from RBC on September 13 th . [ 13 ] Also, on September 13, 2019, counsel for RBC wrote to the court indicating he believed Mr. Morin would be contesting the motion and advising that Ms. Kamstra had not been served. Counsel requested an adjournment of the matter to allow additional time for service and filing of documents. The chambers judge issued an order on September 16, 2019 adjourning the motion to November 29, 2019. Mr.

Morin was not notified of these communications between RBC and the court until after the adjournment was granted. [ 14 ] On September 16, 2019, Mr. Morin filed a brief in opposition to the RBC motion along with his affidavit attaching the email correspondence with counsel for RBC requesting service of the documents. In addition, he filed an affidavit of Dr.

Bob Uttl, a professor at Mount Royal University, attaching various publicly available documents concerning market conditions and property values in Nova Scotia and, in particular, the Annapolis Valley where the Property was located. [ 15 ] For reasons not germane to this appeal, the RBC motion was adjourned further and ultimately heard on September 16, 2021. A decision was issued on January 14, 2022 granting the deficiency judgment in the amount requested by RBC. The deficiency was calculated using the Wetmore appraisal value of $145,000 for the Property.

Hearing and Decision [ 16 ] To provide context for the issues raised by Mr. Morin on appeal, I will review the arguments advanced by the parties before the hearing judge as well as his decision. [ 17 ] Mr. Morin’s initial brief dated September 16, 2019 raised a number of arguments as to why RBC was not entitled to a deficiency judgment. The significant ones for purposes of this appeal were: 1. RBC failed to comply with the Rules and Practice Memorandum #1 , contrary to the directions given in Royal Bank of Canada v. Christanson , 2016 NSSC 70 . 2. The affidavit of Mr.

Godin did not contain admissible evidence because the attached documents were hearsay. 3. The value of the Property exceeded the amount of the RBC claim which meant there was no shortfall. [ 18 ] Mr. Morin’s brief cited Rule 72.12(1)(

a) requiring the filing of a Notice of Motion for assessment of deficiency no later than six months after the effective date of the default judgment. Rule 72.11(3)(

a) defines the effective date of the default judgment as 15 days after the foreclosure sale, if the mortgagee purchases the property. Mr. Morin noted that Practice Memorandum #1 requires a motion for deficiency judgment to be supported by an affidavit of the mortgagee and specifies a solicitor’s affidavit is not to be used. Since the RBC motion relied on the affidavit of Mr. Godin, Mr. Morin argued RBC did not file a proper motion within the six month time period. [ 19 ] Mr.

Morin’s brief also referenced Rule 72.12(3) requiring notice of the deficiency motion to be delivered no less than 10 days before the hearing date. His affidavit said he was not served until September 13 th . [ 20 ] With respect to the exhibits to Mr. Godin’s affidavit, the brief said they were not admissible because they were hearsay, and Mr. Godin had no personal knowledge of them. According to Mr. Morin, this meant there was no admissible evidence before the court on the deficiency motion. Mr.

Morin also noted the Wetmore appraisal included the following qualification: Verification of Third Party Information: The analysis set out in this report relied on written and verbal information obtained from a variety of sources we considered reliable. Unless otherwise stated herein, we did not verify client-supplied information, which we believed to be correct.

The mandate for the appraisal did not require a report prepared to the standard appropriate for court purposes or for arbitration, so we did not fully document or confirm by reference to primary sources all information herein. [Emphasis added] [ 21 ] With respect to the value of the Property, Mr. Morin’s brief argued the 2012 appraisal of $266,000, together with the documents attached to Dr. Uttl’s affidavit, demonstrated the Property was worth more than the RBC claim.

The materials attached to the Uttl affidavit included the following: • Statistics Canada listing of the 2018 median assessed value for properties in Nova Scotia. • Nova Scotia Association of Realtors listing of 2019 median sale prices for properties in the Annapolis Valley. • RE/MAX Canada

summary of 2018 average sale prices for homes in Kings County.

