Royal Bank of Canada v. Robertson, 2016 NSSC 176

SUPREME COURT OF Nova Scotia Citation: Royal Bank of Canada v. Robertson , 2016 NSSC 176 Date: 20160705 Docket: Hfx No. 425472 Registry: Halifax Between: Royal Bank of Canada Plaintiff v. Glenn Douglas Robertson and Amber Charlotte de Vos Defendants Docket: Hfx No. 437076 Royal Bank of Canada Plaintiff v. Norman Doucet Defendant Decision Judge: The Honourable Justice Gerald R.P. Moir Heard: April 29, 2016 and May 5, 2016, in Halifax, Nova Scotia Counsel: Joshua J. Santimaw, for the Plaintiff ex parte in Robertson Ian D.

Brown, for the Plaintiff ex parte in Doucet Introduction [ 1 ] Prothonotary McInnes refused motions for orders confirming sale and suggested the plaintiffs make new motions in chambers where the judge has discretion under Rule 2 – General that a prothonotary does not possess. [ 2 ] Orders for foreclosure and sale required the plaintiffs to give fifteen days’ notice to each subsequent encumbrancer by registered mail. Notices were mailed and sales were held.

If the fifteen days begins to run when the notice is delivered to the postal service, then the required notice may have been given depending on how time is calculated under an order. If it runs from a later time, such as when the subsequent encumbrancer signed for the envelope, then the plaintiffs did not give the required notice in time. Issues

[3] The cases raise two issues: 1. At what point can the notice be said to have been given? 2. Do we apply the

interpretation provisions of the Civil Procedure Rules when calculating fifteen days under a court order? [4] These questions are to be answered in light of the historical context of the provision in orders for foreclosure and sale forbinding subsequent encumbrancers by special notice and the practice surrounding the notice, of which the orders would be cognizant andby which the words of the order are contextualized. I think the practice, and what registered mail is and was about, are subjects forjudicial notice. [5] We shall begin with principles for interpreting court orders.

Among other things, those principles import Professor Driedger’scontextual approach to interpreting statutes. So, we shall examine the external context, including the history of related statutes, rules ofcourt, rules of practice, and the internal context. Finally, we will set out a contextualized

interpretation, but one that also has regard to theprinciple of commercial efficacy. Interpreting Court Orders [6] The orders in these cases follow the order for foreclosure and sale standardized in Practice Memorandum No. 1. They requirethat “the plaintiff shall give at least fifteen days’ notice of public auction… to each recorded subsequent encumbrancer by registered orcertified mail”. Does this mean notice is given when a properly addressed envelope is delivered to Canada Post with a requisition fordelivery by registered mail?

Or, does it mean notice is given when a postal worker hands the envelope to an individual or leaves a card? Or, when an individual actually signs for the envelope to accept delivery? [7] Counsel drew my attention to Justice Haliburton’s decision in Trimper v. McClement, [1989] N.S.J. No. 13 (N.S. Co. Ct.),which concerned a provision in the Small Claims Court Act for “service of all documents… by personal service, registered mail, orsubstituted service…” (para. 4). Some other judges had held “the ‘sending’ of a registered letter will be… effective service unless thereis evidence to the contrary…” (para. 7).

However, Justice Haliburton was of the view that “it is not the act of ‘sending’ the registeredmail… which will effect ‘service’, but rather it is the presumption that the party who signed for and ‘received’ it was the addressee, orsomeone under his authority” (para. 13). [8] Counsel also referred to Hébert v. Household Trust Co., (NB CA), [1996] N.B.J. No. 599 (C.A.). NewBrunswick legislation for foreclosure by power of sale required the mortgagee to serve a notice of the time and place of sale personallyor “… by registered or certified mail addressed to the mortgagor at the latest address…” (para. 40).

Justice Bastarache, then of theCourt of Appeal, wrote for the majority. “I cannot accept the argument that claiming the letter is essential under… [the legislation]. Such a requirement would be contrary to the object of the Act.” (para. 17). The object was to “facilitate service in the case of a debtorwho leaves with no forwarding address or who seeks to evade personal service.” (para. 17). [9] I do not find Trimper or Hébert helpful for deciding the issue raised in the present cases. In both decisions, registered mail wasan alternative to personal service and was closely associated with substitute service.

