Connelly v Browning et al, 2020 NWTSC 48
IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES
BETWEEN:
DAVID CONNELLY
Plaintiff/Respondent
-and-
ROSIE J. BROWNING and ALEX F. WELLIN
Defendants/Applicants
MEMORANDUM OF JUDGMENT
[1] This is an undefended foreclosure action respecting a property in Fort Simpson. It was commenced on May 10, 2017.
[2] In this motion, the Defendants applied to cross-examine on the Affidavit of Value and, possibly, the Affidavit of Default. Alternatively, they asked to revisit a previous order, described below, to allow them a reasonable redemption period.
PROCEDURAL HISTORY
[3] On August 7, 2020 Mahar, J. granted an order (the “August 7 order”) declaring that the amount due and owing to the Plaintiff under the mortgage was $81,579.73, waiving the redemption period and directing, among other things, that the property be listed for sale for a period of ninety days at a price of $58,000.00. That price was based on an appraisal report, prepared in February of 2019 and appended as an exhibit to the Affidavit of Value which set the fair market value at $55,000.00. The Defendants were served with notice of the application and supporting evidence, including the Affidavit of Value, on July 30, 2020. They did not appear at the application.
[4] Subsequently, the Plaintiff received two offers to purchase, one for $49,000.00 and another for $56,500.00. He rejected the former and accepted the latter, subject to obtaining the Court’s approval.
[5] The Plaintiff appeared in Chambers on October 23, 2020 on an application for an order to confirm the sale, which was scheduled to close on October 30, 2020. Notice was served on the Defendants. The Defendants appeared on that day through their counsel, Mr. Cooper. He had only just been retained and sought an adjournment of the Plaintiff’s application. He indicated at that time that the Defendants wished to cross-examine the appraiser on the affidavit of value. The matter was adjourned to October 29, 2020. On that day, the Defendants applied for an adjournment to allow for cross-examination on the Affidavit of Value.
[6] On October 29, 2020 the Defendants applied for a further adjournment to allow time to conduct the cross-examination on the Affidavit of Value and possibly, on the Plaintiff’s Affidavit of Default. Alternatively, if the sale was approved, the Defendants asked that the Court revisit the August 7 order with a view to providing them a reasonable opportunity to redeem the mortgage.
[7] I dismissed the Defendants’ applications and issued an order confirming the sale. I provided brief oral reasons and indicated that I would provide written reasons at a later time.
EVIDENCE IN SUPPORT OF THE DEFENDANTS’ APPLICATION
[8] The Defendants filed two affidavits in support of their application. The first was sworn by Karie Bell, an employee of the Defendants’ law firm. A copy of an appraisal report dated February 23, 2015 was attached to it. That appraisal report was prepared by the same firm that produced the 2019 appraisal report. It set the value at $125,000.00.
[9] It is convenient to note at this point that the 2019 appraisal report clearly used some information from the one prepared in 2015. For example, the photographs of the interior of the property are noted as coming from the 2015 report. It is also clear that the appraiser adapted the cover letter which accompanied the 2015 report. The date of the cover letter is “February 23, 2015”. That is clearly a clerical error. All of the other information in the cover letter was updated, including the addressee, the property values and the signature block.
[10] The second affidavit was sworn by the Defendant Rosie J. Browning. It includes a copy of the 2015 appraisal report as well. Among other things, Ms. Browning states that to the best of her knowledge, no one entered or attended personally on the property to prepare the 2019 appraisal report. She also expresses her opinion that the 2019 appraisal report does not reflect the actual value of the property; that because of the limited rental market in Fort Simpson, most residents purchase homes and consequently, real estate values fluctuate rapidly throughout the year in Fort Simpson; and that the 2019 appraisal report does not take these factors into account.