• Property Valuation Services Corporation of Nova Scotia assessed values from 2015 to 2019 for the Property as well as a comparison of assessed value and sale price for properties in the vicinity of the mortgaged property which were sold between January 2017 and September 2019. [ 22 ] On March 5, 2020, RBC filed an affidavit of Rene Saulnier, Branch Manager with RBC. Attached were various exhibits including the Wetmore appraisal, the Cooke market analysis, the listing agreement and property condition reports prepared by Veranova Properties Limited, a property manager engaged by RBC.

In addition, RBC filed a brief in support of the motion. [ 23 ] The RBC brief responded to some of the arguments raised in the Morin brief, but did not address the concerns about the hearsay nature of the exhibits to the RBC affidavits. The brief cited Rule 22.15(1) which states the rules of evidence apply to materials filed on motions. Relying on this principle, RBC argued the opinions found in the affidavit of Dr. Uttl should not be admitted because of non-compliance with the expert witness provisions in Rule 55.

Their brief said it was the function of the Court to interpret the documentation and come to its own conclusions with respect to the value of the Property and not for Dr. Uttl to express his opinion on that question. [ 24 ] RBC also argued the exhibits to the Uttl affidavit should not be admitted but did not specify which ones or why they should be struck. [ 25 ] The RBC brief said the sale price of $130,000 represented the value of the Property but went on to calculate the deficiency using the Wetmore appraisal value of $145,000. [ 26 ] Mr.

Morin filed a responding brief on March 23, 2020 and repeated many of the arguments from his September 2019 brief. His position was the deficiencies in the initial motion materials could not be rectified by subsequently filing a mortgagee’s affidavit attaching the same hearsay documents. He repeated his argument he had not been served with the motion materials when they were filed and did not consent to the adjournment of the September 17, 2019 hearing.

He said this was part of a pattern of conduct by RBC which flouted the requirements of the Rules as well as the directions provided to foreclosure practitioners in Royal Bank of Canada v. Christanson . [ 27 ] With respect to the RBC submissions concerning the Uttl affidavit, Mr. Morin pointed out the challenged portions were a series of mathematical calculations of value using the information from the attached public documents.

He said these did not amount to inadmissible opinions because the court could confirm the result by performing the same calculations. [ 28 ] The hearing of the deficiency motion took place on September 16, 2021. The hearing judge started by considering the RBC challenge to the Uttl affidavit. With leave of the Court, Dr. Uttl was permitted to act as an agent for Mr. Morin at the hearing. Counsel for RBC was not called upon to make oral submissions on the affidavit issue. After hearing from Dr. Uttl, the judge struck out the clauses in his affidavit containing calculations of value.

He said they were opinion and Rule 55 had not been complied with. [ 29 ] The judge also struck out all of the exhibits attached to the Uttl affidavit on the basis they were hearsay and not relevant. After this decision, Dr. Uttl requested the RBC evidence also be considered hearsay and the exhibits attached to the Godin and Saulnier affidavits be struck out. The judge refused to do so for the following reasons: THE COURT: Okay. Well, let’s go through what – we’ll get – this affidavit from the Bank is no different than the thousands of affidavits from banks that I’ve dealt with over the last 18 years.

None – and that is based in Rules and Practice Memorandum. [ 30 ] At the conclusion of the hearing, the judge reserved his decision and on January 14, 2022 released written reasons granting deficiency judgment to RBC in the amount requested ( 2022 NSSC 5 ). The quantum was reached using the Wetmore appraisal valuation. [ 31 ] In the decision, the hearing judge rejected Mr. Morin’s argument he had not received proper service of the deficiency motion, on the basis the documents were delivered to him long before the actual hearing date in September 2021. [ 32 ] The decision briefly addressed Mr.

