Canadian Imperial Bank of Commerce v. Secrist, (1993) 140 A.R. 111 (QB)

• Judge: Rooke, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: May 27, 1993
• Citations: (1993), 140 A.R. 111 (QB)

CIBC v. Secrist (1993), 140 A.R. 111 (QB)

MLB headnote and full text

Canadian Imperial Bank of Commerce (plaintiff/defendant by counterclaim) v. Gary Lloyd Secrist and T. Dianne Secrist (defendants/plaintiffs by counterclaim)

(Action Nos. 9101-01247; 9101-01248)

Indexed As: Canadian Imperial Bank of Commerce v. Secrist

Alberta Court of Queen's Bench

Judicial District of Calgary

Rooke, J.

May 27, 1993.

Summary:

The bank sued the defendants on three promissory notes. The defendants claimed that s. 41(1) of the Law of Property Act limited the bank to realizing on two mort­gages. The bank claimed s. 41(1) did not apply, because the mortgages were collateral to the notes. Additionally, the defendants claimed there was a settlement agreement constituting an accord and satisfaction of the claims and that noncompliance with the Farm Debt Review Act precluded judgment.

The Alberta Court of Queen's Bench granted judgment to the bank. There was no settlement agreement, the Farm Debt Review Act was sufficiently complied with and s. 41(1) of the Law of Property Act did not apply.

Contracts - Topic 4605

Discharge and termination - Accord and satisfaction - What constitutes - A bank sued the defendants for monies owing under three promissory notes - The de­fendants claimed the parties reached a settlement agreement constituting an accord and satisfaction of the debt - The Alberta Court of Queen's Bench stated that the defendants had to prove an offer and acceptance on an unconditional basis, or on conditions which were satisfied or waived in law - The court held that there was no settlement - The defendants pro­posed a settlement and the bank employees agreed to investigate and, if certain condi­tions were met, recommend the proposal to their superiors - When the first condition was not met, the proposal was rejected within a reasonable time - See paragraphs 30 to 49.

Mortgages - Topic 5405

Mortgage actions - Action on the covenant - Prohibition against - The Alberta Court of Queen's Bench stated that "where a promissory note and mortgage contain the same obligation, the net effect of an action on the note is an action to recover the debt incurred under and by virtue of the mort­gage and as such is barred by s. 41 of the [Law of Property] Act. ... if the promissory note is co-existent in both form and sub­stance with the covenant to pay in the mortgage, then s. 41(1) prevents recovery on the promissory note beyond the amount that might be realized under the mortgage. However ... identical dates and amounts are not determinative of whether s. 41(1) applies, but rather ... it is 'all the circum­stances of the case' that determines whether the mortgage in question was merely collateral to the promissory note" - See paragraphs 62, 69.

Mortgages - Topic 5405

Mortgage actions - Action on the covenant - Prohibition against - The Alberta Court of Queen's Bench stated that s. 41(1) of the Law of Property Act did not preclude judgment on promissory notes where two mortgages were merely collateral security for the loan evidenced by the promissory notes - The parties agreed the mortgages were collateral to the notes - The lands were already mortgaged - Significant other security was held in addition to the mort­gages - Much of the original loans were a consolidation of existing indebtedness - The loans were restricted under special programs for farmers - No independent appraisal of the equity in the mortgaged lands was done - See paragraphs 62 to 71.

Mortgages - Topic 7757

Mortgagee's remedies - Statutory suspen­sion (farmland security legislation) - Prac­tice - Notice of foreclosure proceedings - Section 22(1) of the Farm Debt Review Act required a secured creditor intending to realize on security of a farmer to give written notice in the prescribed form, containing prescribed information, and advising the farmer of his right to apply under s. 20 for a stay of proceedings - The bank sued on three promissory notes -Two mortgages and other security consti­tuted collateral security to the notes - The bank failed to list the notes as security under the form - The Alberta Court of Queen's Bench stated that s. 22(1) was complied with - Effective notice was given of the right to apply for a stay - Even if the notes were "security", which they were not, the defendants were not prejudiced where they obtained the maxi­mum stays allowed - See paragraphs 56 to 61.

Negotiable Instruments - Topic 6002

Promissory notes - Nature of - The Alberta Court of Queen's Bench stated that promissory notes were merely evidence of indebtedness and not "security" - See paragraphs 56 to 61.

Cases Noticed:

Brogden v. Metropolitan Railway Co. (1877), L.R. 2 H.L. 666, refd to. [para. 38].

