Court of Appeal for Ontario

Date: 2024-10-21 Docket: M55320, M55407 (COA-24-CV-0850) & M55319 (COA-24-CV-0851)

Before: Zarnett J.A. (Motions Judge)

Docket: M55320, M55407 (COA-24-CV-0850)

Between: Chris Jamie Sapusak, Plaintiff (Respondent/Responding Party/Moving Party by way of cross-motion)

And: 9706151 Canada Ltd., 11037315 Canada Inc., Roy D’Mello, Alice D’Mello, Annageldi Durdyev, Eric Saldana, Davinder Singh, Amritpal Singh Kullar, 1152729 B.C. Ltd., Bangia Property Services Ltd., Apex Financial Corp., 1824231 Ontario Inc., Parduman Kassiedass, Canguard Group Limited*, Harcharan Kaur, First National Holding Group and Thomas Hipsz, Defendants (Appellant*/Moving Party*/Responding Party by way of cross-motion*)

Docket: M55319 (COA-24-CV-0851)

And Between: Chris Jamie Sapusak, Plaintiff (Respondent/Responding Party)

And: 9706151 Canada Ltd., 11039342 Canada Inc.*, Roy D’Mello, Alice D’Mello, Annageldi Durdyev, Eric Saldana, Davinder Singh, Amritpal Singh Kullar, 1152729 B.C. Ltd., Bangia Property Services Ltd., Apex Financial Corp., 1824231 Ontario Inc., Parduman Kassiedass, Canguard Group Limited, Harcharan Kaur, First National Holding Corp. and Thomas Hipsz, Defendants (Appellant*/Moving Party*)

Counsel: Granville Cadogan, for the moving party (M55320) and the responding party by way of cross-motion (M55407) Canguard Group Limited Karanpaul Singh Randhawa, for the moving party (M55319) 11039342 Canada Inc. Neil Colville-Reeves, for the responding party (M55319 & M55320) and the moving party by way of cross-motion (M55407) Chris Jamie Sapusak

Heard: October 11, 2024

Endorsement

Introduction

[1] Canguard Group Limited (“Canguard”) and 11039342 Canada Inc. (“11039”) each move, under r. 63.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for a stay of orders granted by Ricchetti J. (the summary judgment judge) pending their appeals of those orders. [1] The challenged orders, made July 22, 2024, expunged a mortgage in favour of Canguard from the title to certain property in Caledon, Ontario [2] and a mortgage in favour of 11039 from the title to certain property in Bradford, Ontario. [3]

[2] The moving parties’ central contention is that their appeals will be moot if the challenged orders are registered on title.

[3] For the reasons that follow, I dismiss the motions for a stay, subject to a term applicable in each case that the responding party, Mr. Sapusak, not transfer ownership of the property in question pending final disposition of the appeal (the “no-transfer term”). The moving parties’ contention that they will suffer irreparable harm because the appeals will become moot upon registration of the challenged orders is unpersuasive especially in light of the no-transfer term – if the appeals succeed, the mortgages may be re-registered. The grounds of appeal are weak, and the balance of convenience favours refusing the stay subject to the no-transfer term. [4]

Background and Context

[4] The motions for summary judgment were brought by the responding party, Mr. Sapusak, in two actions and were heard together. The subject of one action was the property in Caledon and the subject of the other was the property in Bradford. Mr. Sapusak’s claim in each action was that he had been victimized by fraudulent transactions, resulting in him being replaced as each property’s registered owner and in an invalid mortgage encumbering the title to each property.

The Caledon Property and Canguard’s Mortgage

[5] Canguard’s mortgage was registered on title to the Caledon property. It was in the face amount of $400,000 and was purportedly granted to Canguard by an entity known as Bangia Property Services Ltd. (“Bangia”). On September 15, 2023, prior to the hearing of the summary judgment motions, Bangia’s pleadings were struck and a judgment was issued removing it as registered owner and directing that Mr. Sapusak be registered as owner of the Caledon property. No appeal is taken from that order.