Morin’s concerns the Wetmore appraisal was flawed: [17] Mr. Morin alleges the 2018 appraisal was "extraordinarily low, unreasonable and also fatally flawed". I see no merit in this argument. The author was fully qualified and the appraisal reflected what she saw on the ground. I refer to Royal Bank of Canada v. Marjen Investments Ltd. , supra , at paragraph 28: The primary purpose of the appraisal reports, on an application for a deficiency, is to assist the Court in fixing a fair value when the mortgagee has purchased the property at the Sheriff’s sale, often for a nominal amount, and has not resold it.

Where the property has been resold, an appraisal report provides the Court with a hypothetical value to which to compare the price actually realized. If there is little difference, the inquiry into the reasonableness of the resale price is simplified. Where, however, there is a significant difference in the two values, the Court will more closely scrutinize the circumstances surrounding the resale. I am satisfied that the 2018 appraisal reflected the real value of the property at that time. Also, the best indicator of value is the market and I am satisfied that the market reflected what appeared in the appraisal.

I find no merit in this argument. [ 33 ] The judge rejected Mr. Morin’s arguments concerning RBC’s inadequate efforts to sell the property, the weight to be given to the 2012 appraisal and his lack of consent to the adjournment of the September 17, 2019 date. The decision then granted deficiency judgment to RBC for the following reasons: [21] I am satisfied that this Motion for Deficiency was conducted in compliance with the Rules, the practice memorandum and the jurisprudence. I grant RBC a deficiency of $62,585.24.

If the parties cannot agree on costs, I will accept written submissions within 30 days of this decision. Issues

[34] The Notice of Appeal filed by Mr. Morin describes the grounds as follows:

(1) GROUND #1 - BIAS, DENIAL OF OPPORTUNITY TO BE HEARD, PREJUDGMENT: Justice Coady's conduct evidences (a)reasonable apprehension of bias and alignment with the RBC's counsels, (

b) actual bias, (

c) denial of procedural fairness, (

d) denial of anopportunity to be heard, and (

e) improper reversal of burden of proof.

(2) GROUND #2 - DEFICIENCY, IF ANY, WAS EXTINGUISHED: Justice Coady erred in finding that the Royal Bank of Canada(“RBC”) filed its deficiency motion within the six-month limitation period and erred in finding that the RBC complied with the Rule72.12, Practice Memorandum #1, and jurisprudence.

(3) GROUND #3 - RBC FAILED TO SERVE DEFENDANTS: Justice Coady erred in finding that the RBC Skeleton DeficiencyMotion was served in compliance with the Rules, Practice Memorandum #1, and jurisprudence.

(4) GROUND #4 - RBC HAD NO BASIS FOR CALCULATION OF DEFICIENCY: Justice Coady erred in relying on a hearsay,unsworn, non-expert, lay opinion appraisal prepared on July 19, 2019 by Rebekah Wetmore (“Wetmore Appraisal” erroneously referredto by Justice Coady as “The 2018 Appraisal”) and on a hearsay, unsworn, non-expert, lay opinion comparative market analysis preparedMs. Cooke.

(5) GROUND #5 - RBC IMPROPERLY ADJOURNED THE HEARING IN AN ATTEMPT TO GET AROUND SIX MONTHSLIMITATION: Justice Coady erred in finding that the RBC’s ex-parte, without notice, motion to adjourn September 17, 2019 hearingwas proper rather than astonishing affront to administration of justice in Nova Scotia.

(6) GROUND #6 - RBC MADE NO EFFORT TO SELL THE PROPERTY: Justice Coady erred in finding that the RBC was“diligent in its' effort to sell the property”.

(7) GROUND #7 - RBC'S ALLEGED 45% DROP IN THE PROPERTY VALUE: Justice Coady erred in finding that the alleged45% drop in the value of the Property was explained by “comparing two appraisals” ($266,000 R&J Appraisal used by the RBC toextend the mortgage and the inadmissible hearsay $145,000 Wetmore Appraisal used by the RBC to value the Property for determinationof the deficiency).

