COURT OF APPEAL FOR BRITISH COLUMBIA  
Citation:  
Century Services Corp. v. LeRoy,  
2022 BCCA 239  
Date: 20220708  
Docket: CA47647  
Between:  
Century Services Corp.  
Appellant  
(Plaintiff)  
And  
Cynthia Rebecca Delores LeRoy  
Respondent  
(Defendant)  
Before:  
The Honourable Madam Justice Newbury  
The Honourable Mr. Justice Fitch  
The Honourable Madam Justice Horsman  
On appeal from: An order of the Supreme Court of British Columbia, dated  
June 30, 2021 (Century Services Corp. v. LeRoy, 2021 BCSC 1285,  
Duncan Docket S12043).  
Counsel for the Appellant:  
R.J. Robinson  
Counsel for the Respondent:  
A. Crabtree  
M. Abdelkader, Articled Student  
Place and Date of Hearing:  
Place and Date of Judgment:  
Vancouver, British Columbia  
May 16, 2022  
Vancouver, British Columbia  
July 8, 2022  
Written Reasons by:  
The Honourable Madam Justice Newbury  
Concurred in by:  
The Honourable Mr. Justice Fitch  
The Honourable Madam Justice Horsman  
Century Services Corp. v. LeRoy  
Summary:  
Page 2  
Defendant Ms. L guaranteed indebtedness of her husband’s company (“TLT”) to  
plaintiff C on a limited recourse basis, and granted a mortgage on her home as  
security for her guarantee. TLT went into CCAA protection and then bankruptcy, and  
C called its loan and commenced foreclosure proceedings against Ms. L. TLT’s  
assets were liquidated, partially by public auction supervised by accounting firm  
PWC, which was also CCAA monitor, trustee in bankruptcy, and had been appointed  
as (private) receiver by C. When C sought to foreclose on Ms. L’s mortaged  
property, the exact amount of TLT’s remaining indebtedness to C was unknown and  
interest was accruing at 24% per annum compounded monthly. Thus the redemption  
amount was unknown.  
At trial in this foreclosure proceeding, judge found auction had been carried out  
“improvidently” and that C had ‘padded’ its claimed debt with charges not permitted  
by the loan agreement between TLT and C. Trial judge found C had been “reckless”  
in doing so and that charging interest at the contractual rate over the years of legal  
proceedings in this matter engaged public policy considerations in favour of  
exercising an equitable jurisdiction to decline to calculate interest on redemption  
amount at the contractual interest rate. She ordered that interest calculated at the  
court order interest rate should be charged from February 2009 to the date of her  
reasons, and that thereafter, the contractual rate should apply up to date of payment  
in full.  
On appeal, Court rejected C’s argument that PWC could not have acted as its agent  
because of duties to the court. This would be correct if PWC had been court  
appointed, but in fact it was privately appointed and as such had acted as C’s agent.  
Court found no palpable and overriding error in trial judge’s findings of fact regarding  
improvident auction, amount of “loss” occasioned thereby and padded charges.  
Thus TLT’s indebtedness, guaranteed by Ms. L, was to be reduced by the  
consequential loss and improper charges were to be deducted from TLT’s debt as  
trial judge had ordered.  
Trial judge had requested and received counsel’s submissions on the question of  
interest, although a report submitted by C and prepared by an independent  
accountant was by C’s own admission not completely accurate. Although s. 19 of  
Law and Equity Act gave the court some discretion in exceptional circumstances to  
vary (for example) the date to which interest is calculated, there is no equitable  
principle that would permit a court to rewrite a commercial loan agreement by  
varying the agreed-upon interest rate because of judge’s opinion that the rate  
agreed upon, though legal, was excessive or that a party’s misconduct was  
deserving of punishment. Accordingly, interest had to be calculated at the  
contractual rate, compounded monthly.  
Finally, Court ruled that punitive damages were not appropriate, even if they had  
been pleaded.  
Century Services Corp. v. LeRoy  
Page 3  
Appeal allowed. Determination of redemption amount of Ms. L’s mortgage was  
remitted back to Supreme Court with interest to be calculated at contractual rate on  
principal amount of debt, unless parties could settle on a redemption amount that  
would not involve more time and money. Given that guarantee was a limited  
recourse obligation, this should not be difficult.  
Reasons for Judgment of the Honourable Madam Justice Newbury:  
Overview  
[1]  
This long and hard-fought foreclosure proceeding arose out of a common fact  
situation: in order to assist in the financial restructuring of a company of which her  
spouse was the principal, the defendant Ms. LeRoy provided a guarantee, limited in  
amount to $2,000,000 plus interest, to a new lender, the plaintiff Century Services  
Corp. (“Century”). The guarantee was secured by a mortgage on the couple’s home  
near Duncan, British Columbia, of which Ms. LeRoy is the sole registered owner.  
She obtained independent legal advice before signing the guarantee. At the time of  
trial, the property was appraised at $1.3 million.  
[2]  
Shortly after the restructuring documents had been signed, the debtor  
company, Ted Leroy Trucking Ltd. (“TLT”), defaulted under the new loan agreement  
(the “Loan Agreement”). A long liquidation of TLT’s assets began, including a public  
auction of a large volume of equipment and smaller items. However, a deficiency  
remained, in large part because of the high rate of interest (said to constitute an  
annual effective rate of 26.82%) accruing on the loan. In due course, Century made  
demand to Ms. LeRoy under her guarantee and notified her of its intention to enforce  
the mortgage. Now, more than 13 years later, the amount required to redeem under  
the order nisi is still the subject of contention.  
[3]  
Around the same time that it defaulted, TLT was already in CCAA  
proceedings. It then petitioned itself into bankruptcy, although it did so only to allow  
the transfer of certain governmental contracts to third party purchasers. All other  
aspects of the bankruptcy process were stayed by order of Chief Justice Brenner  
dated September 3, 2008. (This order was the focal point in Century Services Inc. v.  
Canada (Attorney General) 2010 SCC 60.) TLT also appointed Messrs. Price  
Century Services Corp. v. LeRoy  
Page 4  
Waterhouse Coopers (“PWC”) as a private (as opposed to court-appointed) receiver.  
Eventually, the Court approved the holding of a public auction of various items of  
logging equipment as part of the liquidation of TLT’s business.  
[4]  
PWC supervised the auction, which netted proceeds of over $9,000,000.  
When the time came for an order nisi to be issued in the foreclosure action against  
Ms. LeRoy, however, she contended that the sale had been carried out negligently  
and that certain charges had been improperly made by Century to TLT’s loan  
account. These circumstances, she argued, prevented her from knowing the amount  
of her liability and of course, the amount necessary to redeem the mortgage.  
[5]  
The implications of these “defences” were the subject of the first portion of the  
trial in late 2016, after which the trial judge found that Ms. LeRoy had established  
that Century had never intended to administer the loan in accordance with the Loan  
Agreement but had impliedly made a representation to her that it would do so. She  
had relied on that implied representation in agreeing to provide her guarantee. The  
trial judge ruled that the representation was “a fraudulent misrepresentation that  
vitiates the guarantee and renders the mortgage unenforceable.(See 2017  
BCSC 1880 at para. 113.)  
[6]  
Century appealed, and for reasons indexed as 2018 BCCA 279, this court  
allowed the appeal, declaring that that the guarantee was enforceable. The Court  
remitted the case back to the Supreme Court for resolution of “the remaining  
defencebased on the allegedly improvident sale of TLT’s assets.  
[7]  
The trial resumed with the filing of further submissions in August 2020; and  
the judge issued her reasons, indexed as 2021 BCSC 1285, on June 30, 2021. In  
them she noted, correctly, that the factual findings she had made in 2017 had not  
been disturbed by this court. She purported to exercise an equitable jurisdiction that  
permitted her to decline to calculate the redemption amount at the contractual  
interest rate of 24% per annum, compounded monthly. Instead she found that the  
redemption amount was $378,000, and that interest should be calculated on that  
amount at prejudgment rates payable under the Court Order Interest Act,  
Century Services Corp. v. LeRoy  
Page 5  
R.S.B.C. 1996, c. 79, from February 26, 2009 to the date of the judge’s 2021  
reasons, and at the contractual rate thereafter.  
[8]  
Century appeals this conclusion, as well as others.  
Factual Background  
Relevant Dates  
[9]  
I do not intend to recount the facts in detail, since the proceedings below  
involved many questions that are no longer in contention or are irrelevant to the  
grounds of appeal asserted by Century. I will provide a skeletal history of the parties’  
dealings, referring only to the facts found by the trial judge that are necessary to  
describe and decide the issues raised in this court. The judge was helped  
considerably, as are we, by the fact that the parties agreed on a consolidated  
statement of admitted facts. She drew upon these at paras. 1143 of her 2017  
reasons and repeated them at para. 13 of her 2021 reasons.  
[10] The following events are relevant for our purposes:  
December 10, 2007  
December 14, 2007  
The Royal Bank of Canada (“RBC”) demanded payment of  
its loans to TLT in the amount of approximately  
$18,000,000.  
TLT obtained a stay of proceedings under the Companies’  
Creditors Arrangement Act, R.S.C. 1985, c. C-36  
(“CCAA”). PWC was appointed as the monitor, but the  
order stated that the Monitor was not to take possession  
of the Property.  
March 27, 2008  
TLT entered into the Loan Agreement with Century, under  
which Century advanced $14,250,000 to RBC to acquire  
TLT’s debt. All of RBC’s security (including PPSA security)  
over TLT’s assets was assigned to Century. Century  
received a commitment fee of $725,000 and interest at 24  
percent, compounded monthly, was to accrue on TLT’s  
indebtedness.  
Century Services Corp. v. LeRoy  
Page 6  
Ms. LeRoy signed the “limited recourse guarantee” for  
$2,000,000 secured by a mortgage on the LeRoys’ home.  
(We are told that Mr. LeRoy was released from a  
mortgage he had granted in the principal amount of  
$1,000,000 and that there were other benefitsdescribed  
in Century’s factum at footnote 2.) The guarantee stated  
that if an Event of Default under the Loan Agreement  
occurred, Ms. LeRoy would pay forthwith on demand “the  
full amount of the Borrower Obligations due and payable  
(by acceleration or otherwise) by the Borrower [TLT], free  
from any claim, counterclaim or defence of the Guarantor  
against Century.” Century’s recourse against Ms. LeRoy  
was limited, however, to her interest in the Duncan  
property.  
April 7, 2008  
The stay order under the CCAA was extended to  
November 28, 2008 to allow for a proposed restructuring.  
Several subsequent extensions were granted.  
May 31, 2008  
July 1, 2008  
TLT defaulted on its first loan payment to Century under  
the Loan Agreement.  
TLT presented an “orderly wind up and liquidation plan” to  
Century and in accordance therewith, negotiated an  
auction contract with Ritchie Bros. Auctioneers (Canada)  
Ltd. for the auctioning of most of its business assets.  
July 30, 2008  
TLT and Ritchie Bros. Auctioneers agreed that the latter  
would carry out a public auction of specified equipment  
belonging to TLT.  
September 3, 2008  
TLT petitioned itself into bankruptcy, with PWC continuing  
as monitor and trustee in bankruptcy.  
Chief Justice Brenner ordered that TLT and a related  
company were permitted, “subject to the supervision of  
[PWC], in its capacity as Monitor herein or in its capacity  
as Receiver of [TLT], to proceed with a sale of their assets  
...;” that the proceeds of sale after reasonable selling costs  
and the payment of certain priority claims were to be paid  
to Century; that TLT was permitted to file an assignment in  
bankruptcy “with [PWC], but all proceedings under the  
bankruptcy are stayed until further order of the Court”; and  
that TLT or any receiver thereof was authorized to  
proceed with the Auction Agreement “notwithstanding any  
bankruptcy proceedings in respect of the Petitioners.”  
Century Services Corp. v. LeRoy  
Page 7  
September 4, 2008  
Century issued a demand for payment and gave notice to  
TLT of its intention to enforce its security. The amount of  
TLT’s indebtedness was said to be $13,024,353.34 as of  
August 31, 2008, plus interest of $8,563.95 per day.  
Century appointed PWC as receiver under its security  
instruments, with the power to “take possession of and get  
in any and all of the Collateral and take such steps as may  
be necessary” for its preservation and to “make any  
arrangement or compromise, with the consent of Century”  
that PWC thought “expedient”.  
September 22, 2008  
September 23, 2008  
Ritchie Bros. conducted the auction of TLT’s equipment,  
resulting in gross proceeds of approximately $9,081,225.  
Century made demand on Ms. LeRoy for payment of the  
amount guaranteed and issued a notice of intention to  
enforce the mortgage. No payment was made. The notice  
of enforcement stated that on September 3, TLT’s  
indebtedness had stood at just over $13 million and that  
although some payment was expected, the total debt still  
exceeded $2 million as of September 23, 2008. As a  
result, Century made demand on Ms. Leroy for the sum of  
$2 million plus interest in an unspecified amount.  
November 12, 2008  
May 13, 2009  
Century commenced foreclosure proceedings in respect of  
the mortgage on Ms. LeRoy’s Duncan property.  
A master of the Supreme Court of British Columbia  
granted an order nisi in the foreclosure action and fixed  
the last date for redemption as November 13, 2009. The  
redemption amount was set at $1,737,932.35 plus  
contractual interest of $1,111.54 per day, but was subject  
to any further Order of this Court as to the amount due  
under the limited recourse guarantee ....”  
March 16, 2010  
April 24, 2014  
Asserting a defence to the enforcement of the guarantee  
and mortgage based on the “improvident realization” of  
TLT’s assets, Ms. LeRoy obtained an order of Goepel J.,  
as he then was, referring the question of the final  
foreclosure order to the trial list. (See 2010 BCSC 328.)  
