Executive Summary: Key Legal and Evidentiary Issues

• The Court of Appeal for British Columbia dismissed an appeal from a chambers judge's refusal to extend time to appeal an order absolute of foreclosure.
   
• Leave to appeal had earlier been granted on a single issue: whether the associate judge erred in assessing a potential windfall to the mortgagee from the order absolute.
   
• Both the associate judge and the chambers judge considered the value of a second mortgage on the same lands when calculating the potential windfall.
   
• Evidence showed any windfall amounted to no more than a three percent lift in value, which the courts below characterized as purely hypothetical.
   
• Appellants failed to demonstrate a reasonable prospect of redemption, a requirement under the applicable two-part test.
   
• A bankruptcy trustee separately determined that the doctrine of merger did not extinguish the appellants' debt on the second mortgage.
   

Facts of the case

Grace Mtn. Land Company, Ltd. and Herkenn Singh Kenny Braich (also known as Kenny Braich) owned six titles comprising approximately 64 acres in Mission, B.C. (the "Lands"). They granted two mortgages over the Lands with overlapping priorities: one to Ms. Jennifer Street, referred to as the "Street Mortgage," for $7,450,000, and another to the respondent, 1055249 B.C. Ltd. ("105"), referred to as the "105 Mortgage," for $10,050,000. Ms. Street was first mortgagee on three of the six titles and second mortgagee on the remaining three, on which 105 held first priority. 105 was later assigned both mortgages.

Foreclosure proceedings on the Lands had been ongoing since 2015. Ms. Street commenced foreclosure proceedings in March 2019 and obtained an order nisi on the Street Mortgage in August 2021, with a redemption period expiring February 19, 2022 [the record also separately states that 105 commenced foreclosure proceedings in respect of the Street Mortgage/Lands on February 14, 2019 — the relationship between this date and Ms. Street's March 2019 commencement is not clarified in the reasons]. The appellants did not redeem by the February 2022 date. On May 11, 2023, Associate Judge Robertson (then a Master) granted an order absolute in favour of 105. Justice Stephens later allowed an appeal of that order, with reasons indexed at 2023 BCSC 2339, based on 105's non-disclosure of an agreement (the "Commitment Letter") with a third party, 1347851 B.C. Ltd. ("134"). Under the Commitment Letter, 134 agreed to advance $7.6 million to enable 105 to buy out the Street Mortgage, with repayment structured as a transfer of 85 percent of the Lands and a contemplated total purchase price of approximately $18 million. Justice Stephens set aside the order absolute and remitted the matter for rehearing.

On May 22, 2024, following the rehearing, Associate Judge Robertson granted a second order absolute (the "Order Absolute") and dismissed the appellants' application to extend the redemption period, with reasons indexed at 2024 BCSC 880. Due to their then-counsel's mistaken belief that 30 days (rather than the 14 days prescribed by the applicable rule) were available to appeal, counsel missed the June 6, 2024 deadline and instead filed a notice of appeal directly in the Court of Appeal on June 21, 2024. Justice Saunders, sitting in Court of Appeal chambers, dismissed an application for leave to bring that direct appeal, with reasons indexed at 2024 BCCA 280, concluding that section 13(2)(b) of the Court of Appeal Act precludes a direct appeal from an associate judge's order to the Court of Appeal. The appellants then applied in the Supreme Court of British Columbia for an extension of time to appeal, filing that application on July 17, 2024 — 41 days after the 14-day appeal period had expired. On September 6, 2024, Jones J., sitting as chambers judge, dismissed that application, citing, among other things, a lack of merit in the proposed appeal, with reasons indexed at 2024 BCSC 1916.

The appellants sought leave to appeal Jones J.'s order. In oral reasons dated March 7, 2025 (2025 BCCA 92), Justice Edelmann, sitting alone in chambers, denied leave on one proposed ground (that the associate judge had improperly weighed the appellants' misconduct) but adjourned generally a second ground concerning an alleged windfall to 105, pending a determination in Mr. Braich's parallel bankruptcy proceeding of whether the doctrine of merger had extinguished his personal debt on the 105 Mortgage [the 2026 decision at para. 27 refers to this denial as occurring on May 7, 2025, which appears inconsistent with the March 7, 2025 date of the 2025 BCCA 92 judgment itself]. The bankruptcy trustee subsequently determined that merger did not apply, and on May 5, 2025, Justice Edelmann granted leave to appeal on the windfall issue. The resulting appeal was heard on February 19, 2026, and decided on August 19, 2026 (2026 BCCA 349), before a panel of Justices Warren, MacNaughton, and Brundrett, with reasons written by Justice Brundrett.

Policy and legislative provisions at issue

The appeal engaged Rule 23-6(8.1) of the Supreme Court Civil Rules, which prescribes a 14-day period to appeal an associate judge's order, and section 13(2)(b) of the Court of Appeal Act, S.B.C. 2021, c. 6, which the court found precludes a direct appeal from an associate judge's order to the Court of Appeal. Rule 11(e) of the Court of Appeal Rules requires leave to appeal an order granting or refusing an extension of time, and section 31(1) of the Court of Appeal Act gives a single justice in chambers jurisdiction to grant or refuse such leave. Rule 1-3 of the Supreme Court Civil Rules, addressing the just, speedy, and inexpensive determination of proceedings on their merits, was also applied in weighing the extension application. The terms of the Commitment Letter between 105 and 134, though not legislative in nature, were central to the equitable analysis of whether the Order Absolute would confer a windfall on 105.

Reasoning and analysis

Justice Brundrett applied the five-factor test from Davies v. Canadian Imperial Bank of Commerce (1987), 15 B.C.L.R. (2d) 256 (C.A.) for assessing an extension of time to appeal, and noted that the two-part test from Canada Permanent Mortgage Co. v. Dan-Al Construction Co., [1982] B.C.J. No. 2339 (C.A.), governed whether to extend a redemption period: the mortgagor must show sufficient equity in the property to secure the amount outstanding and a reasonable prospect of repayment within an extended period. The court held that a mortgagee's other mortgages on the same lands may properly be taken into account when assessing both equity and a potential windfall, since it is the Lands, not the separate court actions, that are the focus of the equitable inquiry. The associate judge had found that after accounting for property transfer tax and the combined face value of the Street and 105 Mortgages ($17.5 million), any lift on a sale under the Commitment Letter's terms amounted to less than three percent, a margin the courts below found insufficient to constitute an unreasonable windfall, which must be a probability rather than a mere possibility. Justice Brundrett also found that the appellants had not raised, before Jones J., either the significance of 105's proof of claim in the bankruptcy or the doctrine of merger, and so could not rely on those arguments on appeal. The court further agreed that the appellants had failed to establish a reasonable prospect of redemption, noting evidence of a lapsed $50 million offer from 2023 and an unsubstantiated $13 million offer from 2022, and endorsed Jones J.'s view that the appellants had taken active steps to delay the mortgagee's remedies rather than pursue redemption.

Ruling and overall outcome

The Court of Appeal dismissed the appeal, holding that Jones J. made no reviewable error in concluding that the windfall ground of appeal was bound to fail and that an extension of time was not in the interests of justice. The decision confirms that a court may consider the value of other mortgages affecting the same lands when assessing both equity and windfall in a foreclosure redemption analysis. No monetary award, damages, or costs order is addressed in the reasons; the outcome instead upholds the underlying Order Absolute in favour of 105 by leaving intact the dismissal of the appellants' application for an extension of time to appeal it.