ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
O’DRISCOLL, CHAPNIK and SWINTON JJ.
B E T W E E N:
RAKEEM RAHIM, OMAR RAHIM and MOHAMED RAHIM
Applicants
(Respondents)
- and -
L-JALCO HOLDINGS INC.
Respondent
(Appellant)
Arlindo Aragao, for the Appellant/ Respondent/mortgagee
Philip I. Ulrich, for the Respondents/ Applicants/mortgagors
HEARD at Toronto: March 2, 2006
O’DRISCOLL J.: (Orally)
1The appellant, L-Jalco Holdings Inc., the mortgagee, appeals to this Court from the final order of Horkins J., dated March 18, 2005.
2Jurisdiction to bring the appeal is found in s.19(1)(a)(i) of the Courts of Justice Act, R.S.O. 1990, c.C.43, which states:
An appeal lies to the Divisional Court from,
(a) a final order of a judge of the Superior Court of Justice
(i) for a single payment of not more than $25,000.00 exclusive of costs.
3An application was launched in the Superior Court of Justice by the mortgagor seeking:
(a) an Order discharging a Charge registered in the Land Registry Office for the County of Lennox (29), Napanee, as Number 260461 between Rakeem Rahim, Omar Rahim and Mohamed Rahim as Chargors and L-Jalco Holdings Inc., as Chargee.
(b) an Order permitting payment into Court of the sum of $235,000.00 as security for payment of the Charge pending a hearing of this Application.
(c) Costs on a complete indemnity basis. …..”
4The appellant, L-Jalco, the mortgagee, is a State Farm Insurance Broker. The principal of the mortgagee is a State Farm Insurance agent. The mortgagee held a mortgage against the camp ground property of the respondents/mortgagors.
5At all times, the mortgagors had an obligation to maintain proper and sufficient insurance on the property. The mortgage came up for renewal in 2004. The mortgagors had insured the camp ground with a State Farm Homeowner’s Policy.
6According to the mortgagors, the principal of the mortgagee had been provided with the particulars of the State Farm Insurance Policy prior to funds being advanced and he knew the policy was a homeowner’s policy. The mortgagee claims that he only determined that the insurance was insufficient in October, 2004. After discussions to renew the mortgage ended, the principal of L-Jalco Holdings Inc. notified the mortgagors that he considered the mortgage to be in default due to insufficient insurance coverage.
7The mortgagors claimed that they requested a discharge statement and received no reply in November, 2004. A disputed discharge statement was delivered on December 16, 2004, one day before the balance due date. The statement contained additional charges associated with the alleged default. The mortgagors made an application to the Superior Court for an order discharging the mortgage, allowing payment into Court and costs. The mortgagors had not tendered any amount to the mortgagee at this point. According to the mortgagors, they had not done so because the mortgagee stated that it would not provide a discharge unless all funds in the statement were paid.
8Horkins J. heard the matter on March 18, 2005. The parties had submitted affidavits in support of their position. Neither party conducted cross-examinations. At the time of the hearing before Horkins J., the mortgagors had paid all principal and interest owing on the mortgage.
9The Motions Judge found that there was no default under the insurance provision of the mortgage and any alleged default had not been enforced correctly. Horkins J. did not allow the additional charges and legal fees claimed by the mortgagee.
10Charges that normally flow from a discharge were found to be payable by the mortgagors despite the “unfortunate and unreasonable behaviour of the mortgagee”. The Motions Judge held that other amounts claimed by the mortgagee were not proper charges and did not have to be paid by the mortgagors.
11Horkins J. stated:
5“… While I do not know exactly when the mortgagee received the declaration page, it is reasonable to assume that he would not have advanced the funds without proof of insurance.”
12The Motions Judge found that the mortgagee had not acted in good faith. She made a full indemnity cost award in favour of the mortgagors. The Motions Judge rejected the mortgagee’s argument that it had been successful in the proceeding because the judge had ordered payment of the usual mortgage charge items. She stated:
20“… This application was about the improper charges and the mortgagor was successful. Costs are fixed at $7,000.00, payable by the mortgagee to the mortgagor forthwith.”
21The amounts owing by the mortgagor to the mortgagee are to be set off against the cost award.”
13We have heard the submissions of counsel for the appellant and we are of the view that credibility was not a substantial issue at the hearing because the mortgagee chose not to make it an issue. The mortgagee had three (3) months to conduct cross-examination on the affidavit material, but chose not to do so.
14In our view, there were no material facts in dispute. The finding that there was no default under the mortgage was a finding of law based on the undisputed facts. As to costs, it is not disputed that they are discretionary. The application was necessary because of charges relating to the alleged default. Horkins J. found that “the mortgagee did not act in good faith” and concluded that the mortgagee’s actions were to blame for the court proceeding.
15In our view, the judge reviewed the admitted facts, fully understood them and applied the proper law. We see no error in law or in the result, nor in the way she exercised her discretion as to costs. It follows, then, that the appeal is dismissed.
16With the concurrence of my colleagues, I have endorsed the back of the appellant’s Appeal Book and Compendium as follows: “This appeal is dismissed for the oral/recorded reasons of even date given for the Court by O’Driscoll J. Counsel for the respondent has submitted a Bill of Costs claiming $4,200.00 fees (12 hours at $350.00) plus disbursements, plus GST. Counsel for the appellant submits that if there is to be a costs award, it should not exceed $2,000.00. In all of the circumstances, we fix costs at $3,500.00, plus disbursements, plus GST, payable by the appellant to the respondents within 30 days.”
O’DRISCOLL J.
CHAPNIK J.
SWINTON J.
Date of Reasons for Judgment: March 2, 2006
Date of Release: March 29, 2006
COURT FILE NO.: 156/05
DATE: 20060302
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
O’DRISCOLL, CHAPNIK and SWINTON JJ.
B E T W E E N:
RAKEEM RAHIM, OMAR RAHIM and MOHAMED RAHIM
Applicants
- and -
L-JALCO HOLDINGS INC.
Respondent
(Appellant)
ORAL REASONS FOR JUDGMENT
O’DRISCOLL J.
Date of Reasons for Judgment: March 2, 2006
Date of Release: March 29, 2006