Ms. LeRoy obtained an order in the foreclosure  
proceeding allowing the addition of an allegation of  
fraudulent misrepresentation to her pleading, a ruling  
upheld in March 2015 by this court. (See 2015 BCCA  
120.)  
Century Services Corp. v. LeRoy  
Page 8  
February 9, 2016  
Ms. LeRoy applied for and obtained an adjournment of the  
trial.  
November 21, 2016  
October 24, 2017  
Trial commenced.  
Trial judge delivered the 2017 reasons, finding that  
Ms. LeRoy’s guarantee was vitiatedby reason of  
fraudulent misrepresentation.  
July 10, 2018  
As mentioned earlier, this court allowed Century’s appeal  
and remitted the case back to the Supreme Court for  
resolution of the “defence” of improvident realization.  
August 1213  
Further submissions heard by trial judge.  
Trial judge delivered the 2021 reasons.  
June 30, 2021  
The 2017 Reasons  
[11] As the trial judge noted at para. 8 of the 2021 reasons, the first part of the trial  
(from late 2016 to early 2017) had seen the expansion of the parties’ dispute in the  
course of the discovery process. It was during this process that Ms. LeRoy learned  
that Century had posted certain charges to TLT’s loan account (the “Contested  
Charges”) which she claimed were improper. Thus in addition to the “improvident  
realization defence”, she advanced a defence based on fraud relating to the  
Contested Charges and argued that the fraud nullified or vitiated her guarantee and  
made the mortgage unenforceable.  
[12] The judge found that the Contested Charges had not been authorized under  
the terms of the Loan Agreement and that Century had “improperly and recklessly”  
posted them to TLT’s loan account. She also found that:  
(b) there was no consideration [by Century] of the actual language of the  
TLT Loan Agreement before the Contested Charges were posted to  
TLT's account and, rather than checking the actual language of the TLT  
Loan Agreement, Century simply followed its standard practices  
concerning the posting of charges and was indifferent as to whether  
those practices conflicted with the terms of the TLT Loan Agreement;  
(c) Century had no standard practice or system directed at ensuring that its  
employees administered its loans in accordance with the actual terms of  
its loan agreements;  
Century Services Corp. v. LeRoy  
Page 9  
(d) Century did not use a standard form loan agreement; and  
(e) the language of the TLT Loan Agreement with respect to the charging  
of interest and expenses, which did not authorize Century to post the  
Contested Charges, was not the result of oversight or mistake. [At  
para. 91.]  
[13] These findings led her to the conclusion that at the time Century made its  
demand on Ms. LeRoy for payment under the mortgage, it had been “indifferent” as  
to whether it would comply with the terms of the Loan Agreement and indeed had  
intended to post charges irrespective of whether they were permitted. From this, the  
judge inferred that Century had made an implied representation to Ms. LeRoy that it  
intended to administer the loan in accordance with the Loan Agreement and that that  
representation had been false. (At para. 92.) Further, this representation had been a  
“significant factor” that had induced Ms. LeRoy to provide the guarantee and grant  
the mortgage and her reliance had been objectively reasonable. (At para. 101.)  
[14] Finally, the judge found on this point:  
The final question is whether Ms. LeRoy has established that she suffered a  
loss as a result of providing the guarantee and granting the mortgage.  
Century submits there was no loss because Ms. LeRoy has failed to establish  
that TLT would have obtained alternative financing from a lender that did not  
require her to grant a mortgage over her home as security. I disagree with  
that submission because it ignores the LeRoys’ other option of liquidating  
TLT's assets to pay off the RBC debt, letting the company go, and keeping  
their home. I accept Mr. LeRoy’s evidence that had he known Century was  
going to treat TLT's loan as an open tickethe would have taken that option.  
The loss that Ms. LeRoy suffered is the fact that she entered into the  
guarantee, which rendered her liable for the shortfall on TLT’s loan and  
exposed her home to foreclosure.  
Ms. LeRoy has established a fraudulent misrepresentation that vitiates the  
guarantee and renders the mortgage unenforceable. [At paras. 1023;  
emphasis added.]  
[15] The judge added that if she had not concluded the guarantee had been  
vitiated as a result of Century’s implied misrepresentation at the time it was entered  
into, Ms. LeRoy would have been entitled to a proper accounting of the quantum of  
her liability, but the guarantee would have remained valid. (At para. 111.)  
Century Services Corp. v. LeRoy  
Page 10  
Court of Appeal’s Reasons: 2018 BCCA 279 (leave to SCC dism’d  
[2019]S.C.C.A. No. 12)  
[16] This court allowed Century’s appeal for reasons dated July 10, 2018.  
Speaking for the Court, Hunter J.A. reviewed the relevant authorities, including  
Bauer v. the Bank of Montreal [1980] 2 S.C.R. 102, Hamilton v. Watson (1845) 12  
Cl & F 109 (H.L.), Royal Bank of Scotland v. Etridge (No. 2) [2002] 2 A.C. 773 (H.L.),  
Toronto-Dominion Bank v. Rooke (1983) 49 B.C.L.R. 168 (C.A.), Royal Bank v.  
Hislop (1989) 39 B.C.L.R. (2d) 392 (C.A.), and finally, Collum v. Bank of Montreal  
2004 BCCA 358. From these, he summarized the applicable principles:  
From this I extract the following principles concerning the circumstances  
when a creditor has a duty to disclose information to a prospective guarantor  
who has not asked questions of the creditor:  
(a) the information must be material;  
(b) materiality is to be assessed on an objective basis, that is,  
whether the information would be likely to affect the mind of a  
reasonable guarantor in the position of the prospective  
guarantor; and  
(c) the information must be of facts connected to the dealings  
between creditor and debtor (or other guarantor) which are the  
subject of the guarantee, that the surety would expect not to  
exist.  
The scope of this disclosure obligation facilitates efficient credit markets.  
Prospective guarantors are able to make informed decisions because they  
are provided sufficient information to assess the risks they are assuming, and  
lenders are not unduly burdened by having to disclose information that a  
reasonable person would not find material or unexpected. [At paras. 6970;  
Emphasis added.]  
[17] Applying them to the case at bar, the Court reasoned that the trial judge had  
erred in law in concluding that the “mere proffering of the loan agreement and  
guarantee, without disclosing information relating to how Century intended to post  
charges if the loan went into default, was capable of constituting a misrepresentation  
that vitiates the guarantee.” That information, it was said, had not been material to  
the risk assumed by Ms. LeRoy in guaranteeing the loan. In Hunter J.A.’s words:  
A reasonable person in the position of Ms. LeRoy would not have declined to  
sign the guarantee because of a concern that Century might seek to recover  
unauthorized charges if the loan went into default. If Century overcharged by  
following its standard billing practices instead of following the actual terms of  
Century Services Corp. v. LeRoy  
Page 11  
the agreement, neither the debtor nor Ms. LeRoy would be obliged to pay the  
charges. The terms of the loan agreement and guarantee would govern,  
regardless of Century’s billing practices. [At para. 9; emphasis added.]  
[18] This court also disagreed with the trial court’s finding that the proffering of the  
Loan Agreement had constituted an implied representation that Century intended to  
abide by its terms. This characterization did not, Hunter J.A. said, “transform the  
analysis into one of express misrepresentation. Any offer to contract carries with it a  
promise to comply with the contract at such future time as contract performance is  
required. Breach of the promise to perform does not render a contract voidable.” (At  
para. 79; my emphasis.) Applying the objective standard he had described, he  
concluded that the guarantee was enforceable. The Court remitted the issue of  
alleged negligence in the liquidation of TLT’s assets back to the Supreme Court.  
[19] I add that at no stage did Ms. LeRoy raise the duty of honest performance in  
contract as established in Bhasin v. Hrynew 2014 SCC 71.  
Trial Judge’s 2021 Reasons  
[20] After describing the factual background and the parties’ positions when the  
trial resumed, the trial judge described the issues before her as follows:  
1. Is it open to Ms. LeRoy to seek a set-off for improvident realization in the  
absence of a counterclaim?  
2. If so, has she established that the sale of the TimberWest Bill 13  
Contract, the sale of the WFP Bill 13 Contract, and/or the organization of  
the auction were commercially unreasonable and, as a result, that less  
money was recovered than would otherwise have been the case?  
3. If so, did Century have a duty to maximize TLT’s recovery?  
4. Even if Century had a duty to maximize TLT’s recovery, is Ms. LeRoy  
prevented from challenging the reasonableness of the liquidation by  
application of the collateral attack doctrine or res judicata principles?  
5. What is the amount required to redeem?  
6. What redemption period should be set?  
7. What costs award is appropriate? [At para. 23.]  
Century Services Corp. v. LeRoy  
Page 12  
Set-off for Improvident Realization?  
[21] Under this rubric, Century made an argument based on portions of ss. 68  
and 69 of the Personal Property Security Act, R.S.B.C. 1996, c. 359 (“PPSA”).  
These sections provide in part:  
68 (1) The principles of the common law, equity and the law merchant,  
except insofar as they are inconsistent with the provisions of this  
Act, supplement this Act and continue to apply.  
(2) All rights, duties or obligations arising under a security agreement,  
this Act or any other law applicable to security agreements or  
security interests must be exercised or discharged in good faith and  
in a commercially reasonable manner.  
69 (2) A person to whom a duty or obligation is owed under this Act has a  
cause of action against any person who, without reasonable  
excuse, fails to discharge the duty or perform the obligation.  
(3) Subject to subsection (5) in an action under subsection (2), the  
plaintiff is entitled to recover damages from the defendant for  
losses that are reasonably foreseeable as being liable to result  
from the failure to discharge the duty or perform the obligation.  
...  
(7) In an action for a deficiency, the defendant may raise as a defence  
the failure on the part of the secured party to comply with  
obligations in section 17, 18, 59 or 60, but non-compliance limits  
the right to the deficiency only to the extent that it has affected the  
ability of the defendant to protect the defendant's interest in the  
collateral or has made the accurate determination of the deficiency  
impracticable.  
...  
(9) Except as otherwise provided in this Act, a provision in a security  
agreement or any other agreement that purports to exclude a duty  
or onus imposed by this Act or that purports to limit the liability of or  
the amount of damages recoverable from a person who has failed  
to discharge a duty or obligation imposed by this Act is void.  
I also note s. 17, which states:  
17 (1) In this section, “secured party” includes a receiver.  
(2) A secured party must use reasonable care in the custody and  
preservation of collateral in the possession of the secured party  
and, unless the parties otherwise agree, in the case of an  
instrument or chattel paper, reasonable care includes taking  
necessary steps to preserve rights against other persons.  
Century Services Corp. v. LeRoy  
Page 13  
[22] Century contended that although the PPSA created a cause of action for  
breach of the duty to act in good faith and in a commercially reasonable manner, it  
did not create a right of set-off or defence in an action for a deficiency. The judge  
rejected this submission, observing that the fact that s. 69(7) does not include a  
defence based on a party’s breach of its duty under s. 68(2) does not mean that no  
defence could be asserted on the basis of improvident realization. Century also cited  
this court’s decision in J & W Investments Ltd. v. Black [1963] B.C.J. 125 for the  
proposition that an aggrieved debtor who has a complaint of improvident realization  
has an equitable cause of action but may not have an equitable defence to a  
secured creditor’s deficiency action. Again, the trial judge did not agree. In her  
analysis:  
... The point being made is that a successful assertion of improvident  
realization gives rise to an equitable right to an account (in other words, a  
right to an account that would ground a set-off against any deficiency), but  
not a claim for tort damages. An equitable set-off may be raised as a defence  
to an action for debt: Cactus Restaurants Ltd. v. Morison, 2010 BCCA 458 at  
para. 12.  
As Century acknowledges, several cases in this jurisdiction have determined  
allegations of improvident realization framed as a defence to a deficiency  
action: see e.g., Kupritz; Mercedes-Benz Financial Services Canada Corp.  
v.1063995 B.C. Ltd., 2018 BCSC 1324; Arbutus Capital Vehicle Leasing Ltd.  
v. Hanif, 2013 BCSC 189; Bank of Montreal v. Tolo-Pacific Consolidated  
Industries Corp., 2012 BCSC 1785 [Tolo-Pacific]; and Canadian Western  
Bank Leasing Inc. v. SSC Ventures (No. 98) Ltd., 2016 BCSC 223 [Canadian  
Western Bank]. There is no express consideration in these cases of the  
existence of a defence of improvident realization but, in my view, that is  
because its existence is obvious.  
The defence may be framed as an equitable set-off. It is also a specific  
example of the doctrine of mitigation. As stated in Kevin McGuiness, The Law  
of Guarantee, 3rd (Markham, ON: LexisNexis, 2013):  
§10.56 Vis-á-vis a surety, the duty of prudent realization is no  
more than a normal obligation of a contract party to mitigate  
the damages that flow from a breach of contract. A failure to  
discharge the duty of prudent realization does not render the  
creditor liable to the surety. It merely releases the surety from  
liability to the extent of any prejudice suffered.  
[At paras. 2830; emphasis added.]  
[23] In summary, the trial judge was of the view that Ms. LeRoy was entitled to  
raise the question of improvident realization in defence to a “deficiency action”. As  
Century Services Corp. v. LeRoy  
Page 14  
far as the PPSA was concerned, she found it would not be inconsistent with the  
statute to “supplement” the defences expressly mentioned in s. 69(7) with a defence  
of improvident realization. Given this, Ms. LeRoy was entitled to seek an equitable  
set-off for improvident realization in the absence of a counterclaim. (At para. 34.)  
