Royal Bank of Canada v. Benchmark Real Estate Appraisals Ltd. et al., (2014) 589 A.R. 277 (QBM)

• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: March 05, 2014
• Citations: (2014), 589 A.R. 277 (QBM);2014 ABQB 297

Royal Bk. v. Benchmark Real Estate (2014), 589 A.R. 277 (QBM)

MLB headnote and full text

Temp. Cite: [2014] A.R. TBEd. MY.073

Royal Bank of Canada (plaintiff) v. Benchmark Real Estate Appraisals Ltd., Syed Waris, Randall G. Stegemann, and M. Terry Leonard and M. Terry Leonard Professional Corporation (defendants) and M. Terry Leonard, M. Terry Leonard Professional Corporation, Danny Starke, Ali-El-Sayed, 1341223 Alberta Inc., Imtiaz Manji, MDevelopments Inc., David Steed, Catherine Steele, Lori MacPherson, Jason Evans, John Doe 1, John Doe 2, Jane Doe 1, Jane Doe 2 and ABC Corp. (third party)

Royal Bank of Canada (plaintiff) v. Danny Starke also known as Dan Starke (defendant)

(1101 11605; 1101 11606; 2014 ABQB 297)

Indexed As: Royal Bank of Canada v. Benchmark Real Estate Appraisals Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Hanebury, Master

May 14, 2014.

Summary:

After obtaining a final order of foreclosure, the bank sued the mortgagor, the bank's lawyer and its appraisers, alleging fraud, breach of contract and negligence. The defendants sought summary dismissal of the actions.

A Master of the Alberta Court of Queen's Bench dismissed the applications.

Equity - Topic 5006

Merger - Application of doctrine - After obtaining a final order of foreclosure, the bank sued the mortgagor, alleging fraud - Seeking summary dismissal, the mortgagor asserted that the action was barred by the doctrine of merger - A Master of the Alberta Court of Queen's Bench rejected the argument - Merger precluded a party from obtaining a second judgment against the same defendant on the same cause of action - Here, the original claim was under a mortgage against the property alone, a claim in rem - The present action was in tort for deceit or fraudulent misrepresentation against the mortgagor personally - Merger did not apply - See paragraphs 61 and 62.

Equity - Topic 5041

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

Estoppel - Topic 377

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - When applicable - [See Estoppel - Topic 386 ].

Estoppel - Topic 379

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Cause of action - [See Estoppel - Topic 386 ].

Estoppel - Topic 386

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Issues decided in prior proceedings - After obtaining a final order of foreclosure, the bank sued the mortgagor, alleging fraud - Seeking summary dismissal, the mortgagor asserted that the action was barred by the doctrine of res judicata - A Master of the Alberta Court of Queen's Bench rejected the argument - Res judicata encompassed both issue estoppel and cause of action estoppel - The former stopped the litigation of an issue that had already been decided in a prior court proceeding, while the latter stopped the litigation of a cause of action that had been determined in a prior proceeding - Here, the issues against the mortgagor were different from the issue in the foreclosure action - The question was whether the bank would have lent the money at all and the claim was for damages, not land - Similarly, the causes of action were not the same - See paragraphs 63 to 74.

Estoppel - Topic 387

Estoppel by record (res judicata) - Res judicata as a bar to subsequent proceedings - Matters or claims available in prior proceedings - After obtaining a final order of foreclosure, the bank sued the mortgagor, alleging fraud - Seeking summary dismissal, the mortgagor asserted that the action was barred by the doctrine of res judicata because the bank should have known of his alleged deceit and should have included that claim in the foreclosure action - A Master of the Alberta Court of Queen's Bench rejected the argument - Such an argument did not lie in the mouth of someone who was alleged to have committed fraud - Should no fraud have been committed, the trial judge might find that the argument had "traction" - However, at this stage of the proceeding, such an argument was untenable and was an insufficient basis to dismiss the bank's claim - See paragraph 75.

Mortgages - Topic 5512

Mortgage actions - Action for foreclosure and sale - Foreclosure order - Effect of - After obtaining a final order of foreclosure, the bank sued the mortgagor, the bank's lawyer and its appraisers, alleging fraud, breach of contract and negligence - Seeking summary dismissal, the defendants asserted that the actions were barred by s. 48 of the Law of Property Act - The bank did not dispute that s. 48 left it unable to sue for the debt owed under the mortgage, but asserted that s. 48 did not affect its right to claim for damages suffered as a result of fraud, breach of contract and negligence - A Master of the Alberta Court of Queen's Bench held that the foreclosure order did not bar the bank's actions - The claim for damages in tort against the mortgagor for a fraudulent misrepresentation or deceit that induced the bank to enter into a contract was a totally different claim from one for the debt resulting from that contract - Section 48 did not bar such a claim - The same analysis applied to the claim against the lawyer and appraisers for negligence - Against the lawyer, the claim was in contract and tort and the contract was one other than the mortgage contract referred to in s. 48 - Against the appraisers, the argument was that a proper appraisal would have resulted in the bank's refusal of the loan - See paragraphs 24 to 59.

