CitiFinancial Canada East Corp. v. Morrow (Bankrupt), 2006 NBQB 132

• Judge: Glennie, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: January 24, 2005
• Jurisdiction: New Brunswick
• Citations: 2006 NBQB 132;(2006), 302 N.B.R.(2d) 240 (TD)

CitiFinancial v. Morrow (2006), 302 N.B.R.(2d) 240 (TD);

    302 R.N.-B.(2e) 240; 784 A.P.R. 240

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2006] N.B.R.(2d) TBEd. AP.045

CitiFinancial Canada East Corporation, a body corporate, duly incorporated under the laws of New Brunswick (applicant) v. A.C. Poirier & Associates Inc., a body corporate, in its capacity as Trustee in Bankruptcy of the Bankruptcy Estates of Mark Wallace Morrow and Crystal Dawn Morrow (respondent)

(NB 11066 and 11067; 2006 NBQB 132)

Indexed As: CitiFinancial Canada East Corp. v. Morrow (Bankrupt)

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Saint John

Glennie, J.

February 21, 2006.

Summary:

CitiFinancial had two mortgages on the Morrows' property the day the Morrows' went bankrupt. Only one mortgage was registered under the Land Titles Act and the trustee in bankruptcy had notice of the other. CitiFinancial filed a proof of secured claim with the trustee for the value of both mort­gages. The trustee disallowed Citifinancial's claim with respect to the unregistered mort­gage. Citifinancial appealed.

The Registrar of the New Brunswick Court of Queen's Bench, In Bankruptcy and In­solvency, in a decision reported 285 N.B.R.(2d) 317; 744 A.P.R. 317, dismissed the appeal. CitiFinancial appealed.

The New Brunswick Court of Queen's Bench, Trial Division, allowed the appeal.

Bankruptcy - Topic 403

Property of bankrupt - General - Rights of trustee - [See Bankruptcy - Topic 3652.1 ].

Bankruptcy - Topic 3652.1

Creditors - General - Priorities - Unper­fected or unregistered security interest v. trustee - CitiFinancial had two mortgages on the Morrows' property the day the Morrows' went bankrupt - Only one mort­gage was registered under the Land Titles Act (N.B.) and the trustee in bankruptcy had notice of the other - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, held that CitiFinancial was entitled to file proofs claim as a secured creditor in respect of both mortgages - A trustee in bankruptcy had no higher rights than the bankrupt and took the bankrupt's property merely as a successor in interest and not as an innocent purchaser for value without notice - A trustee took the property of the bankrupt subject to the equities and, in New Brunswick, subject to the provisions of s. 15 of the Land Titles Act, which included an unregistered mortgage - The Land Titles Act did not contain clear lan­guage modifying the trustee's rights.

Bankruptcy - Topic 3937

Secured creditors - What constitutes a secured creditor - Respecting mortgages - Equitable mortgages - [See Bankruptcy - Topic 3652.1 ].

Bankruptcy - Topic 4101

Secured creditors - Mortgages - General - [See Bankruptcy - Topic 3652.1 ].

Mortgages - Topic 209

Equitable mortgages - Equitable mortgage - Enforcement of - [See Bankruptcy - Topic 3652.1 ].

Mortgages - Topic 311

Land titles (Torrens) system - Priorities - [See Bankruptcy - Topic 3652.1 ].

Real Property - Topic 8014.3

Title - Registration of instruments, etc. - Land titles system - Registration - Effect of failure to register - [See Bankruptcy - Topic 3652.1 ].

Cases Noticed:

Yale v. MacMaster (1974), 46 D.L.R.(3d) 167 (Ont. H.C.), consd. [para. 24].

Flintoft v. Royal Bank of Canada, [1964] S.C.R. 631; 7 C.B.R.(N.S.) 78; 47 D.L.R.(2d) 141, refd to. [paras. 25, 27].

Canadian Western Millwork Ltd., Re - see Flintoft v. Royal Bank of Canada.

Weyman, Re (1929), 10 C.B.R. 547 (Ont. Registrar), refd to. [para. 25].

Canadian Engineering & Contracting Co., Re (1994), 28 C.B.R.(3d) 136; 1994 CarswellOnt 305 (Gen. Div.), consd. [para. 44]; refd to. [para. 25].

Little Souris Holdings Ltd., Re; Kelleher v. Westoba Credit Union Ltd. (1979), 32 C.B.R.(N.S.) 178 (Man. Q.B.), refd to. [para. 26].

