McInnes Cooper & Robertson v. Sea Star Developments Ltd., (1997) 164 N.S.R.(2d) 60 (SC)

• Judge: Nathanson, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: June 25, 1997
• Jurisdiction: Nova Scotia
• Citations: (1997), 164 N.S.R.(2d) 60 (SC)

McInnes Cooper v. Sea Star Dev. (1997), 164 N.S.R.(2d) 60 (SC);

    491 A.P.R. 60

MLB headnote and full text

Temp. Cite: [1997] N.S.R.(2d) TBEd. SE.038

McInnes Cooper & Robertson, Barristers & Solicitors of Halifax, Nova Scotia (In Trust for Maritime Form Work, Cherubini Metal Works Ltd., Lanthier Construction Co. Ltd., Markland Associates Ltd., PPG Canada Inc., Diaden Masonry & Construction Co. Ltd., Marid Industries Ltd., PMC Roofing Ltd., Steen Mechanical, Gardner Electric, Atlantic Drywall, VIPOND Sprinkler, Precision Concrete, Ramada Construction) (plaintiff) v. Sea Star Developments Ltd., on its own behalf and in its capacity as General Partner of Sea Spa Nova Scotia Ltd. Partnership (defendant).

(S.H. No. 108767)

Indexed As: McInnes Cooper & Robertson v. Sea Star Developments Ltd.

Nova Scotia Supreme Court

Nathanson, J.

June 25, 1997.

Summary:

A mortgagee applied to have a foreclosure sale set aside. The purchaser applied for an order ratifying and confirming the Sheriff's report and all related proceedings.

The Nova Scotia Supreme Court dismissed the mortgagee's application and allowed the purchaser's.

Mortgages - Topic 5540

Mortgage actions - Foreclosure and sale - Final or confirming order - Application - How made - The purchaser at a foreclos­ure sale applied for confirmation of the Sheriff's report - The Nova Scotia Supreme Court stated that "[t]here is some doubt in my mind whether a purchaser at a Sheriff's sale has standing to apply for confirmation of a Sheriff's report. The practice in the past has been that such an application could be made by the mort­gagee or the Sheriff: ... However, such an application has been made by a purchaser in at least one other reported case: ... In order to avoid the unnecessary expense and inconvenience of a further application to the Court, I have decided to allow it." - See paragraph 66.

Mortgages - Topic 5581

Mortgage actions - Setting aside a judicial or foreclosure sale - General - Costs - A mortgagee applied to have a foreclosure sale set aside on the grounds of the pur­chaser's misconduct prior to the com­mencement of the sale and because the purchaser's down payment was not made in a manner authorized by law - The pur­chaser applied for an order ratifying the Sheriff's report - The mortgage sum was $4,299,785.46 - The purchaser obtained the property for the minimum acceptable bid $505,759.38 - The purchaser was awarded costs in both applications - The issues were of minor to moderate com­plexity - How­ever, both issues were novel and quite important to the foreclosure Bar - The hearing lasted 7.5 hours over three days - The Nova Scotia Supreme Court set the amount involved at $50,000 and awarded costs of $5,850 pursuant to Scale 4 of Tariff A - See paragraph 84.

Mortgages - Topic 5581

Mortgage actions - Setting aside a judicial or foreclosure sale - General - Im­mediately following a foreclosure sale, the solicitor for a creditor represented by the mortgagee requested that the sale be set aside on the ground that the purchaser's solicitor's deposit cheque tendered to the Sheriff was not certified as required by the notice of sale, etc. - The Nova Scotia Supreme Court stated that "[w]hile the solicitor for a mortgagee had standing to discuss the details of the sale with the Sheriff, the solicitor for a creditor repre­sented by the mortgagee does not. The Sheriff had every right to disregard the complaint raised by the solicitor for the creditor. This was especially so where what was sought, cancellation of the sale, was for the court, not the Sheriff, to decide." - See paragraph 71.

Mortgages - Topic 5584

Mortgage actions - Setting aside a judicial or foreclosure sale - Grounds - General - Misconduct - A developer executed a mortgage as collateral security for the unpaid debts owed to various contractors - Subsequently, there was an order for fore­closure and sale ($4,299,785.46) - Armoyan purchased the position of one of the contractors - Armoyan agreed with Spatz to bid together up to $800,000 - At the meeting of the contractor/creditors prior to the sale, Armoyan indicated that he would be a bidder - Armoyan also indicated that Spatz would be bidding - The contractors/creditors agreed to proceed with the sale - Armoyan was the only bidder - He obtained the property for $505,759.38 - The mortgagee applied to set aside the sale on the ground that Armoyan misled the contractor/creditors and damped the sale by inferring that Spatz would be a competing bidder - The Nova Scotia Supreme Court declined to set aside the sale - See paragraphs 33 to 42.

Mortgages - Topic 5584

Mortgage actions - Setting aside a judicial or foreclosure sale - Grounds - General - The notice of foreclosure sale specified a 10% deposit payable by cash, certified cheque or solicitor's trust cheque - Armoyan gave his solicitor a certified cheque of $75,000 - The cheque was pay­able to the solicitor's firm in trust - Armoyan obtained the property for $505,759.38 (i.e., the minimum acceptable bid) - Armoyan's solicitor paid the deposit to the Sheriff by cheque drawn from his firm's general account - One of the mort­gagees submitted that the sale should be cancelled because the cheque was neither certified nor from a solicitor's trust account - The solicitor showed the Sheriff the Armoyan's certified cheque for $75,000 - The Sheriff and solicitor went to the bank where the solici­tor's cheque was certified 20 minutes after the sale - The Nova Scotia Supreme Court held that the deposit was paid in a manner auth­orized by law - See paragraphs 43 to 64.