Mortgages - Topic 5537

Mortgage actions - Foreclosure and sale - Final or confirming order - Effect of - [See Mortgages - Topic 5512 ].

Practice - Topic 5408.1

Judgments and orders - General - Collateral attack - After obtaining a final order of foreclosure on mortgaged property, the bank sued its lawyer and its appraisers, alleging negligence - Seeking summary dismissal, the lawyer and appraisers asserted that the action against them was a collateral attack on the foreclosure order - A Master of the Alberta Court of Queen's Bench rejected the argument, stating, "I do not see how the claim made by the RBC against the defendants collaterally attacks the foreclosure order. It does not vary or nullify it, or render it nonsensical. The original order is a judgment in rem against the land that was provided as security for the loan. This claim results from facts subsequently discovered and is against all of the parties in tort and breach of contract. The claim is for damages which resulted from the Bank entering into a mortgage it otherwise allegedly would have refused to fund." - See paragraphs 76 to 81.

Cases Noticed:

Alberta Mortgage and Housing Corp. v. Annoub, [1987] A.J. No. 1276 (Q.B.), refd to. [para. 2].

Guaranty Trust Co. of Canada v. Berger et al., [1972] A.J. No. 137 (Q.B.), refd to. [para. 2].

Arcadia Acceptance and Finance Co. v. Copping, [1984] A.J. No. 59 (Q.B.), refd to. [para. 2].

First National Mortgage Co. and Block Bros. Realty Ltd. v. L.J.V. Holdings Ltd. et al. (1989), 95 A.R. 237; 66 Alta. L.R.(2d) 263 (C.A.), refd to. [para. 2].

Canada Permanent Trust Co. v. King Art Developments Ltd. et al. (1984), 54 A.R. 172; 32 Alta. L.R.(2d) 1 (C.A.), refd to. [para. 26].

Perry v. Barker (1806), 13 Ves. 198; 33 E.R. 269, refd to. [para. 27].

Douglas v. Mutual Life Assurance Co. (1918), 57 S.C.R. 243, refd to. [para. 30].

Isman v. Sinnott (1920), 61 S.C.R. 1, refd to. [para. 33].

Humble Investments Ltd. et al. v. Therevan Development Corp. et al. (1982), 49 A.R. 168; 21 Alta. L.R.(2d) 40 (Q.B. Master), refd to. [para. 33].

Grant (Gordon) & Co. v. Boos, [1926] A.C. 781 (P.C.), refd to. [para. 33].

Style Properties Ltd. v. 220293 Developments Ltd. and McKillop (1986), 67 A.R. 154; 43 Alta. L.R.(2d) 71 (C.A.), refd to. [para. 33].

Clayborn Investments Ltd. v. Wiegert (1977), 5 A.R. 50; 3 Alta. L.R.(2d) 295 (C.A.), refd to. [para. 34].

Cardston Credit Union Ltd. v. Herron et al. (1984), 54 A.R. 94 (C.A.), refd to. [para. 34].

Manitoba Development Corp. v. Berkowits, [1979] 5 W.W.R. 138 (Man. C.A.), refd to. [para. 34].

Village on the Park and Greenwood Acres, Re (2009), 472 A.R. 230; 2009 ABQB 497, refd to. [para. 36].

Morrison v. Sharp, 1993 CarswellOnt 4350 (Gen. Div.), refd to. [para. 36].

Armac Investments Ltd., Re, [2013] A.R. Uned. 520; 2013 ABQB 336, refd to. [para. 38].

McAteer et al. v. Devoncroft Developments Ltd. et al. (2001), 307 A.R. 1; 2001 ABQB 917, refd to. [para. 40].

TWT Enterprises Ltd. et al. v. Westgreen Developments (North) Ltd. (1992), 127 A.R. 353; 20 W.A.C. 353; 3 Alta. L.R.(3d) 124 (C.A.), refd to. [para. 43].

Xerex Exploration Ltd. v. Petro-Canada et al. (2005), 367 A.R. 201; 346 W.A.C. 201; 2005 ABCA 224, refd to. [para. 43].

Rainbow Industrial Caterers Ltd. et al. v. Canadian National Railway Co. et al., [1991] 3 S.C.R. 3; 126 N.R. 354; 3 B.C.A.C. 1; 7 W.A.C. 1, refd to. [para. 45].

Mason (V.K.) Construction Ltd. v. Bank of Nova Scotia and Courtot Investments Ltd., [1985] 1 S.C.R. 271; 58 N.R. 195; 8 O.A.C. 381, refd to. [para. 45].

MCAP Service Corp. v. Chiang (2011), 523 A.R. 223; 2011 ABQB 477, refd to. [para. 46].

Doyle v. Olby (Ironmongers) Ltd., [1969] 2 Q.B. 158 (C.A.), refd to. [para. 47].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 52].