(8) GROUND #8 - RBC'S ABUSE OF PROCESS: Justice Coady erred in not considering at all and not finding that the RBC's conductamounted to abuse of process that brought administration of justice in disrepute.

(9) GROUND #9 - THE PROPERTY VALUE FAR EXCEEDED THE RBC'S LEGITIMATE CLAIM: Justice Coady erred in notconsidering the evidence that the Property's value far exceeded the RBC's legitimate claim. [35] The arguments raised by Mr. Morin can be consolidated and addressed under the following issues: 1. Was the procedure followed for the deficiency motion and hearing unfair to Mr. Morin? 2. Did the hearing judge make an error of law by relying on hearsay evidence submitted by RBC? 3. Did the hearing judge make an error in the calculation of the deficiency judgment amount?

Standard of Review [36] With respect to the first issue, there is no standard of review analysis required because procedural fairness arises for the firsttime on appeal. Bourgeois J.A. described the applicable test in Wolfridge Farm Ltd. V. Bonang, 2016 NSCA 33: There is no standard of review analysis engaged when considering a claim of denial of natural justice or proceduralfairness. In Waterman v. Waterman, 2014 NSCA 110, Justice Beveridge explained: [23] The third ground of appeal argues there was a breach of the rules of natural justice or procedural fairness.

This is a question of law.Our review does not engage concerns associated with the concept of a standard of review. (See Bellefontaine v. Slawter, 2012 NSCA48 at ¶ 18.) The adjudicator either fulfilled the duty required or did not (See Canada (Citizenship and Immigration) v. Khosa, 2009 SCC12 at ¶ 43; Nova Scotia (Community Services) v. N.N.M., 2008 NSCA 69 at ¶ 39).

In other words, either there was a breach of theprinciples of natural justice, or there was not. [37] The second issue raises a question of law and is assessed using the standard of correctness. [38] The hearing judge’s assessment of the amount of the deficiency judgement engages a deferential review on appeal. In theleading case of Royal Bank of Canada v. Marjan Investments Ltd., 1998 NSCA 37 this Court said: In Montreal Trust Co. of Canada v. Grab (1995), 1995 NSCA 40 , 139 N.S.R. (2d) 343, this Court summarized the test on anappeal from a decision fixing the deficiency judgment.

Roscoe, J.A., writing for the Court, said at p. 346: That we might have come to a contrary conclusion is not sufficient. Although this Court must review the record carefully to ensure thetrial judge did not make findings in the absence of evidence or fail to consider material evidence, we cannot substitute our opinion orassessment of the evidence for that of the trial judge. In other words, this Court cannot re-try the issue.

We have the duty to re-examinethe conclusions of the Chambers Judge; however, the authorities are also clear that the Appeal Court's jurisdiction in this regard hasdefined limits and, particularly, should not be exercised unless it can be clearly demonstrated that she made some manifest or palpableand overriding error which affected her assessment of the facts. In the absence of such an error, it is not the Appeal Court's function to"substitute its assessment of the balance of probability for the findings of the judge who presided at trial." See: Stein et al v.

The Ship"Kathy K" et al, (SCC), [1976] 2 S.C.R. 802; 6 N.R. 359; 62 D.L.R. (3d) 1 (S.C.C.)

Analysis Issue #1 – Was the procedure followed for the deficiency motion and hearing unfair to Mr. Morin? [ 39 ] This issue encompasses the arguments made by Mr. Morin in relation to grounds #1, #2, #3, #5, and #8 in the Notice of Appeal. They can be summarized as follows: 1. RBC failed to follow the Rules and Practice Memorandum #1 by doing the following: a. Filing a solicitor’s affidavit in support of the motion contrary to Practice Memorandum #1 which says this is not permissible. b. Not delivering the motion documents to Mr. Morin as required by Rule 31.15. c.

