Spicer et al. v. Middleton (Town) et al., (2014) 341 N.S.R.(2d) 246 (SC)

• Judge: Muise, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 25, 2014
• Jurisdiction: Nova Scotia
• Citations: (2014), 341 N.S.R.(2d) 246 (SC);2014 NSSC 66

Spicer v. Middleton (2014), 341 N.S.R.(2d) 246 (SC);

    1081 A.P.R. 246

MLB headnote and full text

Temp. Cite: [2014] N.S.R.(2d) TBEd. MR.021

Peter M. Spicer, P.M. Spicer Contracting Limited and 3257581 Nova Scotia Limited (applicants) v. The Town of Middleton, Brocklin Enterprises Incorporated, 3263689 Nova Scotia Limited, Mid-Valley Motel Limited, Edward Brock Savage and Sean Pickrem (respondents)

(Kentville No. 408723; 2014 NSSC 66)

Indexed As: Spicer et al. v. Middleton (Town) et al.

Nova Scotia Supreme Court

Muise, J.

February 25, 2014.

Summary:

Pickrem's mother owned the Mid-Valley Motel. Pickrem owed $40,000 on a line of credit to keep the Motel operating. Mid-Valley owed Savage's oil company $53,000 for heating oil. Spicer purchased the property at a tax sale. Spicer and Robinson planned to operate the motel though a numbered company by putting the tax deed in the numbered company's name after the redemption period. There was an agreement and understanding between Spicer, Robinson, Pickrem, Savage and Savage's son-in-law that their debts would be covered in exchange for them not redeeming the property. The Business Development Bank held a $522,000 mortgage on the property, but was prepared to accept $125,000 in exchange for a release of the mortgage, which Savage arranged. Mid-Valley conveyed the property to a company solely owned by Savage (Brocklin). Savage and his son-in-law, through a family trust, owned a company (326) that they intended to own and operate the Motel. Savage paid the redemption price. An issue was raised respecting the redemption amount and the validity of the redemption. No redemption funds were released by the town. Between the tax sale and redemption payment, Spicer and his two companies (Spicer group) operated the Motel, effected repairs and improvements and purchased goods to operate the Motel. The Spicer group alleged that Savage agreed to cover some of those costs. The Spicer group commenced an Application in Court challenging the validity of the redemption on the grounds that: (1) the deed from Mid-Valley to Brocklin was invalid because it was based on an impermissible re-delegation of Pickrem's mother's corporate powers; (2) Brocklin could not redeem the property because it, at the time of the tax sale, was not an owner, person with a charge on the property, or a person interested in the property; (3) Savage's numbered company (326) was likewise not entitled to redeem the property; and (4) the redemption amount had not been paid to the Spicer group. Alternatively, if the redemption was valid and the redemption period was proper and reasonable, the Spicer group claimed the cost of repairs and improvements based on breach of contract, contractual misrepresentation, unjust enrichment, an enforceable promise to pay from Savage and because, in part, the expenses incurred in operating the Motel were beyond the amount included in the redemption amount. The Spicer group also sought a declaration that moveable Motel property, purported conveyed by bill of sale to Brocklin, was owned by the Spicer group's numbered company. The respondents contested portions of the Application on the grounds that (1) the Spicer group gave notice of intention to bring an action, not an Application in Court, without including all of the claims they now advanced (non-compliance with s. 512 of the Municipal Government Act) and (2) the Spicer group lacked standing to challenge Pickrem's mother's re-delegation of her corporate power and responsibility (i.e., no standing to challenge the deed to Brocklin).

