Nova Scotia Court of Appeal
Citation: MacGillivary v. Brown, 2023 NSCA 65
Date: 20230907
Docket: CA 523484
Registry: Halifax
Between:
William MacGillivary
Appellant
v.
Stephen Brown and Brenda Brown
Respondents
Judge: |
Bourgeois, J.A.
|
Motion Heard: |
July 13, 2023, in Halifax, Nova Scotia in Chambers
|
Written Decision: |
September 7, 2023
|
Held: |
Motion for stay granted, with conditions
|
Counsel: |
William MacGillivary, on his own behalf Harvey McPhee, K.C. and Kelly O’Brien, for the respondents |
Decision:
[1] On July 13, 2023, I heard a motion for stay brought by the appellant, William MacGillivary. Two weeks earlier, my colleague, Justice Farrar had heard an emergency motion brought by the appellant, and had issued an order granting a temporary partial stay.
[2] At the conclusion of the motion hearing, I reserved my decision. I further directed that Justice Farrar’s order would remain in place until such time as I rendered my decision and issued an order accordingly.
[3] For the reasons to follow, I am satisfied that it is appropriate in the circumstances to issue a partial stay pending the outcome of the appeal, with conditions.
Background
[4] The factual and legal background giving rise to the dispute between Mr. MacGillivary and the respondents, Stephen Brown and Brenda Brown, is unusual. It is necessary to delve into the factual background in some detail in order to put the present matter into proper context. The material before me demonstrates:
• Mr. MacGillivary was the owner of property known civically as 3457 Eskasoni Road, Islandview, Cape Breton County, Nova Scotia (the “property”). The property abuts the shore of the Bras d’Or Lakes. Historically Mr. MacGillivary used the property as a seasonal residence, but indicates he now resides there full-time. The Browns own a neighbouring cottage property;
• In September 2012, Mr. MacGillivary and the Browns entered into an agreement in which the Browns were granted a right of first refusal to purchase the property in the event Mr. MacGillivary sought to sell it. The agreement was registered at the Cape Breton Land Registration Office in October, 2012;
• In January, 2013, Mr. MacGillivary entered into a mortgage with the Toronto Dominion Bank (“TD”), in which he mortgaged his interest in the property;
• After a number of years of maintaining the mortgage in good standing, Mr. MacGillivary defaulted on payment. In 2019, TD brought an action against Mr. MacGillivary (Hfx No. 494758) under the terms of the mortgage, and subsequently made a motion for an order for foreclosure, sale and possession. Mr. MacGillivary was self-represented since the commencement of proceedings in 2019, and has remained so;
• TD’s motion was heard on July 19, 2021, and an Order for Foreclosure, Sale and Possession was granted by Justice D. Timothy Gabriel (the “Gabriel order”). The mortgage was foreclosed, and the amount of the debt settled at $106,011.29, plus interest and costs. The order further contained the following direction:
3. All the interest and equity of redemption of the defendant, William MacGillivary and of all persons claiming through the defendant in the lands described in the mortgage are forever barred and foreclosed, and shall be sold by the sheriff, the sheriff’s nominee, or another person appointed by the court at a public auction conducted in accordance with the Instructions for Conduct of Foreclosure Auction, which is incorporated by reference except only to the extent varied by this or further order of the court, unless before the time of sale the amount due, together with costs, are paid to the plaintiff. ...
(Emphasis added)
• The property was not sold at auction as contemplated by the Gabriel order. Mr. MacGillivary acknowledged he owed funds in accordance with the Gabriel order and expressed a desire to payout the amount owing prior to sale. Mr. MacGillivary says he made attempts to pay TD the amount outstanding as determined in the order, but payment was declined by TD’s legal counsel. TD had entered into discussions with the Browns’ legal counsel, Mr. Morgan, and ultimately assigned the mortgage to them in exchange for payment of $118,231.81. It is not clear from the material on file, when the assignment was finalized. It does not appear the Gabriel order was amended to permit TD to assign the foreclosed mortgage to a third party as an alternate to a public sale or redemption by Mr. MacGillivary;
• TD unilaterally filed a Notice of Discontinuance of its action against Mr. MacGillivary on December 10, 2021;
• The Browns filed a Notice of Action and Amended Statement of Claim (SN No. 511074) on December 3, 2021 claiming Mr. MacGillivary was in default of the mortgage assigned to them by TD. Mr. MacGillivary filed a Statement of Defence on January 7, 2022;
• The Browns brought a motion seeking an Order for Simple Foreclosure, or in the alternative an Order for Foreclosure, Sale and Possession granted in relation to the property. That motion was heard on October 31, 2022 by Justice Patrick J. Murray (“the judge”). Following that hearing, the judge requested written submissions from the parties in relation to the following issues:
1. What impact, if any, does the Order for Foreclosure, Sale and Possession, issued by Justice D. Timothy Gabriel on July 19, 2021, in the since discontinued action brought by the Toronto-Dominion Bank against William MacGillivary with respect to the mortgage which forms the subject of the present action have on the Court’s ability to grant either an initial order for foreclosure or an order for foreclosure, sale and possession?