Contacting the Court and requesting an adjournment of the September 17, 2019 motion without the knowledge or consent of Mr. Morin. 2. The hearing judge did not consider or respond to the arguments made by Mr. Morin and, in particular, the inadmissibility of the exhibits to the RBC affidavits. [ 40 ] On appeal, counsel for RBC acknowledged it should not have filed a solicitor’s affidavit on the initial motion for deficiency judgment, but says this was rectified by subsequently filing a mortgagee’s affidavit attaching the same documents. RBC also agreed the motion materials should have been served on Mr.

Morin at the time of filing, but say he was not prejudiced because he ultimately received these and the motion was dealt with on the merits in 2021. [ 41 ] In its factum, RBC maintains the hearing judge properly excluded the opinion and exhibits in Dr. Uttl’s affidavit because Rule 22.15(1) requires the application of the rules of evidence to motions.

The factum goes on to say the Wetmore appraisal and Cooke market analysis attached to the RBC affidavits should not be struck because presenting evidence in this fashion reflected a long standing practice used by mortgagees in deficiency motions. [ 42 ] The position of RBC is the hearing judge’s decision to award the deficiency judgment does not demonstrate errors requiring appellate intervention. Counsel for RBC argued that, despite any perception of unfairness, the deficiency motion was ultimately determined on its merits. [ 43 ] In his submissions before the hearing judge, and on appeal, Mr.

Morin put considerable emphasis on the decision in Christanson . He argued the procedure followed by RBC was comparable to the one criticized by the court in that case. I do not agree. [ 44 ] In Christanson , the practice under scrutiny involved the mortgagee filing a Notice of Motion for deficiency judgment within the mandatory six-month time period without adequate supporting evidence. There was no intention on the part of counsel to serve the documents and proceed to a hearing on the designated date.

Counsel then unilaterally amended the Notice of Motion to specify a new hearing date without any review by a judge or the consent of the mortgagor (who was unaware a deficiency proceeding had been initiated). Before the hearing the mortgagee would then file an affidavit with the required supporting evidence. The result was the mortgagee was able to effectively extend the six-month period for filing a deficiency motion without any judicial review. [ 45 ] In this case, RBC filed a Notice of Motion and supporting affidavit.

Although it should not have been a solicitor’s affidavit and service should have been effected immediately, the adjournment of the hearing date was done by a judge. Similarly, subsequent adjournments which eventually led to the September 2021 hearing received judicial permission. This differentiates this case from the circumstances in Christanson . [ 46 ] The shortfalls in the process followed by RBC are ones which a judge considering a deficiency motion could take into account in deciding how to exercise their discretion.

They do not require the motion to be dismissed, particularly where there is ultimately no real prejudice. [ 47 ] Mr. Morin, and his agent, Dr. Uttl, did their best to educate themselves on the foreclosure process in Nova Scotia by reviewing the Rules and conducting legal research. They prepared written briefs setting out comprehensible legal and factual arguments and filed affidavits which generally complied with the requirements of the Rules . [ 48 ] Mr. Morin advanced procedural arguments concerning RBC’s non- compliance with the Rules .

With respect to the merits of the RBC motion he argued the exhibits attached to the affidavits of Mr. Godin and Mr. Saulnier were not admissible because they were hearsay. Despite Mr. Morin raising this argument in two briefs and during the hearing, the hearing judge never expressly dealt with this issue. He did, however, strike out the exhibits to Dr. Uttl’s affidavit. Mr. Morin’s arguments of judicial bias are based, in part, on this apparent differential treatment. [ 49 ] RBC seemed to apply a different admissibility standard to Mr. Morin’s evidence than used for its own.

Before the hearing judge, RBC relied on Rule 22.15(1) to say the rules of evidence should apply to the motion. They argued the opinions found in Dr. Uttl’s affidavit should not be admitted because there was no compliance with the expert witness requirements in Rule 55. [ 50 ] In support of the motion RBC filed opinion evidence in the form of the Wetmore appraisal and Cooke market analysis which did not comply with Rule 55.