The Nova Scotia Supreme Court ruled as follows: (1) the notice of intended action was not invalid merely because the Spicer group decided to commence an Application in Court rather than an action; (2) the notice substantially complied with s. 512 and none of the claims were dismissed by reasons of defective notice; (3) the Spicer group had a sufficient interest in the validity of the deed to Brocklin to give them standing to challenge it; (4) there was no improper re-delegation of corporate power in executing the deed to Brocklin; (5) Brocklin redeemed the property with redemption funds paid by Savage's numbered company, which it was authorized to do; (6) the redemption became effective when Brocklin paid the calculated redemption amount; (7) the town's withholding of the redemption funds did not invalidate the redemption; (8) $3,747.28 deducted from the redemption amount as net revenue earned by the Spicer group prior to redemption was added back, as post-redemption evidence established that the Spicer group's expenses exceeded their revenue; (9) there was an enforceable agreement entitling the Spicer group to $8,642 for vacuums, bedding, towels, etc., purchased by the Spicer group and left at the Motel; (10) Savage and the other respondents were not liable for the cost of repairs and improvements not included in the redemption price despite them being enriched and the Spicer group being deprived (s. 152 of the Municipal Government Act was a juristic reason for the enrichment); and (11) the bill of sale of chattels to Spicer's group was only to authorize use of the Motel chattels, not to transfer ownership (that bill of sale unenforceable and bill of sale to Brocklin valid).

Agency - Topic 1061

Authority of agent - Express authority - Power of attorney - General (incl. validity of) - [See Company Law - Topic 4162 ].

Company Law - Topic 4162

Directors - Powers - Delegation of - Dupree was the sole owner and director of a company that owned and operated a motel - The applicants purchased the property at a tax sale and were entitled to a tax sale deed unless the property was redeemed - Dupree executed a power of attorney in favour of Gillis - Gillis executed a transfer of the property by deed to Brocklin, who redeemed the property - The applicants challenged the validity of the deed on the basis that it was executed by an invalid power of attorney - Specifically, the applicants alleged an impermissible re-delegation of Dupree's corporate power and responsibilities and that an adverse inference should be drawn from the failure to produce, upon request, an alleged subsequent power of attorney given by Dupree that nullified or revoked the power of attorney relied on to support the validity of the deed - The Nova Scotia Supreme Court declined to draw the requested adverse inference - There was a legitimate explanation for failing to produce the document (no undertaking to provide it and Dupree and her lawyer could not locate it) - The applicants merely speculated that there was a subsequent power of attorney revoking the power of attorney relied on - The deed was not executed under an impermissible re-delegation of corporate power and fiduciary responsibility - The negotiations respecting the sale of the property were conducted between Brocklin and Dupree - Only the signing of the deed was done by power of attorney - Dupree exercised her discretion to convey the property to Brocklin - Her delegation of the power to execute the deed to Gillis was proper and the power of attorney authorizing him to do so was valid - See paragraphs 73 to 95.

Deeds and Documents - Topic 1561

Execution - Capacity - General - [See Company Law - Topic 4162 ].

Evidence - Topic 227

Inferences and weight of evidence - Inferences - Inferences from failing to produce documents - [See Company Law - Topic 4162 ].

Municipal Law - Topic 6242

Actions against municipality - Conditions precedent - Notice of accident or action - General - Section 512 of the Municipal Government Act required that a municipality be given at least one month's notice of any intended action against it - The applicants gave one month's notice of their intention to bring an action against the municipality, but commenced a Notice of Application (alternative to an action) - The municipality contested the notice on the ground that the notice was defective for failing to specify the nature of the proceeding (application instead of action) - The Nova Scotia Supreme Court held that notice was required prior to commencing an Application in Court, as it was an alternative to an action - The court stated that "I ... disagree with the Town's position that a notice of an intended action becomes invalid notice simply because the party having given notice chooses to proceed by way of application in court instead of by way of action. Either way, the municipal body has notice of an intended proceeding and what it is about. It can take steps to preserve evidence, negotiate a settlement and/or incorporate contingent liabilities in its budgeting. If the municipal body views the choice to proceed by application in court as being inappropriate in the circumstances, it can move to convert the application to an action" - The municipality was not misled or prejudiced "by the Notice referring to an action and defendants, rather than an application and respondents" - See paragraphs 28 to 33.

