101252 P.E.I. v. Brekka, (2015) 363 N.S.R.(2d) 273 (CA)

Judge:Fichaud, Saunders and Oland, JJ.A.
Court:Nova Scotia Court of Appeal
Case Date:February 17, 2015
Jurisdiction:Nova Scotia
Citations:(2015), 363 N.S.R.(2d) 273 (CA);2015 NSCA 73
 
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101252 P.E.I. v. Brekka (2015), 363 N.S.R.(2d) 273 (CA);

    1143 A.P.R. 273

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Temp. Cite: [2015] N.S.R.(2d) TBEd. JL.049

Betty Ann Brekka (appellant/respondent by cross-appeal) v. 101252 P.E.I. Inc. (respondent/appellant by cross-appeal)

(CA 420096; 2015 NSCA 73)

Indexed As: 101252 P.E.I. Inc. v. Brekka

Nova Scotia Court of Appeal

Fichaud, Saunders and Oland, JJ.A.

July 28, 2015.

Summary:

Foreclosure proceedings with respect to two properties owned by Brekka resulted in sales of the properties to the plaintiff. Brekka claimed that she had reached an oral agreement with the president of the plaintiff on the day of the foreclosure sales that would have entitled her to additional time to come up with financing to save the properties. Brekka moved for an order giving effect to the alleged settlement agreement.

The Nova Scotia Supreme Court, in a decision reported at (2013), 334 N.S.R.(2d) 138; 1059 A.P.R. 138, denied the motion. The plaintiff moved for an order to confirm the sales of the two properties. Brekka moved for an order to declare the plaintiff's two foreclosure actions null and void due to the plaintiff's lack of compliance with s. 17(1) of the Corporations Registration Act.

The Nova Scotia Supreme Court, in a decision reported at (2013), 339 N.S.R.(2d) 97; 1073 A.P.R. 97, found that the plaintiff was not in compliance with s. 17(1) as it was not registered to do business in Nova Scotia. However, Capital Direct Atlantic Inc., the original mortgagee and assignor of the two mortgages to the plaintiff, was a Nova Scotia company. The proper remedy was to add Capital Direct as a plaintiff to the actions. The sales were confirmed subject only to the amendment of the style of cause to include Capital Direct as plaintiff. Brekka appealed from both decisions. The plaintiff cross-appealed from the finding that it was not in compliance with s. 17(1).

The Nova Scotia Court of Appeal dismissed the appeals and the cross-appeal.

Company Law - Topic 7880

Extra-provincial corporations - Licensing or registration - What constitutes carrying on business - Brekka mortgaged two properties to Capital Direct Atlantic Inc., a Nova Scotia company - Capital Direct assigned the mortgages to the plaintiff, a P.E.I. company that was not registered to do business in Nova Scotia - Foreclosure proceedings resulted in sales of the properties to the plaintiff - The plaintiff moved to confirm the sales - Brekka moved for an order to declare the foreclosure actions null and void due to the plaintiff's lack of compliance with s. 17(1) of the Corporations Registration Act - Duncan, J., found that the plaintiff was not in compliance with s. 17(1) - The plaintiff could not rely on Capital Direct's status to found compliance with s. 17(1) - An action commenced by an unregistered assignee immediately on obtaining the assignment and before conducting any business in furtherance of its terms might not be subject to the prohibition in s. 17(1) - However, by the time these actions were filed, the plaintiff's management of the mortgage provisions had continued for several months after the assignments - Therefore, the mortgages were contracts that, once assigned, became connected to the plaintiff's business in Nova Scotia - It would be contrary to the intention of the legislation that the plaintiff could commence an action in such circumstances - The Nova Scotia Court of Appeal dismissed the plaintiff's appeal - Duncan, J., was correct in his interpretation of s. 17(1) - The mortgages were made in Nova Scotia in connection with business carried on by Capital Direct - Capital Direct assigned its rights to the plaintiff, which had carried on business in that capacity in Nova Scotia - Therefore, the contract was made in connection with that part of the plaintiff's business assigned to it by Capital Direct, which it carried out in Nova Scotia while unregistered - The plaintiff was precluded from taking foreclosure proceedings against Brekka - See paragraphs 46 to 62.

Company Law - Topic 7882

Extra-provincial corporations - Licensing and registration - Effect of lack of registration - Brekka mortgaged two properties to Capital Direct Atlantic Inc., a Nova Scotia company - Capital Direct assigned the mortgages to the plaintiff, a P.E.I. company that was not registered to do business in Nova Scotia - Foreclosure proceedings resulted in sales of the properties to the plaintiff - The plaintiff moved to confirm the sales - Brekka moved for an order to declare the foreclosure actions null and void due to the plaintiff's lack of compliance with s. 17(1) of the Corporations Registration Act - Duncan, J., found that the plaintiff was not in compliance with s. 17(1) and could not have commenced the actions in its own name - However, the appropriate remedy was not nullification of the entire proceedings - Brekka had acknowledged her default - The mortgages and the assignments were valid - Defeating the proceedings would be disproportionate to the harm intended to be deterred - The proper remedy was to add Capital Direct as a plaintiff - The sales were confirmed subject only to the amendment of the styles of cause to include Capital Direct as plaintiff - The Nova Scotia Court of Appeal dismissed Brekka's appeal - Duncan, J., thoroughly considered the consequences to both Brekka and the plaintiff - In fashioning a remedy, he neither erred in principle nor issued a directive that could be seen as producing a patent injustice - See paragraphs 63 to 68.

