The Toronto-Dominion Bank v Gibbs, 2019 SKCA 57

Court of Appeal for Saskatchewan Docket: CACV3189 Citation: The Toronto-Dominion Bank v Gibbs , 2019 SKCA 57 Date: 2019-06-19 Between: The Toronto-Dominion Bank Appellant (Plaintiff) And Jason Scott Gibbs and Her Majesty the Queen in Right of Canada Respondents (Defendants) Before: Ottenbreit, Whitmore and Leurer JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Leurer In concurrence: The Honourable Mr. Justice Whitmore In dissent: The Honourable Mr.

Justice Ottenbreit On Appeal From: 2018 SKQB 12 , Regina Appeal Heard: December 4, 2018 Counsel: Jim Kroczynski for the Appellant No one appearing for the Respondents Leurer J.A. I. Introduction [ 1 ] The Toronto-Dominion Bank [TD] appeals an order of the Court of Queen’s Bench limiting the amount payable to it from the proceeds paid into court from the judicial sale of mortgaged property. [ 2 ] For the reasons that follow, I would dismiss TD’s appeal. II. Facts [ 3 ] Jason Scott Gibbs was the owner of residential property located in Regina, Saskatchewan. On October 25, 2007, Mr.

Gibbs gave a non-purchase-money mortgage in favour of TD for the purposes of securing repayment of the sum of $96,000. The mortgage provides for the payment of interest at the fixed rate of 6.6 percent per annum. Among the mortgage’s other terms, TD also has the right to pay property taxes and add this to the secured debt. [ 4 ] Mr. Gibbs defaulted in his payment obligations under the mortgage. The last payment made by Mr. Gibbs was in February 2014. [ 5 ] In March 2014, TD moved to enforce its security.

As required under The Land Contracts (Actions) Act , RSS 1978, c L-3 [ LCAA ], TD gave notice to the provincial mediation board of its intention to seek leave to apply for an appointment to hear an application for leave to commence an action. At that time, it appeared there was substantial equity in the property. The property secured debt then totalling slightly more than $90,000. A “drive-by” appraisal indicated the property had a market value of between $257,000 and $267,000. All of this suggested that judicial sale, not foreclosure, would be the appropriate remedy if Mr.

Gibbs did not redeem or reinstate the mortgage. [ 6 ] Leave to issue an appointment was granted to TD on June 4, 2014, returnable on August 7, 2014. However, TD had difficulty serving the appointment. Several applications for orders of substitutional service were refused because of an insufficiency of the evidence supporting the applications. An application to dispense with service was also refused. Finally, on August 12, 2015, an order for substitutional service was granted and a new appointment was issued returnable on October 15, 2015.

TD was granted leave to commence an action and the statement of claim was issued on that day. This was approximately 20 months after TD took its first step in the enforcement process. [ 7 ] The statement of claim was promptly served on Mr. Gibbs. Mr. Gibbs did not enter a defence. He was noted in default on November 17, 2015. [ 8 ] Because of the appearance that there was equity in the property, TD applied for an order nisi for judicial sale. The order was granted on February 23, 2016 [First Order Nisi].

The First Order Nisi authorized the sale of the property through a realtor at an upset price of $196,000.00 and with a 90 day listing period. Taking into account the time for serving the First Order Nisi and the redemption period the order provided, the listing period began in mid-July 2016. [ 9 ] In August 2016, the realtor was given, for the first time, access to the inside of the property. The realtor described the property as “destroyed”.

Because of this, the realtor recommended a listing price of $139,000.00 to $144,000.00 and expressed the opinion that the property would sell for a price between $130,000.00 and $135,000.00 “to a handyman ready to do a complete redo”. Notwithstanding that the realtor was recommending a listing well below the upset price as set out in the First Order Nisi, TD did not immediately seek an

amendment to the First Order Nisi to change the upset price nor did it list the property pursuant to the First Order Nisi. [ 10 ] On March 1, 2017, TD applied, without notice to Mr. Gibbs, for an amended order nisi for judicial sale.

As is evident, this was now three years since TD’s first step in the enforcement process, over 11 months after the granting of the First Order Nisi, approximately six months after TD learned that the property was worth significantly less than the upset price set out in the First Order Nisi, and over four months after the expiration of the listing period set out in the First Order Nisi. [ 11 ] The Queen’s Bench judge before whom TD’s application came refused to grant the order on an ex parte basis.

In a fiat dated March 2, 2017, the Court directed that “[g]iven the sharp reduction proposed for the upset price, coupled with the fact it is not a purchase money mortgage, the application should proceed by notice”. The Court’s fiat also ordered that TD file evidence to justify a reduction in the upset price and indicated the type of information that would be required in order to justify a new or amended order nisi: ... The mortgagee should file an affidavit from the listing agent setting out the efforts made on her part to sell the subject property. What happened after the expiration of the redemption period?

Were any offers made? What was the feedback from realtors & prospective purchasers? In short, a much more fulsome affidavit is warranted, if you wish to reduce the upset price. [ 12 ] TD proceeded by way of notice of application. Its application was twice adjourned because the Court was dissatisfied with the additional evidence TD had filed in an effort to comply with the March 2, 2017 order. Eventually, a second order nisi for judicial sale was granted on June 27, 2017 [Second Order Nisi]. [ 13 ] The Second Order Nisi set a one-day redemption period, calculated from the date of service of the Second Order Nisi.

