Bank of Montreal v. Hoehn, 2010 ABQB 405

• Judge: Mason
• Neutral Citation: 2010 ABQB 405
• Citation: 2010 ABQB 405,(2010), 496 A.R. 355 (QBM),496 AR 355,(2010), 496 AR 355 (QBM),496 A.R. 355
• Date: 15 December 2009
• Court: Court of Queen's Bench of Alberta (Canada)

Bk. of Mtrl. v. Hoehn (2010), 496 A.R. 355 (QBM)

MLB headnote and full text

Temp. Cite: [2010] A.R. TBEd. JN.129

Bank of Montreal (plaintiff) v. Jonathan E. Hoehn and Tamara C. Hoehn (defendants)

(0901 12231)

MCAP Service Corporation (plaintiff) v. Terry Le Lievre and Leona Le Lievre (defendants)

(0901 12336)

MCAP Service Corporation (plaintiff) v. Manpreet Sidhu and Bhupinder Sidhu (defendants)

(0901-13201)

Bank of Montreal (plaintiff) v. Amir Ali Mawji and Shameera Hirji (defendants)

(0901 05547)

Bank of Montreal (plaintiff) v. Imtiyaz S. Narsingani and Amir Ali Mawji (defendants)

(0901 05904; 2010 ABQB 405)

Indexed As: Bank of Montreal v. Hoehn

Alberta Court of Queen's Bench

Judicial District of Calgary

Mason, Master

June 15, 2010.

Summary:

Section 2 of the Law of Property Regulation (the "LPA Regulation") required a high ratio mortgage to prominently publish a specific statement indicating that the mortgagor or another assuming the mortgage may be sued for any obligation under the mortgage if the borrower or another assuming the mortgage defaulted (the "High Ratio Statement"). Several lenders applied for deficiency judgments in regard to high ratio mortgages which did not contain the High Ratio Statement. The mortgagors resisted deficiency judgment on the basis of the absence of the High Ratio Statement in the mortgage documents. The lenders submitted that the LPA Regulation was ultra vires the Lieutenant Governor-in-Council. They asserted that it exceeded the power to define "high ratio mortgage" granted under s. 50.1 of the Law of Property Act (LPA) by imposing a requirement on the lenders to include the High Ratio Statement in the mortgage document. In the alternative, the lenders argued that the requirement of the prominent publication of the High Ratio Statement was directory and not mandatory, allowing the court flexibility in responding to non-compliance. They suggested that where borrowers had otherwise received notice that the mortgage was insured and that there was a potential for a deficiency judgment against them in the event of default, deficiency judgment should be permitted.

A Master of the Alberta Court of Queen's Bench held that s. 2 of the LPA Regulation exceeded the scope of power granted by s. 50.1 of the LPA and was ultra vires the Lieutenant Governor-in-Council. In requiring the prominent publication of the High Ratio Statement, it went beyond the granted power to define "high ratio mortgages". The lenders were accordingly entitled to deficiency judgment against the mortgagors in their respective applications. In the event that the Master was incorrect in concluding that s. 2 of the LPA Regulation was ultra vires, the Master would have concluded that s. 2 was directory. In cases of non-compliance, the court could consider whether the mortgagor was otherwise informed that the lender could obtain deficiency judgment in the event of default by the mortgagor or another assuming the mortgage, and whether the mortgagor was prejudiced by the non-compliance. Given the novelty of the issues and the importance to foreclosure practice in Alberta, there was no order as to costs.

Mortgages - Topic 56

General principles - Duties of mortgagee - High ratio mortgages - Section 2 of the Law of Property Regulation (the "LPA Regulation") required a high ratio mortgage to prominently publish a specific statement indicating that the mortgagor or another assuming the mortgage may be sued for any obligation under the mortgage if the borrower or another assuming the mortgage defaulted (the "High Ratio Statement") - Several lenders applied for deficiency judgments in regard to high ratio mortgages which did not contain the High Ratio Statement - The mortgagors resisted deficiency judgment on the basis of the absence of the High Ratio Statement in the mortgage documents - A Master of the Alberta Court of Queen's Bench held that s. 2 of the LPA Regulation exceeded the scope of power granted by s. 50.1 of the LPA and was ultra vires the Lieutenant Governor-in-Council - In requiring the prominent publication of the High Ratio Statement, it went beyond the granted power to define "high ratio mortgages" - Section 2 of the LPA Regulation added a new substantive requirement outside the scope of the LPA and had been adopted for a purpose beyond providing a definition, namely to provide a warning of the potential legal consequences of entering into a high ratio mortgage - In the event that the Master was incorrect in concluding that s. 2 of the LPA Regulation was ultra vires, the Master would have concluded that s. 2 was directory - In cases of non-compliance, the court could consider whether the mortgagor was otherwise informed that the lender could obtain deficiency judgment in the event of default by the mortgagor or another assuming the mortgage, and whether the mortgagor was prejudiced by the non-compliance - Given the novelty of the issues and the importance to foreclosure practice in Alberta, there was no order as to costs.

Mortgages - Topic 5546

Mortgage actions - Foreclosure and sale - Deficiency judgment - Right to claim - [See Mortgages - Topic 56].

