Toronto-Dominion Bank v. Coombs, 2016 NSSC 263

SUPREME COURT OF Nova Scotia Citation: Toronto-Dominion Bank v. Coombs , 2016 NSSC 263 Date: 20161006 Docket: Hfx No. 425954 Registry: Halifax Between: The Toronto-Dominion Bank Plaintiff v. Valerie A. Coombs Defendant Decision Judge: The Honourable Justice Denise M. Boudreau Heard: Final Written Submissions: August 24, 2016, in Halifax, Nova Scotia September 8, 2016 Counsel: Selina Bath, for the Plaintiff Valerie A.

Coombs, Defendant, not appearing By the Court: [ 1 ] The matter before the court is a motion for deficiency judgment, made by the applicant mortgagee. [ 2 ] The background of this matter is as follows: [ 3 ] An order for foreclosure, sale and possession was made on June 20, 2014. This was in relation to the mortgaged property located in Queens County, Nova Scotia. The public auction was held in August 2014. The property was sold to the applicant for the highest bid at the sale, $4388.23. [ 4 ] Two appraisals were conducted, one before the sale in July 2014, one after, in November 2014.

Both appraisals valued the property at $28,000. [ 5 ] The applicant listed the property in December 2014 for $29,000. Following a comparative market analysis performed in January 2015, the applicant lowered the price to $27,900. [ 6 ] Through the winter and spring of 2015, a number of offers, accepted offers, and reductions occurred. The evidence before me indicates that sales fell through “due to the condition of the property”. In May 2015, the applicant received an offer in the amount of $8500.

The potential buyer accepted the applicant’s counteroffer of $12,500; however, following an inspection, agreement was reached for a sale in the amount of $4500. The property was then sold.

[7] In the meantime, the applicant filed with the court a motion for deficiency judgment on January 30, 2015. The notice ofmotion has no supporting documentation, and provided a hearing date of March 25, 2015. There is no evidence before me that thisparticular motion was ever served on the respondent. By letter dated March 24, 2015, counsel for the applicant requested that the matterbe removed from the March 25 docket, and “adjourned without day”. [8] Counsel for the applicant next filed an amended notice of motion, dated July 5, 2016. The hearing date was scheduled asAugust 24, 2016.

I have been provided with an affidavit of service upon the respondent of that amended notice. [9] The motion documents provide the value of the property (for the purposes of the calculation of deficiency) as $4500 (the saleprice). The original appraised value was $28,000. Other than “the condition of the property”, I was given no satisfactory reason for thissignificant difference. [10] The matter came before me in chambers on August 24, 2016. The respondent did not appear.

I raised with counsel for theapplicant the significant delay that had occurred in this case, particularly in light of this court’s decision in Royal Bank v. Christanson2016 NSSC 70. I invited counsel to provide me with further submissions in support of her motion that a deficiency judgment should begranted. She has done so.

What follows is my decision in the matter. [11] Pursuant to Civil Procedure Rule 72.12(1)(a), a notice of motion for deficiency judgment must be filed within six months afterthe effective date of the judgment; in the event of a public auction, where the bank is the purchaser, that effective date is 15 days afterthe auction. [12] The applicant’s first motion, filed in January 2015, appears to have met that basic requirement, albeit without any evidence insupport, and without service being effected.

As far as the court record is concerned, there was no activity between the adjourned date inMarch 2015, and the amended notice and reappearance of the matter, in August 2016, a period of approximately one and a half years. [13] It is clear from the case law in Nova Scotia that the six-month time period within which to make a motion for deficiencyjudgment shall not be extended unless the applicant can show a reasonable excuse for having missed that deadline. That principle hasbeen repeated on numerous occasions (see Royal Bank of Canada v. Phillips 1994 NSCA 100; Inrich v. LeBlanc (NSSC); First National v.

Raynard 2011 NSSC 205). It is unfair to a mortgagor for a mortgagee to wait an unjustifiably extended periodof time before bringing such a motion. The mortgagor is entitled to know, within a reasonable time, whether such a judgment is beingsought. A motion for deficiency judgment is subject to principles of equity. (TD Bank v.

