101252 P.E.I. Inc. v. Brekka, (2013) 339 N.S.R.(2d) 97 (SC)

• Judge: Duncan, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: December 19, 2013
• Jurisdiction: Nova Scotia
• Citations: (2013), 339 N.S.R.(2d) 97 (SC);2013 NSSC 390

101252 P.E.I. v. Brekka (2013), 339 N.S.R.(2d) 97 (SC);

    1073 A.P.R. 97

MLB headnote and full text

Temp. Cite: [2014] N.S.R.(2d) TBEd. JA.055

101252 P.E.I Inc. (plaintiff) v. Betty Ann Brekka (defendant)

(Hfx No. 413840/413842; 2013 NSSC 390)

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

Nova Scotia Supreme Court

Duncan, J.

December 19, 2013.

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 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.

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 - The Nova Scotia Supreme Court found that the plaintiff was not in compliance with s. 17(1) - The court rejected the plaintiff's argument that it could rely on Capital Direct's status to found compliance with s. 17(1) - It was arguable that 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 - See paragraphs 14 to 28.

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 - The Nova Scotia Supreme Court 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 objectives of s. 17(1) were met when the non-registrant was forced into compliance by ensuring that the proceeding was advanced by a registered corporation - The concern for controlling non-registered corporate plaintiffs was further mitigated by the fact that the assignor was properly registered and the plaintiff had the authority to use the assignor's name to enforce the mortgages - The sales were confirmed subject only to the amendment of the styles of cause to include Capital Direct as plaintiff - See paragraphs 29 to 46.

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 ].

Cases Noticed:

Shore v. Cantwell and Cantwell (1975), 21 N.S.R.(2d) 288; 28 A.P.R. 288 (S.C.), refd to. [para. 15].

Allto-Import, A. Larsson A.B. v. Fairbanks et al. (1988), 84 N.S.R.(2d) 380; 213 A.P.R. 380 (C.A.), refd to. [para. 15].

C.B.M. Contracting & Developing Ltd. v. Johnstone (1980), 39 N.S.R.(2d) 156; 71 A.P.R. 156 (C.A.), refd to. [para. 15].

I.A.C. Ltd. v. Hirtle (Donald E.) Transport Ltd. and Hirtle (1977), 27 N.S.R.(2d) 416; 41 A.P.R. 416 (S.C.), affd. (1978), 29 N.S.R.(2d) 482; 45 A.P.R. 482 (C.A.), refd to. [para. 15].

Kaeser Compressors Inc. v. Bent et al. (2006), 247 N.S.R.(2d) 359; 785 A.P.R. 359 (S.C.), refd to. [para. 15].

MacLellan Lincoln Mercury Ltd. v. Jacobsen (2008), 265 N.S.R.(2d) 258; 848 A.P.R. 258; 2008 NSCA 45, refd to. [para. 15].

Jacobsen v. 1358751 NSL - see MacLellan Lincoln Mercury Ltd. v. Jacobsen.

Island Seafoods v. R&L Fisheries (2012), 321 N.S.R.(2d) 392; 1018 A.P.R. 392; 2012 NSSC 348, refd to. [para. 22].

Statutes Noticed:

Corporations Registration Act, R.S.N.S. 1989, c. 101, sect. 17(1) [para. 14].

Counsel:

Ezra Van Gelder and Nicholas Mott, for the plaintiff;

Richard Bureau and Sean Kaulback (Articled Clerk), for the defendant.

These motions were heard at Halifax, N.S., on December 11 and 19, 2013, by Duncan, J., of the Nova Scotia Supreme Court, who determined the motions on December 19, 2013, and delivered the following written decision on January 22, 2014.