2. What impact, if any, do the Notice of Defence and Statement of Defence filed by the Defendant, Mr. MacGillivary, have on the Court’s ability to grant an initial order for foreclosure or an order for foreclosure, sale and possession?
• The Browns filed a motion on November 7, 2022 seeking an order setting aside the Statement of Defence filed by Mr. MacGillivary and granting summary judgment on the pleading pursuant to Civil Procedure Rule 13.03(3). That motion was scheduled for November 21, 2021. The Browns were represented by counsel. Mr. MacGillivary did not appear, but was found to have had notice of the motion;
• On March 10, 2023, the judge sent a letter to counsel for the Browns and Mr. MacGillivary indicating it constituted his decision in respect to the “Motion by the Plaintiffs”. The judge indicated he reserved “the right to edit and supplement same in decision format”. It does not appear that further reasons have been given;
• On March 20, 2023, the judge issued an Order for Foreclosure, Sale and Possession;
• On April 20, 2023, the judge issued an amended Order for Foreclosure, Sale and Possession with terms identical to that granted earlier, except for appointing Joseph R. Wall as auctioneer;
• On April 27, 2023, Mr. McGillivary filed a Notice of Appeal in which he sought to challenge the two Orders for Foreclosure, Sale and Possession granted by the judge. Given the two orders are nearly identical in content, I will refer to them in the singular;
• The property was sold by public auction on May 29, 2023 pursuant to the orders under appeal. The Browns were the successful bidders and a deed was executed transferring title to the property to them;
• The Browns contacted Sheriff Services on June 29, 2023 to evict Mr. MacGillivary, as their daughter was planning to move into the property on July 1, 2023. Mr. MacGillivary was evicted from the property on June 29, 2023;
• On June 30, 2023, Mr. MacGillivary made an emergency motion seeking a stay of execution. By order issued the same day, a partial temporary stay was granted by Justice Farrar, the operative provisions of which stated:
IT IS HEREBY ORDERED THAT to the extent that any Order allows the respondents to take possession of the lands foreclosed upon be and is hereby stayed pending the appellant’s motion for a stay pending appeal, which is scheduled to be heard in this Court at 10:00 a.m. on Thursday, July 13, 2023.
FOR GREATER CERTAINTY, IT IS ORDERED THAT the sheriff shall allow the appellant to re-enter and reside on the Property pending further the hearing of the stay motion or further Order of this Court.
IT IS FURTHER ORDERED all other provisions of the Orders shall remain in full force and effect.
• Following Justice Farrar’s order, Mr. MacGillivary re-entered the property and was residing there at the time the present motion was heard.
Decision under Appeal
[5] In the letter, the judge found Mr. MacGillivary’s Statement of Defence disclosed “no basis for a defence or contest”. The judge noted Mr. MacGillivary’s defence was not in proper form, and it attempted to incorporate by reference an affidavit he filed at the same time.
[6] The judge referenced the contents of the affidavit in his letter to the parties:
The Defendant, being self-represented, filed an affidavit with his Defence. As such it is an improper pleading. Pleadings are intended to contain relevant and material facts, and not evidence. (Rule 38) The Court has, however, reviewed the affidavit.
In this affidavit, Mr. MacGillivary refers to his dealing with the original mortgagee TD Bank:
7. I spoke to Mr. Doug Schipilow on September 7th, 2021, and followed up with an email to him on September 14th regarding the total payout agreed upon between myself and TD Bank. Mr. Schipilow informed me the following day on September 15, 2021, that his client (TD Bank) decided to go with the Brown’s offer and indicated that by the end of the day (September 15th) the transaction should be completed. I have included the email correspondence above, (Exhibit “B”).
It is obvious that the substance of this paragraph contains hearsay evidence. In it, however, the Defendant acknowledges the Bank’s decision to assign the mortgage to the Plaintiffs.
In other paragraphs of his affidavit, the Defendant states his reasons for non-payment:
10. ... Since I was not made aware of their successful assignment until December 10, 2021, I was not given any details to date including the following: payments obligations, to whom payments should be made to, payment amounts, and documents pertaining to the Assignment from TD Bank. There has been no communication or reference to any demands for payment until court “Notice of Action” documents received on December 20, 2021.
