Guenther v Princess Homes Ltd., 2019 SKCA 88

Court of Appeal for Saskatchewan Docket: CACV3291 Citation: Guenther v Princess Homes Ltd. , 2019 SKCA 88 Date: 2019-09-05 Between: Myron Quinn Guenther and Rachel Dawn Guenther Appellants (Proposed Defendants) And Princess Homes Ltd. Respondent (Proposed Plaintiff) Before: Richards C.J.S., Whitmore and Leurer JJ.A. Disposition: Appeal allowed (orally) Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Mr. Justice Whitmore The Honourable Mr.

Justice Leurer On Appeal From: QBG No. 1175 of 2018, Saskatoon Appeal Heard: September 5, 2019 Counsel: Davin Burlingham for the Appellants Nicholas Conlon for the Respondent Richards C.J.S. I. Introduction [ 1 ] The appellants, Myron and Rachel Guenther, signed a mortgage agreement with the respondent, Princess Homes Ltd. [Princess Homes]. The Guenthers immediately defaulted on their mortgage payments.

In the course of its enforcement efforts, Princess Homes obtained an order abridging the time for service of its application for leave to commence an action for foreclosure and an order granting it leave to commence that action. Princess Homes then caused a statement of claim to be issued. [ 2 ] The Guenthers appealed and sought to have the statement of claim declared a nullity.

They submitted that s. 3(7) of The Land Contracts (Actions) Act , RSS 1978, c L-3 (repealed) [ Act ], required a minimum of 15 days’ notice before the hearing on the question of whether a foreclosure action could be commenced and that this minimum notice period could not be abridged. We accepted the Guenthers’ submissions and, in an oral decision, set aside both the order abridging the time for service and the order granting leave to commence. We also declared the statement of claim issued by Princess Homes to be a nullity. All of this was done with the promise of brief written reasons to follow.

These are those reasons. II. The Land Contracts (Actions) Act [ 3 ] The Act , now supplanted by The Land Contracts (Actions) Act, 2018 , SS 2018, c L-3.001 [ 2018 Act ], specified the procedures that had to be followed before commencing an action for foreclosure, sale or possession, or recovery of moneys payable under a mortgage. Its relevant features are set out below: 3(1) No action shall be commenced except by leave of the court granted upon application under this section.

(1.1) An action that is commenced without obtaining leave pursuant to this

section is a nullity.

(2) A person desiring to commence an action may, after the expiry of a period of thirty clear days from the date of service upon the Provincial Mediation Board of a notice in writing of his intention to do so, apply ex parte to a judge for an appointment to hear an application for leave to commence the action.

(3) A notice of intention pursuant to subsection (2) shall set forth the names of the parties to the proposed action and the nature of the proposed action and when served upon the Provincial Mediation Board shall be deemed to constitute an application in writing within the meaning of subsection (1) of

section 6 of The Provincial Mediation Board Act and upon receipt of such notice the board shall comply with the said subsection (1). The notice may be served by registered mail and shall be deemed to have been served on the date of the receipt of the postmaster for the envelope containing the notice. …

(7) All notices of the hearing shall be served not less than fifteen days before the date of the hearing. …

(15) Except as herein otherwise provided, all statutory provisions and all rules of the Court of Queen’s Bench respecting service of process, including those respecting substitutional service, apply with respect to service of a notice under this section.

III. Background [ 4 ] The essential background of this appeal is readily summarized: (

a) On May 13, 2011, the Guenthers’ signed a $50,000 mortgage in favour of Princess Homes. (

b) The Guenthers’ failed to make any payments under the mortgage. (

c) On August 12, 2016, Princess Homes made a formal demand for immediate payment of the full amount of principal and interest owing under the mortgage. (

d) On March 22, 2017, Princess Homes notified the Provincial Mediation Board of its intention to apply for leave pursuant to s. 3 of the Act . (

e) On March 23, 2017, the Provincial Mediation Board sent a letter to the Guenthers notifying them of their right to seek mediation. (

f) On July 25, 2018, Princess Homes applied ex parte for (

a) an order fixing an appointment to hear its application for leave to commence an action, and (

b) an order abridging the time for service so that the application could be heard in Queen’s Bench Chambers on August 7, 2018. The affidavit filed in support of the application suggested that Princess Homes might be statute-barred from commencing proceedings after August 12, 2018. (I note that s. 3(19) of the Act provided that when an application was made for leave to commence an action, the period between the date of the application and the date on which leave was given to commence the action was not included in the calculation of the running of time under The Limitations Act , SS 2004, c L-16.1 .

