



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



1026238 B.C. Ltd. v. Pastula,









2018 BCCA 32




Date: 20180119

Docket: CA44996

Between:

1026238 B.C. Ltd.

Respondent

(Petitioner)

And

Catherine Grace
Pastula,
also known as Catherine Grace Picco

Appellant

(Respondent)




Before:



The Honourable Madam Justice Fisher

(In Chambers)




On appeal from: an
order of the Supreme Court of British Columbia, dated
December 21, 2017 (
1026238 B.C. Ltd. v. Pastula
, Nanaimo Registry No. H76173)

Oral Reasons for Judgment




Counsel for the Appellant:



J.A.S. Legh





Counsel for the Respondent:



J.L. Williams





Place and Date of Hearing:



Vancouver, British
  Columbia

January 19, 2018





Place and Date of Judgment:



Vancouver, British
  Columbia

January 19, 2018








Summary:

The applicant seeks leave to
appeal the order of a Supreme Court judge allowing an appeal from a masters
order to adjourn the hearing of an application for order absolute. The judge
overturned the masters decision and granted the order absolute effective
immediately. If leave to appeal is granted, the applicant also seeks a stay of
the judges order pending the disposition of her appeal. Held: (1) Leave to
appeal is granted. Whether a master has discretion to grant an adjournment on
equitable grounds, in circumstances where the legal test for an extension of
the redemption period is not met, may be a significant question in foreclosure
practice. The point is significant to the action, and the appeal has some
merit. (2) The order is stayed pending the disposition of the appeal. There is
some merit to the appeal, the applicant would suffer irreparable harm if the
order absolute is not stayed, and the balance of convenience is in her favour.

[1]

FISHER J.A.:
This application has a long, unfortunate history. It
involves foreclosure proceedings in respect of three parcels of farm land near
Duncan, British Columbia.

[2]

The properties were owned by the appellant/applicant Catherine Grace
Pastula and her husband Gordon, and had been in Mr. Pastulas family for over
60 years. The mortgage on all three parcels has been in default since May 2013,
a considerable period of time. The original mortgagor, a commercial lender,
commenced foreclosure proceedings in April 2014. The respondent, who is not a
commercial lender (its director is a neighbour of the appellant), purchased the
mortgage after that. However, the original foreclosure proceeding was
subsequently declared a nullity. The respondent then commenced these
foreclosure proceedings in 2015. An order
nisi
was granted on September
30, 2015, with a six-month redemption period ending March 16, 2016. At that
time the redemption amount was $1,029,987.

[3]

On November 25, 2016, the respondent brought an application for order
absolute but this was not granted and the redemption period was extended to
March 31, 2017 to give the Pastulas an opportunity to sell the properties
themselves. However, they did little to do so during the extended redemption
period.

[4]

There have been various appeals of many of these orders which I need not
outline here, and Ms. Pastula has been representing herself and her husband
throughout many of the proceedings. What is important for the purposes of the
applications before me is what has occurred since April 6, 2017, when the
respondent filed another application for an order absolute.

[5]

On September 13, 2017, the respondent set the hearing of its application
for October 11, 2017. A week later, on September 20, 2017, Gordon Pastula died
suddenly of a heart attack. As the properties were held in joint tenancy, Ms.
Pastula became the sole owner.

[6]

Due to the death of her husband, Ms. Pastula sought an adjournment of
the hearing set for October 11, 2017. The respondent opposed this but Master
Dick in Chambers ordered an adjournment for two weeks, to October 25, 2017,
peremptory on Ms. Pastula. She suggested that Ms. Pastula bring with her a
current appraisal to provide evidence of the equity in the properties.

[7]

On October 22, 2017, Ms. Pastula listed the properties for sale. The
list prices totaled over $2 million.

[8]

On October 25, 2017, Master Dick considered the listing of the
properties as well as an appraisal provided by the respondent valuing them at
$1.76 million. The amount outstanding under the mortgage was then $1.254
million, leaving about $500,000 in equity assuming the appraised value. While
she was satisfied that Ms. Pastula had not at that time met the test for a
further extension of the redemption period, she recognized that the death of
Mr. Pastula was a material change of the matters before the court and that Ms.
Pastula had since taken steps to list the properties for sale and to put
materials before the court indicating the steps she has taken to pay the amount
owing to the respondent. She acknowledged that the effect of granting another
adjournment was basically extending the redemption period without Ms. Pastula
meeting the legal test, but she considered the equities at play, which included
the significant amount of equity that may be available, and reluctantly
adjourned the application to November 29, 2017.

