British Columbia v. A & A Estates Ltd. et al., 2000 BCCA 317

• Judge: Esson, Huddart and Saunders, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: May 15, 2000
• Jurisdiction: British Columbia
• Citations: 2000 BCCA 317;(2000), 138 B.C.A.C. 52 (CA)

B.C. v. A&A Estates Ltd. (2000), 138 B.C.A.C. 52 (CA);

    226 W.A.C. 52

MLB headnote and full text

Temp. Cite: [2000] B.C.A.C. TBEd. JN.057

Her Majesty The Queen in Right of the Province of British Columbia (petitioner/respondent) v. City of Kamloops, Baron Enterprises Ltd. and British Columbia Wilderness Tours Inc. (respondents/appellants) and 592123 B.C. Ltd. (respondent/respondent) and A & A Estates Ltd., A & A Foods Ltd., Canadian Western Bank, Giovanni Camporese, AIC International Resources Corporation and 415669 B.C. Ltd. (respondents)

(CA026657; CA026668 and CA026691; 2000 BCCA 317)

Indexed As: British Columbia v. A & A Estates Ltd. et al.

British Columbia Court of Appeal

Esson, Huddart and Saunders, JJ.A.

May 15, 2000.

Summary:

The province, as first mortgagee, applied for court-approval of a sale of the subject property to a numbered company (592123 B.C.) in a foreclosure proceeding. The prov­ince assured the numbered company that it would not consent to any adjournment of the proceedings, thereby allowing the company's offer to become a bench mark for other offers.

The City of Kamloops was owed a sub­stantial amount of municipal taxes on the property. Pursuant to s. 396 of the Municipal Act, the province's mortgage took priority over any such outstanding taxes. However, the city had reached a "handshake" agree­ment with the province for payment of at least a portion of the back taxes from the proceeds of any sale. The city applied to adjourn the province's application, citing surprise and the need for time for the city to consider whether to itself make an offer to purchase the property. In fact, the city had no intention of making such an offer. The city also cited the existence of other poten­tial offers to purchase. Neither the city nor the province disclosed to the court the exist­ence of the "handshake" agreement respect­ing taxes.

The British Columbia Supreme Court granted the city's application for an adjourn­ment and also converted the sale of the property into a sealed bid process. The court, in a subsequent decision, also directed the form of the bids be the same as the one in which the numbered company's offer was made.

The province recommended that the prop­erty be sold to the highest bidder (B.C. Tours). A Master subsequently ordered the property sold to B.C. Tours. Two unsuccess­ful bidders (592123 B.C. and Baron Enter­prises) appealed the order for sale. The province, city and successful bidder applied to have the appeal dismissed.

The British Columbia Supreme Court, in a decision reported in 20 B.C.T.C. 241, allowed the appeal. The court ruled that it had juris­diction to review the order for adjournment and changing the sale process, the order directing the form of the bids and the order of sale. The court set aside the order for sale to B.C. Tours. The court held that the adjournment order should not have been granted. The interests of the numbered company were ignored in granting the ad­journment. The court found that the city's misrepresentation to the court regarding its intention to make an offer on the property was a material misrepresentation which affected the court-approved sale process. The numbered company was the innocent victim in this process and was treated un­fairly. The court ordered that the original offer of sale to the numbered company be approved.

In the alternative, the court ruled that all of the bids submitted in the sealed bid process were not properly considered. It was not clearly specified that price was to be the determinative factor in the bid process. In such circumstances, each bidder should have had the opportunity to make submissions in support of their bids, which opportunity was not given. Accordingly, if necessary, the presiding judge seized herself of a further review of the bids currently submitted, in order to hear submissions in support of the respective bids.

The city and B.C. Tours appealed, sup­ported by the province, seeking restoration of the Master's order. Baron, one of the unsuccessful bidders, also appealed, seeking to set aside the Chambers judge's order and have the matter remitted back to her to fix new conditions of sale.

