Court of Appeal for Ontario
Hoy A.C.J.O., Lauwers and Benotto JJ.A.
BETWEEN
John Stawro
Plaintiff (Respondent)
and
Mayfield Holdings Inc. and Harpreet Sethi
Defendants (Appellants)
Olubunmi Ogunniyi, for the appellants
Amandeep Sidhu, for the respondent
Heard: September 12, 2016
On appeal from the order of Justice Patrick J. Flynn of the Superior Court of Justice, dated May 17, 2016.
1The appellants, Mayfield Holdings Inc. and Harpreet Sethi, are the owners of adjoining properties located at 3142 Mayfield Road and 3172 Mayfield Road in Brampton, Ontario. The respondent, John Stawro, is the assignee of the mortgages of each property.
2The original mortgagees, with respect to the property at 3142 Mayfield Road, which is the subject of the order under appeal, were Joseph and Frances Borg. They obtained a default judgment, in respect of the mortgage, on November 18, 2014. Eventually the Borgs assigned the mortgage on 3142 Mayfield Road to Finance Mart Corp. (“FMC”), which was also the mortgagee on 3172 Mayfield Road. By transfers of charge dated February 4, 2016, FMC then transferred both mortgages to the respondent.
3The motion judge granted the order under appeal for a writ of possession in favour of the respondent respecting 3142 Mayfield Road on May 17, 2016, to be executed if the appellants failed to make the following payments to the respondent:
- $45,000.00 on or before May 31, 2016
- $15,000.00 on or before June 4, 2016
- $15,000.00 on or before July 4, 2016; and
- $15,000.00 on or before August 4, 2016
4The appeal is dismissed for the following reasons.
The Factual and Procedural Context
5In an agreement made March 20, 2015, FMC and Mayfield Holdings Inc. agreed to a series of recitals in respect of both mortgages:
Whereas the FMC Mortgage [respecting 3172 Mayfield Road] is in default and the current amount due under the FMC mortgage is $747,688.53 as set out in Schedule “A” attached.
Whereas the Borg mortgage [respecting 3142 Mayfield Road] went into default and Borg commenced power of sale proceedings against the borrowers and obtained judgment.
Whereas in consideration for full payment of the Borg Mortgage, Borg assigned its mortgage to the lender in the current amount of $549,520.54 as set out in Schedule “B” attached.
Whereas the borrowers in consideration for the lender agreeing to take an assignment of the Borg mortgage has agreed to pay an assignment fee of $35,000.00.
Whereas the new principal amount under both mortgages is now ($549,520.54 + $747,688.53 + $35,000.00 = $1,332,209.07) as at March 20, 2015.
Whereas the FMC Mortgage accrues interest at a rate of 12 percent per annum, calculated monthly and the Borg Mortgage accrued interest at a rate of 8.4 percent per annum, calculated monthly, the lender and [the appellants] have agreed to an interest rate of 12 percent per annum, calculated monthly for both mortgages.
6The March 20, 2015 agreement had the effect of increasing the interest rate of the Borg mortgage on 3142 Mayfield Road from 8.4% to 12%, which was the rate of interest on the FMC mortgage on 3172 Mayfield Road. The recalculated amounts on the mortgages reflected past defaults, accrued costs and additional fees.
7By transfers of charge dated February 4, 2016, FMC transferred the mortgages on the subject property and on 3172 Mayfield Road to the respondent. The record contains a document entitled “Assignment Agreement,” dated February 4, 2016, between 1727300 Ontario Inc., identified as the lender, and Mayfield Holdings Inc. and Sethi, identified as the borrowers. There is no signature line for 1727300 Ontario Inc., but the evidence is that it is the respondent’s corporate vehicle. By direction concerning title, the transfer of charge for both 3142 Mayfield Road and 3172 Mayfield Road was directed to the respondent. The Assignment Agreement provides:
The 1727300 Ontario Inc. (sic) hereby agrees to take an assignment of the mortgages registered in the name of Finance Mart Corp., on the above captioned Mortgaged Property, by payment of the sum of $1,478,679.47 on February 4, 2016 on the following terms (the “Assignment”):
The Assignment shall be for a term of six months from February 4, 2016 to August 4, 2016.
The borrower shall be [charged] a legal and transfer fee of $21,320.53 in consideration for the Assignment.
The borrower shall be [charged] interest of 12% per annum, payable monthly of $15,000.00 per month, commencing March 4, 2016.
8Upon further default, the respondent moved for a writ of possession based on the default judgment in respect of 3142 Mayfield Road that had been granted in favour of the Borgs. The matter came before the motion judge, who made the May 17, 2016 order under appeal. The figures in the order came from the Assignment Agreement.
9The mortgage on 3142 Mayfield Road was in default as was the mortgage on 3172 Mayfield Road. The respondent also pursued relief in respect of the mortgage on 3172 Mayfield Road, and on June 10, 2016, Price J. gave a similar conditional order for a writ of possession. His order provided:
On consent to paragraph one (1) only, the defendants shall pay the sum of $30,000.00 to Keyser Mason Ball LLP, in trust on or before June 30, 2016 at 5:00 p.m.