Municipal Law - Topic 6242

Actions against municipality - Conditions precedent - Notice of accident or action - General - Section 512 of the Municipal Government Act required that a municipality be given at least one month's notice of any intended action against it - The applicants gave one month's notice of their intention to bring an action against the municipality, but commenced a Notice of Application (alternative to an action) - The municipality challenged the validity of the Notice of Action for, inter alia, failing to specify the nature of the proceeding (application instead of action) - The applicants had no notice of this challenge until raised by the municipality during its closing argument at the hearing - The municipality argued that "this notice issue need not be raised in the Notice of Contest as the notice requirement is a condition precedent and it is up to the Applicants to prove that it has been satisfied" - The Nova Scotia Supreme Court stated that "it is unfair to the Applicants to raise the issue at that late date. The Town was clearly aware of the claims being advanced by the Applicants prior to filing its pretrial memorandum. The issue ought to have been raised by that time. At the latest, it ought to have been raised at the commencement of the hearing. In my view, it is improper to wait until closing submissions to raise the issue. Therefore, I agree with the Applicants that the issue has been raised too late" - See paragraphs 27 to 41.

Municipal Law - Topic 6242

Actions against municipality - Conditions precedent - Notice of accident or action - General - Section 512 of the Municipal Government Act required that a municipality be given at least one month's notice of any intended action against it - Section 512(3) required that the "cause of action" be specified - A Notice did not specify each claim being advanced, but the applicants argued that "it contains sufficient detail to fulfill the general purpose of the notice requirements and, as such, is in substantial compliance with the notice provision" - The Nova Scotia Supreme Court stated that "the reason for requiring strict compliance with statutory provisions mandating notice to the Crown is that such provisions have to be 'strictly interpreted in favour of the Crown' because the Crown has merely 'relaxed its traditional immunity from claims against it'. Strictly speaking, a municipal unit is not the Crown. It is merely an incorporated body to which a provincial legislature has delegated some powers ... Therefore, provisions requiring notice to municipal units ought not be interpreted as strictly as those requiring notice to the Crown" - See paragraphs 42 to 45.

Municipal Law - Topic 6245

Actions against municipality - Conditions precedent - Notice of action or accident - Notice of accident or action - Form and content - Section 512 of the Municipal Government Act required that a municipality be given at least one month's notice of any intended action against it - Section 512(3) required that the "cause of action" be specified - A Notice did not specify each claim being advanced, but the applicants argued that "it contains sufficient detail to fulfill the general purpose of the notice requirements and, as such, is in substantial compliance with the notice provision" - The Nova Scotia Supreme Court held that the Notice made it clear that the applicants sought losses and damages arising from the way in which the municipality, following a tax sale, handled the redemption process and the redemption funds - Section 512 did not require that the type of damages being sought be specified, nor did s. 512 apply to claims for declaratory relief against a municipality - The court held that "I have jurisdiction to hear all of the claims advanced by the Applicants; and, none of the claims advanced by the Applicants ought to be dismissed by reason of a defective Notice of Intended Action" - See paragraphs 46 to 57.

Practice - Topic 222

Persons who can sue and be sued - Individuals and corporations - Status or standing - Persons interested under written instrument (Will, Deed, etc.) - The applicants purchased a motel property at a municipal tax sale and were, accordingly, entitled to a tax sale deed unless the property was redeemed - The property owner, through her delegate, transferred title to Brocklin, which subsequently redeemed the property - The applicants challenged the validity of the deed - Brocklin argued that the applicants had no standing to challenge the deed, as they were strangers to the corporate action and property conveyance involved - The Nova Scotia Supreme Court held that the applicants had standing - The court stated that if the deed were declared invalid, Brocklin would lack authority to redeem the property and the applicants would have been entitled to acquire the property by tax deed - The applicants "suffered a real injury or damage" - The applicants "have a legal interest in relation to the property which has been affected by the conveyance into Brocklin; the validity of the conveyance has a real economic significance to them; a declaration of invalidity has practical value to them; and, the validity of the conveyance is an element in the dispute regarding the validity of the redemption, irrespective of whether the Applicants were a party to the conveyance. ... the Applicants have a sufficient interest to give them standing to challenge the validity of the deed" - See paragraphs 58 to 72.

