Gryckiewicz v. Calfate Holdings Ltd. et al., 2015 ABQB 284

• Judge: Jeffrey, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: December 08, 2014
• Citations: 2015 ABQB 284;(2015), 611 A.R. 350 (QB)

Gryckiewicz v. Calfate Holdings Ltd. (2015), 611 A.R. 350 (QB)

MLB headnote and full text

Temp. Cite: [2015] A.R. TBEd. MY.061

Ada Gryckiewicz (respondent on appeal/applicant) v. Brett Ironside (appellant/application respondent) and Calfate Holdings Ltd. and Timber Ridge Capital Ltd. (application respondents)

(1301 00523; 2015 ABQB 284)

Indexed As: Gryckiewicz v. Calfate Holdings Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Jeffrey, J.

April 30, 2015.

Summary:

Gryckiewicz had half of the money required to purchase a home, but did not have a good credit history. She entered into an agreement with her daughter and son-in-law (Dalen) pursuant to which they purchased the home for her, but put title in Dalen's name and Dalen obtained a mortgage for the remaining half of the purchase price. Dalen, without the knowledge of Gryckiewicz, borrowed funds from a "syndicate" for his own purposes and granted them a second mortgage on the home. When Gryckiewicz learned about the second mortgage, she spoke to Dalen who said that he would pay it off. Unbeknownst to Gryckiewicz, Ironside paid the second mortgage off on Dalen's behalf and subsequently obtained default judgment against Dalen for the amount owing as a result of the payment. Gryckiewicz applied under s. 106(1)(c) of the Land Titles Act to have the second mortgage discharged, asserting that the time for enforcing it had run under the Limitations Act. Ironside opposed the application, asserting that he was the successor to the syndicate's position as mortgagees and the limitation period had not run to prevent a foreclosure because Dalen had acknowledged the debt and made payments in kind that re-started the limitation period.

A Master of the Alberta Court of Queen's Bench, in a decision reported at 587 A.R. 358, allowed the application and discharged the mortgage. Ironside appealed. Meanwhile, on October 15, 2014, the syndicate executed a Transfer of the Mortgage and a certified copy of a certificate of title for the property showing the registration of the Transfer of the Mortgage updating the mortgagee to specify Ironside. Ironside asserted that the syndicate had held the second mortgage in trust for him until October 15, 2014.

The Alberta Court of Queen's Bench dismissed the appeal.

Agency - Topic 301

Creation of relations - General - What constitutes - Gryckiewicz had half of the money required to purchase a home, but lacked a good credit history - She entered into an agreement with her daughter and son-in-law (Dalen) pursuant to which they purchased the home for her, but put title in Dalen's name and Dalen obtained a mortgage for the remaining half of the purchase price (the Co-Ownership Agreement) - Dalen, without Gryckiewicz's knowledge, granted a "syndicate" a second mortgage on the home - When Gryckiewicz learned about the mortgage, she spoke to Dalen who said that he would pay it off - Unbeknownst to Gryckiewicz, Ironside paid the mortgage off on Dalen's behalf and subsequently obtained default judgment against Dalen for the amount owing as a result of the payment - Gryckiewicz applied under s. 106(1)(c) of the Land Titles Act to have the second mortgage discharged, asserting that the time for enforcing it had run under the Limitations Act - Ironside asserted that the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen, acting as Gryckiewicz's agent, provided written acknowledgments of the debt and made part payments - The Alberta Court of Queen's Bench rejected Ironside's argument - There was no basis for concluding Dalen was Gryckiewicz's agent when given the prohibition against such in article 3.1 of the Co-Ownership Agreement - There was also no basis to find that Gryckiewicz authorized or instructed Dalen to act as her agent to pay the second mortgage when she did not consent to it, was not aware of it at the time it was made, and was not a party to it - There was no evidence that she was aware of the part payments and acknowledgment when they were made, or that they were given on her behalf to reduce the claim against her property - There was no basis, express or implied, for finding authorization or consent by Gryckiewicz - See paragraphs 57 to 63.