[24] The judge also held that it would not be fair to bar Ms. LeRoy from asserting  
improvident realization because of her lateness in pleading such a defence or  
set-off. Century had been aware since at least January 2010 that she was contesting  
Century’s claim on these grounds. (At paras. 356.) Further, the fact Ms. LeRoy had  
in the guarantee agreement expressly waived “all defences of a surety to which [she]  
may be entitled” did not prevent her from raising this defence: Ms. LeRoy could be  
liable only up to the amount of TLT’s indebtedness, which depended on Century’s  
having fulfilled its duty of prudent realization; and a secured creditor cannot contract  
out of its statutory duties under the PPSA: see s. 69(9).  
Had Ms. LeRoy Established that the Auction was Commercially Unreasonable?  
[25] This issue required a great deal of detailed analysis by the trial judge, which I  
hope not to rehearse here. She began by describing “the test” for improvident  
realization, which had been expressed in Canadian Western Bank Leasing Inc. v.  
SSC Ventures (No. 98) Ltd. 2016 BCSC 223 and HSBC Bank Canada v. Kupritz  
2011 BCSC 788 as a test of reasonableness i.e., did the secured party [take] all  
reasonable steps to obtain the best price for the collateral”? The burden is on the  
debtor to show that the manner of sale of collateral was improvident and that the  
failure to act in a commercially reasonable manner meant that less money was  
recovered than would otherwise have been the case. (At para. 40.) The judge  
continued:  
As Justice Fenlon observed in Kupritz at para. 36, in practical terms this  
requires the debtor to establish that the secured party departed from industry  
norms and that a higher price would have been obtained if the secured party  
had done what is considered to be reasonable in the industry in question. As  
she noted, the debtor will generally be required to provide expert evidence on  
the industry standard against which the allegedly substandard conduct may  
be measured, although in some cases the conduct may so obviously depart  
from commercial common sense that evidence of what was done will suffice.  
Century Services Corp. v. LeRoy  
Page 15  
The standard of “commercially reasonable” is an objective one. Justice  
Fenlon identified the following potential considerations:  
the method of sale (private sale or public auction);  
the extent to which the sale was advertised;  
the time and place of the sale;  
whether an opportunity to inspect the goods was provided;  
whether the collateral was sold as one parcel or in smaller lots;  
costs associated with the sale or delaying a sale; and  
whether collateral should have been repaired or improved prior to a sale.  
(Kupritz, at para. 34)  
Applying this objective standard in the case at bar, the trial judge found that the sale  
of both the so-called TimberWest” and “Strathcona” Agreements had been  
reasonable.  
[26] The equipment auction was a different matter. (See paras. 5877.) Overall,  
the judge found that the sale of the small items of equipment had been “very poorly  
organized” (see para. 678); that the refusal of Mr. Slavik (who had been hired by  
TLT for “operational management expertise”), to accede to a request from Ritchie  
Bros. that Jason LeRoy be hired to assist, had been commercially unreasonable (at  
para. 72.); and that if Jason LeRoy had been hired or more manpower and expertise  
had been provided, more sale proceeds would have been recovered. This, the judge  
said, was the only reasonable inference to be drawn from the extensive evidence of  
the disorganized state of the equipment during the auction.  
[27] At para. 85, the judge carried out a rough calculation of the quantum of the  
difference between the proceeds actually realized and what would have been  
realized had the auction been properly organized. She estimated that about  
$450,000 more would have been realized.  
Century’s Role in Asset Realization  
[28] At para. 88, the trial judge turned to the matter of what responsibility, if any,  
Century had owed to TLT (and indirectly to Ms. LeRoy as a guarantor thereof), to  
maximize TLT’s recovery from the realization process. Century’s position was that it  
Century Services Corp. v. LeRoy  
Page 16  
had no such duty because it was not in control of the process; nor was any “relevant  
party” in control as its agent. It said TLT itself had remained in possession and  
control of its assets until sold “in the context of the ongoing CCAA proceeding”. As  
well, the lender contended, PWC had acted as the monitor under the CCAA or as  
receiver, and in both capacities was an officer of the Court and obliged to consider  
the interests of all parties. Thus in Century’s submission, PWC had never acted as  
its agent.  
[29] The trial judge did not accede to this argument. In her analysis, it overlooked  
the fact that the invocation of the CCAA and the appointment of PWC as a private  
receiver had been followed by later events that vested possession and control of  
TLT’s assets clearly in PWC. (At para. 91.) As the judge observed:  
... First, there was a subsequent order in the CCAA proceeding on  
September 3, 2008, permitting TLT to file an assignment in bankruptcy with  
PWC (para. 4) and authorizing TLT “or any Receiver of [TLT]” to, among  
other things, proceed with the auction (para. 6). Second, TLT subsequently  
filed an assignment in bankruptcy and, on September 4, 2008, Century  
appointed PWC as its receiver.  
The September 3, 2008 order reflected a fundamental change in  
circumstances: the restructuring of TLT with CCAA protection had become a  
liquidation and winding up of the company. The assignment in bankruptcy  
was required to crystalize the claims and priorities of creditors. However, the  
Bill 13 Contracts were subjected to termination in a bankruptcy, which would  
eliminate substantial value. The solution, as reflected in the Chambers Brief  
filed for the September 3, 2008 hearing and the reasons of Chief Justice  
Brenner dismissing an application by the Federal Crown for payment of GST  
monies that had been segregated earlier in the CCAA proceeding, was for  
Century to privately appoint PWC as receiver to finalize the liquidation, and  
for the Court to permit the assignment into bankruptcy to be filed, but then to  
stay the proceedings in the bankruptcy and continue the CCAA stay, all of  
which would maximize Century’s recovery. [At paras. 912; emphasis added.]  
[30] TLT had assigned itself into bankruptcy on September 3, 2008 and although  
Chief Justice Brenner’s order of that date had stayed the bankruptcy proceedings,  
TLT’s assets became vested in its trustee in bankruptcy — i.e., PWC in  
accordance with s. 71 of the BIA. (Citing Royal Bank of Canada v. North American  
Life Assurance Co. [1996] 1 S.C.R. 325 at 354.) Section 71 states:  
On a bankruptcy order being made or an assignment being filed with an  
official receiver, a bankrupt ceases to have any capacity to dispose of or  
Century Services Corp. v. LeRoy  
Page 17  
otherwise deal with their property, which shall, subject to this Act and to the  
rights of secured creditors, immediately pass to and vest in the trustee named  
in the bankruptcy order or assignment, and in any case of change of trustee  
the property shall pass from trustee to trustee without any assignment or  
transfer. [Emphasis added.]  
No statutory provision that would have permitted a court to override s. 71 was  
suggested.  
[31] The result was that TLT’s assets had vested in PWC as trustee in bankruptcy,  
but (the judge stated at para. 96) “subject to Century’s rights as the secured  
creditor. In this capacity, the judge noted that Century had appointed PWC as  
receiver and that PWC had taken over TLT’s responsibility for organizing the sale of  
TLT’s assets at the auction. This fact had been reflected, she observed, in the  
statement of admitted facts at paras. 745 and in representations made to the Court  
by PWC in the CCAA proceeding, including in its various reports to the Court. As of  
the date of PWC’s appointment as receiver — September 4, 2008 the judge  
concluded, everything Mr. Slavik had done in relation to TLT’s assets “had to have  
been done for PWC.” (At para. 105.)  
[32] Had PWC acted as Century’s agent in carrying out the liquidation? Century  
argued that it had not, since receivers are officers of the court and do not act for the  
secured party who caused the appointment. Again, the judge disagreed, ruling that  
cases such as Forjay Management Ltd. v. 0981478 B.C. Ltd. 2018 BCSC 527 and  
Re Philip’s Manufacturing Ltd. (1992) 69 B.C.L.R. (2d) 44 (C.A.) did not assist  
Century because PWC was not a court-appointed receiver. Private receivers, the  
judge reasoned, do not owe fiduciary obligations to the debtor or other creditors, but  
are agents of the secured creditor who appointed them. (Citing Re Graham Mining  
Ltd. (2001) 26 C.B.R. (4th) 28 at paras. 45 and 50 (S.C.), aff’d (2002) 34 C.B.R.  
(4th) 37 (C.A.); Royal Bank of Canada v. Eastern Infrastructure Inc. 2019 NSSC 243  
at paras. 3940; and 620630 Saskatchewan Ltd. v. Price Waterhouse Coopers Inc.  
2003 SKQB 175 at paras. 3744.)  
Century Services Corp. v. LeRoy  
Page 18  
[33] The judge went on to find that it could not be said PWC had acted as a dual  
agent for both TLT and Century. TLT had by this time ceased as a going concern  
and no longer had possession of its assets. PWC on the other hand was acting as  
Century’s agent, for Century’s benefit. (At para. 112.)  
[34] Accordingly, the judge concluded that Century was vicariously liable for  
PWC’s negligence, provided the conduct in question (in particular Mr. Slavik’s  
refusal to hire Jason LeRoy) was within the ambit of its authority. There could be no  
doubt that this proviso was met. She continued:  
Century privately appointed PWC to liquidate TLT’s assets. The evidence  
overwhelmingly establishes that Century was intimately involved throughout  
the liquidation and provided instructions to PWC with respect to the  
liquidation, going so far as to require that Mr. Slavik be put in charge. This is  
not a case in which PWC can be said to have been acting as a dual agent for  
both TLT and Century. TLT ceased to be a going concern and no longer had  
possession of its assets. Even a deemed agency clause in the security  
instrument could not have changed the reality that PWC was conducting its  
private receivership for the sole purpose of realizing on Century’s collateral.  
In its capacity of privately appointed receiver, PWC was acting as Century’s  
agent, for Century’s benefit.  
For the forgoing reasons, I find that as of September 4, 2008, PWC, in its  
capacity as private receiver, was acting as Century’s agent. ... [At  
paras. 1123; emphasis added.]  
The Redemption Amount of the Mortgage  
[35] The trial judge returned at para. 119 to the central issue before her what  
amount was required to redeem the mortgage granted by Ms. LeRoy on her  
property? As seen earlier, on September 23, 2008 (the day after the auction)  
Century had made demand under the guarantee for $2,000,000 plus accrued  
interest and costs. Century relied at trial on an expert report prepared by  
Ms. Potgieter of Ernst & Young, a chartered accountant and business valuator. Her  
report showed the amount outstanding on the TLT loan on each day between  
March 27, 2008 and November 9, 2015 (the date of her calculation) after deduction  
of the “Contested Charges” but before any allowance for the improvident realization.  
Applying the effective rate of 26.82% per annum, Ms. Potgieter’s report showed  
Century Services Corp. v. LeRoy  
Page 19  
$12,724,590 outstanding under the loan on the date of demand. The amounts she  
calculated on other dates are set forth at para. 15 of the reasons.  
[36] As the judge observed at para. 119, after September 23, 2008, the loan  
balance had been reduced by the net realization proceeds raised through the  
auction and other sales, so that according to Ms. Potgieter, on October 21, 2008 the  
shortfall was reduced to $3,072,943. Further proceeds were received even after this  
date and according to the report, the lowest point of the TLT loan balance occurred  
on February 26, 2009 when the amount owing was $976,040. The judge did her best  
to calculate what the result would be if the $450,000 “loss” resulting from the  
improvident auction had been applied against the balance on October 21, 2008 and  
calculated interest accordingly. Her rough calculation was that the amount owing on  
February 26, 2009 (the date of the low point) would have been about $378,000,  
including interest to that date. This, the judge said, was the starting point for  
determining the redemption amount of Ms. LeRoy’s mortgage.  
Interest  
[37] The next question, the trial judge stated, was whether interest was payable  
and if so at what rate and to what date. According to Century, Ms. Leroy had not  
raised the question of interest until August 2020 when she filed her written  
submissions. Century says that without notice, the trial judge “morphed the issue to  
one where she could also arbitrarily choose an interest rate and the time period it  
would run as opposed to denying it outright” and that the judge ultimately “decided  
the matter based on her own research” and “mistaken accounting analysis, both  
seen for the first time in the reasons, without providing the parties any notice or  
opportunity to respond.”  
[38] Ms. LeRoy sought to invoke an equitable jurisdiction that would relieve her  
from the obligation to pay any interest or at least from paying interest as stipulated in  
Century Services Corp. v. LeRoy  
Page 20  
the Loan Agreement. The trial judge described her submission, based in part on  
United Savings Credit Union v. 631252 B.C. Ltd. 2003 BCSC 367, as follows:  
Ms. LeRoy says that Century’s conduct, specifically, the posting of the  
Contested Charges to the TLT Loan account and the improvident realization,  
precluded her from ascertaining the true amount outstanding. This deprived  
her of the opportunity to make an informed decision about whether to  
redeem. She says that she had to endure years of discovery and a trial to  
determine that the Contested Charges had been improperly posted to the  
TLT Loan account and then several years of further litigation to determine  
that Century breached its duty of prudent realization, and that Century should  
not profit from its conduct by receiving any interest at all. She observes that  
had she tendered $2 million in response to Century’s demand she would  
have vastly overpaid.  
Alternatively, Ms. LeRoy says that it would be inequitable to award Century  
anything more than contractual interest on the declining balance of the TLT  
Loan between September 23, 2008 (the day of the demand) and February  
26, 2009 (the lowest point), and that interest on any amount outstanding as of  
February 26, 2009 should be calculated at prejudgment interest rates  
pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79, rather than at  
the contractual rate. [At paras. 1267; emphasis added.]  
[39] In response, Century contended that the Court had no power to decline to  
award contractual interest, citing the cases mentioned at para. 128. In the  
alternative, it claimed that Ms. LeRoy was not entitled to invoke Equity because she  
did not have clean hands, having “intentionally reneged” on a contractual promise to  
secure a replacement mortgage on the Duncan property. (This argument was  
rejected for the reasons at paras. 1823.) As well, the lender submitted that  
Ms. LeRoy had not expressly sought equitable relief from contractual interest in her  
pleadings and that it was now too late to amend them because the matter had not  
been explored at trial. (At para. 129.)  