Giffen (Bankrupt), Re, [1998] 1 S.C.R. 91; 222 N.R. 19; 101 B.C.A.C. 161; 164 W.A.C. 161; 1 C.B.R.(4th) 115; 1998 CarswellBC 147; 1998 CarswellBC 148, consd. [para. 28]; refd to. [para. 47].

Lefebvre (Bankrupt), Re, [2004] 3 S.C.R. 326; 326 N.R. 353; 244 D.L.R.(4th) 513; 7 C.B.R.(5th) 243; 2004 CarswellQue 2831; 2004 SCC 63, consd. [para. 32]; refd to. [para. 48].

DaimlerChrysler Services Canada Inc. v. Lebel - see Lefebvre (Bankrupt), Re.

GMAC Leaseco Ltd. v. Chabot (Raymond) Inc. - see Lefebvre (Bankrupt), Re.

Wharton v. Smerychynski (2000), 262 A.R. 73; 2000 CarswellAlta 303 (Q.B.), consd. [para. 35].

Durrani v. Augier et al., [2000] O.T.C. 607 (Sup. Ct.), consd. [para. 36].

Vancouver City Savings Credit Union v. Hu et al., [2005] B.C.T.C. 712; 31 R.P.R.(4th) 309 (S.C.), consd. [para. 37].

CIBC Mortgages Inc. v. Registrar of Titles (Sask.) (2005), 273 Sask.R. 137; 2005 CarswellSask 733 (Q.B.), consd. [para. 38].

Canadian Imperial Bank of Commerce v. Saskatchewan Lawyers' Insurance Asso­ciation Inc. (1996), 140 Sask.R. 114; 1996 CarswellSask 21 (Q.B.), consd. [para. 46].

International Harvester Credit Corp. of Canada Ltd. v. Bell's Dairy Ltd. (Bank­rupt) (1986), 50 Sask.R. 177; 30 D.L.R.(4th) 387; 34 B.L.R. 76 (C.A.), consd. [para. 47].

Ouellet (Bankrupt), Re, [2004] 3 S.C.R. 348; 326 N.R. 379; 2004 CarswellQue 2833, consd. [para. 53].

Commercial Textiles Ltd., Re (1940), 21 C.B.R. 387 (Ont. S.C.), refd to. [para. 57].

Husky Oil Operations Ltd. v. Minister of National Revenue et al., [1994] 1 W.W.R. 629; 116 Sask.R. 46; 59 W.A.C. 46; 22 C.B.R.(3d) 153 (C.A.), refd to. [para. 58].

Dartmouth (City) v. Barclays Bank of Canada et al. (1996), 151 N.S.R.(2d) 264; 440 A.P.R. 264; 40 C.B.R.(3d) 1 (C.A.), refd to. [para. 59].

Manco Home Systems Ltd., Re, 1990 CarswellBC 398 (C.A.), refd to. [para. 65].

Royal Bank of Canada v. MacKesey (1991), 97 Sask.R. 102; 10 C.B.R.(3d) 146 (C.A.), consd. [para. 69].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 2(1) [para. 56].

Land Titles Act, S.N.B. 1981, c. L-1.1, sect. 15(1) [para. 21]; sect. 61(1) [para. 60].

Personal Property Security Act, S.N.B. 1993, c. P-7.1, sect. 20(2) [para. 30].

Authors and Works Noticed:

Anger and Honsberger, The Law of Real Property (2nd Ed. 1985), paras. 1628, 1629 [para. 34].

Halsbury's Laws of England (4th Ed. 1976), vol. 3(2), para. 394 [para. 22].

Houlden, Lloyd W., and Morawetz, Geof­frey B., Bankruptcy and Insolvency Law of Canada (3rd Ed.) (Looseleaf Supp.), vol. 2, pp. 3-11 [para. 22]; 3-122, para. F§33.1 [para. 25]; 3-123, para. F§33.1 [para. 26].

Neave, Marsha, Indefeasibility of Title in the Canadian Context (1976), 26 U.T.L.J. 173, p. 174 [para. 36].

Rayner, W.B., and McLaren, R.H., Falcon­bridge on Mortgages (4th Ed. 1977), §10.9 [para. 41]; 10.10 [para. 42]; 10.11 [para. 40].

Counsel:

Frederick A. Welsford, for the applicant;

Max W. Richardson, for the respondent.

This appeal was heard on January 24, 2005, by Glennie, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Saint John, who delivered the following oral decision on February 21, 2006.