






Citation:


598543 
          B.C. Ltd. v. 630350 Saskatchewan Ltd.


Date:
20030117









2003 
          BCCA 30


Docket:


CA030370






Registry:  
          Vancouver




COURT OF APPEAL FOR BRITISH COLUMBIA




BETWEEN:




598543 B.C. LTD.




APPELLANT

(RESPONDENT)




AND:




630350 SASKATCHEWAN LTD.

630351 SASKATCHEWAN LTD. and

630352 SASKATCHEWAN LTD.




RESPONDENT

(PETITIONER)



















Before:


The 
          Honourable Madam Justice Saunders







(In 
          Chambers)












G.J. 
          Scharfstein


Counsel 
          for the Appellant




G.T. 
          Tucker


Counsel 
          for the Respondent




Place 
          and Date of Hearing:


Vancouver, 
          British Columbia






December 
          13, 2002






Place 
          and Date of Judgment:


Vancouver, 
          British Columbia






January 
          17, 2003










Reasons for Judgment of the Honourable 
    Madam Justice Saunders:






[1]

598543 B.C. Ltd. seeks directions as to whether it requires leave to 
    appeal an order
nisi
, and if leave is required, seeks leave to appeal.  
    In the event it obtains leave to appeal, it also seeks a stay of the order
nisi
.

[2]

I shall refer to the parties as the BC Company and Saskatchewan Companies 
    respectively.

[3]

The order
nisi
was made in foreclosure proceedings concerning 
    land in Kimberley, British Columbia, being developed as the Kimberley Ridge 
    Property.  The land development contemplated construction and sale of condominium 
    units.  The circumstances leading to and reasons for issuing the order
nisi
are set out by Chief Justice Brenner in his reasons for judgment thus:

. . . The mortgage is 
    in the principal amount of 1.33 million dollars.  It has no periodic payments, 
    but it has a maturity date of June 30, 2002.



The mortgage was 
    entered into pursuant to a settlement agreement negotiated between the parties 
    dated 12 December of 2000.  It is common ground between the parties that in 
    the event of any conflict between the terms of the mortgage and the settlement 
    agreement, the terms of the settlement agreement are to prevail.



The land in question 
    was for a condominium development and the parties appeared to have contemplated 
    that this development would take place in phases.  Phase 1 and 2 on the original 
    tract of land, comprise twelve units each.  Those units have been sold.  The 
    remaining portion of the original tract of land is the land that is the subject 
    matter of this foreclosure proceeding.  There are plans for an additional 
    three buildings containing twelve units each for that portion.



.  
    .  .  .  .



One of the terms 
    of the mortgage was that the property taxes be kept in good standing.  The 
    affidavit filed by counsel for the petitioner shows that the property taxes 
    currently in arrears total $20,366.00.  However, the affidavit filed in response 
    by the principal of the respondent states that an arrangement exits with Kimberley 
    relating to the payment of those taxes.  It appears to me that on the evidence 
    before me and principally on the certificate issued by the City of Kimberley, 
    that there are in fact taxes owing and that the mortgage is in breach by reason 
    of that default.



The other question is whether the principal of the mortgage is now payable 
    because the maturity date of June 30, 2002 has now passed.  It is submitted 
    on behalf of the respondent that a portion of paragraph 7 of the settlement 
    agreement effectively extends that date by reason of the settlement agreement 
    provision.  Subparagraph (d) on page 9 of the settlement agreement provides 
    that payment to the mortgage under the terms of the mortgage was to be deferred 
    on Phase 1 of the Kimberley Ridge Project until within eight months of the 
    date of the agreement.  Payment with respect to Phase 2 of the project was 
    to be made on an eight month issuance of a commitment letter for the construction 
    financing of Phase 2.  The paragraph then goes on, and these are the critical 
    words at issue here, to provide that the same provision shall apply
mutatis 
    mutandis
for all subsequent phases of the Kimberley Ridge Project.  Counsel 
    for the respondent submits that this means that until a commitment letter 
    has been issued for construction financing for Phase 3 of the project, the 
    eight month time period does not start to run.  Counsel for the petitioner 
    says that this argument makes no commercial sense as such a commitment letter 
    may never be issued.  If that turns out to be the case, the principal amount 
    of the mortgage would never become repayable to the petitioners.  I am persuaded 
    with the latter argument.  It seems to me that the parties chose the date 
    of June 30, 2002, as the date by which this matter was to be concluded between 
    them and the principal amount of the mortgage was to be payable at that time 
    to the extent that it had not already been paid.

