Alberta (Treasury Branches) v. Elaborate Homes Ltd. et al., (2014) 590 A.R. 156 (QB)

• Judge: Nielsen, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: May 14, 2014
• Citations: (2014), 590 A.R. 156 (QB);2014 ABQB 350

Alta. v. Elaborate Homes Ltd. (2014), 590 A.R. 156 (QB)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. JN.049

Alberta Treasury Branches (plaintiff) v. Elaborate Homes Ltd., Elaborate Developments Inc., Manjit (John) Nagra, Jaswinder Nagra (defendants)

(1103 02937; 2014 ABQB 350)

Indexed As: Alberta (Treasury Branches) v. Elaborate Homes Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Edmonton

Nielsen, J.

June 11, 2014.

Summary:

Alco held a second mortgage for $1,075,000 on a condo owned by Elaborate. Elaborate went into receivership and its assets and property were sold. Alco received $90,553.09 in relation to its security. Alco applied for leave to commence proceedings against the receiver.

The Alberta Court of Queen's Bench dismissed the application.

Practice - Topic 2651.2

Service - Generally - E-mail - [See second Receivers - Topic 4643 ].

Receivers - Topic 2884

Property - Sale of property - Duties of receiver - [See third Receivers - Topic 4643 ].

Receivers - Topic 4643

Actions against receivers - Conditions precedent - Leave to commence action - Alco held a second mortgage for $1,075,000 on a condo owned by Elaborate - Elaborate went into receivership and its assets and property were sold - Alco received $90,553.09 in relation to its security - Alco applied for leave to commence proceedings against the receiver, alleging gross negligence or wilful misconduct in serving documents on Alco by email and by selling the condo for less than its appraised value, thereby preferring the interests of other creditors - The Alberta Court of Queen's Bench stated that the threshold for granting leave was low, but the court should not grant leave for unmeritorious claims - The process of reviewing the claim was not to be perfunctory - In order for Alco to establish the receiver's liability at trial, it would have to show that the receiver demonstrated a very marked departure from the standards by which responsible and competent people in such circumstances would have acted or that the receiver had acted in a manner that showed that it knew that what it was doing was wrong or was recklessly indifferent to its conduct - See paragraphs 30 to 40.

Receivers - Topic 4643

Actions against receivers - Conditions precedent - Leave to commence action - Alco held a second mortgage for $1,075,000 on a condo owned by Elaborate - Elaborate went into receivership and its assets and property were sold - Alco received $90,553.09 in relation to its security - Alco applied for leave to commence proceedings against the receiver, alleging, inter alia, gross negligence or wilful misconduct in serving documents on Alco by email - The Alberta Court of Queen's Bench dismissed the application - Nothing in the material before the court suggested that the receiver had not properly effected service of both the application for approval of the sale and the sale order on Alco by emailing those documents to its principal - There was no factual basis for Alco's claim that the receiver was either grossly negligent or that it had wilfully misconducted itself in serving those documents by email - See paragraphs 41 to 50.

Receivers - Topic 4643

Actions against receivers - Conditions precedent - Leave to commence action - Alco held a second mortgage for $1,075,000 on a condo owned by Elaborate - Elaborate went into receivership and its assets and property were sold - Alco received $90,553.09 in relation to its security - Alco applied for leave to commence proceedings against the receiver, alleging, inter alia, gross negligence or wilful misconduct by selling the condo for less than its appraised value, thereby preferring the interests of other creditors - The Alberta Court of Queen's Bench dismissed the application - The offer accepted provided the highest net recovery on the condo of all of the "en bloc" offers received and represented a recovery of 85% of the forced liquidation value of the condo - Only one other offer assigned a higher purchase price for the condo and that was an offer regarding the condo only (not an en bloc offer) - Nothing suggested that the receiver had not made sufficient efforts to obtain the best price for the assets or that it had acted improvidently - Nothing supported an inference that the receiver had not acted for the benefit of the general body of creditors - There was no factual basis for Alco's claim - See paragraphs 51 to 67.

Receivers - Topic 5861

Duties of receiver - Negligence - General - [See second Receivers - Topic 4643 ].

Cases Noticed:

GMAC Commercial Credit Corp. - Canada v. T.C.T. Logistics Inc. et al., [2006] 2 S.C.R. 123; 351 N.R. 326; 215 O.A.C. 313; 2006 SCC 35, refd to. [para. 30].

RoyNat Inc. v. Omni Drilling Rig Partnership No. 1 (Receivership), [1988] 6 W.W.R. 156; 90 A.R. 173 (Q.B.), refd to. [para. 31].

McCulloch v. Murray, [1942] S.C.R. 141, refd to. [para. 37].

Société Telus Communications et al. v. Peracomo Inc. et al. (2014), 457 N.R. 75; 2014 SCC 29, refd to. [para. 38].

Look Communications Inc. v. Look Mobile Corp. et al., [2009] O.T.C. Uned. U81; 2009 CarswellOnt 7952 (Sup. Ct.), refd to. [para. 54].

Royal Bank of Canada v. Soundair Corp. et al. (1991), 46 O.A.C. 321; 7 C.B.R.(3d) 1 (C.A.), refd to. [para. 58].

Skyepharma plc v. Hyal Pharmaceutical Corp. (1999), 96 O.T.C. 172; 12 C.B.R.(4th) 87 (Gen. Div.), refd to. [para. 60].

Scanwood Can. Ltd., Re (2011), 305 N.S.R.(2d) 34; 966 A.P.R. 34; 2011 NSSC 189, refd to. [para. 61].

Counsel:

Robert M. Curtis, Q.C. (McCuaig Desrochers LLP), for Alco Industrial Inc.;

Michael J. McCabe, Q.C. (Reynolds Mirth Richards & Farmer LLP), for PricewaterhouseCoopers Inc.

This application was heard on May 14, 2014, by Nielsen, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following reasons for judgment on June 11, 2014.