Degelder Construction Co. v. Dancorp Developments Ltd. et al., (1996) 73 B.C.A.C. 45 (CA)

• Judge: Lambert, Gibbs and Newbury, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: March 22, 1996
• Jurisdiction: British Columbia
• Citations: (1996), 73 B.C.A.C. 45 (CA)

Degelder Constr. Co. v. Dancorp Dev. (1996), 73 B.C.A.C. 45 (CA);

    120 W.A.C. 45

MLB headnote and full text

Degelder Construction Co. Ltd. (plaintiff) v. Dancorp Developments Ltd. (defendant/appellant) and Metropolitan Trust Company of Canada and Dunwoody Ltd. (defendants/respondents) and Mike Degelder and William Little (defendants by counterclaim) and Metropolitan Trust Company of Canada, Owen Bird, Seaboard Life Insurance Company, Co-Operators Life Insurance Company, Confederation Life Insurance Company, and Dunwoody Ltd. (third parties)

(CA019339)

Indexed As: Degelder Construction Co. v. Dancorp Developments Ltd. et al.

British Columbia Court of Appeal

Lambert, Gibbs and Newbury, JJ.A.

March 22, 1996.

Summary:

Following a summary trial under rule 18A, the defendant Dancorp's counterclaim was dismissed in its entirety. Dancorp appealed.

The British Columbia Court of Appeal ordered that certain claims proceed to trial in the usual way.

Creditors and Debtors - Topic 1064

Debtors' rights - Before payment - Demand for payment - Sufficiency of - The British Columbia Court of Appeal stated that provided an event of default existed at the time of demand, a lender need not identify, at the time it makes demand, its reasons for doing so - See paragraph 14.

Creditors and Debtors - Topic 1065

Debtors' rights - Before payment - Rea­sonable notice of requirement to pay - A mortgagee sent a demand for payment and notice of its intention to appoint a receiver to the mortgagor's address as specified in two mortgages on December 24, 1990 - The letters required payment of both mort­gages no later than 9:30 a.m. on December 27, 1990 - Because of intervening Christ­mas holidays, the letters did not come to the attention of the mortgagor until the morning of the 27th - Since the receiver was in place at 3:15 p.m. that day, the mortgagor received about six hours notice - The British Columbia Court of Appeal affirmed that in this case, where the mort­gagee's security was in jeopardy, the mort­gagor received reasonable notice - See paragraphs 19 to 31.

Criminal Law - Topic 1744

Offences against property - Criminal interest rate - Effective rate of interest - A mortgagee would receive a "bonus" of 30 percent of the gross amount of each loan advance, deducted by the mortgagee - Interest on the principal sum was at the bank prime rate plus two per­cent per annum, accruing daily, and calcu­lated, compounded and payable monthly in arrears - The mortgagor was to pay a "placement and processing fee", the mort­gagee's solicitors' fees and a five percent fee on all principal funds advanced ex­ceeding $1,550,000 - The entire loan was due December 31, 1990, but not paid in full until January 29, 1993 - The British Columbia Court of Appeal, calculating interest over the actual time during which the loan remained unpaid, held that the mortgagee did not receive interest at a criminal rate - See paragraphs 32 to 42.

Estoppel - Topic 1171

Estoppel in pais (by conduct) - Represen­tation - By conduct - Variation of con­tract - [See Mortgages - Topic 1384 ].

Estoppel - Topic 1301

Estoppel in pais (by conduct) - Approba­tion and reprobation - General - [See Mortgages - Topic 1384 ].

Mortgages - Topic 1384

The mortgage - Variation of - Side agreements - A lender agreed to finance remedial construction work necessitated by a design error in return for a second mort­gage - The borrower alleged the repay­ment date had been extended - The British Columbia Court of Appeal affirmed that there was no "umbrella" agreement between the parties to extend repayment - The court further affirmed that there were no words or conduct by the lender or reliance by the borrower which would estop the lender from enforcing the repay­ment date in the loan agreements - Nor did the lender "elect" to delay the due date of the loan - See paragraphs 3 to 12.

Mortgages - Topic 3004

Payment of mortgage - Default - What constitutes - [See Mortgages - Topic 8203 ].

Mortgages - Topic 8203

Statutory and contractual rights - Ap­pointment of receiver - Grounds - The British Columbia Court of Appeal affirmed that the following constituted a material adverse change in the risk constituting default under the mortgage and justifying the appointment of a receiver by the mort­gagee: (1) registration of a judgment against the property; (2) admission by the mortgagor that it lacked funds to pay the judgment into court and was unable to obtain alternate financing; (3) various construction deficiencies which the pur­chasers required to be remedied before purchase; (4) the mortgagor's termination of its surveyor and architect for inability to pay them; (5) the fear that various trades would cease work on the project and (6) the mortgagor's statement that it was plac­ing conditions on its continued cooperation - See paragraph 15.

