Bonang v. Wolfridge Farm Ltd., 2016 NSCA 33

• Judge: Bourgeois, Hamilton and Van den Eynden, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: February 16, 2016
• Jurisdiction: Nova Scotia
• Citations: 2016 NSCA 33;(2016), 373 N.S.R.(2d) 265 (CA)

Bonang v. Wolfridge Farm Ltd. (2016), 373 N.S.R.(2d) 265 (CA);

    1175 A.P.R. 265

MLB headnote and full text

Temp. Cite: [2016] N.S.R.(2d) TBEd. AP.049

Wolfridge Farm Ltd. f.k.a Wolfridge Farm Limited (appellant) v. Gerald P. Bonang and Dianne Bonang (respondents)

(CA 439106; 2016 NSCA 33)

Indexed As: Bonang v. Wolfridge Farm Ltd.

Nova Scotia Court of Appeal

Bourgeois, Hamilton and Van den Eynden, JJ.A.

April 28, 2016.

Summary:

The plaintiff mortgagees commenced an action seeking foreclosure on property that they sold to the defendant company in 2003. The defendant defended the action and counterclaimed that the plaintiffs breached the terms of a written agreement to remediate the property of environmental contaminants.

The Nova Scotia Supreme Court, in a decision reported at [2014] N.S.R.(2d) Uned. 13, granted the plaintiffs an order for foreclosure, sale and possession and dismissed the counterclaim. The public auction proceeded on November 10, 2014. The defendant's representative (Early) was the successful bidder. He paid the requisite 10% deposit, but did not pay the balance of the sale price. The defendant moved on November 19, 2014, seeking to have the foreclosure sale set aside, and further, the opportunity to redeem the property in question. The plaintiffs moved for a declaration that they were the successful bidders at the sale because Early had failed to complete the transaction. The plaintiffs also sought possession of the property and removal of the defendant from the property.

The Nova Scotia Supreme Court, in a decision not reported in this series of reports, held that the November 10 sale should be set aside as the timing of the newspaper advertising did not accord with the order for foreclosure, sale and possession. The deposit paid by Early was to be returned. The court heard submissions on what amount should constitute appropriate payment, in the event that the defendant sought to redeem the property. The court set a return date to hear further submissions and set a date for the next foreclosure sale, if required. The defendant moved for a declaration that the original order for foreclosure, sale and possession was void by virtue of the Farm Debt Mediation Act.

The Nova Scotia Supreme Court, in a decision not reported in this series of reports, dismissed the defendant's motion and set March 5, 2015, for the next foreclosure sale in the event that the defendant did not redeem the property. The court also set a return date. The defendant did not exercise its right to redeem the property. A foreclosure sale was conducted in accordance with the court's direction. Early was the successful bidder at the sale, and he paid the required 10% deposit. He did not pay the balance of the sale price. The matter returned to court. Early advised the court that he was no longer representing the defendant as counsel had been retained. However, given that the newly-retained counsel had advised Early the previous day that he would no longer represent the defendant, an adjournment was sought. Early also advised that the defendant, previously a Nova Scotia company, had been exported to the United States and had filed for Chapter 11 creditor protection in that jurisdiction. He advised that as a result of that filing, the defendant was seeking the assistance of counsel to have that proceeding recognized under Canadian bankruptcy legislation. He asserted that the order of the United States Bankruptcy Court served to stay the motion scheduled to be heard by the court.

The Nova Scotia Supreme Court, in a decision reported at [2015] N.S.R.(2d) Uned. 241, denied an adjournment and held that the matter was not stayed. The court held that the 10% deposit paid by Early in relation to the March 5, 2015 sale was forfeited. The court declared the plaintiffs, having been the second highest bid, as the successful bidder at the sale. The court directed the sheriff to provide a deed conveying the property to the plaintiffs, granted the plaintiffs possession of the property and authorized the sheriff, if required, to remove the defendant from the property. The court awarded costs to the plaintiffs. The defendant appealed.

The Nova Scotia Court of Appeal dismissed the appeal.

