Leby Properties Ltd., Re, (2005) 287 N.B.R.(2d) 328 (TD)

• Judge: Landry, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: March 08, 2005
• Jurisdiction: New Brunswick
• Citations: (2005), 287 N.B.R.(2d) 328 (TD);2005 NBQB 111

Leby Prop. Ltd., Re (2005), 287 N.B.R.(2d) 328 (TD);

    287 R.N.-B.(2e) 328; 750 A.P.R. 328

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[French language version follows English language version]

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

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Temp. Cite: [2005] N.B.R.(2d) TBEd. AP.031

In The Matter Of the proposal of Leby Properties Ltd. under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3

Leby Properties Ltd. (moving party) v. Manufacturers Life Insurance Company (responding party)

(10890; 2005 NBQB 111)

Indexed As: Leby Properties Ltd., Re

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Moncton

Landry, J.

March 8, 2005.

Summary:

Leby Properties Ltd. defaulted in payment of principal and interest under a mortgage held by Manufacturers Life Insurance Com­pany. Manufacturers demanded immediate payment of the arrears and served Leby with a Notice of Intention to Enforce Security (Form 86) pursuant to s. 244 of the Bank­ruptcy and Insolvency Act. Leby sought an order that it was entitled to redeem the mortgage. At issue was whether Manufac­turers was entitled to the prepayment penalty of $262,588 which they demanded from Leby who intended to repay or redeem the mortgage upon the sale of the mortgaged property.

The New Brunswick Court of Queen's Bench, Trial Division, held that Manufac­turers was entitled to the prepayment penal­ty.

Mortgages - Topic 2986

Payment of mortgage - Prepayment - Penalty - A mortgagor defaulted in pay­ment of principal and interest under a mortgage - The mortgagee demanded immediate payment of the arrears and served the mortgagor with a Notice of Intention to Enforce Security (Form 86) pursuant to s. 244 of the Bankruptcy and Insolvency Act - The mortgagor intended to repay or redeem the mortgage upon the sale of the property - The mortgagee de­manded a prepayment penalty of $262,588 - The New Brunswick Court of Queen's Bench, Trial Division, held that, by deliv­ering the Notice, the mortgagee did not resort to the security but was only readying itself in the event that satisfactory arrange­ments for dealing with the arrears were not forthcoming and it became necessary to take further steps to enforce its security - The delivery of the Notice was not in and of itself the exercise of the power of sale as contemplated by the Property Act and hence was not a resort to security that triggered the mortgagor's equitable right of redemption.

Mortgages - Topic 4602

Redemption of mortgage - General prin­ciples - When available - [See Mortgages - Topic 2986 ].

Cases Noticed:

Shankman v. Mutual Life Assurance Co. of Canada (1985), 11 O.A.C. 1; 52 O.R.(2d) 65 (C.A.), refd to. [para. 16].

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

Central Trust Co. v. Dunne (1984), 49 Nfld. & P.E.I.R. 28; 145 A.P.R. 28 (Nfld. C.A.), refd to. [para. 22].

Authors and Works Noticed:

Laidlaw, Andrew B., Enforcement of Se­curity - The Battle of the Notices, 37 C.B.R.(3d) 281, generally [para. 24].

Counsel:

R. Bruce Johnson and Lee McKeigan, for the moving party;

Charles A. LeBlond, Q.C., and John Eric Pöllabauer, for the responding party.

This motion was heard on January 10 and 26, 2005, before Landry, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Moncton, who delivered the following decision on March 8, 2005.