It provided that TD “is to have Judgment” against Mr. Gibbs “for the sum of $115,963.99, with interest on $84,471.60 at the rate of 6.60 percent per annum from December 19, 2016, to the date of this Order Nisi”. Finally, the Second Order Nisi provided for a listing period of 90 days, with an upset price of $115,200.00. [ 14 ] In August 2017, the listing agent accepted an offer to purchase the property for $140,000.00. On September 14, 2017, TD obtained an order confirming the sale. So far as it is relevant to the issues in this appeal, that order provides as follows: ...

AND IT IS FURTHER ORDERED that the Plaintiff shall have leave to apply for Judgement [ sic ] against the Defendant, JASON SCOTT GIBBS, for any deficiency owed by the said Defendant once the net proceeds from sale of the mortgaged premises are known. AND IT IS FURTHER ORDERED that the proceeds of sale shall be distributed as follows: (

a) firstly, to the property taxes outstanding on the mortgaged premises to the date of sale; (

b) secondly, to any real estate commission payable; (

c) lastly, the remaining purchase monies are to be paid into Court to the credit of this cause to be applied as directed by the Court. [ 15 ] The sale of the property closed on October 6, 2017. After payment of realtors’ fees, $132,784.65 was paid into court and was available for distribution. [ 16 ] On December 22, 2017, TD applied for an order directing that this full amount be paid to it. TD did not seek a personal judgment against Mr. Gibbs. Mr. Gibbs did not appear on the return of TD’s application.

III. cOURT OF qUEEN’S bENCH dECISION (2018 skqb 12) [ 17 ] The Chambers judge conducted a detailed review of the procedural history of the action and found that TD had been dilatory at various stages of the enforcement proceedings. His conclusion was that of the 43 months between the commencement of the enforcement proceedings and the application that came before him (to pay out money paid into court), 24 months “are attributable to missteps by the Bank” (at para 13). [ 18 ] The Chambers judge then determined that Mr.

Gibbs “should not be obligated to bear the increased interest, taxes and costs that have resulted from the inordinate delay caused by the Bank” (at para 14). He stated that he was “prepared to grant a deficiency judgment in the amount of principal, interest and taxes, but not legal fees, to December 31, 2015, being 19 months after the action was commenced” (at para 15). He invited TD to submit a detailed calculation on this basis, to be directed to his attention. Finally, the Chambers judge also fixed costs at $6,500.00, plus disbursements totaling $1,189.69. IV.

PositionS of The parties [ 19 ] TD appeals the refusal of the Chambers judge to allow it to be paid the full amount of interest that had accrued, and property taxes it paid, during the time it took to pursue judicial sale of the property. TD’s argument has two wings. [ 20 ] First, TD challenges the Chambers judge’s conclusion it was dilatory in its enforcement. Specifically, TD challenges the

conclusion that the delay totaling 24 months was due to “missteps” on its part. [ 21 ] Second, TD argues that the Chambers judge misconstrued its application. It says that it was not seeking a “deficiency judgment”, but instead was claiming payment out from court of monies to which it has a contractual entitlement. It asserts that, in any event, there is “no authority” to limit TD from recovering the full amount it claimed in the face of “uncontroverted evidence” as to what it is owed. [ 22 ] Neither Mr. Gibbs nor the Crown appeared on the appeal, and therefore no submissions were made on their behalf. V. Issues [ 23 ] TD’s appeal raises two questions: (

a) Did the Chambers judge err in finding that 24 months’ delay was attributable to missteps by TD? (

b) Did the Chambers judge err in allowing TD to be paid only part of the interest that accrued and expenses TD incurred from the monies held in court from the sale of the mortgaged property? VI. analysis A.

Did the Chambers judge err in finding that 24 months’ delay was attributable to missteps by TD? [ 24 ] After his detailed review of TD’s enforcement efforts, the Chambers judge stated as follows: [13] … I am prepared to infer that the property would have sold for $140,000.00, rather than some higher amount, if the Bank had taken reasonable steps to obtain an order for substitutional service, apply for the first order, list the property, and apply for the second order in a timely manner.

It is reasonable to conclude that the application for the second order would have been necessary, as a result of the shortcomings in the first appraisal. I conclude that these steps could reasonably have been completed in approximately 18 months. If that is so, approximately 24 of the 43 months that have passed since the action was commenced are attributable to missteps by the Bank. [ 25 ] So far as TD argues that the findings embedded in this paragraph are in error, TD’s appeal is in relation to findings of fact.

The applicable standard of review in relation to such errors is palpable and overriding error ( Archibald v Archibald , 2018 SKCA 86 at para 38 ). I will proceed to assess TD’s arguments in relation to the Chambers judge’s findings of fact against this standard of review. [ 26 ] The first plank of TD’s argument is the assertion that the total time taken to prosecute the “action” was slightly over 26 months, not the 43 months referred to by the Chambers judge.

TD’s point is premised on the observation that the action only began when its statement of claim was issued on October 15, 2015. [ 27 ] Respectfully, TD takes far too narrow a view of the Chambers judge’s actual findings. While the action was only commenced when the statement of claim was issued, it is evident that the Chambers judge’s reference to the time the “action” took was made with an eye to the total length of time between TD’s first step in the enforcement process and its application for an order directing the payment out of monies held in court.