Bankruptcy - Topic 6781

Practice - Stay of proceedings - General - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The matter returned to court - Early advised that the defendant, previously a Nova Scotia company, had been exported to the United States and had filed for Chapter 11 creditor protection in that jurisdiction - He advised that as a result of that filing, the defendant was seeking the assistance of counsel to have that proceeding recognized under Canadian bankruptcy legislation - He asserted that the order of the United States Bankruptcy Court served to stay the motion currently before the court - The chambers judge determined that the motion had not been stayed - The defendant appealed, asserting that the judge erred by not recognizing the obligation under s. 267 of the Bankruptcy and Insolvency Act (BIA) to co-operate with foreign jurisdictions in cases of cross-border insolvencies - The defendant asserted the presentation of a "valid US Bankruptcy Court order" was sufficient authority, in conjunctions with the BIA, to mandate a stay - The Nova Scotia Court of Appeal rejected the argument - Although s. 267 sets out general objectives relating to the facilitation of cross-border recognition of bankruptcies, s. 269 specified a procedure for seeking the recognition of a foreign bankruptcy by a Canadian court - The defendant had not undertaken that mandatory process prior to appearing before the chambers judge - The judge had no Notice of Motion, no supporting affidavit and no authorities - The U.S. order submitted by the defendant was neither certified nor under court seal as required by the Nova Scotia Evidence and the Canada Evidence Act for the introduction of records from courts outside the jurisdiction - The judge was under no obligation to consider the request, let alone grant a remedy based upon the document presented to him - See paragraphs 22 to 26.

Conflict of Laws - Topic 5606

Bankruptcy and insolvency - General - Effect of foreign bankruptcy - [See Bankruptcy - Topic 6781 ].

Conflict of Laws - Topic 6606

Foreign judgments - Recognition of judgment of foreign state - [See Bankruptcy - Topic 6781 ].

Courts - Topic 586

Judges - Duties - Duty to hear evidence and submissions of a litigant - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The matter returned to court - The chambers judge held that Early's 10% deposit was forfeited, declared the plaintiffs, having the second highest bid, as the successful bidder at the sale, and granted them possession of the property - The defendant appealed, asserting that the judge denied it natural justice and procedural fairness by pre-determining the motion's outcome - The defendant asserted that the judge, without hearing from the parties, simply read a pre-prepared decision into the record at the hearing - The Nova Scotia Court of Appeal rejected the defendant's characterization of what happened - The parties were heard - The chambers judge had the benefit of considering the materials filed in advance of the hearing - The judge specifically advised the parties that the matter would be heard on a motion taking a half hour or less - As such, both parties were well advised that additional oral submissions would be time-limited - After hearing from Early, the judge immediately gave his oral decision - Although a court might often adjourn to consider the submissions heard, the failure to do so did not call into question the decision maker's impartiality - The judge might prepare a draft decision based on the strength of the written materials filed by the parties - If the oral submissions did not alter his preliminary view, nothing prevented him from rendering the decision as he did - The court dismissed this ground of appeal - See paragraphs 46 to 49.

Courts - Topic 592

Judges - Duties - Duty to conduct fair and impartial proceedings - [See Courts - Topic 586 ].

Courts - Topic 599.1

Judges - Duties - Duty to take sufficient time to consider evidence before rendering decision - [See Courts - Topic 586 ].

Courts - Topic 2015

Jurisdiction - General principles - Controlling abuse of its process - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The matter returned to court - The chambers judge held that Early's 10% deposit was forfeited, declared the plaintiffs, having the second highest bid, as the successful bidder at the sale, and granted them possession of the property - Early appealed, asserting that the judge impermissibly infringed the requirement in paragraph 2(c) of the Instruction to Sheriff in Practice Memorandum 1 that, in the case of a default, a new foreclosure sale be ordered - The Nova Scotia Court of Appeal rejected the argument - Neither the foreclosure Practice Memorandum, nor the Instructions to Sheriff created thereunder, shackled the chambers judge - The Practice Memorandum recognized that it was not the exclusive means of addressing foreclosure proceedings - Rather, it set out the simplified procedure to be used in "most" instances - Further, the need for flexibility was an adjunct not only to the court's power to control its own processes, but, in particular, to respond effectively to abusive conduct - The chambers judge made strong findings in relation to the abusive and improper conduct of the defendant and Early - Those findings were not challenged on appeal - In the face of that conduct, the chambers judge had ample authority to proceed as he did, and craft a remedy that brought the ongoing abuse to an end - See paragraphs 54 to 61.