Agency - Topic 301

Creation of relations - General - What constitutes - Gryckiewicz had half of the money required to purchase a home, but lacked a good credit history - She entered into an agreement with her daughter and son-in-law (Dalen) pursuant to which they purchased the home for her, but put title in Dalen's name and Dalen obtained a mortgage for the remaining half of the purchase price (the Co-Ownership Agreement) - Dalen, without Gryckiewicz's knowledge, granted a "syndicate" a second mortgage on the home - When Gryckiewicz learned about the mortgage, she spoke to Dalen who said that he would pay it off - Unbeknownst to Gryckiewicz, Ironside paid the mortgage off on Dalen's behalf and subsequently obtained default judgment against Dalen for the amount owing as a result of the payment - Gryckiewicz applied under s. 106(1)(c) of the Land Titles Act (LTA) to have the second mortgage discharged, asserting that the time for enforcing it had run under the Limitations Act - Ironside asserted that the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen provided written acknowledgments of the debt and made part payments - Although the second mortgage had not been formally transferred to him at that time, he asserted that the original mortgagees held it in trust for him pending a formal transfer, or that he acted as agent for the mortgagees - The Alberta Court of Queen's Bench held that Ironside's agency arguments contradicted the clear evidence that the original second mortgagees were paid out prior to the part payments and acknowledgment - They assigned the in personam claim and agreed to Ironside assuming the in rem claim - There was no reason for the mortgagees to have Ironside act as their agent - To establish agency there had to be some control by the principal - None was proven - An agency relationship could not be implied - There was also no evidence of any formal or express trust relationship - It might be that the original mortgagees were subject to a resulting trust as they held the second mortgage for a prolonged period in which the transaction was neither papered nor registered on the property and it might be that they breached their duties - However, any such trust, resulting or otherwise, did not override the express provisions in the LTA that a mortgage was not effectual until registration - See paragraphs 64 to 70.

Equity - Topic 5006

Merger - General - Application of doctrine - Gryckiewicz had half of the money required to purchase a home, but lacked a good credit history - She entered into an agreement with her daughter and son-in-law (Dalen) pursuant to which they purchased the home for her, but put title in Dalen's name and Dalen obtained a mortgage for the remaining half of the purchase price - Dalen, without Gryckiewicz's knowledge, granted a "syndicate" a second mortgage on the home - When Gryckiewicz learned about the mortgage, she spoke to Dalen who said that he would pay it off - Unbeknownst to Gryckiewicz, Ironside paid the mortgage off on Dalen's behalf and subsequently obtained default judgment against Dalen for the amount owing as a result of the payment - Gryckiewicz applied under s. 106(1)(c) of the Land Titles Act to have the second mortgage discharged, asserting that the time for enforcing it had run under the Limitations Act - Ironside asserted that the default judgment on the in personam claim against Dalen was conclusive proof that the limitation period did not expire and that his claims under the second mortgage were not extinguished - The Alberta Court of Queen's Bench rejected Ironside's argument - A default judgment was not a judicial determination that an action was not time-barred - It did not follow from the default judgment that a limitations defence was unavailable - A limitation period was not automatically applied in a court action - It had to be pleaded - Since no statement of defence was filed, no limitation defence was pleaded and the matter was not placed in issue - The court noted that there was discussion of whether the doctrine of merger operated to extinguish Ironside's in rem claim and whether it merged into the default judgment on the in personam claim - There was no merger by virtue of a term in the second mortgage - It was agreed that the obligations under the second mortgage would not merge in the event of something like the default judgment - See paragraphs 54 to 56.

Equity - Topic 5041

Merger - Judgments - General - [See Equity - Topic 5006 ].

Limitation of Actions - Topic 206

Practice - Requirement of pleading expiry of limitation period - [See Equity - Topic 5006 ].

Limitation of Actions - Topic 2055

Actions in contract - Actions for debt - Acknowledgments - [See both Agency - Topic 301 ].

Limitation of Actions - Topic 2055

Actions in contract - Actions for debt - Acknowledgments - A property owner applied under s. 106(1)(c) of the Land Titles Act to have the second mortgage on her property discharged, asserting that the time for enforcing it had run under the Limitations Act - The second mortgage had been taken out by Dalen without the owner's knowledge - Ironside asserted that he was the successor to the position of the original second mortgagees, and the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen, inter alia, provided written acknowledgments of the debt via four e-mails (Limitations Act, s. 8(2)) - The Alberta Court of Queen's Bench stated that although the four e-mails referenced the debt, there was no acknowledgment of the debt by Dalen - However, the fourth e-mail included a handwritten summary which Dalen had physically signed - The summary referred to the "debt he owes" and hockey tickets to be credited to the debt - The summary, incorporating by reference the information in the fourth email, was sufficient to constitute an acknowledgement of the debt owed by Dalen - The acknowledgement was in writing and signed by Dalen - See paragraphs 24 to 37.

