Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on whether pre-leave property management charges are recoverable in a foreclosure action.

• Court examined the sufficiency of evidence supporting charges incurred both before and after leave was granted.

• Determination hinged on whether CIBC’s handling of service delays contributed to unnecessary costs.

• Pre-leave delay was partly attributed to CIBC’s failure to provide complete evidence in support of a without notice application.

• Total recoverable amount was reduced to account for excessive utility costs due to procedural delay.

• Deficiency judgment was limited by the statutory rule on purchase-money mortgage proportions.

Facts and procedural background

The Canadian Imperial Bank of Commerce (CIBC) sought a deficiency judgment against Terence Johnson following foreclosure proceedings on a residential property located in Air Ronge, Saskatchewan. The property had become vacant in March 2022, and CIBC retained a property management company to secure and maintain it. CIBC also began the process of obtaining leave to commence foreclosure proceedings. However, its early efforts to dispense with service on Mr. Johnson were denied by the court due to inadequate search efforts, contributing to a significant delay.

Mr. Johnson was ultimately served in March 2023, nearly a year after the property had been secured. Foreclosure proceedings progressed with a series of court orders culminating in the sale of the property in April 2024 for $165,000. The court was then asked to rule on whether CIBC could recover various legal fees, disbursements, and property management charges totaling nearly $20,000.

Legal analysis and evidentiary findings

The court had to determine whether CIBC was entitled to recover property management charges incurred before it received leave to commence its foreclosure claim and whether the charges themselves were reasonable. The judge considered relevant case law, including Harpham and Whitesell, which addressed the timing and evidentiary thresholds for such claims. The court concluded that there is no absolute bar to recovering pre-leave property management charges but emphasized that claimants bear the burden of proving them and must justify any delay.

In this case, the court found that CIBC’s delay in effecting service was partly self-inflicted. It had failed to provide key evidence during its initial application to dispense with service, which could have led to an earlier resolution and reduced utility expenses. Notably, a process server had previously been in contact with Mr. Johnson and later identified his address, but this information was not shared with the court until much later.

Outcome and reasoning

Due to the delay caused by CIBC’s procedural missteps, the court reduced the amount recoverable for property management charges by $4,328.03, which reflected excessive utility costs incurred during the prolonged vacancy. The adjusted total for legal fees, disbursements, and property charges was set at $22,131.62.

However, because over half of the mortgage in question was not a purchase-money mortgage, the court applied statutory limitations under Saskatchewan law and restricted the deficiency judgment to $11,287.13. The court permitted CIBC to issue an order in accordance with a previously filed draft, substituting the original amount with the lower figure.

This decision illustrates the importance of thorough evidentiary preparation in mortgage enforcement actions and confirms that mortgagees bear significant procedural and evidentiary responsibilities when seeking recovery of pre-foreclosure expenses.