Base Mortgage & Investments Ltd. (Receivership) et al., Re, 2016 ABCA 163

• Judge: Wakeling, J.A.
• Court: Court of Appeal (Alberta)
• Case Date: Thursday May 12, 2016
• Citations: 2016 ABCA 163;[2016] A.R. TBEd. JN.001

Easy Loan Corp. v. Base Mortgage, [2016] A.R. TBEd. JN.001

MLB being edited

Currently being edited for A.R. - judgment temporarily in rough form.

Temp. Cite: [2016] A.R. TBEd. JN.001

Easy Loan Corporation and Mike Terrigno (applicants) v. Base Mortgage & Investments Ltd., Base Finance Ltd., Arnold Breitkreutz, Susan Breitkreutz, Susan Way and GP Energy Inc. (respondents) and Tom Wiseman (interested party)

(1601-0044-AC; 2016 ABCA 163)

Indexed As: Base Mortgage & Investments Ltd. (Receivership) et al., Re

Alberta Court of Appeal

Wakeling, J.A.

May 27, 2016.

Summary:

Investors provided funds to Base Finance Ltd. with the understanding that Base Finance was to pool and lend the funds to borrowers as part of its mortgage broker business. Base Finance deposited the funds into its bank account. The Alberta Securities Commission issued an order freezing Base Finance Ltd.'s bank account. Base Finance was placed into receivership. The receiver applied for an order remitting the funds in the bank account to it so that it could continue with its work. The investors asserted that Base Finance, instead of lending the funds to borrowers, operated a Ponzi scheme in which it continued to solicited investments from its investor group so that it could maintain the interest payments and principal redemption requirements of its investor group. The investors asserted that the funds in the bank were impressed with a constructive trust for the benefit of all of the investors who Base Finance defrauded.

The Alberta Court of Queen's Bench directed that the funds in the bank account were to remain frozen and that a hearing should be scheduled to hear applications concerning entitlement to the funds. Several investors applied for recovery of the funds that they had provided to Base Finance, asserting that Base Finance held the funds in trust for them. The receiver opposed the applications.

The Alberta Court of Queen's Bench, in a decision reported at [2016] A.R. TBEd. FE.046, imposed a constructive a trust over the funds in the bank account for the benefit of the applicant investors, and other investors who were defrauded by Base Finance. The court determined the methodology to be used to distribute the trust funds. (Yamauchi, J.'s decision) Easy Loan Corporation and Terrigno, the original applicants who sought and obtained the appointment of the receiver, filed a notice of appeal that indicated that they were challenging the whole of Yamauchi, J.'s decision. Easy Loan and Terrigno applied for leave to file an amended notice of appeal. The amended notice of appeal challenged (1) the methodology used to decide what interest each beneficiary had in the trust funds, and (2) the lack of accounting for any sums that had already been paid to some of the investors by the individual who operated the fraudulent scheme.

The Alberta Court of Appeal, per Wakeling, J.A., allowed the application.

Courts - Topic 8385

Provincial courts - Alberta - Court of Appeal - Jurisdiction - General - The Executive Director of the Alberta Securities Commission issued an order freezing the respondent's bank account - An applications judge imposed a constructive a trust over the funds in the account for the benefit of the applicant investors, and other investors who were defrauded by the respondent - The judge also determined the methodology to be used to distribute the trust funds - The appellants filed a notice of appeal which challenged the whole of the decision - The appellants applied for leave to file an amended notice of appeal - The amended notice of appeal challenged (1) the methodology used to decide what interest each beneficiary had in the trust funds, and (2) the lack of accounting for any sums that had already been paid to some of the investors by the individual who operated the fraudulent scheme - The Alberta Court of Appeal, per Wakeling, J.A., allowed the application - Rule 14.37(1) of the Alberta Rules of Court gave an appeal judge the jurisdiction to "hear and decide any application incidental to an appeal" - An application to amend a notice of appeal was incidental to an appeal - A notice of appeal could be amended if the proposed amendment did not enlarge the scope of the appeal set out in the filed notice of appeal - The proposed amendment did not enlarge the appeal's scope - Rather it clarified the appellants' intention - They no longer wished to appeal the whole decision, just portions of it - See paragraphs 24 to 60.

Practice - Topic 8999

Appeals - Notice of appeal - General - The Alberta Court of Appeal, per Wakeling, J.A., discussed the three important, but limited, purposes of a notice of appeal - See paragraphs 24 to 41.

Practice - Topic 9004

Appeals - Notice of appeal - Amendment of - [See Courts - Topic 8385].

Counsel:

C. Souster, for the applicants;

R.C.P. Smyth, for the respondent (not present);

D. Hutchinson, for Tom Wiseman (interested party).

This application was heard on May 12, 2016, by Wakeling, J.A., of the Alberta Court of Appeal, who delivered the following reasons for decision at Calgary, Alberta, on May 27, 2016.