This was an appeal of a Master’s dismissal of Applications to discharge ten Caveats registered against titles for ten properties.

The Caveators/Respondents filed Caveats claiming an equitable interest in mortgages and related instruments which they alleged were funded with their own traceable money. The same interest was claimed in all of the Caveats and the same evidence and arguments were applied in all ten Applications.

Master Schulz concluded that the Caveators had established a prima facie case for their Caveats. Maser Schulz noted that their problem in gathering evidence to better support their position was due to the Defendants’/Appellants’ undisputed refusal to disclose certain financial documents despite their obligation to do so.

On Appeal, the Appellants contended that the Master erred in finding that the Caveators had established a prima facie case. They argued that the Caveators’ unfounded suspicions regarding funding of the impugned mortgages was insufficient, and that their inability to obtain better information did not negate the requirement to meet their onus.

Justice Topolniski first addressed the standard of review on an Appeal from a Master’s Decision. Topolniski J. stated that Rule 6.14(3) governs Appeals from a Master’s Decision. Topolniski J. noted that the applicable test is whether the Master was correct, and the Appeal of a Master’s Decision continues under the new Rules as it had in the past – a de novo hearing.

In discussing the nature and quality of the evidence presented, the Court considered the Respondents’ supporting Affidavit (“Butt’s Affidavit”), which the Appellants claimed was inadmissible and deficient, and constituted nothing more than unfounded suspicions. Justice Topolniski discussed Rule 13.18 of the Rules of Court, stating:

Rule 13.18(2) is akin to old Rule 305(3) which permitted hearsay evidence on “interlocutory motions" if it was accompanied by the source, and grounds for the belief were given. […]

Rule 13.18(3) is very different. It prohibits hearsay in affidavits in support of an application that disposes of a claim, but it imposes no such prohibition in respect of affidavits like Steven Butt’s affidavit, filed in response to an application: Murphy v. Cahill, 2012 ABQB 793 at paras. 3, 25-26.

The Court stated that, in any event, the beliefs in Butt’s Affidavit were founded on his own conclusions based on the Records he reviewed, the result of his registry searches, as well as some information provided by the Appellants. Topolniski J. stated that even if this were hearsay, it would be permissible under Rule 13.18(3), and that Butt primarily drew inferences based on his study of the materials provided to him.

The Appellants pointed to the Questioning of Butt on his Affidavit to support their position that there was no basis for his beliefs. Essentially, they claimed that he was not qualified to opine about what he discerned from his reviews because he was not an accountant, nor had he seen the “whole picture”.

The Court responded by stating that, although Butt was not an accountant, he had conducted a detailed review of what was made available, and the Appellants did not direct the Court to any evidence suggesting that the documentation he reviewed was inaccurate or otherwise unreliable. The Court also conceded that Butt had not seen the “whole picture”, but stated that “[h]ad the Promoters and Mortgagees complied with their obligations under the Settlement, he might have had the complete picture, but the Promoters and Mortgagees have chosen not to do so”. The Court also noted that Butt’s beliefs were not proffered as bare assertions. His conclusions were supported by the documents and registry searches.

In the result the Court determined that Butt’s Affidavit was admissible, and that the Caveators had established a prima facie case to support the Caveats. The Appeal was dismissed.