This understanding of the Chambers judge’s decision emerges from paragraph 3, where he says the “action” was commenced on May 30, 2014, which was the date of the filing of the application for the issuance of an appointment to commence the action, and is made clear by his later reference at paragraph 8 of his judgment to a “17 month delay between the commencement of the action and the order for leave to commence”. [ 28 ] The time between the first step taken by TD to enforce its security and its application for payment of monies out of court totals 42 months and 24 days.

The Chambers judge can hardly be said to have committed a palpable and overriding error by rounding this to 43 months. [ 29 ] TD also argues that it moved with reasonable dispatch once it secured leave to bring its action. This, of course, does not address the delay before the statement of claim was issued. Moreover, in making this argument, TD ignores several unexplained delays even after the statement of claim was issued.

For example, TD offers no explanation for the delay that occurred between the granting of the First Order Nisi in February 2016 and the service of that order in April 2016. [ 30 ] TD next points out that the property was substantially damaged when it finally gained access to it and this justified delay on its part.

However, the Chambers judge took this into account in his overall assessment of what would have been a reasonable time period for TD to prosecute his action when he states that it was “reasonable to conclude that the application for the second order would have been necessary” (at para 13). [ 31 ] TD acknowledges responsibility for some delay in seeking an amendment to the First Order Nisi to reduce the listing price, but brushes this delay aside as being insignificant. In this regard, TD argues that this delay caused no prejudice to Mr.

Gibbs because there was no drop in the value of the home between what it might have been sold for if TD had moved with dispatch, compared with what it ultimately sold for. Respectfully, however, this misses the point that the prejudice the Chambers judge identified was not associated with the reduction in value of the security.

Rather, the prejudice was the additional interest and unnecessary expenses arising from TD’s delay that TD sought to recover against the equity in the property. [ 32 ] In short, the Chambers judge conducted a comprehensive review of the rather tortured procedural course TD’s enforcement efforts took. He not only looked at the detail of what took place, but he also stepped back from the minutiae and assessed the overall time

period TD took to enforce its mortgage security. The Chambers judge also had the benefit of familiarity with the practice and procedures of mortgage enforcement. All of this was the basis for his conclusion that “approximately 24 of the 43 months that have passed since the action was commenced are attributable to missteps by the Bank”. [ 33 ] I find no error, let alone palpable and overriding error, in the Chambers judge’s finding of fact that 24 months’ delay in this matter was attributable to missteps by TD. I therefore respectfully reject this ground of appeal. B.

Did the Chambers judge err in allowing TD to be paid only part of the interest that accrued and expenses TD incurred from the monies held in court from the sale of the mortgaged property? [ 34 ] The Chambers judge concluded that TD’s delay in pursuing its remedies had caused prejudice to Mr. Gibbs, specifically because of the accrual of additional interest, property taxes and costs. The Chambers judge concluded that, because of this, TD should be limited in what it received from the monies held in court.

He stated as follows: [14] The mortgagor should not be obliged to bear the increased interest, taxes and costs that have resulted from the inordinate delay caused by the Bank. Further, the statement of account not only reflects the inordinate time spent as a result of those missteps, but contains limited information as to the services provided. Like the account considered in Hollman , it is made up of a list of generic entries, many of which reflect standardized time charges rather than the time spent.

Although the hourly rate is a very moderate $200.00 per hour, the account does not specify the services that were undoubtedly provided by paralegals. ... [15] In the result, I am prepared to grant a deficiency judgment in the amount of principal, interest and taxes, but not legal fees, to December 31, 2015, being 19 months after the action was commenced. Leave is granted for the Bank to submit a detailed calculation of the deficiency on that basis, which should be directed to my attention.

Costs are assessed at $6,500.00, plus $1,189.69 for disbursements.... [ 35 ] TD does not object to the limitation of its costs as ordered by the Chambers judge. TD also does not in any way challenge the Chambers judge’s conclusion that the additional time taken by TD to enforce its security resulted in increased interest charges and property tax expenses. However, TD says that payment of monies out of court should be based on its full-contractual entitlements, without abatement or set-off. [ 36 ] The first point TD makes is that the Chambers judge misapprehended its application.

TD says it was not seeking a deficiency judgment. Instead, it was only seeking “payment out of Court of the indebtedness owed to it, with a corresponding assessment and Order for payment out of the balance of the funds to be applied toward costs”. [ 37 ] I accept TD’s point that it is not seeking a judgment against Mr. Gibbs for any amount it would be owed after it receives the monies held in court that stand in place of its security. However, in my respectful view, TD misconstrues the references by the Chambers judge to a “deficiency judgment”.

I have no doubt that the Chambers judge correctly understood the nature of TD’s application. This is evident from the first paragraph of the Chambers judge’s decision when he stated as follows: [1] The plaintiff Toronto-Dominion Bank [Bank] has applied for an order for payment out of the proceeds realized from the sale of the property in the course of this foreclosure action .

The amount paid in was $132,784.65, being the net proceeds from the sale of the property for $140,000.00, after adjustment for real estate commission and taxes. (Emphasis added) [ 38 ] In context, the several references by the Chambers judge to TD seeking a “deficiency judgment” are properly understood as a shorthand description of TD’s request to payment out of monies out of court without any adjustment for the additional interest and expenses that accrued because of TD’s delay in its enforcement efforts. [ 39 ] TD’s further points are more oblique.

In its notice of appeal, TD states that the Chambers judge “erred in principle and in law in limiting [TD’s] recovery of principal, interest and taxes under the subject Mortgage”, but does not say what the specific error in principle and law is alleged to be. In its factum, TD states that the Chambers judge “had no discretion or authority in the present circumstances to limit the recovery of [TD]”. I understand TD’s latter point to be that the Chambers judge acted without jurisdiction. However, TD fails to explain why the Chambers judge had no jurisdiction to make the order he did.

