S.C.A. No. 02736 IN THE NOVA SCOTIA COURT OF APPEAL Clarke, C.J.N.S.; Matthews and Chipman, JJ.A. BETWEEN: PRENOR TRUST COMPANY OF CANADA and SEAWOOD ENTERPRISES LIMITED, JOHN C. CLAES and NORMAN BEZANSON Respondents Robert L. Barnes and J. Kevin Quigley for the Appellant J. William Jordan, Q.C. for the Respondents Appeal Heard: March 12, 1993 Judgment Delivered: March 23, 1993 THE COURT: The appeal is allowed as per reasons for judgment of Chipman, J.A.; Clarke, C.J.N.S. and Matthews, J.A., concurring. CHIPMAN, J.A.: The appellant Prenor is a mortgagee which unsuccessfully sought a deficiency judgment against the respondent, Bezanson, a guarantor of the covenants of a mortgage given by Seawood Enterprises Ltd. to Prenor. The mortgage dated December 31, 1987 was for $400,000 given on the security of property which had been appraised at $538,000. The mortgage fell into arrears and Prenor commenced foreclosure proceedings on August 2, 1990 against Seawood, the respondent and one Claes, another guarantor. The statement of claim, to which no defence was filed, specifically claimed deficiency judgment against all three defendants. On Prenor's application, an order for foreclosure and sale was granted on August 23, 1990 and the sheriff's sale took place on October 2, 1990. Prenor, the only bidder at the sale, bought in the property at $10,731.84. Prenor then embarked on an extensive effort to recover its outlay by marketing the property. It finally sold it at price of $295,000 on November 1, 1991. Civil Procedure Rule 47.10(3) dealing with foreclosure proceedings provides with respect to deficiency judgment as follows: "47.10(3) An application for deficiency judgment pursuant to sub‑paragraph (2), unless otherwise ordered by the court, shall be made within six months from the date of the Sheriff's Sale on ten days notice and any deficiency judgment allowed shall not exceed the difference between the amount realized by the plaintiff from the Sheriff's Sale and the amount owing to the plaintiff at that date determined in accordance with the provisions of the order for foreclosure and sale." On October 17, 1991 Prenor obtained an order from the prothonotary confirming the sheriffs sale and purporting to grant leave to Prenor to apply for deficiency judgment within six months from the date thereof. On March 30, 1992 Prenor issued an interlocutory notice (application inter panes) for an order pursuant to Civil Procedure Rule 47.10 for leave to enter deficiency judgment against the respondent. On May 19, 1992 an order was granted in chambers in the Supreme Court upon application of Prenor with the consent of the respondents' solicitor. It provided inter alia: "NOW UPON IT APPEARING that it is appropriate to extend the time in which the Plaintiff may make an application for an order for deficiency judgment against the Defendants; NOW UPON MOTION: IT IS HEREBY ORDERED that the Plaintiff is granted an extension of time for the hearing of an application for an Order for deficiency judgment to hearing on the 27th day of May, A.D. 1992 at 11:00 o'clock in the forenoon until the conclusion of such hearing, or such further time as this Honourable Court may hereafter approve; AND IT IS FURTHER ORDERED that the Defendant, Norman Bezanson, shall have leave to file Defence to such application and shall be entitled to appear at the said hearing for the purpose of opposing the application;" On May 21, 1992 the respondent filed defence, the essence of which was that Prenor neglected the property, as result of which the price obtained ($239,000) was significantly below the appraised value of $438,000 arrived at following the sheriffs sale. The defendant at no time pleaded that the application for deficiency judgment was out of time by reason of noncompliance with the Civil Procedure Rules. The matter was heard in chambers on July 6, 1992 and by oral decision rendered at the conclusion of the hearing and released in writing on August 14, 1992, the chambers judge dismissed the application. As to the issues raised in the defence, the judge said: "I find that Prenor acted with due diligence and without negligence in the exercise of its obligation to the mortgagor and the guarantors to obtain reasonable price on resale. Prenor listed the property with credible real estate agents, changed agents when their efforts were not successful, and also acted independently to market the property during the listings. It had no conflicting interest to retain the property in its possession, and the sale to the third party was at arm's length. Prenor consulted frequently with others, including its real estate agents, to determine proper listing price and there is simply no credible evidence that the resale price was not reasonable market price." However, the judge held that the application could not succeed because the order of October 17, 1991 extending the time was not one which the prothonotary had power to give. This was an irregularity, but it was not one that the court was prepared, in the circumstances, to cure. See Civil Procedure Rule 2.01 and 3.03. As to the amount of the claim, the judge said: "I advised the parties that would accept Prenor's statement of deficiency in the amount of $186,386 unless any of the amounts therein were successfully challenged by the guarantor, Mr. Bezanson. do not find that any of them have been successfully challenged." In the result, the application was dismissed with costs to the respondent. It is not disputed that the prothonotary did not have jurisdiction to grant the order of October 17, 1991 purporting to extend the time within which an application for a deficiency judgment could be made. However, I am of the view that the order made on May 19, 1992 conclusively resolved the issue of the timeliness of Prenor\'s application for a deficiency judgment. This was an order "otherwise" within the meaning of Civil Procedure Rule 41.10(3). It was consented to by the respondents' solicitor. I would allow the appeal, set aside the order of the chambers judge and give judgment to Prenor against the respondent and the other two defendants for $186,386, together with interest at 6% from August 14, 1992, costs on the chambers application of $1,500 plus disbursements and costs of this appeal of $600 plus disbursements. J.A. Concurred in: Clarke, C.J.N.S. Matthews, J.A. S.H. 73802 IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN: PRENOR TRUST COMPANY OF CANADA, body corporate, formerly known as Atlantic Trust Company of Canada and SEAWOOD ENTERPRISES LIMITED, body corporate, and JOHN C. CLAES and NORMAN BEZANSON Defendants HEARD: before the Honourable Mr. Justice F. B. W. Kelly, Supreme Court of Nova Scotia, Trial Division, on June 17, 1992 in Halifax, Nova Scotia. (Complicated Chambers Matter) DECISION: July 6, 1992 (Orally) WRITTEN RELEASE: August 14, 1992 COUNSEL: Roberta J. Clarke for Prenor Trust Company of Canada J. William Jordan, Q.C. for Norman Bezanson S.C.A. No. 02736 IN THE NOVA SCOTIA COURT OF APPEAL BETWEEN: PRENOR TRUST COMPANY OF CANADA and SEAWOOD ENTERPRISES LIMITED, JOHN C. CLAES and NORMAN BEZANSON REASONS FOR JUDGMENT BY: CHIPMAN, J.A.
The appellant mortgagee appealed a chambers decision denying it a deficiency judgment on the basis the application was not made within the time limit set out in the Civil Procedure Rules. The appellant had relied on a prothonotary's order extending the time to apply for a deficiency judgment, which the prothonotary did not have authority to give. Allowing the appeal, setting aside the chambers decision and giving judgment to the appellant. While the prothonotary did not have jurisdiction to extend the time for the application, an additional chambers order had resolved the timeliness issue in the appellant's favour.