11. … I also stated that I did not believe the request Darren Morgan has made for interest and legal costs were warranted since I was unaware of the situation until December – the Brown’s through their unsolicited actions had interfered with my payout agreement with TD Bank prior to October 7, 2021 – solely for the purpose of buying the property outright or forcing a simply foreclosure procedure as seen in the existing court documents. I have included a copy of my email offer to Mr. Morgan dated December 24, 2021, (Exhibit “C”).
[7] In addressing whether summary judgment ought to be granted, the judge wrote:
Summary judgment on the Pleadings must be granted if, assuming the facts stated in the pleadings can be proven, the judge is satisfied the Defence discloses no basis for a defence or contest. (Civil Procedure Rule 13.03(1)(a))
In his Defence, the Defendant admits the particulars of the mortgage, and that he is in default. Does therefore, his denial of the interest claimed form a basis for defence or contest?
...
The Plaintiffs submit that even if the contents of the affidavit were included in the statement of Defence, this does not change the fact that Mr. MacGillivary has admitted the particulars of the mortgage and that it is in default. I concur.
[8] The Statement of Defence was struck and the Browns’ motion for summary judgment was granted. The judge then turned his mind to what order should flow from the evidence before him, with the import of the earlier Gabriel order being the first consideration. The judge wrote:
The Court raised the issue of whether the Orders of Justice Gabriel impacted this proceeding. Submissions were made by the parties in this respect on October 31, 2022.
I have considered the submissions of the Plaintiffs of November 7, 2022 and the submission of the Defendant of November 15, 2022.
The Plaintiffs submit the Court has the authority under its inherent jurisdiction to control its own processes. Further, they submit that an Order for Foreclosure, is not a final order.
The Court was advised by the Plaintiff, following its inquiry, that the previous foreclosure action has been discontinued. A copy of the discontinuance of that action (Hfx. No. 494758) was filed on December 10, 2021.
The Defendant, in his submission, has stated his agreement that TD Bank had no interest in pursuing their order for foreclosure, “since the debt has been resolved”. The Defendant, however, takes issues with the “new proceeding”, stating it has not been in compliance with Civil Procedure Rule 72, and specifically Rule 72.05. I will later address this issue in this decision.
The Court is satisfied that Rule 9.07(1) confirms that a discontinuance of a proceeding, does not give rise to a defence in a subsequent proceeding, “for the same or essentially the same cause”.
The Court is also satisfied this provides a complete answer to its inquiry and does not present a bar for the Court to issue a further Order in this proceeding.
[9] The judge proceeded to settle the amount due to the Browns under the mortgage, along with interest and costs. The Order for Foreclosure, Sale and Possession followed. From the record before me, it does not appear the judge issued an order granting summary judgment in favour of the Browns or setting aside of the Statement of Defence.
Legal Principles
[10] The filing of a Notice of Appeal does not serve to stay the enforcement or execution of a judgment under appeal. Rather, an appellant seeking such relief is required to make a motion, pursuant to Civil Procedure Rule 90.41(2) which provides:
(2) A judge of the Court of Appeal on application of a party to an appeal may, pending disposition of the appeal, order stayed the execution and enforcement of any judgment appealed from or grant such other relief against such a judgment or order, on such terms as may be just.
[11] In Colpitts v. Nova Scotia Barristers’ Society, 2019 NSCA 45, Justice Beveridge set out the considerations guiding a chamber judge’s discretion to grant a stay as follows:
[21] How this discretionary power should be exercised is guided principally by Justice Hallett’s test set out in Purdy v. Fulton Insurance Agencies Ltd. (1990), 100 N.S.R. (2d) 341 (C.A.). The test has two parts.
[22] For the primary test, an applicant will be successful if the Court is satisfied on a balance of probabilities: an arguable issue is raised by the appeal; the appellant will suffer irreparable harm should the stay not be granted (assuming the appeal is ultimately successful); and, the appellant will suffer greater harm if the stay is not granted than the respondent if the stay is granted.
[23] The appellant may also obtain relief pending an appeal, even if it cannot meet all of the criteria for the primary test, if there are exceptional circumstances that nonetheless make it fit and just to grant a stay. This is known as the secondary test.
Analysis
Is the granting of a stay the appropriate remedy in these circumstances?
[12] The Browns argue a stay is not an appropriate remedy as the Order for Foreclosure, Sale and Possession under appeal has already been fulfilled. In effect, there is nothing to stay – the public auction has taken place and the Browns now hold legal title to the property.
