MCAP Service Corp. v. Chiang, (2011) 523 A.R. 223 (QB)

• Judge: Shelley, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: April 12, 2011
• Citations: (2011), 523 A.R. 223 (QB);2011 ABQB 477

MCAP Service Corp. v. Chiang (2011), 523 A.R. 223 (QB)

MLB headnote and full text

Temp. Cite: [2011] A.R. TBEd. JL.164

MCAP Service Corporation (plaintiff) v. Chuan Huan Chiang and Cuong Chiang (defendants)

(1003 18874; 2011 ABQB 477)

Indexed As: MCAP Service Corp. v. Chiang

Alberta Court of Queen's Bench

Judicial District of Edmonton

Shelley, J.

July 21, 2011.

Summary:

The plaintiff mortgagee foreclosed on a property and sold it on an "as is" basis because of damage caused to it by a marijuana grow operation. The plaintiff sued the mortgagor and his son, who had leased the property, for the tort of waste. It also sued the mortgagor for breach of the mortgage covenant to repair the property and keep it in good condition. The plaintiff sought default judgment for $71,499 (the amount the property had been devalued by the waste). An issue was whether an action for waste was an independent remedy which did not fall within the scope of the prohibition covered by s. 40(1) of the Law of Property Act.

The Alberta Court of Queen's Bench allowed the tort action. The court held that the plaintiff could not recover on the basis of the covenant to repair contained in the mortgage.

Mortgages - Topic 5405

Mortgage actions - Action on the covenant - Prohibition against - A mortgagee foreclosed on a property and sold it on an "as is" basis because of damage caused to it by a marijuana grow operation - The mortgagee sued the mortgagor and his son for the tort of waste and for breach of the mortgage covenant to repair the property and keep it in good condition - It sought default judgment for $71,499 (the amount the property had been devalued by the waste) - Section 40(1)(a) of the Law of Property Act provided that no action laid on a covenant for payment contained in a mortgage in any action brought on a mortgage of land and that the right of a mortgagee was restricted to the land and to foreclosure of the mortgage - The Alberta Court of Queen's Bench allowed the tort action - An action for waste was an independent remedy which did not fall within the scope of the prohibition covered by s. 40(1) - The mortgagee was not attempting to recover the mortgage debt per se - Rather, it was seeking to recover damages in tort for the devaluation of its security caused by the wrongful acts - However, the mortgagee could not recover on the basis of the covenant to repair contained in the mortgage.

Mortgages - Topic 5406

Mortgage actions - Action on the covenant - Circumstances outside statutory prohibition - [See Mortgages - Topic 5405 ].

Mortgages - Topic 7709

Mortgagee's remedies - General - For waste - [See Mortgages - Topic 5405 ].

Cases Noticed:

Brown v. Sage (1865), 11 Gr. 239; 1865 CarswellOnt 30 (Ch.), refd to. [para. 9].

McLeod v. Avey (1888), 16 O.R. 365 (H.C.J.), refd to. [para. 9].

Mann v. English (1876), 38 U.C.R. 240; 1876 CarswellOnt 241 (Q.B.), refd to. [para. 9].

Parisian Fashions Ltd. et al. v. Petrus (1996), 195 A.R. 81; 46 Alta. L.R.(3d) 159 (Q.B.), refd to. [para. 10].

Holland-Canada Mortgage Co. v. Fraser, [1926] 2 W.W.R. 32 (Sask. K.B.), refd to. [para. 12].

Metropolitan Life Co. v. McQueen, [1924] 2 W.W.R. 981 (Alta. T.D.), refd to. [para. 12].

Hoare v. Tsapralis et al. (1997), 31 O.T.C. 39; 10 R.P.R.(3d) 89 (Gen. Div.), refd to. [para. 12].

Tuxedo Savings and Credit Union Ltd. v. Krusky (1987), 75 A.R. 190; 49 Alta. L.R.(2d) 282 (C.A.), refd to. [para. 15].

Royal Bank of Canada v. Stallman et al. (2009), 485 A.R. 391; 2009 ABQB 766 (Master), refd to. [para. 15].

Joyner v. Weeks, [1891] 2 Q.B. 31, refd to. [para. 19].

Miles v. Marshall (1975), 7 O.R.(2d) 544; 55 D.L.R.(3d) 664 (H.C.), refd to. [para. 19].

Heemskerk v. Stinn and Rossum (1996), 191 A.R. 126 (Prov. Ct.), refd to. [para. 19].

Montreal Trust Co. v. Hercules Sales Ltd. (1969), 3 D.L.R.(3d) 504 (Ont. C.A.), refd to. [para. 19].

Toerper v. Hoard et al., [2011] A.R. Uned. 165; 2011 ABQB 85, refd to. [para. 24].

Statutes Noticed:

Law of Property Act, R.S.A. 2000, c. L-7, sect. 40(1)(a) [para. 14].

Authors and Works Noticed:

Price, Francis C.R., and Trussler, Marguerite J., Mortgage Actions in Alberta (1985), generally [para. 9].

Counsel:

Wendy L. Thiessen, for the plaintiff.

This application was heard on April 12, 2011, before Shelley, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on July 21, 2011.