TD makes no mention of any statute or rule of court that is relevant to the jurisdiction of the court when administering a judicial sale. TD fails to engage with the case law cited by the Chambers judge, except to make one extremely narrow point to which I will return. [ 40 ] TD’s argument might imply it is arguing that the amount of monies to be paid from court has been determined or otherwise has been fixed by the judgment contemplated in the Second Order Nisi.

However, I can set this argument aside because TD did not ground its request for payment of monies out of court on the basis of the judgment contemplated in the Second Order Nisi or, for that matter, any of the orders that preceded it. [ 41 ] The record discloses that the figure of $115,963.99, which the Second Order Nisi references as owing under the mortgage and which is the basis for the judgment TD “is to have”, was comprised of the principal outstanding, interest to December 19, 2016, “previous” legal fees, as well as a property tax balance of $6,968.74.

The Second Order Nisi also contemplated that the judgment, if issued, would include interest at the contractual rate of 6.60 percent from December 19, 2016, to the date of that judgment. However, TD did not seek payment from monies held in court on the basis of these amounts. Instead, when TD applied for payment of monies out of court, it presented an entirely new calculation of the amount it was claiming.

First, TD asked for contractual interest, and not post- judgment interest, for the period of time between the date of the Second Order Nisi and the date payout was to be made, suggesting that it was not relying on the Second Order Nisi as amounting to a judgment. Second, TD recognized that although the judgment contemplated an

amount for costs, these costs were properly fixed only at the point it sought release of the monies held in court. Third, TD recalculated itsclaim for unpaid property taxes, now seeking $17,368.88, an amount $10,400.14 above what it had claimed when it calculated unpaidproperty taxes for the purposes of the judgment contemplated in the Second Order Nisi. This increased amount included property taxesthat would have accrued before the Second Order Nisi was granted.

The important point I take from all of this is that TD’s own actionsreveal that it does not view its rights as being determined by the judgment contemplated in the Second Order Nisi. [42] The final point that TD makes, and what I take to be the crux of its submission, is to challenge the authority of a Queen’s Benchjudge to alter the contractual rights of a mortgagee in the context of the enforcement procedure itself.

To assess this argument, it is usefulto step back and examine in greater detail the Chambers judge’s reasoning to justify a reduction in the amount to be paid to TD frommonies held in court. [43] The Chambers judge based his decision on the court’s equitable jurisdiction to supervise the remedy of judicial sale. TheChambers judge referred to the decisions in Royal Bank of Canada v Hollmann, 2017 SKQB 299 [Hollmann], CIBC Mortgages Inc. vGreyeyes, 2017 SKQB 313 [Greyeyes], and Royal Bank of Canada v Wolff, 2017 SKQB 318 [Wolff].

The principle at play in these cases iscaptured by the following passage from Hollmann, which was quoted in part by the Chambers judge at paragraph 9 of his decision: [16] As Hall J.A. noted in Co-operative Trust Co. of Canada v O'Grady (1985), (SK CA), 43 Sask R 317 at para 4(Sask CA) [Co-operative Trust] “[j]udicial sale is an equitable remedy and will only be granted in accordance with the rules of equity”.The source of the court’s authority to order a judicial sale is the Chancery Procedure Amendment Act, 1852, 15 & 16 Vict, c 86, s. 48 ands. 70 of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01 and Rule 10-46: see Saskatoon Credit Union Ltd v Goertz (1989), (SK CA), 73 Sask R 81 at paras 11- 22 (Sask CA).

A judicial sale, like all major remedies of the mortgagee, is subject to supervisionby the court pursuant to s. 132 of The Land Titles Act, 2000, SS 2000, c L-5.1: Co-operative Trust at para 18. [17] That supervision includes fixing costs and determining the amount to be paid to the bank from the proceeds of sale, or for adeficiency.

As Rothery J. noted in Toronto-Dominion Bank v Schell, 2014 SKQB 344, 461 Sask R 257 where, as here, the net proceeds ofsale are paid in to court, the process is as follows: [16] Monies owed under the mortgage are to be set by the court on further application; the plaintiff does not receive those funds inadvance. There may be accounting issues that the defendants may wish to address and the application to confirm the sale allows for thisrelief.

The proper forum to disburse funds is the application to confirm the sale, if the judicial sale process has proved successful. … [18] Because solicitor-client costs must be assessed by the court on notice of application, it follows that the application for the orderconfirming sale must also be brought by notice of application. This is the stage in the foreclosure proceeding to not only seek confirmationof the sale, but also to seek the court’s direction on the payment of the purchase monies, including costs. It is the stage to set thedeficiency amount of the judgment, if any.

All these outstanding matters ought to be addressed in one final proceeding. (Emphasis added) [44] In each of Hollmann, Wolff and Greyeyes, judges of the Court of Queen’s Bench interpreted and applied the court’s supervisoryjurisdiction over the equitable remedy of judicial sale. Of these three decisions, Hollmann and Wolff are most germane to the issuesinvolved in this appeal. [45] Hollman concerned an application by a mortgagee for payment of monies held in court and taxation of costs. An order nisi forsale was first granted in 2015.