[13] I agree that it is too late to stay those aspects of the order which directed a public auction and sale. A stay cannot reverse those actions. However, the Orders under appeal also contain the following provision:
2. The sheriff shall, if requested by the plaintiff, take possession of the lands described in the mortgage and deliver possession to the plaintiff or a person designated by the plaintiff.
[14] Pursuant to Justice Farrar’s order, Mr. MacGillivary is now in possession of the property. In my view, this provision is subject to being stayed, should I find it appropriate to do so. It is not necessary for an order to be stayed in its entirety, and I am satisfied a partial stay is a remedy available in these circumstances.
Has the primary test for a stay been met?
[15] As set out above, Fulton’s primary test for a stay requires Mr. MacGillivary to establish on a balance of probabilities that he has raised an arguable issue for appeal; that he will suffer irreparable harm if the stay is not granted, and he will suffer greater harm if the stay is not granted than the Browns would should a stay be imposed.
[16] Mr. MacGillivary’s evidence and the other material before the Court satisfies me that there are arguable issues on appeal. Indeed, as I will explain later, there are a number of issues which, in my opinion, far surpass that low threshold. However, I am not satisfied Mr. MacGillivary has met the other two factors. As such, Mr. MacGillivary has failed to meet the primary test.
Has the secondary test for a stay been met?
[17] Fulton’s secondary test permits a Court to grant a stay in exceptional circumstances where an applicant fails to meet all three of the factors noted above. I am satisfied this is such a case, in particular due to my assessment of the strength of Mr. MacGillivary’s appeal.
[18] Although a panel of this Court, based upon a complete record, may ultimately find otherwise, I am of the view that there is a strong likelihood of appellate intervention in these circumstances. In short, Mr. MacGillivary has a solid argument that he had raised or attempted to raise, arguable defences to the Browns’ action, and as such, he ought to have been permitted to amend his Statement of Defence accordingly pursuant to Civil Procedure Rule 13.03(4). Further, it is arguable that the judge failed to recognize the potential legal significance of the Gabriel order and its impact on the proceeding before him.
[19] There is a strong argument to be made that the Statement of Defence ought not to have been struck, summary judgment ought not to have followed, and the Order for Foreclosure, Sale and Possession ought not to have been issued. In reaching this conclusion, I make the following observations:
• Mr. MacGillivary never challenged that he was in default of the TD mortgage, nor did he challenge the debt as settled in the Gabriel order;
• Mr. MacGillivary asserted that he attempted to exercise his right to redemption as contemplated by the Gabriel order, but he was precluded from doing so by virtue of the arrangement negotiated between TD and the Browns;
• Mr. MacGillivary further asserted that he attempted to make payment to the Browns after he became aware of the assignment of mortgage, but his requests for information directed to their then lawyer Darren Morgan went unaddressed. Mr. MacGillivary said he wanted to know the status of the assignment, who he should pay (TD or the Browns), and the amount of accrued interest being claimed;
• Mr. MacGillivary also said that although he acknowledged the debt as set out in the Gabriel order, he questioned why, given he had been prevented from exercising his right to redemption in September, 2021, that he was responsible to pay the Browns accruing interest and their legal costs.
[20] These assertions were not contained in the Statement of Defence, but rather in his accompanying affidavit and submissions. In my view, Mr. MacGillivary raised arguments that, if properly plead, may have impacted upon the quantum being sought by the Browns under the assigned mortgage. As a self-represented litigant, it is certainly arguable Mr. MacGillivary ought to have been given the opportunity to amend the Statement of Defence.
[21] In addition to the concerns articulated by Mr. MacGillivary, I am of the view the judge’s conclusion that the Gabriel order did not preclude him from entering an Order for Foreclosure, Sale and Possession in favour of the Browns, may have been premature. From the background circumstances outlined earlier herein, a number of questions arise which warrant, in my opinion, further consideration.
[22] Did the Notice of Discontinuance filed in the TD action (in December 2022), serve to invalidate the Gabriel order, and in particular the right afforded to Mr. MacGillivary thereunder to exercise his right of redemption? Although notices of discontinuance are often filed in foreclosure actions, this is after matters have proceeded to a sale and subsequent accounting, or where the mortgagor has made payment of the settled debt in advance of the public auction. It is questionable whether the Notice of Discontinuance in the present instance served to extinguish Mr. MacGillivary’s right to redemption afforded to him by the Gabriel order.