[40] The trial judge began her analysis of the interest questions by acknowledging  
that contractual interest at the annual rate of 24%, compounded monthly, was not  
illegal. It had reflected the high-risk nature of the loan made to TLT when it was in  
CCAA protection and there was a real riskof bankruptcy. The judge also  
expressed the view that there had been no inequality of bargaining power between  
the parties resulting in an improvident bargain that would justify setting aside the  
Century Services Corp. v. LeRoy  
Page 21  
guarantee itself. (Citing Uber Technologies Inc. v. Heller 2020 SCC 16 at paras. 65  
and 79.) She formulated the real issue before her as follows:  
The issue is whether this Court has the jurisdiction to depart from a  
contractual interest rate in the course of fixing the amount required to redeem  
a mortgage, or order that interest is payable to a date other than the date full  
payment is made, because of the mortgagee’s post-contracting conduct and,  
if so, whether that jurisdiction should be exercised in this case. [At para. 131;  
emphasis added.]  
[41] The judge found that none of the cases cited by the parties provided clear  
authority either way as to whether the Court had jurisdiction to depart from  
contractual interest or to make interest payable to a date other than the date of full  
payment. In United Savings Credit Union, Sigurdson J. had left the issue open: he  
found the case before him was not an appropriate one in which to exercise a  
jurisdiction to vary an interest rate, assuming it existed. (At paras. 138.) In Bank of  
Montreal v. Awards-West Ventures Inc. (1990) 50 B.C.L.R. (2d) 363 (C.A.), the  
Court was concerned with whether delay on the part of the mortgagee in pursuing a  
claim on the covenant constituted a defence known to law. Agate Developments Ltd.  
v. United Gulf Developments Ltd. 2009 NSSC 160 did not concern the purported  
jurisdiction in equity to fix the terms on which a mortgagor may exercise the  
equitable right to redeem, and in any event, had been overruled in Jorna & Craig Inc.  
v. Chiasson 2020 NSCA 42. Other cases to which the judge was referred had been  
about interest on claims in debt.  
[42] This left the Supreme Court of Canada’s decision in Bank of America Canada  
v. Mutual Trust Co. 2002 SCC 43, which the trial judge described at paras. 1504 of  
her reasons. It revolved around s. 128 of the Courts of Justice Act, R.S.O. 1990,  
c. C. 43, which permitted a court in making an order “for the payment of money” to  
award interest thereon at the pre-judgment interest rate, but prohibited an award of  
interest on interest. Similarly, s. 129 specified that money owing under an order  
bears interest at the post-judgment interest rate, but prohibited an award of interest  
under that provision “where interest is payable by a right other than under this  
section.” The trial judge in Bank of America, Mr. Justice Farley, had found the  
respondent lender in breach of the loan contract for a number of reasons, including  
Century Services Corp. v. LeRoy  
Page 22  
that it had acted in bad faith in refusing to fund the loan to which it had agreed, had  
caused unreasonable delay in replacing its counsel, and had taken the position that  
it was relieved of its obligation to provide takeout financing as agreed. (At para. 10.)  
[43] Farley J. made various adjustments to, and deductions from, the redemption  
amount claimed, and ordered monthly compounded interest at the rate specified in  
the loan agreement. As Mr. Justice Major, speaking for the Supreme Court of  
Canada, observed:  
In deciding the appropriate measure of pre-judgment and post-judgment  
interest, the trial judge agreed with the appellant that it should be awarded  
the interest rate provided for in the Loan Agreement because, although it only  
intended to be an interim lender, the breach by the respondent resulted in the  
appellant becoming a long term lender which resulted in the appellant  
missing other investment opportunities as the money due to it was not paid  
and not available for other loans. The appellant also submitted that awarding  
simple interest would result in a windfall for the respondent as it would lend  
the money it owed to the appellant to customers at its usual compound  
interest rates. [At para. 12; emphasis added.]  
In so ruling, the trial judge had rejected the lender’s argument that it had been  
prejudiced because the appellant had not challenged compound interest in its  
pleadings. As Farley J. noted, the statement of claim could have been amended at  
any stage and that the lender had been fully aware of the issue of compound interest  
throughout. (At para. 14.)  
[44] The Ontario Court of Appeal affirmed the trial judgment except for the award  
of compound interest, ruling that the discretion granted under the statute did not  
include the authority to award compound interest. That authority arose from the  
court’s general equitable jurisdiction, so that the award was “payable by a right other  
than under this section”. Equitable principles were found not to warrant damages at  
compound interest rates in what was a case of simple breach of contract. (At  
para. 19.)  
Century Services Corp. v. LeRoy  
Page 23  
[45] On appeal, the Supreme Court of Canada restored the trial judge’s order. It  
recognized the time value of money, which compound interest was designed to  
reflect. In the Court’s analysis:  
Simple interest and compound interest each measure the time value of the  
initial sum of money, the principal. The difference is that compound interest  
reflects the time-value component to interest payments while simple interest  
does not. Interest owed today but paid in the future will have decreased in  
value in the interim just as the dollar example described in paras. 21-22.  
Compound interest compensates a lender for the decrease in value of all  
money which is due but as yet unpaid because unpaid interest is treated as  
unpaid principal.  
Simple interest makes an artificial distinction between money owed as  
principal and money owed as interest. Compound interest treats a dollar as a  
dollar and is therefore a more precise measure of the value of possessing  
money for a period of time. Compound interest is the norm in the banking and  
financial systems in Canada and the western world and is the standard  
practice of both the appellant and respondent. [At paras. 234; emphasis  
added.]  
[46] Major J. reviewed the history of “interest at law” (described as “long and  
miserly” by Picard J.A. in Costello v. Calgary (City) (1997) 152 D.L.R. (4th) 453 (Alta.  
C.A.)) and observed that although the initial theory underpinning an award of  
judgment interest was that the defendant deserved “additional punishment”, the  
modern theory is that judgment interest should be used to compensate rather than  
punish. (See also M.A. Waldron, The Law of Interest in Canada (1992) at 1278.)  
Compound interest had not historically been awarded, but is nevertheless now “well  
suited to compensatea plaintiff for the interval between when damages initially  
arise and when they are finally paid.” (At para. 38; my emphasis.)  
[47] Major J. then turned to interest in Equity. He reasoned:  
If the court was unable to award compound interest on the breach of a loan  
which itself bore compound interest, it would be unable to adequately award  
the plaintiff the value he or she would have received had the contract been  
performed. To keep the common law current with the evolution of society and  
to resolve the inconsistency between awarding expectation damages and the  
courts’ past unwillingness to award compound interest, that unwillingness  
should be discarded in cases requiring that remedy for the plaintiff to realize  
the benefit of his or her contract.  
A contrary rule would lead to inequity and provide incentives to breach  
contracts. If courts were restricted to simple interest in assessing damages  
Century Services Corp. v. LeRoy  
Page 24  
for breach of contract, an apparent abuse could occur in the following way.  
Money lent at compound interest would accrue compound interest until there  
was a breach of contract by the borrower. The lender would then sue and  
only be entitled to simple interest on the judgment. This would encourage  
borrowers not to repay loans. Contract law is not the enemy of parties to an  
agreement but, rather, their servant. It should not frustrate their mutually  
agreed intentions but, instead, absent overriding policy concerns, should  
permit those parties to obtain the benefit of their intended agreement.  
...  
With respect to the failure to repay the loan in this appeal when due, it cannot  
be said that the cost of such delay was not in the contemplation of both  
parties at the time they made the contract, particularly as both parties were in  
the business of lending. A loan agreement with a specified interest rate is an  
agreement between parties on the cost of borrowing money over a period of  
time. Absent exceptional circumstances, the interest rate which had governed  
the loan prior to breach would be the appropriate rate to govern the post-  
breach loan. The application of a lower interest rate would be unjust to the  
lender.  
This analysis applies equally to pre-judgment interest and post-judgment  
interest. Pre-judgment interest is necessary to compensate a plaintiff for the  
period from when the money was initially owed until the date of the judgment.  
Contract law principles may require such interest to be compounded so as to  
award the plaintiff the benefit of the bargain. Damage awards, however, are  
not necessarily paid at the date judgment is rendered. Contract law entitles  
the plaintiff to the full value of the benefit of the bargain at the time payment is  
finally made. Where the parties have earlier agreed on a compound rate of  
interest, or there are circumstances warranting it, it seems fair that a court  
have the power to award compound post-judgment interest as damages to  
enable the plaintiff to be fully compensated when the award is finally paid.  
Additionally, it would be illogical and unfair to the plaintiff to change to a  
simple rate of interest charged upon the judgment at the post-judgment  
phase. This would delay but not eliminate the period when the defendant  
gains a benefit that belongs to the plaintiff by not paying compound interest. It  
would encourage the defendant to delay paying the judgment award. As  
noted above, equity is another jurisdiction under which compound interest  
may be ordered in accordance with s. 129(5) CJA. In light of the illogical and  
inequitable result that would be occasioned by refusing to extend an award of  
compound interest to the post-judgment phase, in addition to common law  
remedies, it may be appropriate to extend that award on equitable grounds  
where it has been already determined that compound interest was part of the  
damages for breach in the pre-judgment phase.  
The court’s common law power to award damages flows from the application  
of contract law. In addition, ss. 128(4)(g) and 129(5) CJA, provide statutory  
authority to award compound pre-judgment and post-judgment interest  
according to this common law power. The court also has an equitable power  
to award compound interest, as has traditionally been done in cases of, inter  
alia, wrongful retention of funds and s. 129(5) CJA provides statutory  
Century Services Corp. v. LeRoy  
Page 25  
authority to award compound post-judgment interest according to this  
equitable power. [At paras. 456, 4952; emphasis added.]  
The Court held that the contract in question was such that compound interest was  
appropriate to compensate the lender properly for the borrower’s breach. This was  
said to yield a “satisfactory result with respect to both expectation damages and  
restitution damages”.  
[48] The trial judge in the case at bar stated that Bank of America had often been  
cited for the proposition that an equitable jurisdiction exists to “decline to award  
contractual interest post breach of contract, in exceptional circumstances.” (Bank of  
America had not been mentioned in the cases relied on by Century.) The judge then  
sought to identify the source of her jurisdiction to “fix a redemption amount and, in  
particular, determine how interest is to be calculated and paid.” (At para. 137.) She  
found that the Court Order Interest Act (which is substantially different from the  
Ontario statute under consideration in Bank of America) was not engaged, since it  
refers to interest on a “pecuniary judgment”.  
[49] The judge noted that R. 21-7 of the Supreme Court Civil Rules prescribes the  
procedure for foreclosure proceedings in this province. Subrule (5) provides a “list”  
of what the Court may do, including ordering that a mortgagor “must, within a  
redemption period that the Court may fix, pay to the [mortgagee] what is due under  
the mortgage [my emphasis] and for costs, and that, in default of payment, the  
respondent is to be foreclosed of his or her equity of redemption”; and ordering “at  
what times, on what terms and in what order of priority [a mortgagor] may redeem  
the mortgaged property and that in default [he or she is] to be foreclosed of any  
interest, right or claim in or to the mortgaged property”. On a plain reading, the judge  
observed, the general power under R. 21-7(5)(h) to fix the terms upon which a  
mortgagor may redeem is not limited by the more specific power under R. 21-7(5)(b)  
to order a mortgagor to pay “what is due under the mortgage”. (At para. 139.)  
[50] The judge noted that in North West Trust Co. v. Paramount Management  
Corp. (1979) 8 B.C.L.R. 199 (C.A.), this court recognized that the setting of terms for  
Century Services Corp. v. LeRoy  
Page 26  
redemption involves the exercise of discretion in accordance with equitable  
principles. (There is, of course, no doubt about this, given that mortgages are  
creatures of Equity.) Thus, the judge observed, it is open to a court to bridge the  
time for redemption in an appropriate case: see Avco Financial Services Realty Ltd.  
v. Gustafson (1977) 3 B.C.L.R. 67 (S.C.) and North West Trust itself at para. 17. In  
fact, what is now s. 19 of the Law and Equity Act, R.S.B.C. 1996, c. 253, was  
enacted in order to reverse this court’s decision in North West Trust and restore the  
form of “presumptive order” adopted in Avco. Section 19 now provides:  
In a proceeding for the foreclosure of the equity of redemption in mortgaged  
property, the court must, unless exceptional circumstances exist, order that  
the payment of interest is to be calculated and payable to the date full  
payment is made to redeem the property. [Emphasis added.]  
[51] The trial judge observed that this provision:  
... does not limit or vary the nature or scope of the court’s discretion to order  
otherwise. To the contrary, it expressly recognizes the court’s discretion to  
order otherwise where “exceptional circumstances exist”. The Legislature did  
not prescribe the circumstances that would be sufficiently exceptional to  
justify a departure from the usual order, leaving that to the discretion of the  
court.  
Although s. 19 was enacted in response to North West, on a plain reading it  
does not limit the court’s jurisdiction, in exceptional circumstances, to select  
any date as the date to which interest is to be calculated and paid. In other  
words, there is nothing in s. 19 to suggest that there are only two permissible  
dates: the date full payment is made in the usual case and the last day of the  
redemption period in exceptional circumstances. Had the Legislature  
intended to constrain the court’s discretion in that fashion, it could easily have  
said so expressly. [At paras. 1456; emphasis added.]  
