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Featured New BCCA Case Summary, “Palmer v. Palmer, 2015 BCCA 438”

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AREAS OF LAW: Property law; Estate law; Certificate of pending litigation

~Even where a certificate of pending litigation is found to have been filed for improper reasons, the court may not find abuse of process if the property owner is not affected by it and does not take steps to have it removed.~

BACKGROUND: The Palmer parents gave properties with different values to each of their sons. To the Respondent Alistair Palmer they gave property on West 27th Avenue in Vancouver. He mortgaged this property and paid his parents $500,000. The parents gave property on French Street in Vancouver to the Respondent Gavin Palmer, who transferred the property into a company, caused the company to mortgage the property, and paid his parents $500,000. The Appellant, Iain Palmer, received property in Roberts Creek from the parents, and he granted an interest-free mortgage for $500,000 back to them, payable on the death of the last parent. The Appellant also received an interest-free loan of $100,000 from the parents, payable when he sold his home. In 2008 there were differences in the properties’ values, and the parties engaged in discussions regarding equalization. A binding agreement was reached at a meeting held with the father in November 2009, but disagreement among the siblings continued. On May 18, 2012, the Respondents filed a notice of civil claim and filed a certificate of pending litigation (“CPL”) against the Appellant’s Robert’s Creek property. On February 5, 2013 the Appellant demanded that the CPL be removed, and on March 7, 2013 he counterclaimed seeking damages arising out of the filing of the CPL. The Appellant also delivered a settlement proposal to the Respondents on February 8, 2013. In proceedings brought to remove the Appellant as an executor, a consent order was made on April 18, 2013. A letter of the same date included a requirement that the CPL be discharged. The CPL was discharged on May 22, 2013. A second consent order, made on January 7, 2014, provided that the Respondents would be at liberty to argue in the action that when the court is determining the issue of equalization between the parties, the Appellant should be required to pay interest on the Roberts Creek mortgage. The trial proceeded on May 5, 2014. Counsel for the Respondents advised the trial judge that the only issues for determination were the scope of the equalization and interest. The trial judge concluded that the Appellant had benefitted from not paying interest at 3% on the mortgage and loan, and that this should be taken into account in the equalization. She dismissed the Appellant’s counterclaim for abuse of process and costs were awarded to the Respondents at Scale B.

APPELLATE DECISION: The appeal was allowed in part. The Appellant argued that the trial judge erred in finding that the parties had agreed she could take interest into account in the equalization process, and that this agreement was embodied in the second consent order. He also contended that the judge erred in dismissing his counterclaim and in awarding costs to the Respondents rather than special costs to him. In the alternative, he argued that he should be awarded costs on Scale B to February 8, 2013 when he made the offer to settle and double costs thereafter, or costs on Scale C. The Respondents took the position that the judge did not err in taking into account interest as a benefit that flowed to the Appellant, or in dismissing his counterclaim based on the finding that there was a legitimate reason for filing the CPL. The Court of Appeal found that there did not appear to be any legal basis on which the judge granted the declaration sought by the Respondents. The equalization process was governed by a binding agreement reached at the meeting held between the parties and their father, and interest or simple benefit was not included. It was also clear that the Appellant had taken the position that interest could not be taken into account in the equalization process. The Court declared that the Appellant was obliged to pay interest to the estate at 1%, not 3%, on the loan and his mortgage from February 19, 2012, which was the date of the last parent’s death. The interest was not to be taken into account in the equalization process. With respect to the counterclaim, the Court found that it was clear the CPL should not have been filed. The Respondents sued mainly to collect debts owed by the Appellant to the parents’ estate, and it was a stretch to suggest there was a sustainable claim for an interest in land. At the same time, the Appellant did not take steps to remove the CPL. He did not challenge it directly in his initial response, but demanded its removal eight months later. The Court questioned whether the CPL affected the Appellant, and noted that the Appellant did not challenge the Respondents’ standing to file the CPL until March 2013. The claim for abuse of process was not made out on the facts of the case. With respect to costs, the Court saw no reason to interfere with the judge’s exercise of discretion in refusing to order special costs.

 

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