The British Columbia Court of Appeal dismissed Baron's appeal. The court allowed the appeals of the city and B.C. Tours and directed that the sale to B.C. Tours be approved. The court remitted the matter to the Supreme Court to give any directions which might be necessary in order to carry that transaction into effect.

Mortgages - Topic 5582

Mortgage actions - Setting aside a judicial or foreclosure sale - Jurisdiction - A mort­gagee, in foreclosure proceedings, applied for court approval of sale of the subject property to a numbered company - The Supreme Court adjourned the applica­tion and also converted the sale into a sealed bid process - A Master subsequently ordered the property sold to the highest bidder - The numbered com­pany and another unsuccessful bidder appealed - The British Columbia Court of Appeal assumed, without deciding, that this was not a purely interlocutory matter, and that it was open to the Supreme Court judge to substitute her own view for that of the Master - See paragraph 45.

Mortgages - Topic 5584

Mortgage actions - Setting aside a judicial or foreclosure sale - Grounds - General - In foreclosure proceedings, the province, as mortgagee, sought court approval of sale of the property to a numbered com­pany - A provincial representative assured the company that its offer was confidential and the sale would be approved absent a better offer at the hearing - The province had an agreement with the city respecting payment of outstanding municipal taxes - At the city's request, the approval hearing was adjourned, plus the sale was converted into a sealed bid process - A Master later con­firmed the sale to the highest bidder - The British Columbia Court of Appeal held that a Chambers judge erred in setting aside the sale, because she proceeded on erroneous assumptions.

Mortgages - Topic 5666

Mortgage actions - Sale - Procedure - In foreclosure proceedings, the province, as mortgagee, sought court approval of sale of the property to 592123 - A provincial representative assured 592123 that its offer was confidential and the sale would be approved absent a better offer at the hear­ing, which did not bind the province - The province had an agreement with the city respecting payment of outstanding munici­pal taxes - At the city's request, the hear­ing was adjourned, plus the sale was con­verted into a sealed bid process - A Mas­ter later confirmed the sale to the highest bidder - The British Columbia Court of Appeal held that the adjournment and bidding decisions were reasonable and not unfair to 592123.

Cases Noticed:

Cameron v. Bank of Nova Scotia, Thompson, Sutherland Ltd., Peat Marwick Ltd. and Treby (1981), 45 N.S.R.(2d) 303; 86 A.P.R. 303 (C.A.), consd. [para. 38].

Royal Bank of Canada v. Derco Industries Ltd. (1988), 24 B.C.L.R.(2d) 202 (S.C.), consd. [para. 41].

Sun Life Savings and Mortgage Corp. v. Sampson (1991), 9 B.C.A.C. 264; 19 W.A.C. 264; 59 B.C.L.R.(2d) 355 (S.C.), leave to appeal refused (1991), 9 B.C.A.C. 262; 19 W.A.C. 262; 62 B.C.L.R.(2d) 399 (C.A.), consd. [paras. 42, 43].

Westcoast Savings Credit Union v. Wachal (1988), 32 B.C.L.R.(2d) 390 (C.A.), refd to. [para. 43].

Abermin Corp. v. Granges Exploration Ltd. (1990), 45 B.C.L.R.(2d) 188 (S.C.), refd to. [para. 45].

Counsel:

Joseph A. Zak, for the appellant, Baron Enterprises Ltd.;

Russell R. Cundari, for the appellant, British Columbia Wilderness Tours Inc.;

Frank R. Scordo and Leonard S. March­and, for the appellant, City of Kamloops;

Robert W. McDiarmid, Q.C., and Eliza­beth A. Harris, for the respondent, Prov­ince of British Columbia;

Rodney A. Chorneyko, for the respondent, 592123 B.C. Ltd.

These appeals were heard before Esson, Huddart and Saunders, JJ.A., of the British Columbia Court of Appeal, at Kamloops, British Columbia, on March 14 and 15, 2000. The decision of the court was delivered at Vancouver, British Columbia, on May 15, 2000, by Esson, J.A.