Vysek v. Nova Gas International Ltd. et al., (2002) 314 A.R. 370 (QB)

• Judge: Chrumka, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: February 28, 2002
• Citations: (2002), 314 A.R. 370 (QB);2002 ABQB 389

Vysek v. Nova Gas Intl. Ltd. (2002), 314 A.R. 370 (QB)

MLB headnote and full text

Temp. Cite: [2002] A.R. TBEd. AP.153

Peter Vysek, Eliska Vysek and Vladimir Vysek (plaintiffs) v. Nova Gas International Ltd. and W.G. (Bill) Howard Memorial Foundation (defendants)

(No. 9701-06747; 2002 ABQB 389)

Indexed As: Vysek v. Nova Gas International Ltd. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Chrumka, J.

April 16, 2002.

Summary:

Peter Vysek and his parents sued the defendants for damages, alleging that they breached contractual, fiduciary and tortious duties toward Peter and that, as a result, Peter became infected with a tropical disease and suffered brain damage. The court reserved judgment on May 31, 2001. Prior to judgment being delivered, the parents (hereafter "the plaintiffs") sold their Calgary property and bought one in Comox, British Columbia. Re/Max was the real estate agent on the sale. The TD Bank provided bridge financing in the amount of $110,675 to enable the plaintiffs to complete the transaction in Comox because the Calgary purchaser delayed one day in getting his financing. On July 31, 2001, the plaintiffs executed an "Irrevocable Assignment" to the TD Bank of $110,675 of the proceeds of sale of the Calgary property. Also, the TD Bank was to get a mortgage on the Comox property if it was not repaid. Upon learning of the plaintiffs' intended move out of Alberta, the defendants sought and obtained, on August 3, 2001, an ex parte order attaching the proceeds of sale of the Calgary property and freezing the plaintiffs' bank accounts. As a result, the TD Bank was not repaid. Nor did it obtain the mortgage on the Comox property. The TD Bank registered a caveat on the Comox property. Re/Max was still owed a $2,085.65 balance of commission. The proceeds were paid into court.

The Alberta Court of Queen's Bench, in a decision reported delivered on August 31, 2001, and reported at 298 A.R. 253, dismissed the plaintiffs' action. The court ordered the plaintiffs to pay costs of $641,601.64 to the defendant Nova (later increased to $770,701.64) and $199,106.13 to the defendant Howard Foundation. The defendants filed writs of enforcement and registered them at the personal property registry. The defendants applied for an order that: (1) the defendants had priority to the proceeds over the claims of TD Bank and Re/Max; (2) alternatively, the defendants were subrogated to the TD Bank's rights against the Comox property, as a result of the TD Bank's exercise of its rights to the monies paid into court to the defendants' prejudice; (3) alternatively, the TD Bank was required to assign its security in the Comox property to the defendants as a condition of receiving payment from the monies paid into court; (4) the Vyseks were not entitled to any exemption from civil enforcement against the proceeds, as the Calgary property was not their principal residence at the material time; and (5) the TD Bank and TD Waterhouse Investor Services (Canada) Inc. ("TD Waterhouse") pay the defendants $3,780 (later corrected to $3,750) as monies wrongfully released to the Vyseks.

The Alberta Court of Queen's Bench ruled as follows: (1) the TD Bank and RE/Max had priority over the claims of the defendants for their respective claims for the interim financing and the outstanding commission; (2) the defendants were not entitled to be subrogated to the TD Bank's interests in the Comox property; (3) the plaintiffs were not entitled to a principal residence exemption under the Civil Enforcement Act for the Calgary property; (4) TD Waterhouse and the TD Bank were not jointly liable to pay $3,750 to the defendants where TD Waterhouse had not been properly served with the August 3, 2001, attachment order; and (5) the plaintiffs were not entitled to have their debts existing at the time of the attachment order paid out from the funds held in court.