The amount outlined in paragraph one (1) above is in parallel, and not an addition, to the order of Justice Flynn dated May 17, 2016 in the action bearing court file no.14-49410; Hamilton registry.
Should the defendants fail to comply with paragraph one (1) above, the plaintiff is granted leave to issue a writ of possession with respect to the property described as in Schedule “A” [which identified 3172 Mayfield Road].
10The appellants admit they made no payments in response to either order.
The Appellants’ Arguments
11The appellants make a number of arguments.
12The appellants argue that the order under appeal must be set aside because the reasons are wholly inadequate to have permitted the issuance of the writ of possession at issue in this appeal. They submit that the reasons do not fully address all of the arguments that were put to the motion judge. While it would have been preferable for the reasons to refer to the arguments, however briefly, that is not an absolute requirement: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at paras. 22-23. This is a simple case with a clear record, and it is not difficult to piece together what happened and to reach a decision. Accordingly, this is not a ground on which the appeal should be allowed.
13Further, the arguments not addressed by the motion judge are without merit. First, the appellants argued the land was subject to the Farm Debt Mediation Act, S.C. 1997, c. 21, since it is zoned agricultural, and that the respondent’s failure to comply with the notice requirements under s. 21 of the Act is fatal. There is, however, no evidence that the appellants are farming the land, which is a necessary element to succeed on this ground: R.S.W.H. Vegetable Farms Inc. v. Bayerische Landesbank Girozentrale, [2009] O.J. No. 4284 (S.C.), at para. 85.
14Second, the appellants argued the new mortgage terms offend s. 8 of the Interest Act, R.S.C., 1985, c. I.15, and rely on the case of P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 331, 126 O.R. (3d) 108. However, this is not the case. There is nothing in the March 20, 2015 agreement or in the Assignment Agreement that has the effect of imposing a higher rate on the arrears owing than on the amount owing that is not in arrears, which is a required element for the appellants to succeed on this ground: Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18, [2016] S.C.J. No. 18, at para. 25-26. Furthermore, the increased interest rate on the Borg mortgage on 3142 Mayfield Road was agreed to as the price of the lender’s forbearance on execution. There is nothing about such a negotiation that offends s. 8 of the Interest Act.
15We turn now to the more substantive arguments.
16The appellants argue the effect of the Assignment Agreement was to constitute a new mortgage, effectively rendering the default judgment obtained by the Borgs a nullity, and therefore compelling the respondent to commence a new action.
17We would not give effect to this argument. The terms of the Assignment Agreement do not constitute a new mortgage but only acknowledge the existing mortgages and their continued state of default. The March 20, 2015 agreement used the expression: “the new principal amount under both mortgages is now ...”, and the Assignment Agreement used the expression: “agrees to take an assignment of the mortgages”; these show the parties were working with the security provided by the original mortgages and were only agreeing to amend certain terms.
18The appellants also argue the new terms are unconscionable. However, the interest rate on the Borg mortgage, which increased from 8.4% to 12%, is nowhere near the criminal interest rate. There is nothing in the dealings between the parties that would give rise to an argument of unconscionability. In this case, the appellants consented to the change in terms and were experienced borrowers: see Smit v. Pluim 2015 ONSC 7945 at paras. 17, 22, and 28. The respondent states that this matter was not argued before the motion judge, but we would reject the argument in any event.
19Finally, the appellants argue the motion judge made a fatal legal error when he tied the two mortgages together and effectively required payments to be made on both mortgages as a condition of withholding the writ of possession on 3142 Mayfield Road.
20The respondent submits that even if the motion judge erred in effectively requiring one payment for the two properties, the effect of the order of Price J. respecting 3172 Mayfield Road corrected the problem with the motion judge’s order in this case. We would not give effect to the respondent’s argument. The order of Price J. dealt with 3172 Mayfield Road alone, which is the subject of other proceedings. It did nothing to amend the order under appeal, which relates to 3142 Mayfield Road.
21Even so, we reject the appellants’ argument that the motion judge erred in tying together the two mortgages in his order. As we see it, the motion before the motion judge was based on the evidence, including the continuing default on the Borg mortgage. The respondent was therefore manifestly entitled to a writ of possession respecting 3142 Mayfield Road. Based on arguments on the evidence in the record, as a matter of his discretion the motion judge gave the appellants one last opportunity to redeem on terms that might appear steep, but were the very terms the appellants had agreed to in the Assignment Agreement, and about which they cannot be heard to complain. Seen in that light the appellants did not suffer a prejudice through the order, but obtained a benefit to which they were not entitled as a matter of right. The motion judge did not err in making the order.
Disposition
22The appeal is dismissed with costs to the respondent payable, as agreed, in the amount of $5,000, inclusive of disbursements and taxes.
Released: September 29, 2016 “AH” “Alexandra Hoy A.C.J.O.”
“P. Lauwers J.A.”
“M.L. Benotto J.A.”