Cole v. Sumner (1900), 30 S.C.R. 379, refd to. [para. 38].

Noel v. Paulin (1987), 82 N.B.R.(2d) 307; 208 A.P.R. 307 (Q.B.), refd to. [para. 38].

Saperstein v. Drury, [1943] 3 W.W.R. 193 (B.C.C.A.), refd to. [para. 44].

Farm Credit Corp. v. Bartha, [1989] A.J. No. 1205 (Alta. Q.B.), refd to. [para. 45].

Turney and Turney v. Zhilka (1959), 18 D.L.R.(2d) 447, refd to. [para. 47].

Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072; 20 N.R. 500; 9 A.R. 308, refd to. [para. 47].

Metropolitan Trustco of Canada v. Pres­sure Concrete Services Ltd. (1973), 37 D.L.R.(3d) 649 (Ont. H.C.), refd to. [para. 47].

McCauley v. McVey and MacFarlane, [1980] 1 S.C.R. 165; 27 N.R. 604; 98 D.L.R.(3d) 577, dist. [para. 47].

Akermann v. Blois (1975), 13 N.S.R.(2d) 8; 9 A.P.R. 8 (T.D.), refd to. [para. 47].

Gilkes v. Loucks (1989), 101 A.R. 25 (Q.B.), refd to. [para. 60].

Edmonton Savings and Credit Union Ltd. v. H.R. Miller Homes Ltd. (1986), 70 A.R. 81 (Q.B. Master), refd to. [para. 60].

Provincial Mortgage Exchange Inc. v. Quitely (1986), 43 Alta. L.R.(2d) 246 (Q.B. Master), refd to. [para. 60].

Tangye v. Calmonton Investments (1988), 87 A.R. 22; 71 Alta. L.R.(2d) 42 (C.A.), refd to. [para. 60].

Saskatoon Motordrome Ltd. v. Pleasant Valley Farms Ltd. et al. (1986), 54 Sask.R. 123 (Q.B.), refd to. [para. 61].

Clayborn Investments Ltd. v. Wiegert (1977), 5 A.R. 50; 3 Alta. L.R.(2d) 295 (C.A.), refd to. [para. 62].

Merit Mortgage Group Ltd. v. Sicoli, [1983] 5 W.W.R. 381; 75 A.R. 204 (C.A.), refd to. [para. 62].

Canadian Imperial Bank of Commerce v. Andrejcsik (1984), 53 A.R. 137; 30 Alta. L.R.(2d) 109 (Q.B.), refd to. [para. 65].

Bank of Nova Scotia v. Bailey (1986), 71 A.R. 321; 45 Alta. L.R.(2d) 259 (Q.B. Master), refd to. [para. 65].

Tuxedo Savings and Credit Union Ltd. v. Krusky (1987), 75 A.R. 190; 49 Alta. L.R.(2d) 282 (C.A.), refd to. [para. 65].

Royal Bank of Canada v. Platts (1987), 82 A.R. 397; 56 Alta. L.R.(2d) 275 (C.A.), refd to. [para. 65].

Ipsco Inc. v. Russell (1989), 100 A.R. 77 (C.A.), refd to. [para. 65].

Alberta (Treasury Branches) v. Bullock and Bullock (1992), 126 A.R. 349 (Q.B.), refd to. [para. 65].

Edmonton Savings and Credit Union Ltd. v. Weir (1987), 57 Alta. L.R.(2d) 43 (Q.B. Master), revsd. 86 A.R. 329; 58 Alta. L.R.(2d) 144 (Q.B.), refd to. [para. 66].

Canadian Imperial Bank of Commerce v. Chan and Wong (1992), 130 A.R. 67 (Q.B. Master), refd to. [para. 77].

Statutes Noticed:

Bank Act, R.S.C. 1980, c. B-1, sect. 178 [para. 9].

Farm Debt Review Act, R.S.C. 1985, c. F-2.3, sect. 22(1) [para. 56]; sect. 23, sect. 29 [para. 21].

Interest Act, R.S.C. 1985, c. I-18, gen­erally [para. 77].

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

Rules of Court (Alta.), rule 218.1 [para. 36].

Authors and Works Noticed:

Price and Trussler, Mortgage Actions in Alberta (1985), p. 404 [para. 62].

Counsel:

K. Horner and D. Findley, for the plaintiff;

S. Kaupp and M. Schultz, for the defen­dants.

This action was heard before Rooke, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the fol­lowing judgment on May 27, 1993.