9.32: Offer for sale of secured property

Case Summary

The Applicant brought an Application to determine the effect of an earlier “Rice Order” in connection with the Respondents’ foreclosure on the Applicant’s property. A Rice Order is a remedy whereby the creditor in foreclosure proceedings is allowed to purchase the property, and the purchase price is credited towards the amount owing by the debtor.

In this case, the Respondents took the position that they were entitled to enforce any or all of their security, and that the Applicant was only to be credited with the money actually received as a result of enforcement. The Applicant took the position that the full purchase price was to be applied to their debt.

Justice Macleod cited Chief Construction Company Ltd. v Royal Bank of Canada, 2017 ABQB 589 for a review of the law surrounding judicial sales pursuant to Rule 9.32. Macleod J. adopted the following propositions: (1) the Court, and not the mortgagee, is authorized to sell property under Rule 9.32; (2) under Rule 9.32, the Court determines the appropriate time, place, manner, and price for the sale; (3) the purchaser’s rights under the sale are limited to the terms of the Court Order; and (4) there is no contract for sale between the debtor and purchaser; rather, the sale is conducted by and approved by the Court, and the rights of the purchaser are contained solely in the terms of the Court Order.

As such, the earlier Order was binding, and the Respondents were obligated to apply the full purchase price towards the debt. Justice Macleod commented that as the Respondents applied for the earlier Order, and they must accept its effect.

View CanLII Details