The order I have to interpret does not provide forregistered mail as an alternative to personal service. Further, I have to interpret an order rather than legislation. Furthermore, the ordercontemplates an imminent deadline, the date when the sale will be held. There was no such imminent deadline in Trimper or Hébert. [10] Therefore, I must apply general principles for interpreting court orders. There is not much Canadian authority on this subject,but there is some. First, a word about what we are not discussing. [11] The

interpretation to be given to a statute or a contract is a question of law. No deference is owed on review. The

interpretationrequires an objective assessment and correctness. I think the same must go for

interpretation of orders, except for one kind. [12] “The motion judge’s

interpretation of his own decision is entitled to considerable deference.”: Boily v. Carleton CondominiumCorp. No. 145, 2014 ONCA 574 at para. 71. The same must be true for a judge’s

interpretation of his or her own order. Unlike whenascertaining Parliamentary intent or the intention of contracting parties, it may be that a judge who is ascertaining only his or her ownintent is entitled to some subjectivity. [13] There will also be cases when the interpreting judge has the benefit of an oral or written record of the decision, which the orderimplements.

If the judge did not change his or her mind, it may be necessary to conform the order to the decision. [14] Allowing for those inapplicable possibilities, one can say with Justice McEwen at para. 18 of Canadian National Railway Co. v.Holmes, 2015 ONSC 3038: “When interpreting an order, a Court will use accepted principles of statutory and contractual

interpretationto ascertain the intent of the ordering judge” (para. 18). For that proposition, Justice McEwen cited L’Homme v. Pliskevicius Estate,2011 ONSC 6102. [15] Principles of statutory and contractual

interpretation are “analogous” (L’Homme, para. 23) to the principles that are to beapplied when construing “the intent of the ordering judge” (para. 22). Justice Crane mentioned first Professor Driedger’s principle ofcontextualized statutory

interpretation, which was adopted by Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R.27 (para. 24 of L’Homme). He says that general principles of contractual

interpretation have “marked similarities” (para. 25) to theDriedger approach. [16] Some controversy exists about the relationship between text and context when one applies the principle of commercial efficacyin contractual

interpretation. The controversy stems from Eli Lilly & Co. v. Novopharm Ltd., (SCC), [1998] S.C.J. No.59. [17] Mr. Hall writes on this subject at pp. 38 and 39 of Geoff R. Hall Canadian Contractual

Interpretation Law, 2nd ed.(LexisNexis, 2012, Markham). It is an accepted precept in the

interpretation of a commercial contract that “an

interpretation which is

commercially absurd is to be avoided” (p. 38). Mr. Hall points out that “courts have struggled with the question of how far a contextualanalysis can depart from the words of an agreement in order to avoid a commercially absurd outcome” (p. 38). This raises “something ofan open question”: In this regard, the precise balance between text and context remains something of an open question, particularly after the Supreme Courtof Canada’s decision in Eli Lilly, which emphasized text over context.

It also suggested that in the absence of ambiguity, it is the text,not the commercially reasonable outcome, which must prevail. (pp. 38-39) [18] Mr. Hall also explains that “The commercial efficacy principle is grounded in the intentions of the parties”: p. 39. He quotesfrom Schuler A.G. v.

Wickman Machine Tool Sales Ltd., [1974] A.C. 235 at 251 (H.L.): “The more unreasonable the result the moreunlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intentionabundantly clear.” (Hall, p. 39). [19] In my opinion, the Driedger contextual approach to interpreting statutes and the principle of commercial efficiency forinterpreting contracts, with necessary modification, apply to the

interpretation of orders. A contextual

interpretation is not for alteringthe effect of an order any more than it allows the interpreting court to alter Parliamentary intent or the intent of the contracting parties.Where supremacy of Parliament and freedom of contract keep

interpretation in bounds for statutes and contracts, the requirement forfinality forbids an

interpretation of a final order that changes its true effect. See, Bank of Nova Scotia v. Golden Forest Holdings Ltd.(N.S.C.A), (NS CA), [1990] N.S.J. No. 230 (SC, AD at para. 9). [20] Contextual

interpretation applies to orders. The words of an order “are to be read in their entire context in their grammatical andordinary sense harmoniously with the scheme of the… [order], the object of the… [order] and the intention of… [the court].”. [21] One must speak of judicial efficacy rather than commercial efficacy when interpreting orders rather than contracts. Otherwise,the results are the same.