Limitation of Actions - Topic 2055

Actions in contract - Actions for debt - Acknowledgments - A land owner applied under s. 106(1)(c) of the Land Titles Act (LTA) to have the second mortgage on her property discharged, asserting that the time for enforcing it had run under the Limitations Act - The second mortgage had been taken out by Dalen without the owner's knowledge - Ironside asserted that he was the successor to the position of the original second mortgagees, and the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen provided written acknowledgments of the debt and made part payments - The Alberta Court of Queen's Bench held that there had been an acknowledgement and part payments, but that was before the second mortgage rights were transferred to Ironside in accordance with the LTA - At the time of the acknowledgment and part payments, Ironside did not have an enforceable in rem claim - He did not have security against the mortgagor's property for any amount due to him from Dalen - Therefore the money due to him was not "money secured by the [second mortgage]" under s. 106(1)(c) - The loan and security assignment agreement between Ironside and the original second mortgagees was not effective to pass the original second mortgagees' rights to Ironside until the Transfer of Mortgage was registered on title to the property - By the time the Transfer of Mortgage was registered, Ironside's right to enforce the second mortgage had been extinguished more than six years earlier by the two year limitation period - Ironside could not revive his right to enforce the second mortgage by registering his interest on title after the limitation period had expired - See paragraphs 46 to 53.

Limitation of Actions - Topic 2055

Actions in contract - Actions for debt - Acknowledgments - Gryckiewicz had half of the money required to purchase a home, but lacked a good credit history - She entered into an agreement with her daughter and son-in-law (Dalen) pursuant to which they purchased the home for her, but put title in Dalen's name and Dalen obtained a mortgage for the remaining half of the purchase price - Dalen, without Gryckiewicz's knowledge, granted a "syndicate" a second mortgage on the home - When Gryckiewicz learned about the mortgage, she spoke to Dalen who said that he would pay it off - Unbeknownst to Gryckiewicz, Ironside paid the mortgage off on Dalen's behalf and subsequently obtained default judgment against Dalen for the amount owing as a result of the payment - Gryckiewicz applied under s. 106(1)(c) of the Land Titles Act (LTA) to have the second mortgage discharged, asserting that the time for enforcing it had run under the Limitations Act - Ironside asserted that he was the successor to the position of the original second mortgagees, and the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen, inter alia, provided written acknowledgments of the debt via four e-mails - Irsonside asserted that Gryckiewicz was bound by the part payments and acknowledgment because she acquired her interest in the property from the maker of the part payments and acknowledgment (LTA, s. 9(5)(b)(ii)) - The Alberta Court of Queen's Bench held that s. 9(5)(b)(ii) had no application because the part payments and acknowledgment were made by Dalen when he was no longer registered on title - The intention of the section was that an acquisitor of property was bound, for limitation purposes, by the acts of a predecessor when the predecessor held that interest, not those made by a predecessor after he divested that interest - See paragraphs 71 to 76.

Limitation of Actions - Topic 2060

Actions in contract - Actions for debt - Part payments - [See both Agency - Topic 301 and third and fourth Limitation of Actions - Topic 2055 ].

Limitation of Actions - Topic 2060

Actions in contract - Actions for debt - Part payments - A property owner applied under s. 106(1)(c) of the Land Titles Act to have the second mortgage on her property discharged, asserting that the time for enforcing it had run under the Limitations Act - The second mortgage had been taken out by Dalen without her knowledge - Ironside asserted that he was the successor to the position of the original second mortgagees, and the limitation period had not run to prevent a foreclosure because it had been restarted when Dalen made part payments that included hockey tickets and a water log chattel - The hockey tickets appeared to come from "United Equities" - Dalen was a director and shareholder of United Equities Inc. - The Dalen Family Trust was a shareholder of United Equities Ltd. - The Alberta Court of Queen's Bench concluded that the payments were specifically intended to be applied to Dalen's debt and they constituted part payments for purposes of the Limitations Act - See paragraphs 38 to 42.