The materials filed did not include descriptions of the qualifications of the authors of those documents. [ 51 ] A litigant is entitled to know the reasons for a judicial decision which affects them, particularly where they have not been successful. Mr. Morin raised an appropriate issue concerning the RBC evidence in light of the provisions of the Rules and counsel for RBC’s insistence that the rules of evidence be applied on the motion. [ 52 ] It would have been preferable for the hearing judge to have provided a clear response to Mr. Morin explaining why he was

prepared to consider the RBC evidence. Saying the affidavits were similar to those in other proceedings does not do this. [ 53 ] The concerns about the process adopted by RBC and the hearing judge do not justify appellate intervention. The materials filed by RBC were appropriate for purposes of assessing the merits of the motion and the Uttl affidavit included materials of marginal relevance to the issue before the court. Despite the problems with the approach taken by RBC, the merits of the motion were ultimately dealt with. Mr. Morin had a fair opportunity to present his arguments.

I would dismiss this ground of appeal. Issue #2 – Did the hearing judge make an error of law by relying on hearsay evidence submitted by RBC? [ 54 ] When, as here, the mortgaged property has been purchased by the mortgagee at the foreclosure sale and resold to a third party, Rule 72.13 provides the criteria for assessing the deficiency claim: 72.13 Calculation of deficiency

(1) A judge must calculate the deficiency by ascertaining the amount of the mortgage debt and ascertaining the applicable of the following credits, and subtracting the credits from the debt: (

a) the amount realized from the secured property, if it has been sold to an arms-length purchaser; …

(4) The amount realized from the security, or the value of the secured property, must be ascertained in the applicable of the following circumstances: (

a) the balance of the sale price paid to the mortgagee, if the property is sold by public auction or approved agreement to a person other than the mortgagee; (

b) the amount reasonably realized on resale, if the property is sold by public auction to the mortgagee or its agent, it is resold by the mortgagee, and the resale price received by the mortgagee is both reasonable and greater than the bid ; (

c) the amount bid by, or on behalf of, the mortgagee, if the property is sold by public auction to the mortgagee and the resale price or the value of the property is less than the bid; (

d) the value of the property, in all other circumstances. [Emphasis added] [ 55 ] As this Rule provides, once the property has been purchased by the mortgagee and resold to a third party, the deficiency calculation should focus on the reasonableness of the resale price. In the seminal case of Royal Bank of Canada v. Marjen Investments Ltd ., this Court said: The primary purpose of the appraisal reports, on an application for a deficiency, is to assist the Court in fixing a fair value when the mortgagee has purchased the property at the Sheriff’s sale, often for a nominal amount, and has not resold it.

Where the property has been resold, an appraisal report provides the Court with a hypothetical value to which to compare the price actually realized. If there is little difference, the inquiry into the reasonableness of the resale price is simplified. Where, however, there is a significant difference in the two values, the Court will more closely scrutinize the circumstances surrounding the resale. … The Court's focus on an application for deficiency judgment on foreclosure is to ensure that the mortgagee recovers no more than “is just and reasonable” (per Hart, J.A. in Adshade, supra ).

When the mortgagee has purchased the property at the Sheriff’s sale, and applies for a deficiency judgment, prior to resale, it is reasonable for the Court to look to objective evidence of value (per Hallett, J.A. in Nova Scotia Savings and Loan v. MacKay, supra ). It may be that the price paid by the mortgagee at the sale is an acceptable amount, particularly where there has been competitive bidding. On the other hand, the purchase price may be nominal, in which case, it is appropriate to assign a more realistic value.