Real Property Tax - Topic 9161

Tax sales for delinquent taxes - Redemption by owner or mortgagee - General - The applicants purchased a motel property at a municipal tax sale and were, accordingly, entitled to a tax sale deed unless the property was redeemed - The property owner transferred title to Brocklin, a company solely owned by Savage - The property was redeemed using Savage's personal funds, but paid by cheque from a numbered company (626), solely owned by him, that was set up to operate the motel - At issue was whether the redemption was invalid because the property was not redeemed by the owner of the property by deed (Brocklin), but by a numbered company that did not own the property - The Nova Scotia Supreme Court held that Brocklin redeemed the property notwithstanding that the redemption funds came from Savage's numbered company - Brocklin, as an "owner" under s. 152(1) of the Municipal Government Act, was entitled to redeem the property - The court rejected the argument that an "owner" under s. 152(1) was limited to the owner at the time of the tax sale - Those persons acquiring title during the redemption period were entitled to redeem the property - Brocklin was entitled to redeem the property - See paragraphs 96 to 119.

Real Property Tax - Topic 9161

Tax sales for delinquent taxes - Redemption by owner or mortgagee - General - The applicants purchased a motel property at a municipal tax sale and were, accordingly, entitled to a tax sale deed unless the property was redeemed - The property owner transferred title to Brocklin, a company solely owned by Savage - Brocklin redeemed the property by paying the calculated redemption funds to the town - The validity of the redemption and the calculation of the redemption amount were in dispute - As the town had notice that the applicants would be challenging the validity of the redemption, the town withheld payment of the redemption funds - The Nova Scotia Supreme Court held that the withholding by the town of the redemption funds did not invalidate the redemption - The need for strict compliance with the redemption process was to avoid an owner unfairly losing its property - The same strict approach was not meant to apply to the process for the owner to redeem - Given time constraints, some flexibility in the redemption process was required - Any uncertainty in the redemption price, or disputes as to that amount, leading to a withholding of the redemption funds, did not invalidate the redemption process - Otherwise, the purchaser at the tax sale could simply challenge the redemption price, even past the redemption period, to foil an owner's attempt to redeem - If the court subsequently determined a higher redemption price was required, it could simply order that the deficiency be paid - The validity of the redemption depended upon payment to the municipality of the redemption price calculated by the municipality - The validity of the redemption did not depend upon payment to the tax sale purchaser of the full amount owed to it - See paragraphs 120 to 134.

Real Property Tax - Topic 9168

Tax sales for delinquent taxes - Redemption by owner or mortgagee - Right of purchaser under redemption - A property subject to municipal tax arrears was sold at a tax sale to the applicants - The applicants were entitled to a tax sale deed if the property was not redeemed by the owner - The owner sold the property to Brocklin, who became the "owner" entitled to redeem - Brocklin redeemed the property - At issue was the amount required to redeem the property, particularly respecting repair costs incurred by the tax sale purchaser during the redemption period - Section 152(2)(f) of the Municipal Government Act required that the person redeeming the property pay "all amounts paid by the purchaser for necessary repairs made, with the written approval of the treasurer, to buildings on the property" - The Nova Scotia Supreme Court held that advance approval of repairs was not required, but purchasers took the risk that after the fact approval would not be given - The court determined which unapproved repairs effected by the purchaser were unnecessary and, accordingly, were not to be included in the redemption price - The court also determined which expenses incurred to earn revenue from the property were to be included in the redemption price - See paragraphs 135 to 157.

