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MORTGAGES - Mortgagee’s remedies - Power of sale - Distribution

Wednesday, July 24, 2019 @ 8:37 AM  


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Appeal by the Bank from an order limiting the amount payable to it from the proceeds paid into court from the judicial sale of mortgaged property. The respondent obtained a non-purchase mortgage in 2007. He defaulted in 2014. At the time, the property secured debt of $90,000. The First Order Nisi granted in 2016 authorized the sale of the property through a realtor at an upset price of $196,000. Upon seeing the inside of the property, the realtor expressed the opinion that the property would sell for a price between $130,000 and $135,000. The appellant did not immediately seek an amendment to the First Order Nisi to change the upset price and did not list the property pursuant to the First Order Nisi. A second order nisi for judicial sale was granted in June 2017 for an upset price of $115,200.00. In August 2017, the property was sold for $140,000. After payment of realtors’ fees, $132,784 was paid into court. The Chambers judge concluded that of the 43 months between the commencement of the enforcement proceedings and the application to pay out money paid into court, 24 months were attributable to missteps by the appellant. The Chambers judge then determined that the respondent should not be obligated to bear the increased interest, taxes and costs that resulted from the inordinate delay caused by the appellant. He granted a judgment in the amount of principal, interest and taxes, but not legal fees, to December 2015, 19 months after the action was commenced.

HELD: Appeal dismissed. The Chambers judge did not err in finding that 24 months’ delay was attributable to missteps by the appellant. While the action was only commenced when the statement of claim was issued, it was 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 the appellant’s first step in the enforcement process and its application for an order directing the payment out of monies held in court. The Chambers judge conducted a comprehensive review of the rather tortured procedural course the appellant’s enforcement efforts took. He not only looked at the detail of what took place, but he also assessed the overall time the appellant took to enforce its mortgage security. The Chambers judge did not err in concluding that, because of delay, the appellant should be limited in what it received from the monies held in court. The several references by the Chambers judge to the appellant seeking a deficiency judgment were properly understood as a shorthand description of the appellant’s request to payment out of monies out of court without any adjustment for the additional interest and expenses that accrued because of the appellant’s delay in its enforcement efforts. The Chambers judge correctly understood that judicial sale was an equitable remedy subject to supervision by the court. The appellant made no attempt to engage with the legal analysis of the Chambers judge that led him to conclude that the court’s equitable jurisdiction entitled him to limit the amount paid put to the appellant.

Toronto Dominion Bank v. Gibbs, [2019] S.J. No. 227, Saskatchewan Court of Appeal, R.K. Ottenbreit, P.A. Whitmore and R. Leurer JJ.A., June 19, 2019. Digest No. TLD-July222019008