Courts - Topic 2181

Jurisdiction - Loss or termination of jurisdiction upon fulfilling function (functus officio) - General - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The defendant moved to set aside the sale and for the opportunity to redeem the property in question - The plaintiffs moved for a declaration that they were the successful bidders because Early had failed to complete the transaction (the December 2014 motion) - They also sought possession of the property and removal of the defendant - On January 14, 2015, the chambers judge set aside the sale due to a procedural irregularity - The judge determined the redemption value, set a date for another foreclosure sale in the event that the defendant did not redeem the mortgage, and set a return date of April 7, 2015 - The defendant did not redeem the property - The foreclosure sale proceeded on March 5, 2015 - Early was the highest bidder - He paid the 10% deposit but did not pay the balance of the price - The matter returned to court - The chambers judge held that the 10% deposit paid by Early in relation to the March 5, 2015 sale was forfeited - The judge declared the plaintiffs, having the second highest bid, as the successful bidder at the sale and granted them possession of the property - Early appealed, asserting that the judge violated the principle of res judicata when he scheduled the April 7, 2015 hearing of the December 12, 2014 motion which was heard and decided on January 14, 2015 - He further asserted that the judge violated the doctrine of functus officio by revisiting his January 14, 2015 decision in his April 7, 2015 decision - The Nova Scotia Court of Appeal rejected the assertions - The chambers judge did not dismiss the plaintiffs' motion on January 14, 2015 - Rather, he anticipated that if the history of incomplete sales continued, it would be heard in the future - As such, he was not functus and his ruling did not violate the principle of res judicata - See paragraphs 27 to 33.

Courts - Topic 2181

Jurisdiction - Loss or termination of jurisdiction upon fulfilling function (functus officio) - General - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The defendant obtained an order setting aside the sale due to a procedural irregularity - The judge determined the redemption value, set a date for another foreclosure sale in the event that the defendant did not redeem the mortgage, and set a return date - The defendant did not redeem the property - The foreclosure sale proceeded - Early was the highest bidder - He paid the 10% deposit but did not pay the balance of the price - The matter returned to court - The chambers judge held that Early's 10% deposit was forfeited, declared the plaintiffs, having the second highest bid, as the successful bidder at the sale, and granted them possession of the property - Early appealed, asserting that the judge was functus by virtue of the earlier order for foreclosure, sale and possession - The Nova Scotia Court of Appeal rejected the assertion - The purpose of the doctrine of functus officio was to ensure that final judgments remained final - Orders for foreclosure and sale were not final, but an interim step in the process leading to concluding a sale - They were subject to variation in appropriate circumstances - The judge was not functus and was entitled exercise the court's inherent jurisdiction to amend the order for foreclosure, sale and possession - See paragraphs 34 to 36.

Evidence - Topic 3793

Documentary evidence - Public documents - Judicial records - Foreign court records - [See Bankruptcy - Topic 6781 ].

Mortgages - Topic 4612

Redemption of mortgage - General principles - Requirement of exercise of right - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - Several attempts to sell the property at public auction had previously been frustrated by the defendant through the actions of its representative (Early) - Early bid $279,000 at the auction, which was the highest bid - The second highest bid was $278,636.86 - As the successful bidder, Early paid the requisite deposit ($27,900) - He did not pay the balance of the sale price - The matter returned to court - The chambers judge held that Early's 10% deposit was forfeited, declared the plaintiffs, having the second highest bid, as the successful bidder at the sale, and granted them possession of the property - Early appealed, asserting that the remedy imposed by the judge infringed paragraph 2(d) of the Instruction to Sheriff in Practice Memorandum 1, as it was entitled to a part of the proceeds of sale - It asserted that it could of redeemed just before the sale by paying $249,478.11 - As such there was a surplus in excess of $25,000 after paying the sheriff's fee - As another person was entitled to part of the proceeds, a sale made under paragraph 2(d) was in error and the sale should be reversed - It asserted that Early, the successful bidder, was treated as if he had not bid - Given that the property was sold to the plaintiffs for the minimum bid, Early's deposit should be returned to him - The Nova Scotia Court of Appeal stated that in effect, the defendant asserted that, notwithstanding its abusive conduct (as found by the chambers judge), Early's deposit should be returned, and it should be given the benefit of applying the lower redemption value to calculate a "surplus", which it claimed - The deposit which the defendant sought was only forfeited because of its decision not to complete the foreclosure sale - There was no reason in law, or in equity, for the court to intervene at its behest - If the defendant wished to obtain the benefit of a lower value, it could have redeemed the property - Instead of doing that, it put the plaintiffs through the delay of another sale while it continued to occupy the property and operate its business without payment of normal overhead - There was no rationale to permit the defendant to utilize the redemption value it chose not to act upon to create a surplus - If the court acceded to that request, it would serve to reward the deliberate frustration of what should have been a straightforward enforcement process - See paragraphs 62 to 65.