Subsequently, there was significant delay by the bank in the enforcement of its security, including one timewhen it allowed a period for sale to lapse without listing the property and another when ten months passed between when sale proceedswere paid into court and the bank’s application for payment of monies out of court. The mortgagor objected to the deduction of mortgageinterest for this ten-month period.

The Court allowed only 21 days’ interest for this period of time, taking into account that the order forsale provided for payment in and the bank was obligated to apply for payment out by notice of application on 14 days’ notice to themortgagor: [18] As is noted above, RBC applied for the payment out of an amount that included interest to the date of this application. However,counsel for RBC abandoned that position at the hearing. He proposed that I order payment of only half of the interest which accrued afterthe date of the sale, November 22, 2016. [19] In my view, that would not be equitable.

RBC applied for an order that the net proceeds of sale be paid in to court, rather thanrelying on the 2016 order nisi, which provided for payment of the principal and interest specified in the order from those proceeds. RBCknew there would be a surplus payable to the mortgagor.

It led no evidence, and counsel offered no explanation, as to why RBC took thiscourse — which would result in the mortgagor paying further interest — or why it failed to bring this application to assess costs anddistribute the proceeds promptly after the sale closed. [20] In these circumstances, it would not be equitable to order that the mortgagor pay interest after the date of sale, to the date of thisorder. I will accordingly exercise my supervisory jurisdiction by allowing RBC only 21 days of interest at the RBC prime rate plus .5%after the date of sale.

That takes account of the fact that the 2016 order nisi provided for payment in, and RBC was obliged to apply forpayment out by notice of application on 14 days’ notice to the mortgagor. (Emphasis added) [46] Wolff builds on Hollmann. Wolff arose from an application for an order for disbursement of the net proceeds from the court-ordered sale of mortgaged property. The path from commencement of proceedings to the final sale of the mortgaged property took sixyears and involved four different orders for judicial sale.

Justice Layh attributed much of this delay to the mortgagee, finding that “anunopposed action against an abandoned mortgaged property could generally be completed in one year” (at para 36). He concluded that thedelay caused the mortgagor prejudice in five different ways: (

i) the accrual of interest at a rate exceeding 5 percent during the period ofdelay; (ii) the decline in the value of the property (he deemed the value of the property on a “reasonable sale” date was $80,000, as

opposed to the $40,000 at which the property sold); (iii) the accrual of property taxes during a period of time that the mortgagor was not inpossession of the property; (iv) the accrual of additional management fees; and (

v) excessive legal fees. Justice Layh determined that all ofthis should be taken into account in assessing the mortgagee’s entitlement to a deficiency judgment. For this reason, he reduced thedeficiency judgment against the debtor to reflect the additional insurance, other expenses incurred, and loss of value to the securityassociated with the mortgagee’s delay. The key paragraphs from the judgment in Wolff are as follows: [34] Authority to grant an order for judicial sale in Saskatchewan is given under s. 70 of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01 and Rules 10-46 and 10-50 of The Queen’s Bench Rules.

In Schnedar Justice Laing, citing O’Grady and Goertz, explained the salientfeature of the remedy of judicial sale at para. 14, stating: [14] As noted above judicial sale is an equitable remedy and will only be granted in accordance with the rules of equity. The equitabledoctrine of laches is part of the rules of equity. With respect to the scope of this doctrine, Fridman The Law of Contract, 4th ed., (Toronto:Carswell, 1999) at p. 840 quotes with approval Lindsay Petroleum Co. v. Hurd (1874), L.R. 5 P.C. 221 at p. 239-240 (P.C.): ...

Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly beregarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put theother party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of thesecases, lapse of time and delay are most material. ... [35] In the context of the above quotation and given the circumstances of this action, I find that “lapse of time and delay” has put themortgagors in an unreasonable situation.

Accordingly, I must fashion a remedy that accords with principles of fairness that the Bank owesto the mortgagors and that to safeguards the role of a judicial sale, which Professor Ronald Cuming in Overview of Saskatchewan RealProperty Security Law, (Regina: Office of the Queen’s Printer, 2016), has described at 11-17 as ensuring “as much as possible, a fairbalance between the interests of mortgagors and mortgagees.” [47] TD fails completely to engage in a meaningful way with any of the case law cited by the Chambers judge, let alone any of theother case authorities, including those from this Court, that are referred to in Hollmann and Wolff.

TD does not mention Hollmann,notwithstanding that Hollmann is the foundation for the Chambers judge’s decision. TD refers to Wolff, but only to make the point that itis distinguishable because it “involved an application for deficiency Judgment”. In my respectful view, on the facts of this case at least,this is a difference without a distinction. [48] In this case, as in Wolff, the mortgagee’s delay resulted in the accrual of additional interest and the incurring of additionalexpenses that the mortgagee sought to add to the mortgagor’s monetary obligations secured by the mortgage.

In both cases, the Courtrefused to allow the mortgagee to recover the increased interest costs and expenses (and in the case of Wolff damages) caused by themortgagee’s delay. The effect of the Court’s order in each case was in substance the same, that is to alter the monetary obligations of thedebtor or, at the very least, the enforceability of these obligations.

The only difference between this case and Wolff is that in Wolff thereduction affected the amount payable on the personal covenant of the mortgagee, whereas in this case the reduction is in the amountpayable to the mortgagee from the proceeds from the sale of the security. [49] In my view, the Chambers judge correctly understood that judicial sale is an equitable remedy subject to supervision by thecourt. The question at large is whether the court’s jurisdiction allows it to adjust the monetary obligations a mortgagor owes to amortgagee, or whether that jurisdiction is more limited in nature.