MacLean 2016 NSSC 221) [14] The present case appears to be another example of the situation noted, with disapproval, by this court in the Christianson(supra) matter: 7 A practice appears to have developed whereby counsel will file a notice of motion within six months without any substantivesupporting evidence concerning the calculation of the deficiency. The notice will include a hearing date but it will not be served on themortgagor. If the mortgagee chooses not to proceed with the motion on the scheduled date, an amended copy of the notice is filed with anew date.

The effect is an adjournment of the deficiency judgment hearing. All of this takes place without any notice to the mortgagor.This allows the mortgagee to extend the period for the motion indefinitely, without explanation. [15] The Christianson decision was released on March 7, 2016. The court notes therein, that this practice had never (to that point)been challenged. The same cannot be said today. The decision clearly indicates that this practice is inappropriate.

The court provides thefollowing: 15 The proper procedure for a bank seeking a deficiency judgment is to initiate the process by filing the notice of motion and supportingdocuments within the six-month time period required under Rule 72.12. They should proceed to personally serve the documentsexpeditiously as required by Rule 31.15(1) and ensure the minimum 10 day time period required under Rule 72.12 (3) is met. If they wishan adjournment of the scheduled deficiency hearing they should obtain the consent of the defendant or permission of the judge.

Thejudge will decide whether to give permission by taking into account the considerations outlined in Royal Bank v. Phillips and subsequentjurisprudence. [16] Counsel for the applicant has provided me with two reasons why she adjourned her motion in March 2015, and did not amend,refile or serve it until July 2016: 1. The applicant was awaiting the actual sale of the property to a third-party, so that they would know the full extent of thedeficiency claimed; this is the reason for the delay up to June 2015; 2. Following the sale, applicant’s counsel became aware of this court’s decisions in CIBC Mortgages v.

Samson-Hahn 2015NSSC 149, released May 25, 2015; and Scotia Mortgage v. Fogarty 2016 NSSC 52, released February 24, 2016. Those cases dealt withthe particulars of protective disbursements and the evidence required. The applicant became aware that these decisions had been issuedor were forthcoming, and wished to wait for directions or clarification therein, before proceeding with their motion. [17] In relation to the sale of the property, it does not appear reasonable to me to await that event before seeking deficiencyjudgment.

The rules are clear that deficiency judgment is to be sought within six months; there is no guarantee that a property would sellin that time. [18] Rule 72.13 (calculation of deficiency) clearly provides alternatives for calculating the value of the property, in variouscircumstances. Resale is one option, but where the property has not re-sold to a third party, other options exist to provide a value for theproperty. There is no need to wait.

[ 19 ] Using the applicant’s logic, if the property had taken another year to sell, their motion would have waited another year. That is inappropriate and a breach of the rules. I reject this as a reasonable excuse for the delay here. [ 20 ] In relation to the second point raised by the applicant, I also reject it. The mere fact that our court is making decisions in relation to certain protective disbursements in certain deficiency judgments, is not an excuse for any and all motions for deficiency judgments to grind to a halt.

Furthermore, these cases were simply, but forcefully, reminding counsel of the evidence requirements of such motions. Practice Memorandum No. 1 is clear that invoices needed to be filed from any third party suppliers of goods or services. [ 21 ] Even if I were to accept as reasonable that the applicant waited for these decisions, the CIBC Mortgages case was released in May 2015, over a year ago. The Fogarty case was released in February 2016. There remains no explanation for the inordinate delay until August 2016.

This is even more striking in light of Christianson (supra) released in March 2016, where delay in these motions was met with very strong disapproval by our court. [ 22 ] It is my conclusion that the requirements of the Rules have not been met in relation to this motion, as it has not been brought inside the timelines. The applicant has not provided me with a reasonable or adequate excuse for the delay in bringing this matter forward (approximately one and a half years after expiration). I do not allow the extension and I dismiss the motion for deficiency judgment. Boudreau, J.