Mortgages - Topic 5513

Mortgage actions - Action for foreclosure and sale - Foreclosure order - Amending, staying or vacating - [See second Courts - Topic 2181 ].

Mortgages - Topic 5582

Mortgage actions - Setting aside a judicial or foreclosure sale - Jurisdiction - [See second Courts - Topic 2181 ].

Mortgages - Topic 5584

Mortgage actions - Setting aside a judicial or foreclosure sale - Grounds - General - [See Mortgages - Topic 4612 ].

Mortgages - Topic 5666

Mortgage actions - Sale - Procedure - [See Courts - Topic 2015 and Mortgages - Topic 4612 ].

Practice - Topic 9

General principles and definitions - Dispensing with compliance with rules - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the successful bidder at the November 2014 sale and paid the requisite 10% deposit, but did not pay the balance of the sale price - The defendant moved to set aside the sale and for the opportunity to redeem the property in question - The plaintiffs moved for a declaration that they were the successful bidders because Early had failed to complete the transaction (the December 2014 motion) - They also sought possession of the property and removal of the defendant - The chambers judge set aside the sale due to a procedural irregularity - The judge determined the redemption value, set a date for another foreclosure sale in the event that the defendant did not redeem the mortgage, and set a return date of April 7, 2015 - The defendant did not redeem the property - The foreclosure sale proceeded - Early was the highest bidder - He paid the 10% deposit, but did not pay the balance of the price - The matter returned to court - The chambers judge held that Early's 10% deposit was forfeited, declared the plaintiffs, having the second highest bid, as the successful bidder at the sale, and granted them possession of the property - Early appealed, asserting that the judge ruled on a non-existent motion - It asserted that as the plaintiffs had not filed a new motion pursuant to rule 23 of the Civil Procedure Rules after the November 2014 sale was set aside, the court could not rely on the plaintiffs' December 2014 motion to found the April 7, 2015 decision - The Nova Scotia Court of Appeal rejected the argument - The chambers judge made it clear that the remedy sought by the plaintiffs in the December 2014 motion would be revisited should the defendant repeat its pattern of placing the highest bid at sale, only to default on final payment - The defendant was aware of the judge's intention and made no objection to it - Although the plaintiffs could have filed a new motion and the judge could have requested that to be done, any technical non-compliance with the Rules had no impact on the defendant's awareness of, or ability to respond to, what was being requested by the court - In the absence of resulting prejudice, the court refused to intervene - See paragraphs 50 to 53.

Practice - Topic 3124

Applications and motions - Motions - Procedure for - [See Practice - Topic 9 ].

Practice - Topic 3129

Applications and motions - Motions - Adjournments - The plaintiff mortgagees obtained an order for the foreclosure and sale of property that they had sold to the defendant company - The defendant's representative (Early) was the highest bidder - He paid the 10% deposit but did not pay the balance of the price - The matter returned to court - Early advised the court that he was no longer representing the defendant, as counsel had been retained - However, given that the newly-retained counsel had advised Early the previous day that he would no longer represent the defendant, an adjournment was requested - Early also advised that the defendant, previously a Nova Scotia company, had been exported to the United States and had filed for Chapter 11 creditor protection in that jurisdiction - He advised that as a result of that filing, the defendant was seeking the assistance of counsel to have that proceeding recognized under Canadian bankruptcy legislation - The chambers judge denied an adjournment - The defendant appealed the denial - The Nova Scotia Court of Appeal stated that the standard of review for such a discretionary decision was a highly deferential one - The context of the proceeding as a whole had to be considered - Early did not seek to retain counsel for the April 7 hearing until April 2, which was the last business day before April 7 - The hearing date had been set for over two months - The defendant was aware of the bankruptcy application over a month in advance of the April 7 hearing - There was no reason for the court to interfere with the chambers judge's exercise of discretion - See paragraphs 15 to 21.

Practice - Topic 5068.2

Conduct of trial - Adjournments - Self-represented litigants (incl. adjournment to consult counsel) - [See Practice - Topic 3129 ].

Practice - Topic 5075

Conduct of trial - Adjournments - Review of decision to refuse adjournment - [See Practice - Topic 3129 ].

Counsel:

John T. Early III, for the appellant;

James J. White, for the respondent.

This appeal was heard at Halifax, Nova Scotia, on February 16, 2016, by Bourgeois, Hamilton and Van den Eynden, JJ.A., of the Nova Scotia Court of Appeal. Bourgeois, J.A., delivered the following reasons for judgment for the court on April 28, 2016.