The decisions in Industrial Development Bank v Lees (1970), (SK CA), 14 DLR (3d) 612 (Sask CA), and Saskatoon Credit Union Ltd. v Goertz, (SK CA), [1989] 3WWR 244 (Sask CA) [Goertz], trace the remedy in this province to the Chancery Procedure Amendment Act, 1852, 15 & 16 Vict, c 86,which became part of Saskatchewan’s received law in 1870. As Hall J.A. observed in Co-operative Trust Company of Canada v O’Grady(1985), (SK CA), 43 Sask R 317 (CA) at para 4, “[j]udicial sale is an equitable remedy and will only be granted inaccordance with the rules of equity”.

However, none of these decisions appear to go so far as Hollman, Wolff, and now the judgment ofthe Chambers judge in this case, to make an order that, in substance, readjusts the debt obligations between the parties to the mortgage. [50] The issue of whether the Court’s supervisory jurisdiction over judicial sale allows for the alteration of the debt between theparties to a mortgage is of general importance to the law and practice in this province.

However, in this case, TD made no attempt toengage with the legal analysis of the Chambers judge that led him to conclude that the court’s equitable jurisdiction had this reach. Withrespect, it is incumbent on a litigant, particularly a litigant of means such as TD, which challenges the jurisdictional basis of an order madeby a judge of the Court of Queen’s Bench, to do more than simply thrust the issue at this Court and expect an answer. I decline therefore tosay more than that, in the absence of meaningful argument by TD on this point, I am unable to find error on the part of the Chambersjudge.

I would on this basis dismiss TD’s appeal. If there is any merit to the question of jurisdiction the issue can be considered in a futurecase where it arises and is properly argued. [51] Since preparing these reasons, I have had the benefit of reading the decision of my colleague. The essential point that I takefrom my colleague’s decision is that the rights of the parties were fixed by the First Order Nisi and that the Court’s equitable jurisdictioncould not thereafter affect the rights of the parties as fixed in that order.

I do not understand TD to have advanced this argument and forthis reason I intentionally do not address this possibility in these reasons. VII. Conclusion [52] I would therefore dismiss TD’s appeal. Mr. Gibbs did not appear in response to TD’s appeal, and I would make no order forcosts. “Leurer J.A.” Leurer J.A.I concur. “Whitmore J.A.” Whitmore J.A.

Ottenbreit J.A. [53] I have read the decision of my colleague and must respectfully disagree with the result. My colleague has generally set out thefactual and procedural background in this matter with which I agree. However, in my view, the Chambers judge made several errors in theexercise of his equitable supervisory jurisdiction over the sale of the mortgaged property. [54] TD argues that the Chambers judge erred by approaching the matter as if it were requesting a deficiency judgment and alsoerred in limiting its recovery of principal, interest and taxes under the mortgage.

There is merit to both of these submissions. [55] I begin with the term “deficiency judgment”. That term is used in connection with foreclosures where the mortgage beingforeclosed was not for the purpose of financing the purchase price of the mortgaged property. In such cases, despite s. 2 of The Limitationof Civil Rights Act, RSS 1978, c L-16, limiting the mortgagee to foreclosure, the mortgagee is entitled to apply for a personal judgmentagainst the mortgagor.

The mortgagee usually obtains an order for judicial sale of the property which, after a credit for the proceeds ofsale, results in a deficiency judgment for the shortfall between the unpaid balance under the mortgage and the proceeds of any sale of themortgaged property. In this case, the mortgage was not a purchase price mortgage, and TD, as it was entitled to do, sought in its statementof claim to obtain a personal judgment against Mr.

Gibbs for the outstanding amount of the loan. [56] Although TD was entitled to request a deficiency judgment, it correctly points out that, when it came to apply for payment outof monies, it did not ask for such relief, but asked merely for payment of the amount in court to the credit of what was owing under themortgage plus its solicitor-client fees. I note that the draft order for payment out filed by TD asks for any remaining sums paid in to beapplied to solicitor-client costs after payment of the amount owing under the mortgage.

Clearly, TD did not seek a deficiency judgment inexcess of the proceeds of the sale. [57] Despite this, the Chambers judge began his decision by stating that TD had sought a deficiency judgment and ended it byawarding a deficiency judgment. He purported to use his equitable jurisdiction to supervise the judicial sale to determine the amount of thedeficiency judgment and the amount to be paid out to TD. In making that determination, he found that TD had caused inordinate delay ofthe proceedings and that such delay resulted in increased interest, taxes and costs.

He determined that, looking at the proceedings as awhole, 24 of the 43 months that had passed since the action was commenced was attributable to missteps by TD. On this basis, he used hisequitable jurisdiction to reach back prior to the first order nisi for judicial sale to fix the amount owing under the mortgage to TD as ofDecember 31, 2015: [15] In the result, I am prepared to grant a deficiency judgment in the amount of principal, interest and taxes, but not legal fees, toDecember 31, 2015, being 19 months after the action was commenced.

Leave is granted for the Bank to submit a detailed calculation ofthe deficiency on that basis, which should be directed to my attention. Costs are assessed at $6,500.00, plus $1,189.69 for disbursements,which discounts the amount claimed on that account by $500.00. That award is based on the facts, and takes account of the guidanceprovided by costs awards in similar cases.