[23] The Gabriel order foreclosed the TD mortgage and only contemplated two resulting options – proceed to public auction, or, in advance of the sale, for Mr. MacGillivary to pay the settled debt. Mr. MacGillivary says he tried to do just that, but TD opted for a third option – to assign the mortgage to the Browns. Can a foreclosed mortgage be assigned, or is the assignment limited to the judgment obtained thereunder? Was the assignment contrary to the Gabriel order, and if so, does that impact on its validity?
[24] Can the assignment of a foreclosed mortgage to a third party supersede Mr. MacGillivary’s right to redeem by paying the settled debt to TD as ordered by Justice Gabriel? Can a mortgagee circumvent an ordered sale and right of redemption granted to a mortgagor in an Order for Foreclosure, Sale and Possession by unilaterally filing a notice of discontinuance?
[25] If the assignment was found to be improper, then should the amount of the debt owing by Mr. MacGillivary be limited to what he should have been able to pay to TD? Further, if it is found Mr. MacGillivary was deprived of the opportunity to redeem, then should he be held responsible for the interest and expenses, notably the Browns’ legal fees, which accrued past that point?
[26] If the assignment was contrary to the Gabriel order, then what are the consequences? What did the Browns receive, if anything? Were they entitled to bring legal action on a mortgage if it had been improperly assigned? There is an argument to be made that if the assignment was improper, the Browns may have had no standing to bring an action for foreclosure against Mr. MacGillivary.
[27] All of the above questions cannot be answered on the record before me, nor could they be answered on the record before the judge. They are, however, legitimate inquiries, and arguable defences, based on the material that did exist. The circumstances surrounding the Gabriel order, the assignment and the notice of discontinuance, may have significance to the validity of the claim being made against Mr. MacGillivary. In my view, there is a strong argument to be made that the judge erred in concluding otherwise.
[28] If Mr. MacGillivary is successful, then the result flowing therefrom may be for the Order for Foreclosure, Sale and Possession to be set aside, and for him to be given the opportunity to defend the Browns’ action. If so, the sale to the Browns pursuant to that order would be set aside, as would the resulting deed. Other consequences may flow from a successful appeal, but I leave that to the consideration of the panel to be assigned.
Should Mr. MacGillivary’s acknowledged default on the TD mortgage prevent the granting of a stay?
[29] I am satisfied that in the unusual circumstances here, it is fit and just for Mr. McGillivary to maintain possession of the property pending the outcome of the appeal, and a partial stay is warranted. However, it is appropriate to make the stay conditional on Mr. MacGillivary meeting financial conditions.
[30] As noted earlier, Mr. MacGillivary acknowledges he defaulted on the TD mortgage, and takes no issue with the debt as settled in the Gabriel order. Since 2019, Mr. MacGillivary has occupied the property without paying either the mortgage, or the settled and unchallenged indebtedness. I recognize Mr. MacGillivary argues he was prevented from making payment due to TD’s actions and a lack of information forthcoming from the Browns’ lawyer. He says he has the ability and willingness to pay what was found owing by Justice Gabriel.
[31] It is time for Mr. MacGillivary “to put his money where his mouth is”. From Mr. Brown’s affidavit I am aware the Browns paid TD the sum of $118,231.81 for the assignment of the mortgage, purportedly “representing the full amount owing plus interest and costs”. I am not aware of how that sum was calculated, particularly how much was interest and how much was legal costs incurred by TD. What I do know with certainty, however, is that the total debt owing under the mortgage was settled at $106,011.29 as of July 19, 2021.
[32] I am prepared to grant a partial stay to Mr. MacGillivary permitting him to remain in possession of the property on the condition he pay to Sampson McPhee, in trust, the sum of $106,011.29 on or before October 31, 2023. Mr. MacGillivary is entitled to make payment in installments; however, the total amount must be received by October 31, 2023. The funds shall be held in trust until such time as either this Court or a Justice of the Supreme Court of Nova Scotia directs otherwise.
[33] To be clear, if said amount has not been paid as directed, the partial stay shall be lifted, and the Browns shall be entitled to exercise their rights to possession contained in the order under appeal.
Conclusion
[34] For the reasons above, I am of the view that it is fit and just in the circumstances, for a partial stay to be granted. Specifically, paragraph 2 of the Orders for Foreclosure, Possession and Sale permitting the Browns to take possession of the property and for the sheriff to assist in that regard, shall be stayed. The granting of the stay however, is conditional upon Mr. MacGillivary making payment as described in paragraph [32] above. I reiterate, should payment not be made as directed, the partial stay shall be vacated, and the Browns be entitled to retake possession of the property as contemplated in the order under appeal.
[35] In the unusual circumstances here, I leave it to the panel on appeal to determine what costs should be incurred in relation to this motion, if any.
Bourgeois, J.A.