[11] The photographs included in the 2019 appraisal report, which, as noted, are taken from the 2015 appraisal report, show that the interior of the house has been taken down to the studs. The 2019 appraisal report notes that the home is “a shell only with no interior finish . . . The construction is estimated to be [approximately] 56% complete”. On this point, Ms. Browning states that while the renovations are incomplete, the property could be “sealed” and inhabited while the renovations are ongoing.
[12] Ms. Browning sets out a number of events occurring between 2015 and 2019 which prevented her and her co-defendant from both paying the mortgage and completing the renovations to the property. These include the deaths of close family members, an inability to work and her husband being laid off and rehired. She states that she is actively working with a banking representative to secure financing to bring the mortgage into good standing.
[13] Finally, Ms. Browning states that she is actively working with a banking representative to secure financing to pay off the debt to the Plaintiff. This is supported by email messages appended as exhibits, consisting of an inquiry from Ms. Browning on October 20, 2020 and a reply from a banking representative which sets out a number of options for potential refinancing, subject to conditions such as credit approval.
THE PARTIES’ POSITIONS
The Defendants
[14] The essence of the Defendants’ position is that the disparity in the values assigned to the property by each of the appraisals should lead the Court to question the validity of the 2019 appraisal report, possibly leading it to revisit the August 7 order. They suggest that the second appraisal report essentially “parrots” the first, which undermines the former’s reliability. They question whether the appraiser who prepared the 2019 report actually conducted a personal inspection of the property, notwithstanding his positive statement to this effect in the Affidavit of Value. The Defendants say these are issues which should be explored through cross-examination on the Affidavit of Value, something which, they argue, is available as of right.
[15] The Defendants’ also argue that the August 7 order was not final, owing to the condition that the sale was subject to Court approval. Therefore, the Court can revisit the earlier ruling.
[16] Finally, the Defendants suggest that the property ought to have remained on the market for the full ninety days contemplated in the August 7 order so that the maximum value could be realized on a sale. Relatedly, they say that there is no evidence about what steps the agent took to market the property.
The Plaintiff
[17] The Plaintiff’s position is that the Defendants’ request to cross-examine on either the Affidavit of Value or the Affidavit of Default comes too late. The value proposed by the Plaintiff, set out in the Affidavit of Value, was accepted by the Court in earlier proceedings at which the Defendants did not appear despite having been served with notice. The Plaintiff also argues that the right to cross-examine on affidavit is not absolute and must be exercised within a reasonable time. This is contemplated by the Rules of the Supreme Court of the Northwest Territories.
[18] With respect to the length of time the property was on the market, the Plaintiff argues that the ninety-day period stipulated in the August 7 order is a minimum amount of time that the property must remain on the market before the Plaintiff can return to the Court and seek a price adjustment or alternative relief. It does not prevent the Plaintiff from accepting an offer, conditional upon the Court’s approval, before the ninety days has expired.
ANALYSIS
[19] Cross-examination on affidavit is permitted as of right under Rule 381. In Camillus Engineering Consultants Ltd. v Fort Simpson (Village), 2009 NWTSC 42, Vertes, J stated, at para 7:
. . . the right to cross-examine is “almost absolute”. A court has the discretion to prohibit such cross-examination where it would be frivolous or abusive but, as cases point out, such a discretion should be exercised sparingly and only in the clearest of situations.
[20] I do not suggest that this is an incorrect statement of the law; however, the statement must be considered in context. First, in Camillus there had not yet been adjudication on the outstanding application in response to which the affidavit was filed. Second, the argument tendered against allowing cross-examination was that it would not be a useful exercise. In support of its position, the Respondent in Camillus argued that the issue in the application was one of law; that the deponent had been extensively examined already; and that much of the affidavit amounted to nothing more than a summary of the lawsuit.
[21] Camillus is factually distinct from the situation here. In this case, the Court has already ruled on the application in support of which the Affidavit of Value was filed, obviously accepting the evidence tendered therein. Further, in Camillus, there was no suggestion of delay on the part of the party seeking to conduct the cross-examination, nor was there any consideration of the effect of delay on the right to cross-examine on affidavit generally. These factors are highly relevant in this case.