Company Law - Topic 7884

Extra-provincial corporations - Licensing and registration - Status of unregistered corporation to commence action (incl. what constitutes commencement) - [See Company Law - Topic 7880 ].

Company Law - Topic 7886

Extra-provincial corporations - Licensing and registration - Status of unregistered corporation to maintain action - [See Company Law - Topic 7882 ].

Contracts - Topic 8005

Statute of Frauds - Part performance - General - [See Sale of Land - Topic 1351 ].

Practice - Topic 607

Parties - Adding or substituting parties - General principles - Power of court - [See Company Law - Topic 7882 ].

Practice - Topic 9852

Settlements - What constitutes a settlement - Foreclosure proceedings with respect to two properties owned by Brekka resulted in sales of the properties to the plaintiff - Brekka claimed that she had reached an oral agreement with the president of the plaintiff on the day of the foreclosure sales that would have entitled her to additional time to come up with financing to save the properties - Brekka moved for an order giving effect to the alleged settlement agreement - Wood, J., denied the motion on the basis that, under s. 7(d) of the Statute of Frauds, Brekka was not entitled to enforce the alleged agreement - However, in any event, the court was not satisfied that an agreement existed - At most, there was a discussion about the framework of an arrangement that might have been acceptable - A number of details remained to be resolved before the plaintiff's president was prepared to commit to the arrangement - The Nova Scotia Court of Appeal dismissed Brekka's appeal - Wood, J., was in the best position to find facts, draw inferences, and come to his own conclusions concerning the credibility and reliability of the evidence surrounding the settlement agreement - On appeal, great deference was paid to such assessments - Absent palpable and overriding error, the court could not intervene - See paragraphs 41 to 45.

Sale of Land - Topic 1351

The contract - Necessity for writing - General - Part performance in lieu of writing - What constitutes part performance - Foreclosure proceedings with respect to two properties owned by Brekka resulted in sales of the properties to the plaintiff - Brekka claimed that she had reached an oral agreement with the president of the plaintiff on the day of the foreclosure sales that would have entitled her to additional time to come up with financing to save the properties - Brekka's motion for an order giving effect to the alleged settlement agreement was denied on the basis that s. 7(d) of the Statute of Frauds applied - The court rejected Brekka's assertion that there had been sufficient acts of part performance to take the agreement outside of the Statute of Frauds - The conduct in question had to unequivocally refer to the particular agreement alleged - The two events relied on by Brekka as evidence of part performance were the conveyances of the properties by the sheriff to the plaintiff and Brekka's efforts to secure financing to pay the amounts that she said had been promised to the plaintiff's president - These events did not prove part performance - The Nova Scotia Court of Appeal agreed - Brekka's reliance on steps taken by the sheriff was entirely without merit - Further, her efforts to secure financing were not unequivocally referable to the settlement agreement that she claimed to have negotiated - See paragraphs 22 to 40.

Cases Noticed:

Barthe v. National Bank Financial Ltd. (2015), 359 N.S.R.(2d) 258; 1133 A.P.R. 258; 2015 NSCA 47, refd to. [para. 8].

Housen v. Nikolaisen et al. (2002), 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 23].

McPhee v. Gwynne-Timothy (2005), 232 N.S.R.(2d) 175; 737 A.P.R. 175; 2005 NSCA 80, refd to. [para. 23].

Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725, refd to. [para. 36].

Maddison v. Alderson, [1881-85] All E.R. Rep. 742, refd to. [para. 37].

Carvery v. Fletcher (1987), 76 N.S.R.(2d) 307; 189 A.P.R. 307 (T.D.), refd to. [para. 39].

Self v. Brignoli (2012), 314 N.S.R.(2d) 140; 994 A.P.R. 140; 2012 NSSC 81, refd to. [para. 39].

Innocente v. Canada (Attorney General) (2012), 315 N.S.R.(2d) 273; 998 A.P.R. 273; 2012 NSCA 36, refd to. [para. 53].

Statutes Noticed:

Corporations Registration Act, R.S.N.S. 1989, c. 101, sect. 17(1) [para. 54].

Counsel:

Gary A. Richard, for the appellant;

Ezra B. van Gelder and Nicholas Mott, for the respondent.

These appeals were heard at Halifax, N.S., on February 17, 2015, by Fichaud, Saunders and Oland, JJ.A., of the Nova Scotia Court of Appeal. On July 28, 2015, Saunders, J.A., delivered the following reasons for judgment for the court.

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