In a recent foreclosure case, the bank was found to have presented potentially misleading evidence
There may be systemic issues in foreclosure proceedings in Alberta, according to a professor at the Faculty of Law of the University of Calgary.
The blog post titled “Keeping an Eye on Foreclosing Banks,” written by UCalgary Law professor Jonnette Watson Hamilton for ABlawg, uses the case Canadian Imperial Bank of Commerce v Strihavka, 2019 ABQB 835, to show the potential for inaccuracy and unfairness in foreclosure cases in the province.
The case involved a bank’s application to shorten the redemption period governing the respondent’s residence from six months to one day. The bank argued that it was entitled to seek a shorter period under s. 41(2)(b) of the Law of Property Act, RSA 2000, c L-7, for two reasons: the real property in question had been abandoned, and the respondent lacked the ability to pay.
Master W.S. Schlosser of the Court of Queen's Bench of Alberta rejected the application.
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The affidavit of default, sworn by the bank’s mortgage administrator, made the following statement: “The Plaintiff says that the default herein of the Defendant has not been due to causes beyond his control and that having regard to the said Defendant’s ability to pay and the value of the Plaintiff’s security, the period of redemption in the judgment in this action should be shortened.”
Schlosser noted that this statement had been taken from an allegation found in the Statement of Claim, and yet was now being repeated in the Affidavit of Default as a sworn fact.
A review of the evidence, particularly an occupancy report, showed that the respondent had defaulted due to a temporary inability to pay, which is a ground for extension of the redemption period under the Law of Property Act. The report specifically stated that the respondent had been laid off, then had gone abroad for a family emergency, but now had a new job and was expecting a tax refund.
Moreover, the occupancy report said the residence appeared to be occupied, due to the presence of a pet and parked vehicles. This observation negated the bank’s allegation of abandonment.
Given these findings, Schlosser held that the affidavit of default was self-serving, apparently false and contrary to the other evidence.
Schlosser also emphasized that, because the application had been heard by phone, as was customary for this type of proceedings, the bank’s lawyer was obligated to “present both sides of the picture fully, fairly and candidly.” This obligation had not been discharged in this case.
“This is no way to treat vulnerable individuals,” Schlosser said. “It is what the Act is designed to prevent.”
In the blog post which discussed this case, Hamilton speculated that the irregularities that Schlosser had found in the proceedings could be rooted in “the routinization of foreclosure procedures.”
This “routinization,” Hamilton added, could be caused by the fact that the province’s law on foreclosure has remained largely unchanged over the years. “With the law and procedure fairly well settled, concerns for the efficient handling of increasing numbers of foreclosure actions in Alberta might prompt the creation of generic, fill-in-the-blanks documents,” Hamilton said.
While Hamilton acknowledged that this case, with its false or misleading evidence, may be an “aberration,” she pointed out that the number of foreclosure cases in Alberta has been rising, which may indicate that foreclosure proceedings in the province are defective.
Hamilton also discussed the possible implications of this case on the current rules governing the duty of care owed by lawyers of banks. “[D]o the lawyers for foreclosing financial institutions have a duty to dig deeper, to ensure that the generic documents that they are given by their clients match the actual facts of the case?” Hamilton said.