Cases Noticed:

Orangeville Raceway Ltd. v. Wood Gundy Inc. et al. (1995), 59 B.C.A.C. 241; 98 W.A.C. 241; 6 B.C.L.R.(3d) 391 (C.A.), refd to. [para. 2].

Bank of Montreal v. Wilder (1983), 47 B.C.L.R. 9, affd. [1986] 2 S.C.R. 551; 70 N.R. 341, consd. [para. 5].

Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd. (1991), 120 A.R. 241; 8 W.A.C. 241 (C.A.), affd. [1994] 1 S.C.R. 552; 166 N.R. 1; 149 A.R. 256; 63 W.A.C. 256; 18 Alta. L.R.(3d) 2, refd to. [para. 14].

Kavcar Investments Ltd. et al. v. Aetna Financial Services Ltd. and Coopers & Lybrand (1989), 35 O.A.C. 305; 70 O.R.(2d) 225 (C.A.), refd to. [para. 14].

Pax Management Ltd. v. Canadian Imperial Bank of Commerce (1988), 1 C.B.R.(3d) 31 (B.C.S.C.), refd to. [para. 14].

Holmes, Re (1975), 20 C.B.R.(N.S.) 111 (Ont. S.C.), refd to. [para. 17].

536646 Ontario Inc., Re (1987), 63 C.B.R.(N.S.) 222 (Ont. S.C.), refd to. [para. 17].

Operation I Inc., Re (1985), 55 C.B.R.(N.S.) 304 (Ont. S.C.), refd to. [para. 17].

Action Video Centre Ltd., Re (1979), 33 C.B.R.(N.S.) 14 (B.C.S.C.), refd to. [para. 17].

Canada (Attorney General) v. Gordon (Trustee of) (1992), 15 C.B.R.(3d) 100 (Sask. Q.B.), refd to. [para. 18].

Lister (Ronald Elwyn) Ltd. et al. v. Dunlop Canada Ltd., [1982] 1 S.C.R. 726; 42 N.R. 181, appld. [para. 19].

Royal Bank of Canada v. Got (W.) & Associates Electric Ltd. et al., [1994] 5 W.W.R. 337; 150 A.R. 93 (Q.B.), consd. [para. 22].

Four K Western Equipment Ltd. v. Canadian Imperial Bank of Commerce (1983), 46 C.B.R.(N.S.) 146 (B.C.S.C.), refd to. [para. 23].

Federal Business Development Bank v. Dunn, [1984] 6 W.W.R. 46; 35 Sask.R. 4 (Q.B.), affd. [1989] 4 W.W.R. 662; 74 Sask.R. 180 (C.A.), refd to. [para. 24].

Mister Broadloom Corp. (1968) Ltd. v. Bank of Montreal (1979), 32 C.B.R. (N.S.) 241 (Ont. H.C.), refd to. [para. 25].

Whonnock Industries Ltd. v. National Bank of Canada, [1987] 6 W.W.R. 316 (B.C.C.A.), refd to. [para. 25].

Waldron v. Royal Bank of Canada (1991), 53 B.C.L.R.(2d) 294 (C.A.), refd to. [para. 30].

Nelson v. C.T.C. Mortgage Corp. (1984), 67 N.R. 162; 59 B.C.L.R. 221, affd. [1986] 1 S.C.R. 749; 67 N.R. 161; 16 D.L.R.(4th) 139, consd. [para. 37].

Vandekerkhove v. Litchfield (1995), 1 B.C.L.R.(3d) 70 (C.A.), refd to. [para. 37].

Pacific National Developments Ltd. v. Standard Trust Co. (1991), 53 B.C.L.R.(2d) 158 (S.C.), refd to. [para. 37].

Statutes Noticed:

Company Act, R.S.B.C. 1979, c. 59, sect. 228(1)(a) [para. 23].

Criminal Code, R.S.C. 1985, c. C-46, sect. 347(1), sect. 347(2), sect. 347(3) [para. 33].

Authors and Works Noticed:

Halsbury's Laws of England (4th Ed. 1976), vol. 16, paras. 955 [para. 9]; 957 [para. 11].

Counsel:

D.W. Roberts, Q.C., and W.A. Baker, for the appellant, Dancorp Developments Ltd.;

W.C. Kaplan and F.L. Lamer, for the respondent, Metropolitan Trust Co. of Canada;

R.J. Sewell, for Seaboard Life Insurance Co., Co-Operators Life Insurance Co. and Confederation Life Insurance Co.;

D.R. Bennett, for the respondent, Dunwoody Ltd.;

No one appeared on behalf of Degelder Construction Co.

This appeal was heard in Vancouver, British Columbia, on January 29 to 31 and February 1 and 2, 1996, before Lambert, Gibbs and Newbury, JJ.A., of the British Columbia Court of Appeal. The decision of the court was delivered by Newbury, J.A., on March 22, 1996.