COURT OF APPEAL FOR ONTARIO
MacPherson, van Rensburg and Miller JJ.A.
BETWEEN
Michelle Murphy
Applicant (Respondent)
and
John Wheeler
Respondent (Respondent)
Kevin Sherkin and Ryan Wozniak, for the appellant 1269825 Ontario Inc.
Michelle Murphy, acting in person
James McReynolds, for the respondent Victoria Wood (Main Square) Inc.
Heard: February 23, 2016
On appeal from the judgment of Justice Sherrill M. Rogers of the Superior Court of Justice, dated April 21, 2015.
ENDORSEMENT
1The appellant 1269825 Ontario Inc. (“126”) appeals the judgment of Rogers J. of the Superior Court of Justice dated 21 April 2015 ordering, inter alia, the payment of $297,015.12 plus interest to the respondent Victoria Wood (Main Square) Inc. (“VW”). The appellant also appeals the costs order made by the motion judge in favour of VW in the amount of $22,996 and in favour of Michelle Murphy in the amount of $9,040.
2The judgment at issue was made in matrimonial proceedings between Michelle Murphy and John Wheeler. In particular, the court was addressing claims to the proceeds of sale of their matrimonial home in Maple, Ontario. John Wheeler was the registered owner of the home.
3The matrimonial home had two mortgages on it. The first mortgage was granted by the Bank Nova Scotia for $1,200,000. It has been paid out in its entirety. The second mortgage was granted by 126 for $397,000 with interest of 0%. It was registered on title on July 30, 2010.
4There was a series of amending agreements to 126’s second mortgage. The main one, the Second Amending Agreement on April 27, 2012, increased the principal by $97,785.74 to $494,785.74 and set the interest rate at 11.75%. None of these amendments was registered on title. Michelle Murphy had consented to all of the mortgages and the amending agreements.
5After the parties separated, the matrimonial home was placed on the market. A closing was scheduled for June 3, 2013 with a sale price of $1,999,900. Pursuant to its mortgage, 126 prepared a discharge statement seeking payment of $599,136.74.
6Murphy brought an emergency motion which was heard on May 31, 2013. The order arising from the motion provided for payment from the proceeds of sale of the matrimonial home to discharge the first mortgage and to pay other expenses, and for payment of $259,500 to VW’s counsel in trust and of the balance of the proceeds into court, pending further order. The order discharged from title 126’s mortgage and VW’s writ of execution, thereby enabling the sale to be completed on June 3, 2013.. The order provided that it was without prejudice to the rights of the parties and that the priorities of the parties to the funds paid in trust and into court were preserved.
7On November 14, 2014, the order of May 31, 2013 was amended so that 126 received $397,000 from the proceeds of the sale ($259,500 of which was to come from the trust account of VW’s counsel). The order stated that a motion could be brought to determine, among other things “126’s claims for interest under its mortgage registered against the matrimonial home” and “any and all claims to the proceeds of the sale held in court”.
8126 brought its motion which was heard by Rogers J. on April 2, 2015. The motion judge released her ruling on April 21, 2015. She ruled against 126’s claim for the additional funds (about $200,000) added to the mortgage by the unregistered amending agreements and for interest. She said:
The only amount that is secured under the registered mortgage is the principal amount of $397,000. No interest is owing on this registered document and no other advances fall into this secured category. This sum of $397,000, as paid out to 126 on November 14, 2014, is the total of monies secured under the registered mortgage.
9The appellant appeals on two grounds.
10First, the appellant contends that its claim for principal and interest based on the amended mortgage agreements trumps VW’s claim as an execution creditor of John Wheeler (whose interest arose after the second mortgage was registered), and entitles it to receive the full amount of its claim, $599,136.74.
11We do not accept this submission. The submission is inconsistent with the position taken before the court in a hearing leading up to the hearing before the motion judge. In the previous hearing, the appellant’s counsel (not current counsel), expressly submitted that only the $397,000 plus interest and costs was secured by the mortgage, and that the rest was unsecured. He stated, “all my client would be entitled to Your Honour, is whatever it can secure under that last mortgage registered on title.” The motion judge relied on this admission in her reasons; in our view, she was entitled to do so.
12Furthermore, in a separate action resulting in a default judgment against Wheeler, 126 as plaintiff claimed, under the heading Additional Funds Owing to the Plaintiff:
- Separate and apart from the funds due under its second mortgage, the Plaintiff is also due additional funds from the Defendant for the loan set out in paragraph 9 herein. [Emphasis added.]
The additional funds set out in paragraph 9 explicitly include the money advanced under the Second Amending Agreement. Accordingly, 126’s position in that action is antithetical to its position before the motion judge.
13Finally, we do not accept the appellant’s attempt to overcome the motion judge’s reasoning by relying on the doctrine of equitable mortgage discussed in Trang v. Nguyen (2011), 11 R.F.L. (7th) 105 (Ont. S.J.), aff’d 2012 ONCA 885.
14In the present case, the factual context (an unregistered mortgage from a party that already held a registered mortgage, 126’s admission earlier in these proceedings that its mortgage security applied to only the $397,000 plus interest and costs, 126’s opposite position in different proceedings, and the steep increase in interest rate from zero to 11.75 per cent), belies any serious foundation for an argument grounded in equitable mortgage.
15Second, the appellant contends that the motion judge erred by awarding costs to the respondent and to Murphy.
16We disagree. By August 14, 2014, 126 had received, on consent of the other parties, $397,000, precisely the full amount of its registered mortgage. Everything it has done since then in an attempt to obtain more money from these matrimonial proceedings has been unsuccessful. The costs awarded by the motion judge are deserved.
17The appeal is dismissed. The respondent VW is entitled to its costs of the appeal fixed at $12,800, inclusive of disbursements and HST.
“J.C. MacPherson J.A.”
“K. van Rensburg J.A.”
“B.W. Miller J.A.”