[4]

The BC Company seeks to argue on appeal that the order
nisi
was issued in error because the company was not in breach of the mortgage 
    obligations to pay taxes when due and to repay the principal by the maturity 
    date of the mortgage.  As to the tax issue, it seeks the opportunity to contend 
    before this Court that an arrangement with the municipality had the effect 
    of relieving it from the requirement to pay the taxes within the time set 
    out in the tax notice, such that it could not be said it had failed to pay 
    the taxes when due.  On the issue of paying the principal by the maturity 
    date it wishes to contend on appeal that a term of the Settlement Agreement 
    tying periodic payments to construction phases and sales had the effect of 
    overriding the provision that the mortgage was "fully due and payable" 
    on June 30, 2002.

[5]

The first issue is whether leave to appeal is required.

[6]

Section 7(2)(c) of the
Court of Appeal Act
requires that 
    leave be obtained where the order sought to be appealed was made under Rule 
    50 of the
Supreme Court Rules
.  However, leave is not always 
    required in foreclosure proceedings.  For example, in
Eusanio v. Janolino
, 
    [1998] B.C.J. No. 3134 (C.A.), it was held that leave was not required although 
    the issues were raised in a foreclosure proceeding, because the issues raised 
    (questions of unconscionability, statutory construction and breach of fiduciary 
    duties), were not foreclosure matters in the usual sense.  In contrast, in
Eron Mortgage Corp. v. Endeavour Development Ltd.
, [1999] B.C.J. 
    No. 2079, 1999 BCCA 531, Madam Justice Newbury rejected the argument that 
    leave was not required even though a substantive defence concerning the validity 
    of the mortgage was raised by the appellant.

[7]

In my view, the issues sought to be raised in this case concern simply 
    the existence, or not, of a breach of a term of the mortgage which would give 
    rise to the commonplace foreclosure remedies of a declaration of default and 
    order
nisi
.  As such they fall on the
Enron Mortgage
side of the leave requirement issue.

[8]

I conclude that leave to appeal is required in this case.

[9]

The question is whether leave should be granted in these circumstances.  
    This question engages the merits of the appeal, the importance of the issue 
    to the practice and to the parties, and general considerations of the interest 
    of justice.

[10]

In 
    this case, I am not satisfied that either issue presented by the BC Company 
    has sufficient merit to warrant an order for leave to appeal.  The tax issue, 
    given the legislative payment scheme which binds the municipality, is, I consider, 
    bound to fail.  So, too, in my view, the issue of payment.  As the commitment 
    letters upon which periodic or sales related repayment depends may never be 
    issued, the practical effect of the BC Company's contention is that repayment 
    of the principal amount of the mortgage is not required by any definite time.  
    I do not consider that there is a reasonable prospect that a panel of this 
    Court would accept that interpretation of the mortgage.

[11]

I 
    further conclude that importance of the issues is not a basis on which to 
    grant leave.  The issues raised are not of general concern.  Nor are they 
    issues of significance to the parties beyond the significance any order
nisi
has for a land owner.

[12]

The 
    BC Company contends that it has an argument concerning breach by the Saskatchewan 
    Companies of the Settlement Agreement.  It says damages from this breach would 
    provide a set-off and that the order
nisi
therefore should not have 
    been made without hearing that issue.  However, the BC Company has not yet 
    pleaded such a claim.  While it may be open for it still to raise those issues 
    before the Supreme Court of British Columbia, I would not delay the foreclosure 
    proceedings on that potentiality.

[13]

It 
    follows that I direct that leave to appeal the order
nisi
is required, 
    and I dismiss the application for leave to appeal.





The 
    Honourable Madam Justice Saunders




