Bank of Nova Scotia v. Bailey, (1986) 71 A.R. 321 (QBM)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 02, 1986
• Citations: (1986), 71 A.R. 321 (QBM)

BNS v. Bailey (1986), 71 A.R. 321 (QBM)

MLB headnote and full text

Bank of Nova Scotia v. Bailey and Bailey

(Action No. 8503 29089)

Indexed As: Bank of Nova Scotia v. Bailey

Alberta Court of Queen's Bench

Judicial District of Edmonton

Funduk, Master in Chambers

June 2, 1986.

Summary:

A husband owed the bank monies under a line of credit. As security, the husband and wife gave the bank a promissory note and a demand collateral mortgage. The bank applied for judgment against the husband and wife and sought a determination as to whether s. 41(1)(a) of the Law of Property Act applied to preclude the action.

A Master of the Alberta Court of Queen's Bench awarded judgment to the bank, and held that s. 41(1)(a) did not apply.

Mortgages - Topic 5405

Mortgage actions - Action on the covenant - Prohibition against - A husband and wife gave a bank a promissory note and a demand collateral mortgage as security for an existing credit line debt - The mortgage was payable on demand; the note was payable in specific monthly payments for five years - The mortgage secured both present and future indebtedness; the note secured only a specific debt - A Master of the Alberta Court of Queen's Bench held that the promise to pay in the note was not in substance a claim on the covenant to pay in the mortgage, therefore s. 41(1)(a) of the Law of Property Act did not apply to preclude an action for the debt.

Cases Noticed:

Otan Developments v. Kuropatwa (1978), 12 A.R. 15; 7 Alta. L.R.(2d) 274 (Alta. C.A.), refd to. [para. 6].

Mollot v. Mollot (1981), 39 N.R. 451; 128 D.L.R.(3d) 577 (S.C.C.), refd to. [para. 7].

Clayborn Investments v. Wiegert (1977), 5 A.R. 50; 3 Alta. L.R.(2d) 295 (C.A.), dist. [para. 15].

Merit Mortgage Group v. Sicoli, [1983] 5 W.W.R. 381 (Alta. C.A.), dist. [para. 15].

McClare v. Tadman, 34 Alta. L.R.(2d) 268 (Q.B.) dist. [para. 24].

Calgary Federal Credit Union v. McLaren (1984), 56 A.R. 1; 32 Alta. L.R.(2d) 102 (Q.B.), refd to. [para. 25].

Chateau Developments v. Steele (1983), 46 A.R. 188; 27 Alta. L.R.(2d) 112 (C.A.), dist. [para. 28].

Ukrainian (Calgary) Savings and Credit Union v. Gacek (1986), 70 A.R. 237, dist. [para. 29].

Central Trust Company v. Milchem (1986), 72 A.R. 321, refd to. [para. 33].

First Investors Corporation v. Mehra (1986), 71 A.R. 140, refd to. [para. 33].

Edmonton Savings & Credit Union Ltd. v. Brown's Estate (1986), 70 A.R. 156, refd to. [para. 35].

Bank of British Columbia v. Collen's Estate (1983), 40 A.R. 336; 22 Alta. L.R.(2d) 258 (Q.B.), refd to. [para. 40].

Canadian Imperial Bank of Commerce v. Andrejcsik (1984), 53 A.R. 137; 30 Alta. L.R.(2d) 109 (Q.B.), folld. [para. 42].

Statutes Noticed:

Law of Property Act, R.S.A. 1980, c. L-8, sect. 41(1)(a).

Counsel:

P.E. Odynak (Duncan & Craig), for the plaintiff;

R.C. Stemp (Brownlee Fryett), for the defendant, Jean Bailey.

This application was heard before Funduk, Master in Chambers, of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following judgment on June 2, 1986.