MacCabe v. Board of Education of Westlock (Roman Catholic Separate) School District No. 110 et al. (2001), 293 A.R. 41; 257 W.A.C. 41; 2001 ABCA 257, refd to. [para. 53].

Federal Business Development Bank v. Boudreau (1986), 74 N.S.R.(2d) 429; 180 A.P.R. 429 (T.D.), refd to. [para. 54].

Bristol and West Building Society v. Fancy & Jackson, [1997] 4 All E.R. 583 (Ch. D.), refd to. [para. 54].

Ruzicka v. Costigan (1984), 54 A.R. 385 (C.A.), refd to. [para. 54].

Portmand Building Society v. Bevan Ashford, [2000] Lloyd's Rep. P.N. 354 (C.A.), refd to. [para. 54].

Indian Head Credit Union Ltd. v. Hosie (A.) & Co. et al., [1994] 4 W.W.R. 674; 120 Sask.R. 73; 68 W.A.C. 73 (C.A.), refd to. [para. 57].

South Australia Asset Management Corp. v. York Montague Ltd., [1997] A.C. 191; 199 N.R. 366 (H.L.), refd to. [para. 57].

Banque Bruxelles Lambert v. Eagle Star Insurance Co. - see South Australia Asset Management Corp. v. York Montague Ltd.

Hogarth et al. v. Rocky Mountain Slate Inc. et al. (2013), 542 A.R. 289; 566 W.A.C. 289; 2013 ABCA 57, refd to. [para. 57].

Zukowski v. Royal Insurance Co. of Canada (2000), 266 A.R. 81; 228 W.A.C. 81; 2000 ABCA 165, refd to. [para. 61].

Ernst & Young Inc. v. Central Guaranty Trust Co. (2006), 397 A.R. 225; 384 W.A.C. 225; 2006 ABCA 337, refd to. [para. 64].

574095 Alberta Ltd. v. Hamilton Brothers Exploration Co. et al. (2003), 320 A.R. 351; 288 W.A.C. 351; 2003 ABCA 34, refd to. [para. 66].

Danyluk v. Ainsworth Technologies Inc. et al., [2001] 2 S.C.R. 460; 272 N.R. 1; 149 O.A.C. 1, refd to. [para. 66].

Calgary (City) v. Scobie et al. (2011), 505 A.R. 115; 522 W.A.C. 115; 2011 ABCA 65, refd to. [para. 66].

Bank of Montreal v. Cochrane et al. (2011), 512 A.R. 153; 2011 ABQB 259, refd to. [para. 67].

Cliffs Over Maple Bay Investments Ltd., Re (2011), 304 B.C.A.C. 116; 513 W.A.C. 116; 2011 BCCA 180, refd to. [para. 67].

Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248; 2 N.R. 397, refd to. [para. 67].

Bjarnarson (H.R.) v. Manitoba (1987), 48 Man.R.(2d) 149; 38 D.L.R.(4th) 32 (Q.B.), affd. (1987), 50 Man.R.(2d) 178; 45 D.L.R.(4th) 766 (C.A.), refd to. [para. 67].

Doering v. Grandview (Town), [1976] 2 S.C.R. 621; 7 N.R. 299, refd to. [para. 67].

420093 B.C. Ltd. v. Bank of Montreal (1995), 174 A.R. 214; 102 W.A.C. 214; 34 Alta. L.R.(3d) 269 (C.A.), refd to. [para. 78].

Hoque v. Montreal Trust Co. of Canada et al. (1997), 162 N.S.R.(2d) 321; 485 A.P.R. 321 (C.A.), refd to. [para. 78].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 78].

R. v. Wilson, [1983] 2 S.C.R. 594; 51 N.R. 321; 26 Man.R.(2d) 194, refd to. [para. 78].

Royal Bank of Canada v. Hirsche Herefords et al. (2012), 530 A.R. 339; 2012 ABQB 32, refd to. [para. 79].

R. v. Litchfield, [1993] 4 S.C.R. 333; 161 N.R. 161; 145 A.R. 321; 55 W.A.C. 321, refd to. [para. 80].

Statutes Noticed:

Law of Property Act, R.S.A. 2000, c. L-7, sect. 48(1) [para. 24].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract in Canada (6th Ed. 2011), pp. 291 to 292 [para. 36]; 292 to 293 [para. 42].

Lange, Donald J., The Doctrine of Res Judicata in Canada (3rd Ed. 2010), pp. 281 [para. 75]; 467 [para. 77].

Counsel:

Tyler F. A. Derksen and Tara L. Petersen (Warren Benson Amantea LLP), for Royal Bank of Canada;

Richard Van Dorp (Peacock Linder & Halt LLP), for Terry Leonard and Terry Leonard Professional Corporation;

Loran V. Halyn (Sugimoto & Company), for Danny Starke;

Bruce McLeod (Scott Venturo LLP), for Benchmark Real Estate Appraisals Ltd.

These applications were heard on March 5, 2014, by Hanebury, Master, of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following memorandum of decision on May 14, 2014.