In her analysis, the fact that s. 19 did not refer to a jurisdiction to vary interest rates  
specifically did not mean the Court did not have such jurisdiction when exercising its  
discretion to determine the redemption amount. Rather, s. 19 merely prescribed the  
“presumptive order” with respect to the date to which interest runs. It did not “limit or  
vary the nature or scope of the court’s discretion to fix the terms upon which a  
mortgagor may redeem.” (At para. 147.)  
[52] In light of the foregoing, the trial judge concluded that in fixing the redemption  
amount in a foreclosure proceeding, the Court had the discretion in exceptional  
Century Services Corp. v. LeRoy  
Page 27  
circumstances to order that interest be calculated and paid to a date other than the  
date of full payment of redemption. She could see no principled reason why that  
discretion would not extend to ordering, in exceptional circumstances, that interest  
be calculated at a rate other than the contractual rate. Bank of America was said to  
support this position. Further support was found in Citi Cards v. Ross 2014  
ONSC 114, where the Court stated:  
Exceptional circumstances that would cause a court to decline to apply a  
contractual interest rate must be more than just financial hardship for the  
borrower: vague or unclear terms, overriding policy concerns such as a  
criminal interest rate, unconscionable conduct on the part of the lender, or  
commercially unsophisticated parties. None of these apply here. [At para. 27.]  
[53] The judge suggested that most contract cases in which a party seeks an  
order for pre- or post-judgment interest at a rate that differs from the contractual rate  
do not involve sufficiently exceptional circumstances to warrant such relief. However,  
there were some cases in which this had occurred. In 1468025 Ontario v. 998614  
Ontario 2015 ONSC 7216, aff’d on other grounds 2016 ONCA 504, the Court  
awarded prejudgment interest at 3.5% per year rather than at the contractual rate  
of 7% on the basis that the calculation of interest went back over 13 years during  
which interest rates had remained low. The contractual rate was well above market  
rates and there was a substantial amount of money involved. In Canadian Tire Bank  
v. Saade 2013 54101 (O.N.S.C.), the Court found exceptional circumstances  
where the lender had increased the contractual interest and credit limits on two  
credit cards in circumstances where “it must have been obvious that the cardholder  
was unable to properly service the account”. The lender’s conduct was found to  
justify an award of interest at the lower, original contract rate.  
[54] In a case that has some resonance to the case at bar, Magnum Leasing v.  
Johns Sandblasting & Painting Ltd. (2000) 26 A.R. 309 (Q.B.), a claim of debt arose  
from a promissory note. The Court found the contractual interest rate to be  
reasonable and recognised that courts should refrain from meddling with the parties’  
bargain; but concluded that the cumulative effect of the interest rate was “too high in  
Century Services Corp. v. LeRoy  
Page 28  
the circumstances”. What had been intended as a loan for one month had turned  
into an 8.5 year loan because of delay and the ensuing litigation. (At para. 160.)  
[55] From all the relevant cases, the trial judge in the case at bar found that she  
had the discretion in exceptional circumstances to order that an interest rate different  
from that specified in the parties’ contract be paid to redeem a mortgage. Expanding  
on Citi Cards, she reasoned:  
... The equity of the situation must be assessed by considering the  
perspective of both the mortgagor and the mortgagee. A mere breach of  
contract by the mortgagor or financial hardship for the mortgagee would not  
likely amount to exceptional circumstances that would justify the exercise of  
this discretion. Rather, there likely would have to be vague or unclear  
contractual terms, overriding policy concerns, unsophisticated parties, or  
some kind of wrongful conduct on the part of the mortgagor deserving of  
moral sanction, perhaps combined with other circumstances, such that a  
departure from the freely bargained contractual rate leads to a more just  
result. [At para. 163; emphasis added.]  
The Calculation of Interest  
[56] Turning to whether this equitable jurisdiction should be exercised, the trial  
judge found “exceptional circumstances” in the same conduct that had led her  
in 2017 to find the guarantee to be vitiated. She reasoned:  
In the Original Trial Reasons, I found not only that the Contested Charges  
were not authorized by the TLT Loan Agreement but also that, from the  
outset, Century did not intend to comply with the TLT Loan Agreement. The  
Contested Charges were not posted to the TLT Loan account as a result of  
an innocent mistake on Century’s part. It is not even possible to characterize  
the posting of them as the result of a legitimate dispute over whether they  
were permitted by the terms of the TLT Loan Agreement or an honest, but  
mistaken, belief on Century’s part that they were permitted. There simply was  
no consideration by any Century employee of the actual language of the TLT  
Loan Agreement before the Contested Charges were posted.  
Further, Century stood to gain from posting the Contested Charges. The  
Contested Employee Charges included a very substantial profit margin. The  
Contested Legal Fees (as defined in the Original Trial Reasons) were  
incurred litigating two uneconomical priority disputes in the CCAA  
proceeding. Ms. Kemp acknowledged that Century pursued this litigation on  
TLT’s dime, notwithstanding it was uneconomical, in order to set legal  
precedents that would assist Century in its business in the future. The  
Contested Tom Capital Charge (as defined in the Original Trial Reasons)  
represented a payment by Century to a related party as compensation for  
time spent performing due diligence on the value of a TLT asset the related  
Century Services Corp. v. LeRoy  
Page 29  
party was contemplating purchasing. Century provided no reasonable  
explanation for paying a prospective purchaser to perform due diligence on a  
TLT asset that Century was liquidating. The Contested Interest (as defined in  
the Original Trial Reasons) represented income to Century.  
I found that Century was indifferent about whether it would comply with the  
TLT Loan Agreement and that it intended to post charges to the TLT Loan  
account in accordance with its standard practices, irrespective of whether  
those practices conflicted with the TLT Loan Agreement. In the  
circumstances, I found that Century’s implied representation to Ms. LeRoy to  
the effect that it intended to administer the TLT Loan in accordance with the  
terms of the TLT Loan Agreement, was false. Finally, I found that Century  
was reckless with respect to the truth of that representation and displayed a  
wanton disregard as to whether Ms. LeRoy would be deceived by it. None of  
these findings were overturned by the Court of Appeal.  
Ms. LeRoy found out about the Contested Charges through discovery in this  
proceeding. Had she not challenged Century’s position on the amount owing,  
she likely never would have discovered that the Contested Charges had been  
wrongly posted. She has had to endure more than a decade of litigation to  
determine the true amount owing. If she had paid the $1,737,932.35 set in  
the May 13, 2009 order or the $2.5 million sought by Century in January  
2020, she would have vastly over paid.  
The difference to Ms. LeRoy between calculating interest at the contractual  
rate and calculating interest at a lower rate, such as the prejudgment rates  
that would be payable if the Court Order Interest Act applied, is enormous. As  
explained above, my conclusion is that, but for Century’s improvident  
realization, the amount owing would have been about $378,000 on February  
26, 2009. This is the starting point for determining the redemption amount.  
This is when Century had received all of the proceeds and the true shortfall  
could be determined. Using Ms. Potgieter’s approach, if interest on $378,000  
is calculated at the contractual rate of 24 percent per annum, compounded  
monthly, from February 26, 2009 to July 1, 2021, the redemption amount  
would be about $6.5 million. In contrast, if interest is calculated over the same  
period using prejudgment Court Order Interest Act rates, the redemption  
amount would be about $426,000. [At paras. 1737; emphasis added.]  
[57] She contrasted Ms. LeRoy’s position with that of Century, which had made a  
loan of $14,975,000, paid to RBC in March 2008. There was evidence that Century  
collected $15,948,496 from the sale of TLT’s assets by February 26, 2009 a gain  
of “roughly 12 percent, or about 13 percent annualized.” (At para. 178.)  
[58] The judge again acknowledged that courts rarely interfere with a bargain  
freely made, but was of the view that calculating the redemption amount to include  
the contractual rate of interest would result in a significant injustice in this instance.  
This was not a case of an honest mistake in calculation or even an honest dispute  
Century Services Corp. v. LeRoy  
Page 30  
about the terms of the contractual provisions; nor in her view was it a case of mere  
breach of contract. Century had been reckless when it posted the Contested  
Charges, and indifferent as to whether they were permitted by the terms of the Loan  
Agreement. This was “wrongful conduct” that in the trial judge’s view could not be  
countenanced. (At para. 179.) She added:  
Further, the fact that a high contractual interest rate can serve to insulate a  
lender from challenges to its claims regarding the amount outstanding cannot  
be overlooked. A mortgagor who questions the correctness of a mortgagee’s  
payout statement is placed in a difficult situation if the only options are to pay  
an amount the mortgagor believes is incorrect or embark on years of  
protracted litigation while the amount owing exponentially increases as a  
result of a high contractual interest rate. That result may be acceptable on  
freedom of contract grounds in some circumstances, but where the amount  
owing according to the mortgagor is inflated to the mortgagor’s benefit as a  
result of the mortgagor’s recklessness, public policy considerations weigh in  
favour of exercising the equitable jurisdiction to decline to calculate a  
redemption amount at the contractual interest rate. A departure from the  
contractual interest rate is warranted in these exceptional circumstances. [At  
para. 180; emphasis added.]  
[59] After rejecting Century’s argument that Ms. LeRoy did not come to court with  
clean hands, the judge ruled that the fact Ms. LeRoy had not expressly sought relief  
from contractual interest in her pleadings was not fatal to her claim. If an amendment  
were required, the factors referred to in MacDonald v. MacDonald 1996 1360  
(B.C.S.C.) at para. 40 militated in favour of allowing it.  
[60] In the result, she fixed the starting point of the redemption amount  
determination at $378,000 on February 26, 2009 a figure that reflected the  
adjustment necessitated by the improvident realization in October 2008. This was  
equitable, she said, because Ms. LeRoy “almost certainly” would not have paid off  
the loan until all the proceeds of liquidation had been received by Century. On the  
other hand, it would not be equitable to fix the redemption amount with interest  
calculated and payable only up to February 26, 2009 (the “low point” date), since  
Century had been owed a significant amount of money for over a decade. Permitting  
Ms. Leroy to redeem now by paying what was due over a decade ago would result in  
Century Services Corp. v. LeRoy  
Page 31  
Century’s receiving payment that in real terms was less than what it was owed. Thus  
the judge concluded:  
... In my view, the most equitable result is to fix the redemption amount at  
$378,000 plus interest at the prejudgment rates that would be payable under  
the Court Order Interest Act if it applied from February 26, 2009 to the date of  
these reasons, and contractual interest (24 percent per year, compounded  
monthly) thereafter to the date of payment. Ms. LeRoy finally knows what is  
owing. There is no reason not to hold her to the contractual interest rate from  
now to the date full payment is made. [At para. 191.]  
As well, she found no reason to order a redemption period of less than six months.  
With respect to costs, she asked the parties to attempt to reach an agreement and to  
return with further submissions if they were unable to do so.  
[61] Century appeals to this Court.  
On Appeal  
[62] Century asserts that the trial judge erred in finding that:  
A. Century vicariously liable for the actions of TLT’s consultant and a court  
supervised Monitor/Receiver in TLT’s CCAA/BIA Proceedings;  
B. Century was not prejudiced by allowing the Defendant to raise an issue  
never in the pleadings, after trial, after initial judgment and after the first  
appeal;  
C. The court could deny contractual interest rates to a lender based on its  
purported moral culpability and on the facts of this case;  
D. A commercially unreasonable decision had been made by failing to  
include a disgruntled family member in the asset liquidation process;  
E. The improvident realization set-off defence was not a collateral attack on  
the CCAA/BIA Proceedings;  
F. The PPSA statutory duty could be enforced in an improvident realization  
set-off allegation despite the PPSA also codifying the related procedure  
to require a counterclaim.  
I propose to deal with these in a different order than above. I will deal first with  
grounds A and DF, and then with the more substantive grounds, B and C.  
Century Services Corp. v. LeRoy  
Page 32  
Standard of Review  
[63] Century acknowledges the well-known standards of review for questions of  
law, fact and mixed fact and law, but argues that the trial judge’s conclusions “are  
both incorrect as a matter of law, equity and policy, and founded on a number of  
demonstrably wrong factual conclusions.”  
Vicarious Liability  
[64] Century strongly disputes the trial court’s conclusion that it is vicariously  
liable for PWC’s conduct of the auction. It contends that PWC could not have acted  
as Century’s agent “to the exclusion of its court-appointed duties” and while PWC  
was operating under the Court’s supervision. As I understand it, Century does not  
rely on TLT’s bankrupt status (which dated from September 3, 2008) nor could  
it, in my view, since all the bankruptcy proceedings had been stayed by Chief  
Justice Brenner’s order.  
[65] I agree with the trial judge that as a privately-appointed receiver, PWC was  
Century’s agent. A clear distinction can be drawn between private and court-  
appointed receivers in this respect. On this point, I note first Re Graham Mining  
Ltd., supra, where Cameron J. observed:  
A privately appointed receiver is the agent of the party which appointed it. It  
must take possession of and protect the security of the secured party at  
whose instance it was appointed. It owes no fiduciary duty to the debtor. The  
receiver may exercise the power to sell in accordance with the security  
instrument and, in this case, the provisions of the Personal Property and  
Security Act (“PPSA”) s. 63 and the Notice of Intent provisions of BIA s. 244.  
In doing so the Receiver must act honestly and in good faith and deal with the  
property in a commercially reasonable manner ...  
...  
A privately appointed receiver is the agent of the secured creditor which  
appointed it: Bennett pp. 29-30. A privately appointed receiver has only the  
statutory obligations to act in good faith and in a commercially reasonable  
manner. It need not take on risks of the cost of uncertain litigation in enforcing  
its security. [At paras. 45, 50; emphasis added.]  
