Kruse Estate et al. v. Oakwood Construction Services Ltd. et al., (1982) 16 Man.R.(2d) 270 (CA)

• Judge: Freedman, C.J.M., Matas and O'Sullivan, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: December 09, 1981
• Jurisdiction: Manitoba
• Citations: (1982), 16 Man.R.(2d) 270 (CA)

Kruse Estate v. Oakwood Constr. (1982), 16 Man.R.(2d) 270 (CA)

MLB headnote and full text

Kruse Estate and Canadian Imperial Bank of Commerce v. Oakwood Construction Services Ltd., Hokanson, Hokanson, DeLorenzo, Cesario, Royal Bank of Canada and Bank of Montreal

(Suit No. 227/81)

Indexed As: Kruse Estate et al. v. Oakwood Construction Services Ltd. et al.

Manitoba Court of Appeal

Freedman, C.J.M., Matas and O'Sullivan, JJ.A.

March 2, 1982.

Summary:

This case arose out of a motion to determine the priorities between an unregistered unequitable mortgage and registered judgments.

The Manitoba County Court, in a decision reported in 9 Man.R.(2d) 182, held that the registered judgments took priority over the equitable mortgage, because the mortgage did not crystallize before the judgments were registered. The applicants appealed.

The Manitoba Court of Appeal allowed the appeal. Matas, J.A., dissenting, would have dismissed the appeal.

Contracts - Topic 2281

Terms - Conditions precedent - Defined - A bank held an equitable mortgage in the form of a guarantee payable on demand after default - The Manitoba Court of Appeal held that the guarantee was conditional in relation to liability but that the condition was not a true condition precedent which prevented the existence of a contractual liability to guarantee - See paragraph 7.

Mortgages - Topic 850

Priorities - Registry Act - Priority between an unregistered mortgage and registered certificates of judgment - A bank held an unregistered equitable mortgage in the form of a guarantee payable on demand after default - Prior to a demand by the bank, judgment creditors registered their judgments - The Manitoba Court of Appeal held that the bank's mortgage took priority over the judgments - See paragraphs 1 to 9.

Mortgages - Topic 1403

The mortgage - Property mortgaged - The extent of the security - The Manitoba Court of Appeal stated the test for deciding what a mortgage secures - See paragraph 5.

Real Property - Topic 7968

Title - Registration of instruments - Priorities - Equitable interest - The Manitoba Court of Appeal held that an unregistered equitable mortgage in the form of a guarantee payable on demand took priority over judgments registered after the mortgage was made but before demand was made - See paragraphs 1 to 9.

Cases Noticed:

Dominion Lumber Winnipeg Ltd. v. Winnipeg District Registrar (1963), 41 W.W.R.(N.S.) 343, refd to. [paras. 5, 47].

Turney v. Zhilka, [1959] S.C.R. 578; 18 D.L.R.(2d) 447, refd to. [para. 7].

Toronto-Dominion Bank v. Setter-Donaldson (1977), 75 D.L.R.(3d) 744, folld. [para. 8].

Moschi and Lep Air Services Ltd. et al., [1972] 2 All E.R. 393; [1973] A.C. 331, refd to. [para. 30].

Atkinson v. Grey (1853), 1 Sm. & Giff. 577; 65 E.R. 253, refd to. [para. 34].

Lloyds Bank, Ltd. v. Margolis and Others, [1954] 1 All E.R. 734, refd to. [para. 35].

In re Brown's Estate, [1893] 2 Ch. 300, refd to. [para. 37].

Bradford Old Bank Limited v. Sutcliffe, [1918] 2 K.B. 833 (C.A.), refd to. [para. 39].

Canadian Petrofina Ltd. v. Motormart Ltd. et al. (1969), 7 D.L.R.(3d) 330 (P.E.I. C.A.), refd to. [para. 40].

Bank of Nova Scotia v. Battiste (1980), 22 Nfld. & P.E.I.R. 192; 58 A.P.R. 192, refd to. [para. 40].

Bank of Montreal v. Wilder et al. (1980), 19 B.C.L.R. 77 (S.C. T.D.), refd to. [para. 41].

Bank of Montreal v. MacGregor (1980), 21 B.C.L.R. 83 (S.C. T.D.), refd to. [para. 41].

Toronto-Dominion Bank v. Setter-Donaldson Mechanical Ltd. et al. (1977), 75 D.L.R.(3d) 744, refd to. [para. 48].

Statutes Noticed:

County Courts Act, R.S.M. 1970, c. C-260; C.C.S.M., c. C260 [para. 24].

Court of Queen's Bench Act, R.S.M. 1970, c. C-280; C.C.S.M., c. C-280, sect. 2(1)(i) [para. 24].

Judgments Act, R.S.M. 1970, c. J-10; C.C.S.M., c. J-10, sect. 27(2) [para. 24].

Mechanics' Lien Act, R.S.B.C. 1960, c. 238 [para. 49].

Real Property Act, R.S.M. 1954, c. 220 [para. 47].

Statute of Limitations, (Imp.), 3 & 4 Will. 4, c. 42, sect. 3 [para. 37].

Authors and Works Noticed:

Fridman, The Law of Contract, pp. 268, 275 [para. 7].

Black's Law Dictionary (5th Ed.), p. 823 [para. 31].

English and Empire Digest (1981), vol. 26, pp. 113 to 114, 129 to 136 [para. 32].

Halsbury's Laws of England (4th Ed.), vol. 20, p. 76, para. 143 [para. 30]; p. 80, para. 149 [paras. 132, 134]; p. 86, para. 158 [para. 32].

Rowlatt on Principal and Surety (3rd Ed.), pp. 91 [para. 33]; 152-153 [para. 33].

Counsel:

C.A. Sherbo, for Canadian Imperial Bank of Commerce;

J.L. Henteleff, for Oakwood Construction Services Ltd., R. Hokanson and J. Hokanson;

G.O. DeLucia, for G. DeLorenzo and A. Cesario, Home Fire Magic;

A.B. Graham, for River Valley Store Fixtures (1976) Ltd.

This case was heard on December 9, 1981, by FREEDMAN, C.J.M., MATAS and O'SULLIVAN, JJ.A., of the Manitoba Court of Appeal. On March 2, 1982, the decision of the Court of Appeal was delivered and the following opinions filed:

O'SULLIVAN, J.A. - See paragraphs 1 to 9;

MATAS, J.A., dissenting - See paragraphs 10 to 51.

FREEDMAN, C.J.M., concurred with O'SULLIVAN, J.A.