This ensures that the mortgagee does not, after obtaining a deficiency judgment, resell the property for an amount greater than the price paid at the Sheriff’s sale and thereby effect double recovery. Where the property has not been resold, the best evidence of value is generally established through appraisals. When the property has been resold, however, and, particularly, when subjected to vigorous marketing efforts, as in Offman, supra , the Court should generally not depart from the selling price. Appraisal reports are a best guess, albeit by a person experienced in the real estate field.

It is the market that actually determines the value of the property. [Emphasis added] [ 56 ] The starting point of the deficiency calculation is the assessment of the reasonableness of the sale price. This can be done by examining the circumstances of the sale including whether it was publicly listed with a recognized brokerage firm, the list price, offers and counter-offers, the length of exposure to the market, and other factors. [ 57 ] In this case, the contents of the Wetmore appraisal and Cooke market analysis were not within the personal knowledge of Rene Saulnier, the RBC affiant.

Despite this, the hearing judge was permitted to consider those documents in his assessment of the reasonableness of the sale price under Rule 72.13 because they represent information known to RBC when it negotiated the agreement of purchase and sale. [ 58 ] An example of the permissible use of evidence which might otherwise be considered hearsay in assessing reasonableness is MacKean v. Royal & Sun Alliance Insurance Company of Canada , 2015 NSCA 33 .

Royal & Sun Alliance had settled their insured’s claim for injuries arising out of a collision with an uninsured driver and were pursuing a subrogated claim against him. The issue was the

reasonableness of the settlement between an insurer and their client and how this could be used in calculating the judgment against the uninsured driver. The Court permitted reliance on third party materials which demonstrated the reasonableness of the settlement for the following reasons: [54] The motions judge expressed some concern about the admissibility of some of the evidence tendered by Royal through its own witnesses. Such a practice would accord with assessing the reasonableness of settlement because it describes what Royal knew when it settled.

Nevertheless, some admissible evidence from the plaintiffs should be tendered so that the Court can have confidence that settlement was reasonable in light of the likely recovery by the plaintiffs. [Emphasis added] [ 59 ] The listing agreement, agreement of purchase and sale and the negotiation of the sale price were within the knowledge of the RBC affiant and therefore, strictly speaking, not hearsay.

The Wetmore appraisal and Cooke market analysis could be admitted to show what RBC knew when they settled on the price of $130,000 for the Property. [ 60 ] I am not satisfied the hearing judge made an error of law by considering the evidence attached to the affidavits of Mr. Godin and Mr. Saulnier. I would not allow this ground of appeal. Issue #3 – Did the hearing judge make an error in the calculation of the Deficiency Judgment amount? [ 61 ] The only part of the deficiency calculation placed in issue was the value to be attributed to the Property.

This meant the task of the hearing judge was to assess the reasonableness of the sale price obtained by RBC. Although the price was $130,000, RBC asked the judge to use $145,000 in his calculation. Even if the hearing judge should not have relied on the Wetmore appraisal to establish the Property value, this worked to the advantage of Mr. Morin. [ 62 ] The hearing judge had evidence which would assist him in determining the reasonableness of the sale price. The fact the Property was publicly listed with a broker and exposed to the market supports the price obtained as reflecting actual value.

The Wetmore appraisal and Cooke market analysis would carry less weight because they reflect opinions about what the market might pay; however, they may assist in the reasonableness assessment. [ 63 ] The higher appraisal from 2012 is not irrelevant, but it represents an opinion of value that is dated and reflective of the real estate market and Property condition at that point in time.

There is no reason it should carry significant weight in deciding whether the 2019 sale price was reasonable. [ 64 ] I am satisfied the amount of the deficiency judgment falls within the range that could be supported by the materials filed on the motion. It does not represent a palpable and overriding error by the hearing judge and I would not allow this ground of appeal. Disposition [ 65 ] For the above reasons, I conclude Mr. Morin’s appeal should be dismissed. In the circumstances, the parties shall bear their own costs. Wood, C.J.N.S. Concurred in: Bryson, J.A. Beaton, J.A.