Real Property Tax - Topic 9168

Tax sales for delinquent taxes - Redemption by owner or mortgagee - Right of purchaser under redemption - [See Restitution - Topic 64 ].

Restitution - Topic 62

Unjust enrichment - General - What constitutes - [See Restitution - Topic 64 ].

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - A property subject to municipal tax arrears was sold at a tax sale to the applicants - The applicants were entitled to a tax sale deed if the property was not redeemed by the owner - The owner sold the property to Brocklin, who became the "owner" entitled to redeem - Brocklin redeemed the property - At issue was the amount required to redeem the property, particularly respecting repair costs incurred by the tax sale purchaser during the redemption period - Section 152(2)(f) of the Municipal Government Act required that the person redeeming the property pay "all amounts paid by the purchaser for necessary repairs made, with the written approval of the treasurer, to buildings on the property" - At issue was whether Brocklin was responsible to the applicants, on the basis of unjust enrichment, for the cost of unapproved repairs and improvements that were not included in the redemption price - The applicants knew that redemption was a possibility, that written approval of repairs and improvements was required, and that they risked recouping their expenses incurred if the property was redeemed and the expenses were not approved - The Nova Scotia Supreme Court held that Brocklin was enriched by the repairs and improvements and the applicants suffered a corresponding deprivation - However, s. 152, which denied recovery for unapproved repairs and improvements, constituted a juristic reason for the enrichment - None of the respondents fraudulently, or otherwise, led the applicants to believe that the property would not be redeemed - Consequently, it was not inequitable to permit Brocklin or Savage's numbered company to retain the benefit of those repairs and improvements that were excluded from the redemption price - See paragraphs 169 to 202.

Restitution - Topic 102

Unjust enrichments - Bars - Statutory code - [See Restitution - Topic 64 ].

Cases Noticed:

Cameron v. New Glasgow (Town) (1970), 1 N.S.R.(2d) 651 (T.D.), refd to. [para. 35].

Johnson v. Halifax (City) and Dominix (1975), 12 N.S.R.(2d) 547 (C.A.), refd to. [para. 35].

Lloyd v. Richards (1985), 67 B.C.L.R. 22 (S.C.), refd to. [para. 35].

Carston v. Cowichan Valley (Regional District) (1988), 28 B.C.L.R.(2d) 360 (S.C.), refd to. [para. 35].

Kurolak et al. v. Saskatchewan (Minister of Highways and Transportation) (1986), 48 Sask.R. 92; 1986 CarswellSask 211 (Q.B.), refd to. [para. 39].

Petten et al. v. E.Y.E. Marine Consultants et al. (1994), 120 Nfld. & P.E.I.R. 313; 373 A.P.R. 313; 1994 CarswellNfld 358 (T.D.), refd to. [para. 43].

Canadian Javelin Ltd. and Newfoundland and Labrador Housing Corp. v. Newfoundland (1978), 24 Nfld. & P.E.I.R. 210; 65 A.P.R. 210; 1978 CarswellNfld 97 (T.D.), refd to. [para. 44].

Joseph v. Canada (Attorney General), 1985 CarswellBC 2378 (Co. Ct.), refd to. [para. 45].

Catalyst Paper Corp. v. North Cowichan (District) (2012), 425 N.R. 22; 316 B.C.A.C. 1; 537 W.A.C. 1; 2012 SCC 2, refd to. [para. 45].

Pendergast v. Newfoundland (1987), 65 Nfld. & P.E.I.R. 57; 199 A.P.R. 57; 1987 CarswellNfld 147 (T.D.), refd to. [para. 54].

McNeil v. Nova Scotia Board of Censors (1974), 9 N.S.R.(2d) 483 (C.A.), affd. [1976] 2 S.C.R. 265; 5 N.R. 43; 12 N.S.R.(2d) 85; 6 A.P.R. 85, refd to. [para. 54].

Cowan v. Canadian Broadcasting Corp., [1966] 2 O.R. 309 (C.A.), refd to. [para. 59].