A judicious meaning consistent with the text (read in context) is preferred over an unreasonable result. [22] The problem here is not to resolve a true ambiguity, which is a special problem and one for which extraordinary resort to theslip rule (our Rule 78.08) may be a remedy. The words are clear: “give at least fifteen days’ notice of auction… to each subsequentencumbrancer by registered or certified mail”. The question is, what do the words mean when they call for notice by registered mail?Driedger referred to this as a scope problem of

interpretation rather than a problem of ambiguity. Historical Context of Notice to Subsequent Encumbrancers [23] The notice to subsequent encumbrancers does more than notify. It notifies the encumbrancer of the sale by which its interest inthe mortgaged property is to be foreclosed and how the encumbrancer can defend the proceeding.

However, it also has the effect ofjoining the encumbrancer as if it were a party so that its interest may be extinguished. [24] Early statutes show that second mortgagees and other subsequent encumbrancers were joined as defendants in proceedings forforeclosure and sale in the old Court of Chancery: see S.N.S. 1833, c. 52, s.8, “or other Parties, whether Plaintiffs or Defendants in theCause” and S.N.S. 1849, c. 13, s.1, “all persons interested in the Lands who would be entitled if proceedings were taken in Chancery tobe made Defendants”.

This accorded with the English requirement that subsequent encumbrancers be made defendants in actions forsimple foreclosure: Tylee v. Webb (1843), 49 E.R. 939 at p. 941. The court is being asked to extinguish a property right, an interest inthe equity. The owner of the right is a necessary party. [25] The practice of joining necessary encumbrancers by way of a special notice developed during the period of civil procedurereform that lead to the unification of law and equity and reorganization of the courts of law and the courts of equity.

In Nova Scotia, thestatutory reforms began about 1833 and culminated in the Judicature Act of 1884. [26] In the beginning, the Supreme Court of Nova Scotia was not a court of equity. Equity was in the separate jurisdiction of theCourt of Chancery.

The earliest legislative reforms included a shared jurisdiction for foreclosure, but the Supreme Court was restrictedto cases in which there were no subsequent encumbrancers: S.N.S. 1833, c. 19, s. 2, proviso. “Plaintiff… shall file a Certificate… fromthe Registrar or Deputy Registrar of Deeds… certifying that there is no Mortgage… to any other person… than the Plaintiff” and “nor…any prejudice to any subsequent mortgagee or mortgagees, or subsequent encumbrances…”. [27] The proviso was repealed by S.N.S. 1849, c. 13, s. 1, and s. 1 of the 1849 statute included: Provided that in addition to the Service of Process upon the Defendant, or of the proper proceedings in case of his being an Absent orAbsconding Debtor, Notice in writing for the same length of time as required in cases of Notice of Trial, shall be served upon all personsinterested in the Lands who would be entitled if proceedings were taken in Chancery to be made Defendants… . [28] Rules of the Supreme Court were enacted as a

schedule to the Judicature Act, S.N.S. 1884, c. 15. Like the English reformingstatutes of the time, our Judicature Act preserved the judges’ power to make new or revised Rules (ss. 35 and 38) and even to overrideprocedural provisions in statutes (s. 39).

So, on March 1, 1898, the judges made Order XVI, Rule 8D, which provided for subsequentencumbrancers. [29] With some changes, the subsequent encumbrancer Rule was included in revisions down to Nova Scotia Civil Procedure Rules(1972), where it appeared as Rule 5.13(4): It shall not be necessary to make beneficiaries or subsequent incumbrancers defendants in a proceeding for foreclosure or foreclosure andsale, but the court may direct notice to be given to the beneficiaries or subsequent incumbrancers by mailing by ordinary mail a copy ofthe order and advertisement of sale, and after mailing of the copies any beneficiary or subsequent incumbrancer shall be bound by theproceeding in the same manner as if he had originally been made a party, and any person so notified may within one month thereafter

apply to the court to discharge, vary or add to the order, or for such other relief in the proceeding as he is entitled to, and the court may make such order as is just. The original Rule 5.13(4) was amended to change “ordinary mail” to “registered mail”. [ 30 ] Chief Justice Cowan published Practice Memorandum No. 16 “Foreclosure proceedings and forms” in 1978. The forms referred to in the memorandum included a standard order for foreclosure and sale with a provision for mailing the notice to subsequent encumbrancers by registered mail. The judges of the Supreme Court replaced that memorandum with Practice Memorandum No. 13 in 1995. It provided, in

Part 6: The plaintiff shall, at least 20 days before the public auction, give notice of public auction, in the form attached: a) … to the Defendant…

b) by registered mail to each subsequent encumbrancer appearing on the Certificate of a Solicitor at the last known address of such encumbrancer or its solicitor; and

c) by advertising… . And, para. 4 of the standard order for foreclosure, sale, and possession provided: AND IT IS ORDERED that the Plaintiff shall give at least 20 days’ notice of public auction to the Defendant by ordinary mail and to each recorded subsequent encumbrancer by registered mail… . [ 31 ] Practice Memorandum No. 13 was expanded some years after 1995. The expanded memorandum covered orders confirming sale, among other things.