[6] The summary judgment judge noted that Canguard was not even incorporated at the time its mortgage was registered and that, as a foreign corporation, it was required to be but was not registered to do business in Ontario. He found there to be no evidence that Canguard ever advanced any money under its mortgage. He reviewed various lawyers’ statements of adjustments and reporting letters but found they did not provide any evidence that Canguard advanced any money used for the purchase of the Caledon property. He stressed that Canguard, despite its obligation to put its best foot forward on a motion for summary judgment, did not file responding materials on the motion, did not serve an affidavit of documents as required, and did not conduct any cross-examination of Mr. Sapusak. He found that Mr. Sapusak had established indicia that were numerous, clear and overwhelming that Canguard’s mortgage was a fraud, and that Canguard led no evidence to rebut this. He rejected the argument that a default judgment that Canguard obtained against Bangia, in a separate action to which Mr. Sapusak was not a party, was evidence of the validity of the Canguard mortgage that would bind Mr. Sapusak.

[7] The summary judgment judge declared the Canguard mortgage void and directed it expunged from the register for the Caledon property. Canguard appeals that order.

The Bradford Property and the 11039 Mortgage

[8] 11039’s mortgage was registered against the title to the property in Bradford and was purportedly granted to it by an entity known as First National Holding Group (“First National”) to finance First National’s acquisition of the Bradford property under a power of sale.

[9] The summary judgment judge found that the First National purchase was a “sham or fraudulent transaction”. As against First National, he ordered its interest in the Bradford property expunged and directed the Registrar of Land Titles to register Mr. Sapusak as its owner. No appeal is taken from that order.

[10] The summary judgment judge went on to find that the mortgage to 11039 was part of the “sham or fraudulent transaction” and was invalid as no moneys were advanced under it. 11039 had no bank account, and there were no financial documents produced showing the source, transfer or distribution of any monies to or from 11039. As he stated: “No source documents. No distribution documents. Nothing.” He noted that 11039 failed to produce any evidence in accordance with the court’s timetables for doing so. He analysed late-filed evidence on behalf of 11039 and found it in large part did not even attempt to show that 11039 ever advanced any money as a mortgage loan regarding the Bradford property. To the extent that the evidence even purported to show this, he rejected it as incredible.

[11] The summary judgment judge declared 11039’s mortgage void and directed the Registrar of Land Titles to expunge it from title to the Bradford property. 11039 appeals that order.

Analysis

The Test for a Stay

[12] The test for staying an order pending appeal requires the court to consider the following three factors: (i) the merits of the appeal to ensure, on a preliminary assessment, that there is a serious question to be tried; (ii) whether the moving party would suffer irreparable harm if the stay were refused; and (iii) the balance of convenience, that is, which of the parties would suffer greater harm from the granting or refusal of the stay pending a decision on the appeal: Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), at pp. 676-77, citing RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at p. 334.

[13] The three factors are not watertight compartments, but rather interrelated considerations such that the strength of one may compensate for the weakness of another: Circuit World Corp., at p. 677. The overarching test is whether granting the stay is in the interests of justice: Dhatt v. Beer, 2020 ONCA 545, 449 D.L.R. (4th) 263, at para. 15.

Application of the Test

The Merits

[14] Canguard argues that it has raised serious issues for appeal because: (i) the summary judgment judge proceeded in the absence of evidence from Mr. Sapusak; (ii) he misinterpreted the effect of the power of sale provisions of the Mortgages Act, R.S.O. 1990, c. M.40, and s. 78 of the Land Titles Act, R.S.O. 1990, c. L.5; (iii) he used, as evidence against Canguard, deemed admissions of Bangia arising from its default in defending Mr. Sapusak’s claim; and (iv) he failed to draw the inference that money must have been advanced in the transactions Mr. Sapusak complains about, since when Mr. Sapusak owned the Caledon property it was subject to mortgage debt that was subsequently discharged.