Creditors and Debtors - Topic 2254

Seizure or attachment of debtors' property - Exemptions - Principal residence - While awaiting judgment in their action, the plaintiffs sold their property in Calgary and purchased one in Comox, British Columbia - The transactions closed around July 31, 2001 - There was no improper motive behind them - On August 3, 2001, an attachment order was issued against the proceeds - The money was eventually paid into court - On August 31, 2001, the plaintiffs' action was dismissed and they were ordered to pay costs - The defendants then filed writs of enforcement and registered them in the personal property registry - The plaintiffs claimed an exemption for their Calgary property as a "principal residence" - The Alberta Court of Queen's Bench rejected the claim where the plaintiffs (a) were not enforcement debtors, (b) did not live in Calgary but in Comox when the writs of attachment and enforcement were issued, and (c) the sale of the Calgary property was not "forced" - See paragraphs 46 to 60.

Creditors and Debtors - Topic 2364

Seizure or attachment of debtors' property - Practice - Service of order - Judgment creditors invoked an attachment order issued before judgment against a bank, alleged that a bank affiliate wrongfully paid out sums to the judgment debtors, and claimed that the bank and its affiliate were jointly and severally liable for the sums allegedly wrongfully paid out to the judgment debtors - The Alberta Court of Queen's Bench rejected the claim - The affiliate was not required to repay the money to the judgment creditors where it had not been properly served with the attachment order - See paragraphs 61 to 67.

Equity - Topic 3023

Equitable rules affecting property - Marshalling - When applicable - While awaiting judgment in their action, the plaintiffs obtained bridge financing in the amount of $110,675 from the TD Bank to enable them to complete the purchase of a property in Comox, British Columbia, while they were completing the sale of their property in Calgary - On July 31, 2001, the plaintiffs executed in favour of the TD Bank an "Irrevocable Assignment" of $110,675 of the proceeds of the sale of their Calgary property - On August 3, 2001, an attachment order was issued against the proceeds - The money was eventually paid into court - The TD Bank registered a caveat against the Comox property - On August 31, 2001, the plaintiffs' action was dismissed and they were ordered to pay costs - The defendants then filed writs of enforcement and registered them in the personal property registry - The TD Bank and the defendants disputed priority respecting the $110,675 - The defendants invoked the doctrine of marshalling and argued that they should be subrogated in the rights of the TD Bank with respect to the Comox property - The Alberta Court of Queen's Bench rejected the argument - Apart from finding that the TD Bank had priority respecting the $110,675, the requirements for marshalling were not met - Specifically, the defendants were not prevented from accessing the value in the Comox property - See paragraphs 41 to 45.

Execution - Topic 1084

Writ of execution - Priorities and property affected - Prior transfers to bona fide purchasers or assignees - [See Personal Property - Topic 6006 ].

Execution - Topic 1084

Writ of execution - Priorities and property affected - Prior transfers to bona fide purchasers or assignees - While awaiting judgment in their action, the plaintiffs sold their property in Calgary and purchased one in Comox, British Columbia - The transactions closed around July 31, 2001 - There was no improper motive behind them - The Calgary property had been listed with Re/Max by virtue of a listing agreement dated May 29, 2001 - The listing agreement provided that the plaintiffs assigned enough of the proceeds to pay all money owed under the agreement - Re/Max was still owed $2,085.65 - On August 3, 2001, an attachment order was issued against the proceeds - The money was eventually paid into court - On August 31, 2001, the plaintiffs' action was dismissed and they were ordered to pay costs - The defendants then filed writs of enforcement and registered them in the personal property registry - Re/Max and the defendants disputed priority respecting the $2,085.65 - The Alberta Court of Queen's Bench held that Re/Max had priority - See paragraphs 36 to 40.