[9]

The respondent appealed this decision to a judge of the Supreme Court,
which was heard on December 21, 2017. In the meantime, Ms. Pastula accepted an
offer to sell one of the properties on November 22, 2017, and the matter
proceeded again before Master Dick on November 29, 2017 in accordance with her
October 25 order. At that time, the master adjourned the application again to
February 7, 2018, and extended the redemption period to February 1, 2018. She
also ordered Ms. Pastula to authorize the listing realtor to disclose to
counsel for the petitioner copies of all offers, counteroffers and evidence of
marketing efforts, and, at least 10 days before the expiry of the redemption
period, to deliver affidavits with copies of all accepted offers or contracts of
purchase and sale as well as all offers, counteroffers and evidence of
marketing efforts.

[10]

Despite
this latter order, the petitioners appeal of Master Dicks October 25 decision
proceeded before Gaul J. on December 21, 2017. He considered that Master Dick
erred by failing to properly apply the test for extending the redemption period
to the facts she found and in granting the adjournment. He allowed the appeal
and granted the respondent an order absolute to be effective immediately. I am
advised by Mr. Williams, counsel for the respondent, that Mr. Justice Gaul was
aware of Master Dicks November 29 order extending the redemption period. While
he gave no reasons on this point, he apparently held the view that he had the
jurisdiction to abridge the redemption period which had been extended in that
order.

[11]

It
is this order of Mr. Justice Gaul which Ms. Pastula now seeks leave to appeal
and if granted leave, a stay pending the appeal.

The applicable tests

[12]

The
test for leave to appeal is set out in
Power Consolidated (China) Pulp Inc.
v. British Columbia Resources Investment Corp
., [1988] B.C.J. No. 1403
(C.A.): (1) Is the point of appeal significant to the practice? (2) Is the
point raised of significance to the action itself? (3) Is the appeal
prima
facie
meritorious or is it frivolous? (4) Will the appeal unduly hinder the
progress of the action?

[13]

The
test for a stay of an order pending appeal is the same test applied for
granting an interim injunction as set out in
RJR-MacDonald Inc. v. Canada
(Attorney General)
, [1994] 1 S.C.R. 311 at 334: (1) is there some merit to
the appeal in the sense that there is a serious question to be tried? (2) would
the applicant suffer irreparable harm if the stay is refused? (3) does the
balance of convenience favour the applicant? These principles were outlined by
this Court in
Bea v. The Owners, Strata Plan LMS 2138
, 2010 BCCA
463 at para. 19, in the context of an application for a stay pending appeal.

Decision

[14]

While
I certainly appreciate the frustrations of the respondent, and Mr. Williams
has outlined that history in some detail to me, I am satisfied that leave to
appeal should be granted.

[15]

Master
Dicks decision was a decision to adjourn an application for an order absolute
in circumstances where the mortgagee did not meet the legal test to extend the
redemption period but where there were other equities at play. Whether a master
can exercise such a discretion in these circumstances may be significant in
foreclosure practice and the points raised are clearly significant in the
action. Given the amount of equity in the properties, Ms. Pastula will
suffer a substantial loss and the petitioner will likely receive a considerable
gain if leave is not granted. I say this without considering the new evidence
put forward by the applicant with the new appraisals. I do not need to consider
those, as the evidence that was before both Master Dick and Mr. Justice Gaul
showed considerable equity in the property.

[16]

I
acknowledge that there have been long delays in these proceedings caused by the
Pastulas, but I do not consider this to be a frivolous appeal. Mr. Justice Gaul
considered the question as if the Master had granted an extension of the
redemption period and he restricted her ability to exercise her discretion to
grant an adjournment to the legal test for that. The Master was well aware of
the legal test but chose to consider other equities in granting a one-month
adjournment. In my view, there is some merit to this appeal.

[17]

I
am also satisfied that the order should be stayed pending the appeal. As I have
concluded, there is some merit to the appeal. There is evidence before me to
show that Ms. Pastula would suffer irreparable harm if she loses her equity in
these properties. They are her main asset, and without them it is unlikely that
she would have any ability to exercise her right of redemption. The
inconvenience to her will be greater than the inconvenience to the petitioner,
who, in the absence of the order absolute, stands to be heard again on February
7, 2018, according to the order of November 29, 2017. I will confirm here that
I consider the order of November 29, 2017 to be effective.

[18]

Accordingly, leave to appeal is granted and the order absolute made
December 21, 2017 is stayed pending the appeal.

The
Honourable Madam Justice Fisher