Section 2.9(

c) required “a true copy of confirmation of delivery of Notice of Public Auction to any subsequent encumbrancer” to be exhibited to the affidavit in support of the confirmation motion. Present Legislative Context [ 32 ] Rule 35.12 of the present Rules provides for joining subsequent encumbrancers by special notice.

Unless a judge directs otherwise, a foreclosure order must include a provision by which “the party who seeks foreclosure is required to deliver a notice to subsequent encumbrancers in a time and manner provided in the order”: Rule 35.12(2)(a). [ 33 ] The Practice Memorandum was revised to conform with the Civil Procedure Rules (2008). It is “Practice Memorandum No. 1 – Foreclosure Procedures”.

Paragraph 4 of the standard order for foreclosure and sale provides: “The plaintiff shall give at least fifteen days’ notice of public auction to the defendant by ordinary mail and to each subsequent encumbrancer by registered or certified mail…”. In the

section on confirming orders, the Practice Memorandum requires an affidavit that exhibits various documents including “a true copy of confirmation of delivery of the Notice to Subsequent Encumbrancer to any subsequent encumbrancer”. The Practical Context [ 34 ] Since at least the 1970s, the practice has been to deliver the notice, in a properly addressed envelope, to the postal service with a requisition for registered mail.

Until sometime in the 1990s, that meant that the postal service provided counsel with a receipt showing the day on which the envelope was accepted by the postal service for delivery to the addressee. The receipt could be used to trace the envelope after the postal service accepted it for delivery. [ 35 ] The court granted orders confirming sale on counsel’s affidavit proving that counsel sent the notice to the subsequent encumbrancer by prepaid registered mail on the day the envelope was delivered to the postal service. That evidence was backed by exhibiting a copy of the registered mail receipt.

It was not the practice to go further. No evidence needed to be produced of the envelope having been signed for. [ 36 ] The service provided by Canada Post for registered mail changed. The sender still gets a receipt that shows the day on which the envelope was given to Canada Post for delivery. However, a postal worker does not necessarily obtain a signature from someone. If the person gets mail from a box instead of at the door, the postal worker only puts a card in the box advising where the envelope may be picked up, often at a pharmacy. The same goes for delivery at the door, if no one answers.

Whether at the door, or at the pharmacy, some person has to provide a signature to get the envelope. In addition to the receipt, the sender gets a document showing the signature and the date when it was obtained, unless of course no one claims it. The Textual Context [ 37 ] In the present cases, the order for foreclosure and sale follows the standard text suggested by Practice Memorandum No. 1. The orders begin by settling the mortgage debt and the calculation of further interest (paras. 1 and 2). They allow for possession (para. 3) and then (para. 4) provide that the equity is foreclosed.

However, following a scheme that has ancient origins, para. 4 also orders a public auction and permits redemption in the meantime. [ 38 ] The orders leave it to the plaintiff and the officer conducting the sale to work out a time. However, advertising and notice provisions constrain the timing. One advertisement of the sale must be published in a newspaper at least fifteen days before the sale, and another no more than seven days before the sale.

And, at least fifteen days’ notice has to be given to the defendants by ordinary mail and the subsequent encumbrancers by registered mail (para. 6). [ 39 ] The crucial words for the present issue, “The plaintiff shall give at least fifteen days’ notice of public auction to the defendant by ordinary mail and to each recorded subsequent encumbrancer by register or certified mail”, are in para. 6. Paragraph 7 augments Rule

35.12: A subsequent encumbrancer is bound by the terms of this order when the notice to subsequent encumbrancer under Rule 35.12 is delivered to the subsequent encumbrancer in the time provided in the above paragraph. A subsequent encumbrancer may defend or contest this proceeding by making a motion in chambers before the date of the public auction. [ 40 ] The order goes on to provide for confirmation and judgment on the deficiency, if there is one.

Disposition on When the Notice Period Begins [ 41 ] There is evidence in the textual and external context to support reading the crucial words as starting the fifteen days at the mailing of the notice by registered mail, at the delivery of the envelope or a card or at the signing for, or by the addressee. [ 42 ] The history shows that the special notice replaced the need to join subsequent encumbrancers as defendants. It also shows that since at least 1898 that was accomplished by “mailing” the notice, at first by ordinary mail and later by registered mail.