Canadian Pacific Railways v. Teamsters Union, Local 213 (1975), 60 D.L.R.(3d) 249 (B.C.C.A.), refd to. [para. 64].

Walmsley, Re (2001), 200 Nfld. & P.E.I.R. 141; 603 A.P.R. 141; 2001 PESCTD 37, refd to. [para. 65].

Falkenham (C.R.) Backhoe Services Ltd. v. Human Rights Board of Inquiry (N.S.) et al. (2008), 264 N.S.R.(2d) 281; 847 A.P.R. 281; 2008 NSCA 38, refd to. [para. 76].

McIlvenna v. Viebig, [2012] B.C.T.C. Uned. 218; 2012 BCSC 218, refd to. [para. 77].

Dandeneau v. Dandeneau (2000), 283 A.R. 74; 2000 ABQB 959, refd to. [para. 79].

McLellan Properties Ltd. v. Roberge et al., [1947] S.C.R. 561, refd to. [para. 94].

Point East Investments Ltd. et al. v. Barry (2001), 190 N.S.R.(2d) 215; 594 A.P.R. 215; 2001 NSCA 7, refd to. [para. 111].

Smith v. MacLeod, 1966 CarswellNB 13 (T.D.), refd to. [para. 116].

Moore and Armsworthy v. Wheadon (1993), 126 N.S.R.(2d) 47; 352 A.P.R. 47 (S.C.), refd to. [para. 126].

Cameron Auctioneers & Appraisers Ltd. et al. v. New Brunswick (Minister of Finance) (1998), 206 N.B.R.(2d) 320; 526 A.P.R. 320; 1998 CarswellNB 418 (C.A.), refd to. [para. 127].

Carabin v. Offman (1988), 87 N.S.R.(2d) 407; 222 A.P.R. 407 (C.A.), refd to. [para. 169].

Irving Oil Ltd. v. Hi-Liner Fishing Gear and Tackle Co. et al., [2007] N.S.R.(2d) Uned. 184; 2007 CarswellNS 621 (Sm. Cl.), refd to. [para. 169].

Annapolis County (Municipality) v. Kings Transit Authority (2012), 323 N.S.R.(2d) 90; 1025 A.P.R. 90; 2012 NSSC 401, refd to. [para. 169].

Garland v. Consumers' Gas Co. (2004), 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 169].

Kerr v. Baranow (2011), 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, refd to. [para. 169].

McGrath v. Hazlett (1976), 13 N.S.R.(2d) 567; 9 A.P.R. 567 (T.D.), refd to. [para. 173].

Statutes Noticed:

Municipal Government Act, S.N.S. 1998, c. 13, sect. 152, sect. 153, sect. 154 [para. 125].

Authors and Works Noticed:

Cromwell, Thomas A., Locus Standi: A Commentary on the Law of Standing in Canada (1986), pp. 123 to 131, 146 [para. 63].

Halsbury's Laws of Canada - Civil Procedure II (1st Ed. 2008), para. 228 [para. 78].

Halsbury's Laws of Canada - Civil Procedure II (2012 Reissue), generally [para. 61].

Halsbury's Laws of Canada - Evidence (1st Ed. 2010), para. 14 [para. 78].

Sweatman, Jasmine, Guide to Powers of Attorney (2002), p. 16 [para. 93].

Wigmore on Evidence (3rd Ed. 1940), vol. 2, p. 162 [para. 75].

Counsel:

Randall Balcome, for the applicants;

W. Bruce Gillis, Q.C., for the Town of Middleton;

David Cottenden, Q.C., for Brocklin Enterprises Inc., 3263689 Nova Scotia Ltd. and E. Brock Savage;

Sean Pickrem, self-represented;

Mid-Valley Motel Ltd., not represented.

This application was heard on November 13-15, and 18, 2013, at Digby, N.S., before Muise, J., of the Nova Scotia Supreme Court, who delivered the following judgment on February 25, 2014.