Mortgages - Topic 5555

Mortgage actions - Foreclosure and sale - Deficiency judgment - Defences or bars - [See Mortgages - Topic 56].

Practice - Topic 7029

Costs - Party and party costs - Entitlement - Successful party - Exceptions - Novel or important point - [See Mortgages - Topic 56].

Statutes - Topic 5130

Operation and effect - Enabling Acts - Obligatory, mandatory, imperative and absolute Acts - Whether mandatory enactment is obligatory or directory only - [See Mortgages - Topic 56].

Statutes - Topic 5164

Operation and effect - Enabling Acts - Directory Acts - What constitutes - [See Mortgages - Topic 56].

Statutes - Topic 5367

Operation and effect - Delegated legislation - Regulations - Validity of - Ultra vires - Whether purpose authorized by empowering statute - [See Mortgages - Topic 56].

Cases Noticed:

Grant (Gordon) & Co. v. Boos, [1926] A.C. 781 (P.C.), refd to. [para. 9].

Canwest Trust Co. v. Brady (1994), 16 Alta. L.R.(3d) 160 (Q.B.), refd to. [para. 9].

R. v. Morgentaler, [1993] 3 S.C.R. 463; 157 N.R. 97; 125 N.S.R.(2d) 81; 349 A.P.R. 81, refd to. [para. 20].

BPCL Holdings Inc. et al. v. Alberta et al. (2008), 429 A.R. 311; 421 W.A.C. 311; 2008 ABCA 153, refd to. [para. 25].

Kubel v. Alberta (Minister of Justice) (2005), 58 Alta. L.R.(4th) 254; 2005 ABQB 836, refd to. [para. 25].

R. v. National Fish Co., [1931] Ex. C.R. 75, refd to. [para. 25].

Heppner v. Alberta (1977), 6 A.R. 154 (C.A.), refd to. [para. 25].

Belanger v. R. (1916), 34 D.L.R. 221 (S.C.C.), refd to. [para. 25].

Trans-Canada Pipe Lines Ltd. v. Saskatchewan (Treasurer) (1968), 67 D.L.R.(2d) 694 (Sask. Q.B.), refd to. [para. 25].

Bristol-Myers Squibb Co. et al. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 533; 334 N.R. 55; 2005 SCC 26, refd to. [para. 26].

Yellow Cab Ltd. v. Board of Industrial Relations (Alta.) et al., [1980] 2 S.C.R. 761; 33 N.R. 585; 24 A.R. 275, refd to. [para. 31].

Skapinker v. Law Society of Upper Canada, [1984] 1 S.C.R. 357; 53 N.R. 169; 3 O.A.C. 321, refd to. [para. 34].

Arts Umbrella v. Assessor of Area No. 9 - Vancouver (2007), 235 B.C.A.C. 241; 388 W.A.C. 241; 64 B.C.L.R.(4th) 179; 2007 BCCA 45, refd to. [para. 34].

African Lion Safari and Game Farm Ltd. v. Ontario (Minister of Natural Resources) et al. (1987), 19 O.A.C. 205; 37 D.L.R.(4th) 80 (C.A.), refd to. [para. 34].

Phillips v. Robinson (1982), 35 Nfld. & P.E.I.R. 509; 99 A.P.R. 509; 133 D.L.R.(3d) 189 (P.E.I.C.A.), refd to. [para. 34].

Westdale Construction Co. v. Coa, [2009] O.T.C. Uned. J38; 85 R.P.R.(4th) 289 (Sup. Ct.), affd. [2010] O.A.C. Uned. 108; 2010 ONCA 142, refd to. [para. 34].

Wilson v. Wilson (1980), 12 Alta. L.R.(2d) 311 (Q.B.), refd to. [para. 35].

Valenti, Re (1976), 70 D.L.R.(3d) 385 (Alta. C.A.), refd to. [para. 35].

Peters v. Chilliwack (District) et al. (1987), 43 D.L.R.(4th) 523 (B.C.C.A.), refd to. [para. 35].

Menzies v. Manitoba Public Insurance Corp. et al. (2005), 195 Man.R.(2d) 257; 351 W.A.C. 257; 2005 MBCA 97, refd to. [para. 35].

Ontario English Catholic Teachers Association v. Ontario, 1992 CarswellOnt 2029 (S.C.), refd to. [para. 35].

South Westman Regional Health Authority Inc. v. Accurate Dorwin Co. et al. (2001), 156 Man.R.(2d) 284; 246 W.A.C. 284 (Q.B.), refd to. [para. 35].

Johnson v. Federated Mutual Insurance Co. (1989), 96 A.R. 266 (C.A.), refd to. [para. 45].

Canada (Attorney General) v. Paulson (1973), 38 D.L.R.(3d) 225 (F.C.A.), refd to. [para. 46].

Ulin v. R., [1973] F.C. 319 (T.D.), refd to. [para. 55].

Toronto-Dominion Bank et al. v. Park Valley Village Management et al. (2004), 366 A.R. 148; 2004 ABQB 685, refd to. [para. 57].