Among other things, it reflects the fact that two applications for orders nisi for sale and anapplication for an order for substitutional service were required, and that disbursements were increased by the Bank’s missteps. [58] The Chambers judge invited TD to calculate the amount owing on the putative deficiency judgment. TD instead appealed. [59] It is notable that the judgment given by the Chambers judge is not actually a deficiency judgment.

If the Chambers judge’smethodology set forth above for calculating the amount owing as at December 31, 2015, and the figures in the February 23, 2016, ordernisi for judicial sale [February 2016 Order Nisi] are used to calculate the deficiency, the results are the following: Principal owing as at November 17, 2015 inFebruary, 2016 Order Nisi $105,733.46Accrued interest on $84,471.60 to December31, 2015 at 6.6% $672.07Owing at December 31, 2015 $106,405.53Plus Costs $6,500.00Plus Disbursements $1,189.69Total $114,095.22 [60] The sum of $132,784.65 was paid into court from the sale leaving a surplus of over $18,000.00 on the basis of the abovecalculation.

It is unclear why the Chambers judge believed he was granting a deficiency judgment. [61] The Chambers judge in making his decision relied on Royal Bank of Canada v Hollmann, 2017 SKQB 299, and Royal Bank ofCanada v Wolff, 2017 SKQB 318, 17 CPC (8th) 395 [Wolff], for the general proposition that judicial sales are subject to supervision bythe court, based on equitable principles.

In this aspect, he was correct. [62] In Wolff, a variety of factors were taken into account to arrive at the amount to be paid out, including substantial delay, refusalof an offer to purchase for twice the amount received on sale, and inordinate legal and management fees. The Chambers judge in Wolffnoted that the equitable principle of laches can be applied to judicial sales and found that the lapse of time and delay had put themortgagors in Wolff in an unreasonable position.

He determined that he could fashion a remedy that accorded with the principles offairness the bank owed to the mortgagors, ensuring as much as possible a fair balance between the interests of the mortgagors andmortgagees (at para 35). [63] The Chambers judge found that the case before him bore similarities to Wolff. I infer that the Chambers judge in this caseagreed with the approach taken in Wolff. I generally agree with that approach as well. However, it has its limits as I will explain. [64] I start with Co-operative Trust Company of Canada v O’Grady (1985), (SK CA), [1986] 1 WWR 731 (WL)

(Sask CA) at para 4 , where this Court said that judicial sale is an equitable remedy and will only be granted in accordance with the rules of equity. Equitable principles clearly apply to the supervision of a judicial sale.

These principles come into play at the time there is an order for judicial sale and continue to apply at the application for payment out stage of proceedings. [ 65 ] The supervisory equitable jurisdiction at the payment out of monies stage of a foreclosure was correctly described in Toronto- Dominion Bank v Schell , 2014 SKQB 344 , 461 Sask R 257 [ Schell ]: [16] Monies owed under the mortgage are to be set by the court on further application; the plaintiff does not receive those funds in advance.

There may be accounting issues that the defendants may wish to address and the application to confirm the sale allows for this relief. The proper forum to disburse funds is the application to confirm the sale, if the judicial sale process has proved successful. … [18] Because solicitor-client costs must be assessed by the court on notice of application, it follows that the application for the order confirming sale must also be brought by notice of application.

This is the stage in the foreclosure proceeding to not only seek confirmation of the sale, but also to seek the court’s direction on the payment of the purchase monies, including costs. It is the stage to set the deficiency amount of the judgment, if any. All these outstanding matters ought to be addressed in one final proceeding. [ 66 ] The supervisory equitable jurisdiction is exercised in fixing costs and determining the amount to be paid to the bank from the proceeds of sale or for granting a deficiency judgment.

However, this jurisdiction must be exercised in the context of what has gone before in the proceeding and in recognition of the court’s previous orders and judgments in the proceedings. It cannot be exercised in a manner that has the effect of ignoring the terms of the mortgage contract, which were affirmed by virtue of the court’s order for judicial sale and the terms of that order itself. [ 67 ] In a mortgage foreclosure proceeding, the amount owing is derived from the terms and provisions of the mortgage being foreclosed.

The mortgagee can challenge those terms and provisions or the amount owing by filing a defence. In the absence of a defence, the matter proceeds by default.

It may be taken that the terms of the mortgage and the amount calculated as owing are not challenged as the matter moves either to the order nisi for foreclosure stage or to the order nisi for judicial sale stage, as the case may be. [ 68 ] The Queen’s Bench Rules and forms respecting foreclosures are designed to ensure that all parties know where they stand vis- à-vis the contractual terms of the mortgage after the noting for default. [ 69 ] Rule 10-45(1) makes all of the rules relating to mortgage actions applicable to judicial sale proceedings.

Rule 10-43(1) provides for a determination of the amount owing under the mortgage. This determination is a monetary judgment in favour of the mortgagee at the order nisi for foreclosure stage or order nisi for judicial sale stage. It is based on and incorporates the terms of the mortgage in relation to interest, taxes and various costs. [ 70 ] Rule 10-43(2) allows a time to be fixed to redeem the mortgage. The fixing of an amount owing, together with the time to pay, confirms for all parties what the mortgagor is required to pay to prevent the property from being sold.

Such a determination also sets non- payment of an amount as a trigger of default of redemption, which will engage the sale provisions of the order. All of this is more particularly set out in Form 10-45A, the standard order nisi for sale. This form mandates a paragraph setting out the monetary judgment in favour of the mortgagee. There was such a judgment in this case.