[15] These grounds are weak.

[16] First, as the summary judgment judge noted, there were affidavits from Mr. Sapusak in the record; Canguard could have cross-examined on them.

[17] Second, it is not apparent how the provisions of the Mortgages Act or the Land Titles Act assist Canguard in light of the findings that its mortgage was fraudulent and that no funds were advanced under it. If, as the summary judgment judge found, Canguard was part of a fraudulent scheme to create a mortgage under which nothing was advanced, Canguard had actual notice of the deficiency in the mortgage and it would not be entitled to the protection of s. 78(4) of the Land Titles Act. That provision protects bona fide parties for value who take title without notice of an interest or claim that differs from what is shown on the register: Martin v. 11037315 Canada Inc., 2022 ONCA 322, 469 D.L.R. (4th) 123, at para. 66. As for the Mortgages Act, if nothing was advanced under the mortgage, nothing was owing under it, and in any event, Canguard was not enforcing a power of sale.

[18] Third, the summary judgment judge did not use deemed admissions of Bangia against Canguard. He rejected the argument of Canguard that Mr. Sapusak was bound by Canguard’s default judgment against Bangia, noting that Bangia had defaulted in defending Mr. Sapusak’s claim as well.

[19] As for the fourth ground of appeal that some inference of an advance of money should have been drawn from the discharge of previous mortgages, the question was whether Canguard advanced funds. The summary judgment judge made a finding of fact that nothing was advanced by Canguard, noting in particular the failure of Canguard to offer any evidence despite the obligation on a motion for summary judgment to put its best foot forward: Ramdial v. Davis, 2015 ONCA 726, 68 R.F.L. (7th) 287, at para. 32. The finding of a summary judgment judge that there is no genuine issue requiring a trial is one that is entitled to deference on appeal: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 80-81.

[20] On this motion, Canguard filed an affidavit that included a statement that Canguard did advance money, appending documents that purported to confirm this. No explanation was provided as to why that evidence was not available or proffered for the summary judgment hearing, in other words, why it would be admissible as fresh evidence on the appeal.

[21] 11039 raises a number of grounds of appeal, including: (i) that the summary judgment judge failed to consider trust ledgers which show the provision of almost $750,000 by 11039 to its mortgagor, First National; (ii) that Mr. Sapusak’s title was extinguished by the exercise of a power of sale by a different mortgagee; (iii) that the summary judgment judge should not have relied on the Fraudulent Conveyances Act, R.S.O. 1990, c. F.29; and (iv) that in various ways the summary judgment judge relied on evidence not properly before the court.

[22] I view these grounds as weak.

[23] The assertion that there was evidence that 11039 advanced funds flies in the face of the summary judgment judge’s finding. He emphasized the complete failure of 11039 to produce any documents that showed any funds were advanced by it. Indeed, it never had a bank account. The affidavit evidence it filed on the summary judgment hearing purportedly to address this question was rejected by the summary judgment judge as lacking in credibility. That finding will be accorded significant deference on appeal.

[24] Indeed, the documents that 11039 points to on this motion to say there was evidence of an advance of funds by 11039 do not appear to have been proven, or even explained, by anything properly in evidence. They appear to be documents referred to in an affidavit of documents of First National, sworn to by an individual (Mr. Kassiedass) who, according to the summary judgment judge, did not attend to be examined when ordered and then “could no longer be found”.

[25] As for the other grounds of appeal, the effect of an exercise of a power of sale by a different mortgagee could not arguably support the validity of 11039’s mortgage if it was fraudulent or if no money was advanced under it. And the summary judgment judge relied on multiple bases for his fraud conclusion, citing significant unchallenged and unresponded to evidence to reach it.

