Bank of Montreal v. Peri Formwork Systems Inc., 2012 BCCA 252

In Bank of Montreal v. Peri Formwork Systems Inc., the British Columbia Court of Appeal was required to rule on two issues raised in an application brought by the appellants, Peri Formwork Systems Inc.: 1) settling the terms of a court order and 2) special costs in cases of a complicated appeal. The BCCA ordered that the appellant builder’s lien claim be restored to priority over the Bank of Montreal Receiver’s Borrowing Charge and over all security to which the Receiver’s Borrowing Charge has priority. Secondly, the Court ruled that it has the authority to award increased costs in accordance with Rule 60 of the Court of Appeal Rules when there is a significant discrepancy between the legal fees incurred as a result of a long and complicated legal process and the amount recoverable through an award of ordinary costs. Although the normal rule for awarding increased costs requires proof of not merely a significant discrepancy between costs incurred and ordinary costs but also an additional factor such as party conduct, the Court ruled that departure from the normal rule was merited in the interests of justice. 

Peri Formwork Systems Inc., a builder company, obtained a lien against title to Coastal Village’s property and was granted priority on this lien over all others, including a Bank of Montreal Receiver’s Borrowing Charge. As a result of an error in statutory interpretation by Rice, J. (Supreme Court of British Columbia), the parties were required to seek further appeals to determine who was entitled to lien priority. The lengthy and complicated appeals process resulted in Peri Formwork Systems incurring substantial costs to settle the terms of the court order. The BCCA determined that Rule 60 of the Court of Appeal Rules, a rule allowing the Court to order increased costs to avoid creating an “unjust result”, applies in the case of Peri Form. The Court ruled that Peri Form faced many challenges in bringing its case and application, including the application to settle the terms of the order, and that a failure to order increased costs would not be in the interests of justice. A refusal to order additional costs in complicated cases would act to prevent the hearing of important legal issues. The Court ordered increased costs for the appeal process and costs at Scale C in the court below payable by the Bank of Montreal to the appellants; the Court also ruled that the appellants were only entitled to one set of costs and therefore could not collect costs from the Receiver (Brown Group Inc.). 

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Elizabeth Severinovskaya 

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Karafiat v. Webb, 2012 ABCA 115

In this case, the Court of Appeal of Alberta considered whether the Appellant’s secured interest in land was defeated by operation of the Dower Act, RSA 2000, c. D-15. The majority held that s. 3(2)(a) of the Act, which provides that a homestead is terminated upon registration of a title transfer, is inapplicable to transfers between spouses. The Court also considered the boundaries of the spousal consent requirement as a precondition to a married person’s disposition of the homestead, under s. 2(1) of the Act. Berger JA, for the majority, maintained that the requisite consent must operate in connection with the specific transaction in question; a transaction invalid at its inception for lack of dower consent will be cured neither by consent in connection with another transaction, nor by the subsequent cessation of the dower interest.

Co-respondent Franklin Webb, as sole titleholder to his and Carmen Webb’s matrimonial home, had granted an interest in their home via a promissory note as security for his debt to the Appellant. Subsequently, Mr. Webb had registered a transfer of title to joint tenancy in common with Mrs. Webb. Berger JA found that the s. 3(2)(a) provisions for termination of a homestead upon registration of a title transfer, read alongside s. 11(1), must exclude transfers between spouses; transfers registered in the name of a third party would terminate the homestead and extinguish dower rights, but transfers between spouses, including transfers to joint tenancy, would not. Also, Berger JA rejected arguments that either a) Mrs. Webb’s implied dower consent, under s. 25(2), in favour of mortgagee Alberta Treasury Branches, or b) the ultimate cessation of her dower interest due to foreclosure, relieved the Appellant of the burden to prove Mrs. Webb’s consent – knowledge and intent – in connection with the promissory note. The majority declined to validate the transaction merely because the homestead was now defunct. It affirmed the lower court’s decision barring the Appellant’s claim.

Slatter JA dissented as to the consequence of the initial lack of dower consent. He viewed the Appellant’s interest as merely voidable, subject to Mrs. Webb’s dower interest, and fully enforceable upon termination of her dower rights. Moreover s. 3(2)(a) of the Act, in his view, should apply to all registered transfers including those between spouses. Accordingly, Slatter JA found that the transfer to joint tenancy had terminated the Respondent’s original homestead rights and immediately replaced them with new rights under a new title subject to the Appellant’s prior claim. Stressing that the purpose of the Dower Act was to protect a spouse’s interest in the homestead, and not to reorder the priority of creditors or to enable escape from agreements honestly made, Slatter JA would have allowed the appeal.

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Aaron SanFilippo
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Humphrey Estate v. Canada (Superintendent of Bankruptcy), 2011 ABCA 210

In Humphrey Estate v. Canada (Superintendent of Bankruptcy), the court upheld the trial judge's ruling that license fees charged on a file-by-file basis for use of software program can be claimed by a trustee in bankruptcy as disbursement. The issue arose over Alger & Associates' use of Ascend software provided by Promeric Technologies Inc.

Under the Bankruptcy and Insolvency General Rules and Directives, a trustee's disbursements do not include the indirect costs of the trustee's facilities such as computer software charges. Berger, J.A. agreed with the trial judge's reasoning that Ascend software is not part of the "infrastructure" of a trustee's office since the license fee charged is specific to a particular estate. Thus, the fees are not contemplated by the prohibitions in the Rules and Directives as those extend to more general software such as word processing and billing. Berger, J.A. added that the license fees here are analogous to postage and courier charges, which are direct costs incurred in the administration of a particular estate.

Berger, J.A. held for the court that the software license fees could be claimed as disbursement and dismissed the appeal.

July 5, 2011
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Adrienne Ho
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