It appears that this provision was not drawn to the attention of the Chambers judge who dealt with the application.) (

g) On July 30, 2018, the Chambers judge granted the order abridging the time for service, specifying that service must be effected by August 3, 2018. He ordered, as well, that the application for leave to commence be heard on August 7, 2018. I will refer to this as the “First Chambers Decision”. (

h) Ms. Guenther was served on August 3, 2018 with the application for leave to commence. (

i) On August 7, 2018, a different Chambers judge granted Princess Homes’ application for leave to commence an action. I will refer to this as the “Second Chambers Decision”. (

j) On August 10, 2018, Princess Homes caused a statement of claim to be issued. IV. Analysis [ 5 ] The Guenthers’ position is straightforward. They submit that s. 3(7) of the Act meant what it said: notice of a hearing for leave to commence an action for foreclosure had to be served not less than 15 days before the hearing.

In light of the fact they had only four days’ notice of the hearing, the Guenthers submit that the First Chambers Decision and the Second Chambers Decision were made without proper authority and, as a result, Princess Homes’ statement of claim must be declared a nullity. [ 6 ] Princess Homes attempts to counter the Guenthers’ submissions by relying on s. 3(15) of the Act .

I will set it out again here for ease of reference: 3(15) Except as herein otherwise provided, all statutory provisions and all rules of the Court of Queen’s Bench respecting service of process, including those respecting substitutional service, apply with respect to service of a notice under this section. [ 7 ] Princess Homes says that the reference in s. 3(15) to “all rules of the Court of Queen’s Bench” brought into play Rule 13-7(2) of The Queen’s Bench Rules .

It allows the Court of Queen’s Bench to “enlarge or abridge the time appointed by these rules or fixed by any order for doing any act or taking any proceeding, on any terms that the Court considers just”. Princess Homes also refers to Rule 12-1. That rule authorizes the Court of Queen’s Bench to validate the “irregular or unauthorized service of a document”. [ 8 ] I am unable to accept this line of argument for a very simple reason. It wholly overlooks the opening words of s. 3(15) – “[e]xcept as herein otherwise provided”.

In other words, the Rules of the Court of Queen’s Bench concerning the service of process came into play by virtue of s. 3(15) only to the extent that the Act was silent. However, s. 3(7) of the Act was clear and express. Service had to be effected not less than 15 days before the date of the hearing for leave to commence an action. There was, accordingly, no room to abridge the time for service by resort to the Rules . [ 9 ] Further, and in any event, both Rule 13-7(2) and Rule 12-1 are, by their own terms, inapplicable to the situation in issue here.

This is because Rule 13-7(2) operates only in relation to the abridgment of “the time appointed by these rules or fixed by any order” for doing

an act or undertaking a proceeding. The 15-day notice was fixed by the Act , not by The Queen’s Bench Rules or a court order. As a result, Rule 13-7(2) did not apply. Similarily, Rule 12-1 provides that the authority to validate service is “[s]ubject to the express provisions of any enactment”. In other words, even assuming that Rule 12-1 can be read as applying to more than just how service is effected, that rule was nonetheless subject to the express terms of s. 3(7) of the Act requiring that service had to be effected 15 days before the hearing.

As a result, just as with Rule 13-7(2), there was no room for Rule 12-1 to apply in the circumstances at hand. [ 10 ] In oral argument, Princess Homes attempted to rely on the 2018 Act . This is a new version of the Act that came into force on September 1, 2019. The part of the transitional provisions of the 2018 Act read as follows: 20(1) A proceeding commenced pursuant to The Land Contracts (Actions) Act as that Act existed on the day before the coming into force

of this Act, but not completed before this Act comes into force, is continued and is to be dealt with pursuant to this Act as if it had been commenced pursuant to this Act. [ 11 ] As I understand it, Princess Homes argues that, by virtue of s. 20(1), the 2018 Act applies to its proceedings against the Guenthers and that the 2018 Act then somehow saves the Queen’s Bench action it has commenced against the Guenthers. [ 12 ] Given that this issue was raised only in oral argument, it would be unwise to attempt any wide-ranging assessment of the scope and operation of s. 20 of the 2018 Act .

That said, I am unable to see how the 2018 Act could apply to the question of the adequacy of the notice given for the hearing for leave to commence an action in the circumstances of this case. The orders in question were made more than a year before the 2018 Act came into force. As well, and importantly, the statement of claim in question was issued more than a year before the 2018 Act came into force. As a result, it is simply not clear what the 2018 Act could attach to that would make it relevant to the issues in this appeal.

Put another way, Princess Homes has not explained how the 2018 Act would or could operate to prevent its statement of claim from being declared a nullity. V. Conclusion [ 13 ] As explained above, the Guenthers’ appeal must be allowed. The Court of Queen’s Bench had no authority to abridge the notice period prescribed by s. 3(7) of the Act . The First Chambers Decision and the Second Chambers Decision are both set aside and the Queen’s Bench action is declared a nullity. The Guenthers are entitled to costs in the usual way.