Century Services Corp. v. LeRoy  
Page 33  
(See also 620630 Saskatchewan at para. 39; Arctic Co-Operators Ltd. v. Sigyamiut  
Ltd. 5 C.B.R. (3d) 271 at para. 10; Ostrander v. Niagara Helicopters Ltd. et al. (1973)  
40 D.L.R. (3d) 161 at 166).  
[66] In chapter 2 of Bennett on Receiverships (4th ed., 2021), the author Frank  
Bennett describes the powers, status and practical implications of each type of  
receiver. He notes that a court appointment may involve extra delay and expense,  
but will often be necessary where there are many creditors with competing claims. A  
court-appointed receiver is obviously an officer of the court and is “therefore not an  
agent of the security holder nor that of the debtor(citing Parsons v. Sovereign  
Bank of Canada [1913] AC 160 (JCPC) at 167). It has a general duty to “preserve  
the goodwill and property of the debtor unless otherwise provided in the order.”  
(At 52.) Bennett refers in particular to Royal Bank of Canada v. First Pioneer  
Investments Ltd. (1979) 106 D.L.R. (3d) 330 (H.C.J.), aff’d (1981) 121 D.L.R.  
(3d) 510 (C.A.), rev’d on other grounds [1984] 2 S.C.R. 125 and Ostrander v.  
Niagara Helicopters Ltd. (1973) 1 O.R. (2d) 281 (H.C.J.) and then summarizes the  
distinction thus:  
Unlike the court-appointed receiver who is neither the agent of the security  
holder nor of the debtor, the privately appointed receiver acquires the powers  
of the security holder and is therefore an agent on behalf of the security  
holder in the exercise of those powers. The privately appointed receiver is  
empowered to take possession, realize and remit the proceeds to the security  
holder. The privately appointed receiver takes instructions from the security  
holder to whom the receiver is responsible and is clearly acting as the agent  
of the security holder. The party appointing the receiver usually indemnifies  
the receiver in the proper discharge of its powers and duties save for claims  
of negligence, misfeasance or non-feasance.  
If the security instrument provides for a deemed agency clause, then the  
receiver is also the agent of the debtor vis-à-vis third parties such as  
employees, landlords, and trade creditors. In this capacity the receiver acts  
as a manager of the business. …  
In essence, the receiver is an agent of the security holder and appointed  
primarily to recover the debt. The receiver is not appointed to carry on the  
business in the best interests of the debtor but merely to realize upon the  
property. …The receiver does not become an officer of the debtor but it does  
become a manager of the debtor’s property akin to a mortgagee in  
possession. …. [At pp. 54, 589; emphasis added.]  
Century Services Corp. v. LeRoy  
Page 34  
[67] It is true that private receivers will often be seen as wearing ‘two hats’, one as  
agent for the debtor (as is often specified in loan agreements) and one as agent for  
the security holder: see Bennett at 58; Peat Marwick Ltd. v. Consumers’ Gas Co.  
(1981) 113 D.L.R. (3d) 754 (Ont. C.A.) at 762. (Indeed, in the case at bar, I note that  
the mortgage granted by Ms. LeRoy specified that Century could appoint a receiver,  
who would be the mortgagor’s agent.) Bennett cites the comments of Mr. Justice  
Houlden on this point in Peat Marwick, supra:  
This point arose in the recent case of Diegel & Feick Inc. et al. v. Donia  
Consulting Corp., released March 27, 1980, and not yet reported  
[summarized 2 A.C.W.S. (2d) 256]. It involved an application under the  
Vendors and Purchasers Act, R.S.O. 1970, c. 478. A receiver and manager  
was selling real property which was charged as security under a debenture.  
The purchaser submitted certain requisitions on title. Eberle J., dealt with the  
point that is relevant for this appeal in the following words:  
It was also argued that a sale of the assets of the company is  
subject to the claims of the debenture holders and execution  
creditors I have referred to, because of a provision in para. 4.3  
of the debenture as follows: "Any such receiver shall for all  
purposes be deemed to be the agent of the Company and not  
the agent of the holder of the Debenture." Based on that  
sentence, it is submitted that in selling the assets, the receiver  
is acting as agent of the Company, not as agent of the holder  
of the debenture, and that a sale of the company's interest in  
the assets is subject to all encumbrances against the  
company's interest, including the debentures and executions I  
have referred to. On the other hand, if it were a sale of the  
interests and rights of the debenture holder, those subsequent  
encumbrances would be cut out. I think this submission is  
answered by the decision in Re B. Johnson & Co. (Builders)  
Ltd., [1955] Ch. 634, where at p. 644, the Master of the Rolls,  
Lord Evershed, refers to a debenture which appears to have  
many terms similar to those in para. 4.3 of the debenture here,  
.... At that page the Master of the Rolls says:  
“The situation of someone appointed by a  
mortgagee or a debenture holder to be a  
receiver and manager--as it is said, out of court-  
-is familiar. It has long been recognized and  
established that receivers and managers so  
appointed are, by the effect of the statute law,  
or of the terms of the debenture, or both,  
treated, while in possession of the company's  
assets and exercising the various powers  
conferred upon them, as agents of the  
company, in order that they may be able to deal  
effectively with third parties. But, in such a case  
Century Services Corp. v. LeRoy  
as the present at any rate, it is quite plain that a  
Page 35  
person appointed as receiver and manager is  
concerned, not for the benefit of the company  
but for the benefit of the mortgagee bank, to  
realize the security; that is the whole purpose of  
his appointment; and the powers which are  
conferred upon him, and which I have to some  
extent recited, are (as Sir Lynn observed, and I  
think fairly observed) really ancillary to the main  
purpose of the appointment, which is the  
realization by the mortgagee of the security ...  
by the sale of the assets.”  
.
.
.
I agree with Eberle, J.'s conclusion. It seems to me that the receiver and  
manager in a situation, like the present, is wearing two hats. When wearing  
one hat, he is the agent of the debtor company; when wearing the other, the  
agent of the debenture holder. In occupying the premises of the debtor and in  
carrying on the business, the receiver and manager acts as the agent of the  
debtor company. In realizing the security of the debenture holder,  
notwithstanding the language of the debenture, he acts as the agent of the  
debenture holder, and thus is able to confer title on a purchaser free of  
encumbrance. [At 7612; emphasis added.]  
[68] A more recent application of this principle may be found in 58 Cardill Inc. v.  
Rathcliffe Holdings Limited 2018 ONCA 672 at paras. 1011, citing Sperry Inc. v.  
Canadian Imperial Bank of Commerce (1985) 50 O.R. (2d) 267 at 277 (Ont. C.A.).  
There it was said that “‘in realizing’ … the receiver acts as the creditor’s agent — to  
give commercial efficacy to the security agreement, i.e., so that title may be  
conferred on the purchaser free of encumbrance.” (My emphasis.)  
[69] There is also authority for the proposition that the fact a court exercises some  
supervision over a private receiver does not alter the nature of the receivership.  
Halsbury’s Laws of Canada (Halsbury’s Law of Canada (online), Receivers and  
Other Officers at HRC 123) is instructive:  
Historically, courts had limited ability to supervise the conduct of a privately  
appointed receiver. The involvement of the court was generally limited to  
dealing with ex post facto claims with respect to the conduct of the receiver or  
the secured creditor in realizing on the secured creditor’s collateral or in  
operating the debtor’s business. However, the provisions of the BIA,  
provincial personal property security and corporate legislation that provide the  
court with jurisdiction to provide advice and direction to a receiver apply  
equally to privately appointed receivers; the definitions of “receiver” found in  
such legislation are usually broad enough to include, or specifically include,  
Century Services Corp. v. LeRoy  
Page 36  
both court appointed and privately appointed receivers. The BIA provides that  
if a conflict occurs between a security agreement under which a receiver is  
appointed and an order made under s. 248 or a direction given under s. 249,  
the provisions of Part XI will prevail.  
(See also Prudential Assurance Co. (Trustee of) v. 90 Eglington Limited Partnership  
(1994) 218 O.R. (3d) 201 (Ont S.C.J.) at 207, per Farley J.)  
[70] Bennett on Receiverships also emphasizes the importance of the de facto  
relationship between receiver and creditor in realizing on a debtor’s assets: at 290.  
In the case at bar, Century’s active role in instructing PWC as the liquidation  
progressed is consistent with the trial judge’s finding that Century regarded itself as  
the de facto “boss” of PWC from at least September 4; and as the trial judge noted,  
PWC certainly regarded itself as acting as Century’s private receiver, reporting to the  
Court on several occasions expressly in that capacity.  
[71] In my opinion, it is clear that PWC in its realization efforts, including  
supervision of the auction, was acting as the agent of the security holder, Century.  
On an application of ordinary agency principles, then, the improvident realization  
was properly laid at the feet of Century as PWC’s principal in the circumstances of  
this case.  
Failure to Hire Jason LeRoy  
[72] The trial judge’s finding that PWC had acted in a commercially unreasonable  
manner in refusing to hire Jason LeRoy (or someone else with similar experience  
with the types of equipment being sold) was a largely factual finding. Century  
contends that it would not be reasonable to expect Mr. Slavik to have hired Jason  
LeRoy when the latter was obviously connected to the LeRoys and might cause  
friction with other important personnel in the process”. However, the trial judge  
carefully considered all the evidence, including expert opinion evidence adduced by  
both sides, and explained the reasons for her conclusion that if Mr. LeRoy had been  
retained to assist three to four weeks before the auction as requested by Ritchie  
Bros., the auction would have proceeded in a more organized fashion. In particular,  
the lots of small equipment items would have been better structured and described.  
Century Services Corp. v. LeRoy  
Page 37  
Jason LeRoy would have “provided the additional manpower and expertise” without  
having to familiarize himself with TLT’s inventory.  
[73] Applying the appropriate standard of review, I am not persuaded that any  
palpable and overriding error has been shown in the judge’s reasoning on this point  
or in her estimation that the net recovery from the liquidation was about $450,000  
less than would have been the case but for the improvidence of the sale process.  
The “Improvident Realization Set-off Defence”  
[74] Century submits that the “improvident realization defence” was an  
impermissible collateral attack on both the CCAA and BIA proceedings of TLT. It  
argues first that Ms. LeRoy was an interested person and “no doubt” would have had  
standing to voice her concerns about the auction both before and after it took place.  
Second, it contends the Court had already approved the holding of the auction and  
the gross guaranteed minimum thereunder presumably in the sense that under  
s. 11 of the CCAA, the Court had a general jurisdiction to make such order as it  
considered fit; and under s. 36 it had the jurisdiction to approve any sale of the  
debtor’s assets outside the ordinary course of business.  
[75] It does not follow in my view that Ms. LeRoy’s objections to the manner in  
which the auction was carried out was a “collateral attack” on the order of  
September 3, 2008. This (foreclosure) proceeding is concerned with the  
determination of a redemption amount by Ms. LeRoy under her mortgage of TLT’s  
indebtedness; it is not an attack on the holding of an auction or on any other aspect  
of the 2008 order. Although she may have left things to Tedat the time she granted  
the guarantee and mortgage, Ms. LeRoy became a fully involved party in this  
(separate) proceeding once the guarantee was ‘called’. As the trial judge found,  
Ms. LeRoy turns out to have been right in questioning the amount demanded by  
Century under her guarantee.  
Century Services Corp. v. LeRoy  
Page 38  
Commercial Reasonableness and the PPSA  
[76] Century also challenges the trial judge’s reasoning concerning the availability  
of a set-off by Ms. LeRoy due to the improvident realization, as opposed to a  
counterclaim that she should have advanced at some earlier time. It will be recalled  
that s. 69(2) of the PPSA states that a person to whom a duty or obligation is owed  
under that Act, has a cause of action “against any person who, without reasonable  
excuse, fails to discharge the duty or perform the obligation.” Under subsection 3,  
such a person is entitled to recover damages for reasonably foreseeable losses due  
to the failure to discharge the duty or obligation.  
[77] As pointed out by Fenlon J. (as she then was) in HSBC Bank Canada v.  
Kupritz 2011 BCSC 788, the PPSA defines “debtor” to include a person who “owes  
payment or performance of an obligation secured”, whether or not that person has  
rights in the collateral. (See also Cuming, Walsh and Wood, Personal Property  
Security Law (2005) at 1415, who comment that “whether called a mortgagor, a  
chargor, a pledgor, a buyer, a lessee, or any other term, the important question is  
whether the person qualifies as the obligor on the obligation secured by the security  
interest.” (At 13.)) Since s. 68(1) of the PPSA preserves equitable principles  
(provided they are not inconsistent with the Act, as occurred in KBA Canada, Inc. v.  
Supreme Graphics Ltd. 2014 BCCA 117), I am not persuaded the trial judge erred in  
concluding that Ms. LeRoy was entitled to seek an equitable set-off for improvident  
realization. (At para. 34.)  
[78] I also agree with the judge that whether this was framed as a defence instead  
of a cause of action is a matter of formality only and that the substance of the  
relationship should govern. It seems only fair, in other words, that since Ms. LeRoy  
was liable for TLT’s indebtedness to the extent of $2,000,000 plus interest, she was  
entitled to see her liability reduced to the extent of any defence or set-off to which  
TLT would have been entitled.  
[79] I would not accede to the fifth and sixth grounds of appeal.  
Century Services Corp. v. LeRoy  
Page 39  
Variation of Interest  
Lack of Notice?  
[80] Century’s first argument under this rubric is a procedural one it submits  
that the trial judge did not give the parties notice that she might decide to vary the  
rate of interest accruing on Ms. LeRoy’s liability under the guarantee — or at least to  
vary it in such a profound manner. As seen above, when it made demand under the  
guarantee, the lender had assumed that even without the Contested Charges, that  
amount still exceeded the $2,000,000 mortgage limit (which in turn exceeded the  
value of the property at the time) and there was no reason for Century to “waste time  
and resources on a mathematically moot issue.” Century says that if it had had  
reason to expect the trial judge might vary the contractual interest rate, it would have  
“revisited the accounting” to “confirmthe calculation of interest and all other  
amounts that were in issue at trial and affected the principal amount of TLT’s debt.  