Irreparable Harm

[26] Both Canguard and 11039 submit that they will suffer irreparable harm if a stay is not ordered because the orders expunging their mortgages from title are in the nature of vesting orders which, when registered, preclude their appeals from proceeding and render them moot. They rely on Regal Constellation Hotel Ltd. (Re) (2004), 71 O.R. (3d) 355 (C.A.), at para. 33.

[27] I do not accept this argument, for two reasons.

[28] First, Regal Constellation Hotel was dealing with a vesting order under s. 69 of the Land Titles Act, which applies to an “order of a court of competent jurisdiction [whereby] … registered land or any interest therein is stated by the order … to vest, be vested or become vested in, or belong to … any person other than the registered owner”.

[29] The orders of the summary judgment judge respecting First National and Bangia are vesting orders. But there is no appeal from those orders. The orders of the summary judgment judge which Canguard and 11039 challenge do not state that any interest vests or is to be vested, let alone in a person who is not the registered owner. They provide that the mortgages of Canguard and 11039 are expunged from title. Counsel for Mr. Sapusak expressly takes the position they are not vesting orders and that he does not and will not take the position that the appeals will be moot upon registration of the orders. If the appeals are allowed, he will not oppose the re-registration of the mortgages.

[30] True enough, if the orders are registered, and Mr. Sapusak then transferred ownership of a property while the appeal concerning the mortgage that was registered on its title was pending, he would not be in a position to allow re-registration of the mortgage. The moving parties did not seek to examine or cross-examine Mr. Sapusak on what the possibility of a transfer of ownership might be. Mr. Sapusak’s counsel in any event indicated that I could order him not to transfer ownership pending disposition of the appeals. I am prepared to impose the no-transfer term as a condition of dismissing the motions.

[31] Second, other than the unpersuasive argument that their appeals will be moot, neither Canguard nor 11039 contended there was any basis on which the refusal of a stay would cause them irreparable harm. It was their onus to show irreparable harm. Indeed, any argument that they would suffer irreparable harm assumes the converse of what the summary judgment judge found, namely, that neither Canguard nor 11039 advanced any money under its mortgage.

The Balance of Convenience

[32] In my view, the balance of convenience also favours denying the stay. If the properties remain encumbered by the mortgages that were found to be fraudulent, Mr. Sapusak will be limited in his ability to raise funds to pay taxes or remediate the properties. This outweighs any harm to Canguard or 11039, who other than their assertion that the appeals will become moot, led no evidence of harm that would result from the refusal to stay the orders under appeal. If the appeals succeed and, in the meantime, Mr. Sapusak has put new financing on the properties, the re-registered mortgages may have lost some of their priority. But neither Canguard nor 11039 led any evidence of the values of the property or the likelihood that new financing would materially affect their security. It was their onus to do so.

Conclusion

[33] Given the weak grounds of appeal, the lack of irreparable harm especially if the no-transfer term is imposed, and the balance of convenience, it is not in the interest of justice to impose a stay pending appeal.

Disposition

[34] Canguard’s motion (M55320) is dismissed, subject to the term that pending the disposition of Canguard’s appeal, Mr. Sapusak shall not transfer ownership of the Caledon property.

[35] 11039’s motion (M55319) is dismissed, subject to the term that pending the disposition of 11039’s appeal, Mr. Sapusak shall not transfer ownership of the Bradford property.

[36] In accordance with the agreement of the parties, Canguard and 11039 shall each pay costs to Mr. Sapusak in the amount of $2,500 inclusive of disbursements and HST.

“B. Zarnett J.A.”

[1] The summary judgment judge’s reasons are reported at 2024 ONSC 4113. [2] 11 Royal Terrace Crescent, Caledon, Ontario. [3] 3284 4th Line, Bradford, Ontario. [4] Mr. Sapusak also brought a cross-motion (M55407) to strike the affidavit filed by Canguard on its stay motion. At the hearing, counsel for Mr. Sapusak indicated that his concerns about the affidavit did not need to be separately addressed. The cross-motion is accordingly dismissed as abandoned without costs.