Personal Property - Topic 6006

Security interests - General - Security interest defined - While awaiting judgment in their action, the plaintiffs obtained bridge financing in the amount of $110,675 from the TD Bank to enable them to complete the purchase of a property in Comox, British Columbia, while they were completing the sale of their property in Calgary - There was no improper motive behind the transactions -On July 31, 2001, the plaintiffs executed in favour of the TD Bank an "Irrevocable Assignment" of $110,675 of the proceeds of the sale of their Calgary property - On August 3, 2001, an attachment order was issued against the proceeds - The money was eventually paid into court - On August 31, 2001, the plaintiffs' action was dismissed and they were ordered to pay costs - The defendants then filed writs of enforcement and registered them in the personal property registry - The TD Bank and the defendants disputed priority respecting the $110,675 - The defendants invoked s. 35 of the Civil Enforcement Act and submitted that the TD Bank only had an unperfected security interest which was necessarily subject to their registered writs of enforcement - The Alberta Court of Queen's Bench rejected this contention and held that the TD Bank had priority - For s. 35 to apply, the "Irrevocable Assignment" had to be a security interest as defined in the Personal Property Security Act - It was not because it did not secure the payment of an obligation - It was the obligation itself - Therefore, the provisions of the Civil Enforcement Act and the Personal Property Security Act did not apply to assess priorities - Also, the "Irrevocable Assignment" made the TD Bank owner of the money when it was made, before the attachment order or writs of enforcement - See paragraphs 19 to 35.

Subrogation - Topic 15

General - Right of subrogation - When available - [See Equity - Topic 3023 ].

Cases Noticed:

Minister of National Revenue v. Alberta (Treasury Branches) et al., [1996] 1 S.C.R. 963; 196 N.R. 105; 184 A.R. 1; 122 W.A.C. 1, consd. [para. 27].

Bonavista (Town) v. Atlantic Technologists Ltd. et al. (1994), 117 Nfld. & P.E.I.R. 19; 365 A.P.R. 19 (Nfld. T.D.), refd to. [para. 31].

Bowering, Re (1995), 33 C.B.R.(3d) 267 (B.C.S.C.), refd to. [para. 31].

Bitz, Szemenyei, Ferguson & MacKenzie v. Cami Automotive Inc. (1997), 34 O.R.(3d) 566 (Gen. Div.), refd to. [para. 34].

Regal Distributors Ltd. v. Freele, [1931] 1 D.L.R. 943 (Alta. C.A.), refd to. [para. 55].

Sawatsky (Bankrupt), Re, [2001] 8 W.W.R. 656; 295 A.R. 282 (Q.B. Bktcy. Registrar), refd to. [para. 55].

McAteer, Re (1981), 32 A.R. 248 (Q.B. Bktcy. Registrar), refd to. [para. 56].

Starko v. Starko (1992), 134 A.R. 48 (Q.B.), consd. [para. 56].

Dhalla (Bankrupt), Re (1991), 122 A.R. 365; 8 C.B.R.(3d) 57 (Q.B. Bktcy. Registrar), refd to. [para. 58].

Statutes Noticed:

Civil Enforcement Act, S.A. 1994, c. C-10.5, sect. 1(1)(q), sect. 1(1)(ss) [para. 51]; sect. 31(b)(xi), sect. 35 [para. 22]; sect. 88(g) [para. 48]; sect. 91 [para. 50].

Civil Enforcement Act Regulations (Alta), Civil Enforcement Regulation, Alta. Reg. 276/95, sect. 37(2) [para. 50].

Civil Enforcement Regulation - see Civil Enforcement Act Regulations (Alta.).

Personal Property Security Act, S.A. 1988, c. P-4.05, sect. 1(1)(qq) [para. 22]; sect. 3 [para. 23].

Authors and Works Noticed:

Fridman, G.H.L., The Law of Contract in Canada (4th Ed. 1999), pp. 714 to 716 [para. 34].

Treitel, G., The Law of Contract (10th Ed. 1999), p. 624 [para. 32].

Counsel:

Eliska Vysek and Vladimir Vysek, not represented by counsel;

Gary Draper (Mary Wyatt Sindlinger), for the defendant Nova Gas International Ltd.;

Brent Mescall, for the defendant W.G. (Bill) Howard Memorial Foundation;

John Drummond (David McKenzie), for the Toronto-Dominion Bank and TD Waterhouse Investor Services (Canada) Inc.;

Re/Max Classic Realty, not represented by counsel.

Chrumka, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, heard this application on February 28, 2002, and delivered the following reasons for judgment on April 16, 2002.