[22] Turning first to the delay, while cross-examination on affidavit is permitted as of right under Rule 381 of the Rules, that right is expressly tempered by sub-rule 381(5), which provides:
The right to cross-examine shall be exercised with reasonable diligence, and the Court may refuse an adjournment of any application or proceeding for the purpose of cross-examination where the party seeking the adjournment has failed to act with reasonable diligence. [Emphasis added]
[23] In this case, the request to cross-examine came too late. The Defendants, although served with the materials on July 30, 2020, took no steps to assert their right to cross-examine on the Affidavit of Value or the Affidavit of Default until after the August 7 order was made and implemented. The property had been listed for sale at a particular value, an offer had been conditionally accepted and the Plaintiff was asking the Court to approve the sale on October 23, 2020. The Defendants have offered no explanation for their failure to act. The only conclusion is that the Defendants did not conduct themselves with reasonable diligence in exercising their right to cross-examine.
[24] It should also be noted that it was open to the Defendants to contest the value provided though the 2019 appraisal report by filing their own evidence about the value and raising, at the time the Plaintiff made the application on August 7, 2020, their concerns about the disparity between the values assigned in two appraisals and other perceived deficiencies or questions about the 2019 appraisal. Again, they did not take any steps to do this, nor have they provided an explanation for their failure to bring forward that evidence or to seek a reasonable opportunity to do so at the time the application for the August 7 order was made.
[25] It is not open to the Court to revisit or vary the August 7 order. It was a final order: that is, it determined finally substantive questions on the rights of each party. Specifically, Mahar, J. decided that the property could be placed on the market for an amount consistent with the 2019 appraisal report, being $58,000.00. He also determined that there should be no redemption period. That the August 7 order required the Plaintiff to return and seek the Court’s approval of an offer before the property could be sold does not mean that the issue of the property’s value and whether it should be sold remained open to debate. Rather, it was an exercise of the Court’s supervisory powers to ensure that the property was not sold for an unreasonably low price or, in the event that more than one offer was received, it would provide an opportunity to bring the matter forward to determine which offer would be the best one.
[26] Finally, I turn to the Defendants’ argument that the property should have remained on the market for a full ninety days. The implication is that if the property ought to have been on the market for the full ninety days and was not, then there has been non-compliance with the order and the sale should not be confirmed.
[27] Respectfully, the Defendants are conflating a judicial tendering process with a judicial listing process. If the property was tendered for sale, and the tender documents specified that it was to remain open for bids for a specified period, such as ninety days, then a bid could not be accepted and the property sold until the bidding period had concluded. That is distinct from a judicial listing process, where property is to remain on the market for a minimum period of time before the Plaintiff can ask the Court to change the list price or seek alternative relief. It does not prevent the Plaintiff from conditionally accepting a reasonable offer - nor does it prevent the Court from approving the offer – before the time specified in the listing order has expired.
CONCLUSION
[28] For the foregoing reasons, the Defendants’ application to adjourn to cross-examine on the Affidavit of Value and the Affidavit of Default, as well as their application to extend the redemption period, are dismissed.
[29] Costs shall be in the cause.
K. M. Shaner
J.S.C.
Dated at Yellowknife, NT, this
16th day of November 2020
Counsel for the Applicants/Defendants: Mr. Steven Cooper
Counsel
for the Respondent/Plaintiff: Mr. Edward Gullberg
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S-01-CV 2017 000205 |
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IN THE SUPREME COURT OF THE NORTHWEST TERRITORIES
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BETWEEN:
DAVID CONNELLY
Respondent/Plaintiff -and-
ROSIE J. BROWNING and ALEX F. WELLIN
Applicants/Defendants
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MEMORANDUM OF JUDGMENT OF THE HONOURABLE JUSTICE K. M. SHANER
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