[81] The trial judge, however, requested and received written submissions from  
the parties as to whether interest was payable and if so at what rate and to what  
date. (See para. 124.) Century’s written response included Ms. Potgieter’s expert  
report and a submission that the Court did not have the jurisdiction “to restrict, limit,  
or modify contractual interest”, based on Bank of Montreal v. Awards-West, supra.  
As mentioned earlier, that case concerned whether a mortgagee could be prohibited  
by reason of its delay from suing on the mortgagor’s covenant to pay. This court, per  
Madam Justice Southin, ruled that such a proposition would throw Equity into a  
“state of disarray. In her words:  
It is, in theory, possible for this Court to say something to this effect: While, to  
this time, it never has been the practice in equity to prevent the prosecution of  
claims at law on the ground that the covenantor thought the plaintiff no longer  
cared about his promise to pay and therefore proceeded to arrange his affairs  
on the footing that he would not be called upon to pay, we shall now say it is  
unfair and unjust for the creditor to insist on his money.  
To adopt such a course would throw the law, in which term for this purpose I  
include equity, into a state of disarray. Actions at law on covenants to pay  
would then succeed or fail according to the length of the Chancellor's foot.  
One would turn what is a right at law into a discretionary remedy.  
I am not prepared to embark upon such a course. [At 23; emphasis added.]  
Century Services Corp. v. LeRoy  
Page 40  
[82] In any event, it cannot in my view be said that Century did not have the  
opportunity to address the possibility of a variation in the rate of interest, although it  
may well not have expected the solution ultimately adopted by the Court. I note  
Century’s submission on appeal that Ms. Potgieter’s expert report accounted only for  
receipts in terms of the loan balance and did not necessarily reflect other additions  
to the loan amount that were within Century’s knowledge but may not have been  
known to Ms. LeRoy or her counsel. Century says there are various defects in the  
Ernst & Young report, and that the trial judge should have given Century an  
opportunity to explain differences between that report and its own calculations. The  
result is that even at this late date, we do not have an idea of what the redemption  
amount is, or the principal amount outstanding on the TLT loan.  
Clean Hands?  
[83] Century also reasserts its objections based on what it calls the “reneged  
Refinancing Obligation” which was found at s. 5.2 of the Loan Agreement and was  
reproduced at para. 183 of the trial judge’s reasons. For our purposes it is sufficient  
to note that Ms. LeRoy was not a party to that Agreement. It obliged Mr. LeRoy to  
proceed diligently and in good faith to refinance the Duncan property by way of a  
new first mortgage and to pay to Century “all net proceeds ... from such refinancing  
up to a maximum of $2,000,000”. As the judge observed, on a plain reading, this  
imposed no obligation on Ms. LeRoy at all. The Duncan home was not Mr. LeRoy’s  
to mortgage and it certainly cannot be said that Ms. LeRoy did not have clean hands  
by reason of the existence of her husband’s covenant.  
Court Order Interest Act  
[84] One issue, which we raised with counsel at the end of the hearing of the  
appeal, can be dealt with fairly easily. The question was whether the Court Order  
Interest Act has any application to this case, and the answer is no. This is because  
Century Services Corp. v. LeRoy  
Page 41  
s. 1 applies only to a “pecuniary judgment” and s. 2 provides that s. 1 does not apply  
“if there is an agreement about interest” between the parties.  
[85] The case law is quite clear that a pecuniary judgment is one that orders the  
payment of a fixed sum of money to a person or otherwise “sounds in money”. On  
this point, I note the helpful analysis of Mr. Justice Masuhara in Cabaniss v.  
Cabaniss 2010 BCSC 513:  
If one were to apply the reasoning in Wepruk [(Guardian ad Litem) v.  
McMillan Estate (1993) 87 B.C.L.R. (2d) 194 (C.A.)] and Cathedral Ventures  
[Cathedral Ventures Ltd. v. Gartrell 2004 BCSC 1232], in addition to the  
definition of the words “pecuniary judgment” expounded by the Law Reform  
Commission, it would seem clear that the Judgment in this case is a  
pecuniary judgment. The Judgment is not like an injunction or a divorce  
decree. It “sounds in money”, in that it specifies a sum, which would appear  
to be sufficient to satisfy the definition contemplated by the drafters of the  
legislation. Although the Judgment cannot be enforced directly by a writ of  
seizure and sale, it could, as in Cathedral Ventures, be enforced by a court-  
ordered sale if the defendant refused to satisfy the plaintiff’s judgment. In my  
opinion, the answer to this question is contained in the comment by the Law  
Reform Commission on this point, again excerpted here:  
This phrase was chosen to distinguish orders which do not  
require the payment of money, such as a decree of divorce or  
an injunction, from those which are simple commands to pay  
money. Interest can only be calculated on a sum of money,  
and if no sum is referred to in the court order, then the  
judgment does not sound in money.The legislature, in  
implementing the 1973 recommendations, adopted the phrase  
"pecuniary judgment" to capture this concept.  
Adopting that definition avoids unnecessarily complicated, narrow, and  
technical distinctions and fulfils the purpose of the Act. [At paras. 301;  
emphasis added.]  
(See also S.G. & S. Investments (1972) Ltd. v. Golden Boy Foods Inc. (1991) 84  
D.L.R. (4th) 751 (C.A.)) Obviously, the order contemplated at the end of this  
foreclosure proceeding will not require Ms. LeRoy to pay the redemption amount; it  
will only inform her of what the cost of redeeming her equity in the Duncan property  
will be should she choose to redeem.  
[86] In addition, of course, there is an “agreement about interest” in this case,  
within the meaning of s. 2 of the Court Order Interest Act.  
Century Services Corp. v. LeRoy  
Page 42  
The Exercise of Discretion to Vary Interest  
[87] I come at last to the primary question of principle in this case did the trial  
judge err in varying the interest rate from the contractual rate to the court order  
interest rate between February 26, 2009 and June 30, 2021? Century contends that  
this ruling deprived it of over $6 million although one must keep in mind the  
limited-recourse’ nature of Ms. LeRoy’s guarantee.  
[88] As we have seen, there are some authorities (see paras. 523 above) in  
which courts have varied terms concerning the payment of interest most often, to  
vary the date from which interest runs in a foreclosure. In that context, of course,  
s. 19 of the Law and Equity Act applies, requiring the Court to order the payment of  
interest to the date of payment in full unless exceptional circumstancesexist. (See  
paras. 132149 of the trial judge’s reasons.)  
[89] Notwithstanding cases such as Magnum Leasing, supra, most courts are  
reluctant to interfere with contractual interest rates, especially those agreed upon by  
commercial parties. While the day has passed when “Chancery mend[ed] no man’s  
bargain” (see Maynard v. Moseley [1676] 3 Swan 651 at 655, cited by Harman L.J.  
in Campbell Discount Co. v. Bridge [1961] 2 All ER 97 (C.A.), rev’d [1962] 1 All  
ER 35 (H.L.)), modern courts do not regard themselves as having some free-floating  
discretion to ignore or vary contractual terms of which they disapprove. Equity  
‘follows the law’ and still operates on certain principles to this day. It will not enforce  
penalties; it will relieve against certain mistakes; it will relieve against an  
unconscionable bargain or fraud. But I am not aware of any equitable principle that  
would permit a court to rewrite a commercial loan agreement solely by virtue of the  
judge’s opinion that an interest rate (though legal) was excessive, or that a party’s  
misconduct was deserving of punishment in the form of the denial of interest at the  
rate agreed upon. This was a high-risk loan and as such was always going to exact  
a high rate of return for the lender. The Loan Agreement was entered into by TLT in  
an effort to obtain more time in the very difficult circumstances facing it. Ms. Leroy  
has not challenged the judge’s finding that there was no inequality of bargaining  
Century Services Corp. v. LeRoy  
Page 43  
power resulting in an “improvident bargain”. (At para. 130.) I assume that she has  
remained in occupation of the property since 2008.  
[90] Nor is it contended in this case that any variation of the guarantor’s risk, in  
legal terms, occurred here; we are only concerned with quantum. From that  
quantum, the Contested Charges and the loss occasioned by the improvident sale of  
TLT’s equipment are to be deducted from the amount of indebtedness, effectively  
denying Century any financial benefit from its misconduct. The trial judge’s findings  
concerning these Charges and the negligently-administered auction are matters of  
mixed fact and law and no clear and palpable error in them has been shown.  
[91] This case bears some similarity to Bidell Equipment LP. V. Caliber Midstream  
GP LLC 2020 ABCA 478, lve to appeal dism’d [2021] S.C.C.A No. 72. It concerned  
an equipment purchase agreement under which interest at 24% per annum was  
payable on all instalments of the purchase price owing to the vendor. The buyer  
argued that this interest rate should not have been charged on cancellation or  
storage fees, and that it was “punitive and exorbitant, a penalty and not a genuine  
pre-assessment of damages”. (See para. 42.) The Court agreed with the trial judge  
that the interest rate did not constitute a penalty and that the submission based on  
penalty was not appropriate in any event in a claim for debt arising under a contract.  
(No penalty was asserted in the case at bar, although the “success fee” payable on  
an Event of Default under the Loan Agreement might well have qualified.) The Court  
in Bidell cited the following passage from Bank of America:  
To prevent defendants from exploiting the time-value of money to their  
advantage, by delaying payment of damages so as to capitalize on the time-  
value of money in the interim, courts must be able to award damages which  
include an interest component that returns the value acquired by a defendant  
between breach and payment to the plaintiff. [At para. 33; quoted in Bidell at  
para 47.]  
I would add para. 49 of Bank of America:  
With respect to the failure to repay the loan in this appeal when due, it cannot  
be said that the cost of such delay was not in the contemplation of both  
parties at the time they made the contract, particularly as both parties were in  
the business of lending. A loan agreement with a specified interest rate is an  
agreement between parties on the cost of borrowing money over a period of  
Century Services Corp. v. LeRoy  
Page 44  
time. Absent exceptional circumstances, the interest rate which had governed  
the loan prior to breach would be the appropriate rate to govern the post-  
breach loan. The application of a lower interest rate would be unjust to the  
lender. [Emphasis added.]  
[92] The Bidell Court also cited Cavendish Square Holding BV v. Talal El  
Makdessi [2015] UKSC 67, where the U.K. Supreme Court declined to expand the  
jurisdiction to grant relief against penalties, to all substantive contractual provisions,  
observing that that step would take courts “into a new territory of uncertain  
boundaries, which has hitherto been treated as wholly governed by mutual  
agreement.” (At para. 42.) The Court in Bidell continued:  
The parties contracted to an interest rate of 24% per annum. Caliber could  
have elected to make a payment towards invoices rendered at any time. It  
was neither vulnerable nor a victim of oppression. It has made no payments  
at all. Caliber’s claim that Bidell got an undeserved windfall through the  
accumulation of the interest since cancellation of the contract falls away when  
one notes that had Caliber paid the indisputable charges under the contract,  
the interest buildup would have been a fraction of what it was. As a result,  
Bidell has effectively financed the entirety of its outlays since termination of  
the contract on January 23, 2015. Even a contractually agreed upon high  
interest rate is enforceable and a creditor is entitled to judgment in  
accordance with the terms of the contract: Industrial Acceptance Corp v  
Beaupre [1956] 18 WWR (ns) 685, 686-687 (A.B.C.A.). This is particularly so  
with sophisticated commercial actors.  
We do not find the interest rate as stated to be a penalty nor contractually  
unenforceable as punitive, exorbitant or unconscionable. We do not interfere  
with the considered and reasonable decision of the trial judge on this point.  
[At paras. 489.]  
[93] As in Bidell, it was open to Ms. LeRoy as well to pay something, if not the  
total amount Century claimed under the mortgage, in order to stop interest building  
up over what turns out to have been a very long period indeed. At the same time, I  
appreciate that where a high rate of interest is running, a guarantor who does not  
have deep enough pockets to pay the amount demanded by the lender, but believes  
it is incorrect will, in the trial judge’s phrase, may be motivated to avoid “years of  
protracted litigation while the amount owing exponentially increases” as a result of  
the high rate. Where the collateral is one’s home, this situation is even more difficult.  
However, in my respectful view, the law (including Equity) does not permit a court to  
make a substantive change to the terms of a valid contract such as that made by the  
Century Services Corp. v. LeRoy  
Page 45  
trial judge here on the ground that the rate agreed to by the parties was excessive,  
or that one party’s conduct in breach of the loan agreement cannot be  
countenanced.  
[94] Finally under this rubric, I note the comments of K.P. McGuinness in The Law  
of Guarantee (2nd ed., 1996) concerning the circumstances in which a surety (or  
guarantor) should be able to ‘walk away’ from his or her obligations. The author  
observes:  
In essence, the purpose of virtually every guarantee is to ensure that credit in  
some form or another is given to the principal. If that credit is given by the  
creditor, why then should the surety not pay? It must not be forgotten that  
persons who offer guarantees to creditors are usually quite anxious that the  
creditors will accept their guarantees. It is usually creditors who have doubts  
about the merit of a guarantee, prior to entering into a credit arrangement  
with the principal. If the law were to permit sureties to walk away from their  
obligations under guarantees, then the viability of these agreements as credit  
facilitating instruments would be seriously undermined. Throughout the world  
of commerce, it is in the general interest of creditors, sureties and principals  
that the law respect and enforce the terms in which guarantees are drafted.  
[At 10.12810.130; emphasis added.]  