Limitation of Actions - Topic 2182

Actions in contract - Mortgages - When time begins to run - [See both Agency - Topic 301 and third and fourth Limitation of Actions - Topic 2055 ].

Limitation of Actions - Topic 2185

Actions in contract - Mortgages - Action for foreclosure and sale - [See both Agency - Topic 301 , Equity - Topic 5006 and third and fourth Limitation of Actions - Topic 2055 ].

Limitation of Actions - Topic 2186

Actions in contract - Mortgages - Extinguishment of mortgage - [See both Agency - Topic 301 , Equity - Topic 5006 and third and fourth Limitation of Actions - Topic 2055 ].

Mortgages - Topic 1481

The mortgage - Transfer or assignment - General - [See second Agency - Topic 301 ].

Mortgages - Topic 3307

Discharge of mortgage - General - Entitlement - [See both Agency - Topic 301 , Equity - Topic 5006 and third and fourth Limitation of Actions - Topic 2055 ].

Mortgages - Topic 3403

Discharge of mortgage - Discharge by court order - When available - [See both Agency - Topic 301 , Equity - Topic 5006 and third and fourth Limitation of Actions - Topic 2055 ].

Practice - Topic 5609

Judgments and orders - Default judgments - Effect of - [See Equity - Topic 5006 ].

Real Property - Topic 8007

Title - Registration of instruments, etc. - Land titles system - Acknowledgment - [See fourth Limitation of Actions - Topic 2055 ].

Real Property - Topic 8014.3

Title - Registration of instruments, etc. - Land titles system - Registration - Effect of failure to register - [See second Agency - Topic 301 and third Limitation of Actions - Topic 2055 ].

Trusts - Topic 1901

Resulting trusts - General principles - General - When available - [See second Agency - Topic 301 ].

Cases Noticed:

Bahcheli v. Yorkton Securities Inc. et al. (2012), 524 A.R. 382; 545 W.A.C. 382; 2012 ABCA 166, refd to. [para. 3].

Boyd et al. v. Cook et al., [2013] A.R. Uned. 186; 2013 ABCA 266, refd to. [para. 4].

R. v. Palmer, [1980] 1 S.C.R. 759; 30 N.R. 181, refd to. [para. 4].

Gudzinski Estate v. Allianz Global Risks US Insurance Co. et al. (2012), 519 A.R. 215; 539 W.A.C. 215; 2012 ABCA 5, refd to. [para. 4].

Nikel Investments Ltd. v. Gallaher (2012), 538 A.R. 373; 2012 ABQB 276, refd to. [para. 27].

Fleisher Ridout Partnership Inc. v. Tai Foong International Ltd., 2012 CarswellOnt 11314 (Sup. Ct.), refd to. [para. 32].

Kings County Construction Ltd. v. McKie et al., [1996] 2 P.E.I.R. 295; 147 Nfld. & P.E.I.R. 85; 450 A.P.R. 85 (T.D.), refd to. [para. 40].

Gottlieb (David M.) Professional Corp. et al. v. Nahal, [2011] A.R. Uned. 762; 2011 ABQB 355, affd. (2012), 522 A.R. 25; 544 W.A.C. 25; 2012 ABCA 88, refd to. [para. 55].

Grosvenor Canada Ltd. et al. v. South Coast British Columbia Transportation Authority, [2015] B.C.T.C. Uned. 177; 2015 BCSC 177, refd to. [para. 60].

Air Canada v. M & L Travel Ltd., Martin and Vaillant, [1993] 3 S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 66].

Statutes Noticed:

Land Titles Act, R.S.A. 2000, c. L-4, sect. 9(5)(b)(ii) [para. 71]; sect. 109(1) [para. 47].

Counsel:

Paul Edwards and Tyler Bond (Gowling Lafleur Henderson LLP), for the respondent on appeal/applicant;

David LeGeyt and Doug Schweitzer (Dentons Canada LLP), for the appellant/respondent.

This appeal was heard on December 8, 2014, by Jeffrey, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following memorandum of decision on April 30, 2015.