While not as clear, the 1995 Practice Memorandum does not clearly depart from that practice. [ 43 ] However, the expanded Practice Memorandum does suggest a change had occurred when it provides for the motion to confirm sale and requires “a true copy of confirmation of delivery”. That requirement continues in the present practice memorandum. Why call for “confirmation of delivery”, if mailing is enough? [ 44 ] To some extent the textual context supports the view that the requirement is for actual delivery to the subsequent encumbrancer.

Paragraph 7 speaks of delivery, and merely putting an envelope in the mail might not be what we ordinarily mean by delivery. [ 45 ] Two points compel an

interpretation that it is sufficient compliance with the order to deliver the notice in a properly addressed envelope to Canada Post with a requisition for registered mail. One comes from the immediate text and the other from efficacy. [ 46 ] The plaintiff is required to “give at least fifteen days’ notice of public auction” to two kind of parties. First, “give” notice “to the defendant”. Second, “give” notice “to each recorded subsequent encumbrancer”. In the first instance, the notice is to be given “by ordinary mail”.

That cannot mean the notice is given only on delivery to the defendant, the defendant’s post box, or a signator. The close association of the two notice provisions suggests that the order does not mean that notice is given by mailing to one and actual delivery to the other. [ 47 ] It is not a reasonable result to read “give at least fifteen days’ notice… by registered or certified mail” as meaning the notice is given whenever the subsequent encumbrancer signs for it. As I said, this process does more than give notice.

It brings in the encumbrancers to permit the foreclosure, which takes place when the sale concludes. The fifteen days cannot run from when, if ever, the encumbrancer chooses to sign for the envelope because the date of the sale has to be set before the notice is sent. [ 48 ] Similarly, leaving the timing in the control of Canada Post risks foreclosure sales becoming invalid, depending on when the postal worker goes to the address, or leaves a card in a box, or at the door. [ 49 ] The only provision that works is one that runs from delivery to Canada Post. The words, read in context, are open to that

interpretation and efficacy requires it. Disposition on Calculation of Time [ 50 ] Rule 94.02 begins “A period of days in a Rule does not include any of the following:”. Then it excludes “the day the period begins”, Saturdays, Sundays, and holidays, and the day the period ends. [ 51 ] Rule 94.11(1) provides: A period of days or years in an order, or in another instrument in which the court specifies a period of days or years, is calculated in the same manner as the calculation under Rule 94.02, unless the order or other instrument provides otherwise.

This is why the new Practice Memorandum No. 1 changed the period of notice from twenty days to fifteen. [ 52 ] In the case of Doucet , the plaintiff gave notice for the period calculated under the Rules . In the case of Robertson , the period was only twelve days.

Conclusion [ 53 ] I will grant an order confirming sale in Doucet , in the form of the submitted draft after signing of this decision. [ 54 ] The period for notice to the defendants and the subsequent encumbrancers under the orders for foreclosure, sale, and possession in Robertson began when the plaintiff delivered a properly addressed envelope to Canada Post with a requisition for registered mail. However, the plaintiff calculated the fifteen day period in the ordinary way. [ 55 ] The plaintiff relies on Justice MacAdam’s decision in Aulenback v. Trans Canada Credit Corp. , 2006 NSSC 141 as authority

for the proposition “that, absent fraud or illegality on the part of the purchaser,… the time has passed for raising issues as to the conductof the sale itself” (para. 24).

The time to which Justice MacAdam referred was after the conclusion of the proceeding, and he also said“This are matters to be raised at, or before, the application for the order confirming the sale.” (also para. 24). [56] Because of the failure to give fifteen days’ notice, an order confirming sale can only be granted by exercise of the court’sdiscretion to excuse compliance under Rule 2 – General or the jurisdiction to vary an order for foreclosure and sale recognized at para.14 of Bank of Nova Scotia v. Golden Forest Holdings Ltd. (N.S.C.A), (NS CA), [1990] N.S.J.

No. 230 (SC, AD). [57] These are discretions the court would only exercise on notice to the affected persons, the subsequent encumbrancers. See Rule22.11(3). [58] The notice for a confirming order in the case of Robertson is adjourned so that new notices of motion may be delivered to thesubsequent encumbrancers. Since we have solid evidence of their addresses, notice may be given by ordinary mail in the time providedin the Rules. [59] The plaintiff will bare its own costs of the motions. Moir, J.