Mortgages - Topic 5666

Mortgage actions - Sale - Procedure - The Nova Scotia Supreme Court stated that "[t]he Sheriff, as an officer of the Court, cannot disregard a Rule, Court order, practice memorandum or standardized procedure. A Sheriff cannot follow his own or any local procedure in preference to that which he is directed to follow by the Rules or by the Court. If he does, he opens himself and, possibly, his employer, the Province of Nova Scotia, to potential personal liability. However, the standard­ized procedure is not a complete code. It does not purport to be such. Where a local practice is not in contravention with the standard procedure, there is no reason why it should not and cannot be used to sup­ple­ment the standard procedure ..." - See paragraph 56.

Mortgages - Topic 5675

Mortgage actions - Sale - Postponement - The Nova Scotia Supreme Court stated that "[p]rior to the time of commencement of the sale, the mortgagee may request the Sheriff to postpone the sale, in which case the Sheriff will invariably comply in ac­cordance with current practice. But any delay in the commencement of the time of sale may be detrimental to the opportunity to secure the best price available from bidders. A Sheriff should start foreclosure sales at the time advertised, and should not delay starting the sale process for any reason other than the request of the mort­gagee to postpone the sale to another day." - See paragraph 70.

Mortgages - Topic 5781

Mortgage actions - Deposits - General - [See second Mortgages - Topic 5584 ].

Sheriffs - Topic 441

Duties - Sale of property - General - [See Mortgages - Topic 5666 ].

Cases Noticed:

Pew v. Zinck and Lobster Point Realty Corp. et al., [1953] 2 D.L.R. 337 (S.C.C.), consd. [para. 33].

Nova Scotia Savings & Loan Co. v. Hill and Hill (1981), 45 N.S.R.(2d) 689; 86 A.P.R. 689 (S.C.), dist. [para. 41].

Wood et al. v. Wood Enterprises Ltd. (1991), 108 N.S.R.(2d) 380; 294 A.P.R. 380 (S.C.), dist. [para. 41].

Confederation Trust Co. v. Laconia Gulf Investments Ltd. (1993), 123 N.S.R.(2d) 245; 340 A.P.R. 245 (S.C.), dist. [para. 41].

Cartwright v. West Hants (Municipal Dis­trict) and Sarty (1979), 42 N.S.R.(2d) 517; 77 A.P.R. 517 (S.C.), dist. [para. 46].

Farrer v. Lacy, Hartland & Co. (1885), 31 Ch.D. 42 (C.A.), consd. [para. 52].

McIntosh Estate, Re (1982), 41 N.B.R.(2d) 156; 107 A.P.R. 156 (Q.B.), refd to. [para. 80].

Ripley v. Investment Dealers Association of Canada et al. (No. 3) (1990), 101 N.S.R.(2d) 108; 275 A.P.R. 108 (S.C.), refd to. [para. 80].

Hines v. Registrar of Motor Vehicles (N.S.) (1990), 105 N.S.R.(2d) 240; 284 A.P.R. 240 (S.C.), refd to. [para. 80].

Rowan Companies Inc. v. DiPersio (1991), 105 N.S.R.(2d) 247; 284 A.P.R. 247 (S.C.), refd to. [para. 80].

Landymore et al. v. Hardy et al. (1992), 112 N.S.R.(2d) 410; 299 A.P.R. 410 (S.C.), refd to. [para. 80].

Hi-Fi Novelty Co. et al. v. Nova Scotia (Attorney General) (1993), 121 N.S.R.(2d) 63; 335 A.P.R. 63 (S.C.), refd to. [para. 80].

Glasswall Ltd. et al. v. 2009861 Nova Scotia Ltd. et al. (1994), 131 N.S.R.(2d) 290; 371 A.P.R. 290 (S.C.), refd to. [para. 80].

Canada Life Assurance Co. v. Nova Scotia (Minister of Municipal Affairs) et al. (1996), 150 N.S.R.(2d) 260; 436 A.P.R. 260 (S.C.), refd to. [para. 80].

Statutes Noticed:

Civil Procedure Rules (N.S.), rule 47.08(1); rule 47.08(4) [para. 43]; rule 47.08(5) [para. 60]; rule 63.04(1) [para. 79].

Authors and Works Noticed:

Halsbury's Laws of England (4th Ed. 1989), vol. 2, p. 460 [para. 34].

Practice Memorandum No. 13 (N.S.), re foreclosure procedures, Part II, s. 5(f) [para. 44].

Standard Practice for Sheriff's Sales by Public Auctions - Instructions to the Sheriff (N.S.), para. 2(b) [para. 44];

Counsel:

Stephen J. Kingston, for the plaintiff;

Craig Garson, of behalf of the purchaser at foreclosure sale.

This matter was heard in Chambers in Halifax, Nova Scotia, on June 11, 12 and 13, 1997, by Nathanson, J., of the Nova Scotia Supreme Court, who delivered the following decision on June 25, 1997. Subsequently, a supplementary decision on costs was released on August 26, 1997.