Layh, J. QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2018 SKQB 216 Date: 2018 07 31 Docket: QBG 416 of 2017 Judicial Centre: Saskatoon BETWEEN: ROYAL BANK OF CANADA and DOREEN PEARL PARTRIDGE Counsel: Ljiljana Zerajic for the plaintiff no one appearing for the defendant FIAT ROTHERY J. July 31, 2018 [1] The issue is whether the pro rata distribution of purchase money proceeds and non‑purchase money proceeds in any deficiency judgment pursuant to judicial sale extends to the total outstanding amount of the mortgage. That is, whether the pro rata distribution applies solely to the indebtedness of principal and accrued interest, or applies to all costs of the outstanding mortgage, including solicitor‑client costs permitted under the mortgage. [2] The plaintiff, Royal Bank of Canada [RBC], applies by notice of application for a deficiency judgment against the defendant, Doreen Pearl Partridge [Partridge], pertaining to the non‑purchase money portion of the outstanding indebtedness to RBC pursuant to her mortgage. RBC also applies to have its lawyers’ costs assessed on solicitor‑client basis. The judicial sale by real estate listing was previously confirmed by the order of Danyliuk J. of October 27, 2017. [3] As directed by Toronto‑Dominion Bank Schell, 2014 SKQB 344 (CanLII) at paras 17‑18, 461 Sask 257, counsel has appropriately applied by notice of application to have solicitor‑client costs assessed and to have the judgment for the deficiency amount set. And, as directed by Walker Bank of Montreal, 2017 SKCA 42 (CanLII), 415 DLR (4th) 277 [Walker], counsel for RBC has appropriately calculated the proceeds from the judicial sale that must be distributed pro rata between the purchase money and non‑purchase money balances owing. Partridge had originally executed mortgage for $191,000, of which $176,000 was advanced to purchase her condominium unit and $15,000 was advanced for other purchases. Thus, the non‑purchase money portion of the loan advanced and secured by the mortgage was 8% of the total mortgage. [4] The property sold pursuant to an Order Nisi for Sale by Real Estate Listing for $156,000. In accordance with the Order Nisi, and as set out in Rule 10‑47(5)(c) of The Queen’s Bench Rules and its corresponding Form 10‑47C, the sale proceeds were distributed to pay outstanding property taxes, real estate commission, and the principal and interest due under the mortgage in the sum of $141,945.36. This sum is referred to as the “net sale proceeds” to be distributed pro rata as directed by Walker at paragraph 35. [5] As at November 1, 2017, the amount of principal and interest owing on the non‑purchase money portion of the mortgage was $21,256.86. Applying 8% of the net sale proceeds, calculated as $11,355.63, against the outstanding balance of the non‑purchase money portion of the mortgage, the deficiency of principal and interest is $9,901.23 as at November 1, 2017. As requested in paragraph 9 of the affidavit sworn by the officer for RBC, RBC “is seeking judgement in the amount of $9,901.23 with interest from November 1, 2017 to the date of judgment at the rate of 2.79 per cent per annum.” I find that RBC is entitled to a deficiency judgment for principal and interest owed under the mortgage in the amount requested. [6] RBC claims it is entitled to solicitor‑client costs, and other costs accrued by RBC under its mortgage. The issue is whether such costs should be subject to the pro rata calculation for the non‑purchase portion of the mortgage, that is, 8% of the total costs incurred. [7] It is settled law that mortgagee is entitled to solicitor‑client costs if the obligation to pay those costs is included as term of the mortgage. See: Fidelity Trust Co. Hawrish (1986), 1986 CanLII 3118 (SK CA), 55 Sask 10 (CA) at para 3‑4 [Hawrish]; and Royal Bank of Canada Lafond, 2009 SKQB 346 (CanLII) at para 7, 341 Sask 195. [8] Such is the situation with this mortgage. The solicitor‑client costs charged to RBC by its counsel total $7,227.00, plus disbursements of $301.47, GST of $367.42, and PST of $433.62. [9] This is sale by real estate listing that was conducted in smooth and timely fashion. The solicitor‑client costs to be awarded by this court fall squarely within the reference point referred to in CIBC Mortgages Inc. Greyeyes, 2017 SKQB 313 (CanLII). That is, RBC is entitled to an order for solicitor‑client costs in the amount of $4,500.00. RBC is entitled to taxable disbursements of $121.47, non‑taxable disbursements of $180.00, and the applicable GST and PST. [10] RBC also claims two other charges pursuant to its mortgage. First, RBC has paid to the condominium corporation the sum of $2,528.90 for arrears of condominium fees. Pursuant to s. 63 of The Condominium Property Act, 