Szmuilowicz v. Ontario (Minister of Health) et al. (1995), 82 O.A.C. 183; 24 O.R.(3d) 204 (Div. Ct.), refd to. [para. 59].

Kraft Canada Inc. v. Euro Excellence Inc., [2007] 3 S.C.R. 20; 365 N.R. 332; 2007 SCC 37, refd to. [para. 65].

Yellowbird v. Samson Cree Nation No. 444 et al. (2008), 433 A.R. 350; 429 W.A.C. 350; 2008 ABCA 270, refd to. [para. 65].

Hi Hotel Limited Partnership v. Holiday Hospitality Franchising Inc. et al. (2008), 437 A.R. 225; 433 W.A.C. 225; 2008 ABCA 276, refd to. [para. 65].

Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559; 287 N.R. 248; 166 B.C.A.C. 1; 271 W.A.C. 1; 2002 SCC 42, refd to. [para. 66].

British Columbia (Attorney General) v. Canada (Attorney General), [1994] 2 S.C.R. 41; 166 N.R. 81; 44 B.C.A.C. 1; 71 W.A.C. 1, refd to. [para. 69].

Blueberry River Indian Band v. Canada (Attorney General) - see Blueberry River Indian Band and Doig River Indian Band v. Canada (Minister of Indian Affairs and Northern Development).

Blueberry River Indian Band and Doig River Indian Band v. Canada (Minister of Indian Affairs and Northern Development), [1995] 4 S.C.R. 344; 190 N.R. 89, refd to. [para. 70].

Alberta Teachers' Association v. Information and Privacy Commissioner (Alta.) et al. (2010), 474 A.R. 169; 479 W.A.C. 169; 2010 ABCA 26, refd to. [para. 73].

Manitoba Agricultural Credit Corp. v. Heaman et al. (1991), 71 Man.R.(2d) 6 (Q.B.), affd. (1991), 75 Man.R.(2d) 67; 6 W.A.C. 67 (C.A.), refd to. [para. 80].

Calvert v. Salmon (1994), 69 O.A.C. 397; 113 D.L.R.(4th) 156 (C.A.), refd to. [para. 81].

Intec Holdings Ltd. v. Grisnich (2003), 350 A.R. 264; 2003 ABQB 993, refd to. [para. 85].

Parisian Fashions Ltd. et al. v. Petrus (1996), 195 A.R. 81 (Q.B.), refd to. [para. 106].

Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32; 206 N.R. 321; 97 O.A.C. 81, refd to. [para. 107].

Proprio Direct Inc. v. Pigeon - see Proprio Direct Inc. v. Association des courtiers et agents immobiliers du Quebec et al.

Proprio Direct Inc. v. Association des courtiers et agents immobiliers du Quebec et al., [2008] 2 S.C.R. 195; 375 N.R. 1; 2008 SCC 32, refd to. [para. 108].

Gainers Inc. v. Pocklington Holdings Inc. (2000), 255 A.R. 373; 220 W.A.C. 373; 2000 ABCA 151, refd to. [para. 121].

Statutes Noticed:

Law of Property Act, R.S.A. 2000, c. L-14, sect. 50.1 [para. 4].

Law of Property Act Regulations (Alta.), Law of Property Regulation, Reg. 89/2004, sect. 2 [para. 1].

Law of Property Regulation - see Law of Property Act Regulations (Alta.).

Authors and Works Noticed:

Alberta, Hansard, Legislative Assembly Debates (April 22, 2003), p. 1158 [para. 21].

Alberta, Hansard, Legislative Assembly Debates (March 17, 2003), pp. 508 [para. 20]; 802, 803 [para. 21].

Alberta, Hansard, Legislative Assembly Debates (May 6, 2003), pp. 1483, 1484, 1485 [para. 21].

Hansard (Alta.) - see Alberta, Hansard, Legislative Assembly Debates.

Price, Francis C.R., and Trussler, Marguerite J., Mortgage Actions in Alberta (1985), p. 1 [para. 9].

Sullivan, Ruth, Sullivan on the Construction of Statutes (5th Ed. 2008), pp. 74, 75 [para. 68]; 396 [para. 37].

Counsel:

Richard J. Cotter, Q.C., and Francine M. Ouellette, Student-at-Law (Fraser Milner Casgrain LLP), for the plaintiff, Bank of Montreal;

Anthony J. Di Lello and William H. Fric (Fric, Lowenstein & Co LLP), for the plaintiff, Bank of Montreal;

Francis N.J. Taman and Ksena J. Court (Bishop & McKenzie LLP), for the plaintiff, MCAP Service Corporation;

John W. McKinley (Caron & Partners LLP), for the defendants, Shameera Hirji and Imtiyaz S. Narsingani and as friend of the court in respect of Terry Le Lievre, Leona Le Lievre, Jonathan Hoehn and Tamara Hoehn;

Douglas S. Dartnell (Dartnell Lutz), for the defendants, Manpreet Sidhu and Bhupinder Sidhu;

Robert Normey (Alberta Justice), Solicitor for the Attorney General of Alberta.

These applications were heard on December 15, 2009, and April 20, 2010, before Mason, Master, of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following memorandum of decision on June 15, 2010.