It was contained in the first order for sale, the February, 2016 Order Nisi mentioned above. [ 71 ] The format of Form 10-45A is followed in the February 2016 Order Nisi as well as the later June 27, 2017, order nisi for judicial sale [June 2017 Order Nisi], which provided the basis for the eventual sale of the mortgaged property. The amount owing was fixed by the Court in the February 2016 Order Nisi at “$105,773.46 with interest on $84,471.60 at the rate of 6.60 percent per annum from November 17, 2015.” This amount appears in two places.

On page 2, its purpose is to allow the mortgagor to redeem the whole of the mortgage (and therefore recover the whole of the property) by payment of that sum. As well, non-payment of this sum becomes the event of default, which will allow the sale to proceed, subject to payment of arrears as set forth in the paragraph which follows. On page 3, the amount owing along with contractual interest is noted again (again occurs). In this location, it is a judgment in personam calculated to the date of the order.

The words “is to have Judgement” on the third page of the February 2016 Order Nisi immediately before the fixed amount are words of judgment.

Nothing further, such as an additional, issued formal judgment stating only the amount owing, is required. [ 72 ] The effect of all this is that, at the start of the sale phase of the proceedings, the legal and equitable rights of the parties, including the amount owing up to that point, have been judicially determined and fixed based on the contractual terms of the mortgage that are incorporated in the order nisi for sale. [ 73 ] That said, orders such as these are subject to amendment if the sale is abortive or for some other appropriate reason. This is what happened in this case.

There was a new order: the June 2017 Order Nisi. In that sense, an order nisi for sale is not necessarily the final word on the amount owing under the mortgage contract. Yet, if the sale proceeds as it did in this case, that first order nisi for sale provides the starting point for, and the legal parameters of, the conduct of the sale process. [ 74 ] Such judgments cannot be ignored at the payment out stage of the proceedings and, more importantly, should not be overwritten by equitable principles applied to the supervision of the sale process.

To do so would ignore the rules relating to foreclosures and the process established by those rules. Such a course of action would be inconsistent with the Court’s own process and would not give effect to the order nisi for sale that started the sale process. It would ignore the clear fixing of the parties’ legal and equitable rights at the moment prior to the start of the sale process.

It is not appropriate to exercise equitable jurisdiction that commences only after that order nisi for sale to derogate from matters the Court has already determined prior to that. [ 75 ] I am not satisfied that the equitable principles applicable to the supervision of a sale as described in Schell allow an order which reaches back past the money judgment in the first order nisi for sale and effectively changes that amount.

The amount set for redemption and for avoidance of a sale would be meaningless if months down the road, after the sale, the balance owing to the bank was, incongruously, actually less than the redemption price set in the order nisi for sale that began the whole process of sale.

[ 76 ] In keeping with the approach described in Schell , it is open to a Chambers judge on an application for payment out to balance the equities of the mortgagor and mortgagee. However, that equitable jurisdiction must have as its focus the sale process and those aspects of the process as a whole that are left undetermined by the order nisi for sale that started the process. In short, the terms of that order, including the judgment in personam, cannot be ignored. [ 77 ] In my view, the exercise of the Court’s equitable jurisdiction on an application for payment out is defined by the factors that follow.

The starting point for the determination of what monies will be paid out is the judgment in personam in the first order nisi for sale in the proceedings. That is the amount owing at the point at which the Court begins to supervise the sale. If there are subsequent orders for sale, as often happens, that fact, the reasons for it, any delay in achieving the sale and the factual matrix of how the sale process was conducted as a whole can appropriately be taken into account on an application for payment out.

Likewise, the issue of management fees or miscellaneous fees and costs throughout the proceeding to the extent they are not already incorporated in the judgment in personam in the first order for sale can be considered. Additionally, the matter of the rate and duration of interest payable after the first order for sale can also be considered in the context of exercising equitable jurisdiction. [ 78 ] To be clear, the equitable jurisdiction of a Chambers judge does not allow him or her to reach back past that first order nisi for sale to determine the rate and duration of interest prior to that.

It does not extend to making an order the effect of which is inconsistent with the terms of the order nisi for sale which began the sale process. In short, the equitable supervisory jurisdiction is circumscribed by the amount and the date of calculation of that amount set out in the first order nisi for sale.

The determination of any further sums payable after that date would fall within the discretion of a Chambers judge as part of his or her supervisory equitable jurisdiction over the sale based on the factors described above. [ 79 ] On the basis of the foregoing, the Chambers judge’s fixing of principal, interest and taxes calculated as at December 31, 2015, cannot stand.

That order disregards the February 2016 Order Nisi, which had already fixed a sum which incorporated contractual interest in accordance with the mortgage to February 23, 2016. [ 80 ] That said, I see no error in the Chambers judge’s determination that it was unfair, based on laches, to allow TD’s full claim for interest, costs and disbursements. The Chambers judge was entitled to make such a determination based on the material before him.

The exercise of his equitable jurisdiction in this way insofar as it related to the time period after the February 2016 Order Nisi and to matters not dealt with by that order was entirely appropriate. [ 81 ] Accordingly, I would allow the appeal of TD in this respect only: for the purposes of the application to pay out monies, principal, interest and taxes will be calculated in accordance with the February 2016 Order Nisi only to the date of that order. Added to that will be the costs and disbursements as determined by the Chambers judge.

In the circumstances, there will be no costs. “Ottenbreit J.A.” Ottenbreit J.A.