1993, SS 1993, C‑26.1, the condominium corporation may register lien against the title of the condominium owner’s unit for unpaid contributions to the common expense fund or the reserve fund. These are charges that are allowable pursuant to s. 11 of The Limitation of Civil Rights Act, RSS 1978, L‑16 [LCRA]. See: CIBC Mortgages Inc. Eldstrom, 2014 SKQB 337 (CanLII) at para 9, 458 Sask 314 [Eldstrom]. Thus, the condominium fees paid by RBC are assessments levied against the mortgagor’s land and are recoverable under the terms of the mortgage. [11] Secondly, RBC claims $1,461.92 for its payment of property management charges for securing and caring for the property, appraisal fee and utilities. These charges are permitted by s. 8(1) of the LCRA. Any inspections and administration fees have not been claimed by RBC. See: Hawrish, at para 5; Eldstrom at paras 8‑9; and Royal Bank of Canada Leschinski, 2012 SKQB 286 (CanLII) at para 5, 401 Sask 242. Thus, the property management charges of $1,461.92 are recoverable under the terms of the mortgage. [12] Counsel for RBC submits that the total of the assessed solicitor‑client costs, the total condominium fees and the total property management charges ought to be added to the deficiency judgment, along with the prorated principal and interest due. Counsel argues that it was required to incur the extra legal costs to proceed by judicial sale in order to pursue recovery of the deficiency against Partridge. RBC should not have the solicitor‑client costs prorated in accordance with the non‑purchase money portion of the mortgage. [13] The Saskatchewan Court of Appeal in Walker was not required to address the prorating of solicitor‑client costs because the parties had consented to having the matter remitted to the Queen’s Bench judge. However, Walker is instructive in explaining the policy objective of s. of the LCRA. The protection of s. of the LCRA continues to apply to only that portion of the mortgage loan that was given to secure the purchase price of the land. It logically follows that the protection of s. of the LCRA pertains to all costs which are part of the outstanding mortgage amount. In this case, the pro rata calculation of the non‑purchase money mortgage is 8% of the total outstanding mortgage amount. RBC is entitled to judgment against Partridge for 8% of the solicitor‑client costs, condominium fees and property management charges. [14] It is hereby ordered that RBC is granted judgment against Partridge in an amount calculated as:(a) the sum of $9,901.23 with interest from November 1, 2017, to the date of judgment at the rate of 2.79% per annum, representing the deficiency of principal and interest owed under the mortgage;(b) 8% of solicitor‑client costs assessed at $4,500.00 and 8% of disbursements and applicable taxes;(c) 8% of the condominium fees of $2,528.90 paid by RBC; and(d) 8% of the property management charges of $1,461.92 paid by RBC. [15] Counsel for RBC is directed to prepare draft judgment for my consideration in accordance with the terms of this order. “A.R. Rothery” J. A.R. Rothery
Statutes – Interpretation – Limitation of Civil Rights Act, Section 2The plaintiff bank applied by notice of application for a deficiency judgment against the defendant pertaining to the non-purchase money portion of the outstanding indebtedness to the plaintiff pursuant to her mortgage and to some other costs related to the mortgage. The original mortgage executed by the plaintiff was for $191,000 of which $176,000 was advanced to purchase her condominium and $15,000, eight per cent of the total, was advanced for other purchases. The property sold for $156,000 pursuant to a judicial sale. The sale proceeds were distributed to pay outstanding property taxes, commission, and the principal and interest due under the mortgage in the amount of $141,945 and the net sale proceeds were to be distributed pro rata. As at November 1, 2017, the principal and interest owing on the non-purchase money portion of the mortgage was $21,250. The plaintiff requested judgment for the deficiency in the amount of $9,900 with interest to the date of judgment. It claimed it was entitled to solicitor-client costs and other costs accrued by it under the mortgage. The issue was whether such costs should be subject to the pro rata calculation for the nonpurchase portion of the mortgage, that is, 8 percent of the total costs incurred.  HELD: The application was granted. The court found that the plaintiff was entitled to a deficiency judgment for principal and interest owed under the mortgage in the amount requested. It was also entitled to judgment against the mortgagee for eight percent of the solicitor-client costs, condominium fees and property management charges.