Punitive Damages  
[95] How then should the trial judge have expressed the Court’s opprobrium in  
respect of Century’s conduct in relation to Ms. LeRoy? On this question, Century  
argued that the trial judge should have turned not to Equity but to the law of contract  
and punitive damages, as discussed in Whiten v. Pilot Insurance Co. 2002 SCC 18.  
Since Whiten was decided, Canadian courts have awarded punitive damages in  
contract, although fairly rarely. As stated in Elia v. Chater (1998) 167 N.S.R.  
(2d) 166 (C.A.):  
Punitive damages are rarely awarded in contract. However, in Vorvis [v.  
Insurance Corporation of British Columbia [1989] 1 S.C.R. 1085], the  
Supreme Court of Canada held:  
“...while it may be very unusual to do so, punitive damages  
may be awarded in cases of breach of contract. It would seem  
to me, however, that it will be rare to find a contractual breach  
which would be appropriate for such an award. ... In an action  
based on a breach of contract, the only link between the  
parties for the purpose of defining their rights and obligations  
is the contract. Where the defendant has breached the  
Century Services Corp. v. LeRoy  
contract, the remedies open to the plaintiff must arise from that  
Page 46  
contractual relationship, that “private law”,..... (at 207–208)  
As a general rule, punitive damages are rightly refused in most  
commercial cases. However, where the actionable wrong is markedly  
divergent from the general standard of business morality and where the  
totality of the award for compensatory (including aggravated) damages is not  
sufficient to punish and deter, the trial judge is entitled to consider an award  
of punitive damages: Stewart v. Canada Life Assurance Co. (1994) 132  
N.S.R. (2d) 324; 376 A.P.R. 324; 118 D.L.R. (4th) 67 (C.A.), per Pugsley, J.A.,  
for the court at p. 83 [D.L.R.]. [At paras. 578; emphasis added.]  
(See also this court’s decision in Shanahan v. Turning Point Restaurant Ltd. 2012  
BCCA 411.)  
[96] The Court in Vorvis also adopted the suggestion in the American  
Restatement on the Law of Contracts (Second) that “Punitive damages are not  
recoverable for a breach of contract unless the conduct constituting the breach is  
also a tort for which punitive damages are recoverable.” (My emphasis.) In  
subsequent cases, the Supreme Court of Canada modified this principle to require  
only that an independent wrong of some kind be shown: see Whiten at paras. 79-82;  
Atlantic Lottery Corp. Inc. v. Babstock 2020 SCC 19 at para. 63. It is difficult to fit  
this case, a foreclosure proceeding, into that principle, and counsel made no  
argument based on Vorvis.  
[97] In Whiten, the Court rejected a “categorical” approach to punitive damages,  
although Binnie J. for the majority noted that in practice, punitive damages would be  
largely restricted to cases of intentional torts or breach of fiduciary duty. (At  
para. 67.) The Court acknowledged that the underlying objective of such damages  
was “punishment (in the sense of retribution), deterrence of the wrongdoer and  
others, and denunciation (or, as Cory J. put it in Hill [v. Church of Scientology of  
Toronto [1995] 2 S.C.R. 1130], at para. 196, they are ‘the means by which the jury or  
judge expresses its outrage at the egregious conduct’).” (At para. 68.)  
[98] At the same time, the Court recognized that since criminal law is the primary  
vehicle of punishment, punitive damages should be resorted to “only in exceptional  
cases and with restraint.” With respect to the factor of proportionality, Binnie J. noted  
Century Services Corp. v. LeRoy  
Page 47  
a list of factors that can be helpful in determining the level of blameworthiness of the  
conduct in question. These included whether the misconduct was planned and  
deliberate; whether the defendant [wrongdoer] persisted in it over a lengthy period of  
time; whether the defendant concealed or attempted to conceal its conduct; whether  
it profited therefrom; and whether it was aware that it was doing wrong. Conversely,  
the degree of vulnerability of the plaintiff may be relevant, although as the Court  
noted, this factor militates against the award of punitive damages in most  
commercial situations. (At para. 115.)  
[99] It will be recalled that in this case, the trial judge found that Century had acted  
“recklessly” in including the Contested Charges in TLT’s loan account. As far as the  
improvident auction is concerned, PWC, acting as Century’s agent, was in charge,  
although Century “was exercising significant de facto control over the liquidation.” (At  
para. 116.) The judge concluded that the standard of commercial reasonableness  
had not been met but did not describe PWC’s conduct in organizing the auction as  
anything worse than commercially unreasonable. But taking these items together  
with the ‘inflation’ of TLT’s indebtedness by adding interest seems to have been the  
final straw for the trial judge. I reproduce again paras. 179 and 180 of her reasons:  
Of course, as discussed above, courts will rarely interfere with a bargain  
freely made. However, in this case, calculating the redemption amount as  
including interest at the contractual rate would result in a significant injustice.  
As Century points out, there is “nothing sinister or fraudulent about posting a  
charge [that is] later questioned by a party or disallowed by a court”. But this  
is not a case of a mortgagee making a calculation error or arising out of an  
honest dispute about the construction of the material contract provisions. It is  
not a mere breach of contract. Century gave no consideration to the actual  
language of the TLT Loan Agreement before the Contested Charges were  
posted and was reckless in this regard. Rather than checking the actual  
language of the TLT Loan Agreement, Century followed its standard practices  
concerning the posting of charges, including charges directly benefiting  
Century. It was indifferent as to whether those practices conflicted with the  
terms of the TLT Loan Agreement. This is wrongful conduct that cannot be  
countenanced.  
Further, the fact that a high contractual interest rate can serve to insulate a  
lender from challenges to its claims regarding the amount outstanding cannot  
be overlooked. A mortgagor who questions the correctness of a mortgagee’s  
payout statement is placed in a difficult situation if the only options are to pay  
an amount the mortgagor believes is incorrect or embark on years of  
protracted litigation while the amount owing exponentially increases as a  
Century Services Corp. v. LeRoy  
Page 48  
result of a high contractual interest rate. That result may be acceptable on  
freedom of contract grounds in some circumstances, but where the amount  
owing according to the mortgagor is inflated to the mortgagor’s benefit as a  
result of the mortgagor’s recklessness, public policy considerations weigh in  
favour of exercising the equitable jurisdiction to decline to calculate a  
redemption amount at the contractual interest rate. A departure from the  
contractual interest rate is warranted in these exceptional circumstances.  
[Emphasis added.]  
[100] I have already expressed the view that the judge erred in purporting to  
exercise an equitable jurisdiction to disallow the contractually agreed-upon rate of  
interest. I am also of the view that charging this rate does not qualify as misconduct  
of the kind and degree that should be punished or deterred by an award of punitive  
damages. In this case, punitive damages would be intended only to punish or deter  
the improvidence in auctioning TLT’s equipment and Century’s ‘recklessnessin  
adding the Contested Charges to TLT’s loan account. The Charges have now been  
reversed and the ‘loss’ due to improvidence on PWC’s part will be deducted, so that  
Century will not profit as a result. In all the circumstances including the fact that  
punitive damages were not sought by Ms. LeRoy in her pleadings I am not  
persuaded such an award would be appropriate.  
Disposition  
[101] Obviously, it is time to bring this proceeding to an end, and in as simple a way  
as possible. I would encourage the parties to try to reach an agreement on a  
redemption amount that will not entail more time and money especially since  
Ms. Leroy’s guarantee is a limited recourse one, such that any indebtedness beyond  
the value of the Duncan property will be only of academic interest. Failing  
settlement, the matter must be remitted to the Supreme Court of British Columbia  
and Century would have to prepare, at its own cost, an accounting of the principal  
amount now outstanding under TLT’s loan, after deduction of the amounts of the  
Contested Charges, the $450,000 and any other payments received on TLT’s  
account from later sales, etc. Any additions to that account that were not reflected in  
Ms. Potgieter’s report would have to be considered by the judge or master. Interest  
at the contractual rate on this principal amount should then be calculated from the  
date of demand (September 23, 2008) in accordance with the terms of the  
Century Services Corp. v. LeRoy  
Page 49  
guarantee. Subject to the foregoing, the master or judge hearing the application  
would have the usual discretion in such cases to impose such other terms for  
redemption as seem appropriate, including fixing a time for redemption.  
[102] On the foregoing basis, I would allow the appeal, set aside the trial judge’s  
order and, if the parties do not agree otherwise, remit to the court below the  
calculations of the redemption amount and related matters to be determined in  
accordance with these reasons.  
The Honourable Madam Justice Newbury”  
I agree:  
The Honourable Mr. Justice Fitch”  
I agree:  
The Honourable Madam Justice Horsman”  

Top Judgements:
Saskatoon Co-operative Association Limited v United Food and Commercial Workers | Aug 15, 2022
Old Lakeshore Inc. v City of Burlington | Sep 2, 2022
Tietz v. Affinor Growers Inc. | Sep 13, 2022
Efficiencyone (E1) | Sep 6, 2022
President's Choice Bank v. The Queen | Jul 19, 2022
First Global Data Ltd | Sep 15, 2022
Rayonier v Unifor, Locals 256 and 89 | Aug 11, 2022
Alberta Workers’ Compensation Appeals Commission | Decision No. 2021-0334 | Jul 14, 2022
Metrowest Developments Ltd v Flynn Canada Ltd | Sep 14, 2022
R. v. Cameron | Jul 15, 2022
Functional Servicing and Stormwater Management | Jul 28, 2022
101034761 Saskatchewan Ltd. v Mossing | Aug 24, 2022
Waste Control Services Inc. v International Union of Operating Engineers, Local No. 115 | Aug 12, 2022
RJM56 Holdings Inc. c. Bazinet | Aug 17, 2022
Sherwood v The Owners, Strata Plan VIS 1549 | Aug 9, 2022
WCAT Decision A2001487 | Aug 8, 2022
City of Hamilton v Ontario Water Employees’ Association | Sep 12, 2022
Century Services Corp. v. LeRoy | Jul 8, 2022
United Food and Commercial Workers, Local 175 v Metro Ontario Inc. | Jul 4, 2022
Langmaid’s Island Corporation v Lake of Bays | Sep 12, 2022
WCAT Decision A2102416 | Jul 22, 2022
Inquiry about McAbee Fossil beds | Jul 14, 2022
1088558 Ontario Inc. v. Musial | Sep 16, 2022
Biogen Canada Inc. v. Pharmascience Inc. | Aug 8, 2022
CIC Management Services Inc. v City of Toronto | Jul 21, 2022
Bonterra Energy Corp v Rosells’ Enterprises Ltd | Aug 31, 2022
WCAT Decision A2100606 | Aug 17, 2022
Leffler v Aaron Behiel Legal Professional Corporation | Jun 30, 2022
Espartel Investments v. MTCC No. 993 | Aug 19, 2022
Onespace Unlimited Inc. v. Plus Development Group Corp. | Sep 19, 2022
Professional Institute of the Public Service of Canada v. Canada Revenue Agency | Jun 23, 2022
Community Savings Credit Union v. Bodnar | Jul 29, 2022
Galperti SRL v F.I.A.L. Finanziaria Industrie Alto Lario S.P.A | Jun 30, 2022
WCAT Decision A2102352 | Jul 6, 2022
WCAT Decision A2102306 | Jul 25, 2022
Thrive Capital Management Ltd. v. Noble 1324 Queen Inc. | Jul 12, 2022
Questor Technology Inc v Stagg | Sep 8, 2022
MediPharm v. Hexo and Hwang | Jul 25, 2022
Immunization rates & vaccine hesitancy | Aug 17, 2022
Morabito v. British Columbia Securities Commission | Aug 12, 2022
Killeleagh v Mountain View County (Development Authority) | Aug 24, 2022
Quality Control Council v Stanley Inspection Canada Ltd. | Sep 9, 2022
British Columbia Investment Management Corporation | Aug 17, 2022
Abbeylawn Manor Living Inc. v Sevice Employees International Union, Local 1 Canada | Jul 5, 2022
Windrift Adventures Inc. et al. v. Chief Animal Welfare Inspector | Aug 18, 2022
Irani and Khan v. Registrar, Motor Vehicle Dealers Act | Jul 14, 2022
CP REIT Ontario Properties Limited v City of Toronto | Aug 12, 2022
Potash Corporation of Saskatchewan Inc. v. The Queen | Jul 7, 2022
Wong v. Pretium Resources Inc. | Jul 22, 2022
Labourers' International Union of North America, Local 183, Union v Mulmer Services Ltd. | Aug 5, 2022
City of Mississauga v. Hung | Sep 22, 2022
Secretary of the Ministry of Health v The New South Wales Nurses and Midwives' Association (28 September 2022)
Orewa Community Church v Minister for Covid-19 Response (16 August 2022)
Yeshiva College Bondi Limited v NSW Education Standards Authority (15 August 2022)
Moreland Planning Scheme Amendment C208more | Heritage Nominations Study | Panel Report | 15 July 2022
New Zealand Tegel Growers Association Incorporated | 2 August 2022
Farrow-Smith and Comcare (Compensation) | 26 September 2022
Evolution Fleet Services Pty Ltd v Allroads Plant Pty Ltd | 14 September 2022
656621 B.C. Ltd. v David Moerman Painting Ltd. | Sep 27, 2022
Fraser Valley Packers Inc. v Raiwal Holdings Ltd | Sep 26, 2022
Parmar v Tribe Management Inc. | Sep 26, 2022
DES Studio inc. c. Shuchat | Sep 26, 2022
Van-Kam Freightways Ltd. v Teamsters Local Union No. 31 | Sep 28, 2022
Rogers Communication Inc. v British Columbia | Sep 28, 2022
Alderbridge Way GP Ltd. | Sep 28, 2022

© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission