Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210416 DOCKET: M52365 (C69053)

Pepall J.A. (Motion Judge)

BETWEEN

Kelly Martin Applicant (Respondent/Responding Party)

and

11037315 Canada Inc. , 2670082 Ontario Corp. , and Autodome Ltd. Respondents (Appellants/ Moving Parties )

Counsel: Samir S. Chhina, for the moving parties Dennis Van Sickle, for the responding party

Heard: April 13, 2021 by video conference

Endorsement

[1] The moving parties, 11037315 Canada Inc. (“110”) and 2670082 Ontario Corp. (“267”), seek an order setting aside the Registrar’s March 29, 2021 order dismissing their appeal and an order extending the time to perfect the appeal.

[2] The responding party, Ms. Martin, was served last Wednesday evening. Ms. Martin’s counsel seeks an adjournment to file materials in response. Initially, counsel advised that his client also wanted to bring a cross-motion for security for costs but ultimately indicated that he does not intend to proceed with such a motion at this time. Such a motion would be moot if he is successful in resisting the moving parties’ motion. Accordingly, he will limit his position to responding to the motion. He submits that egregious facts are missing from the materials before the court and the merits and overall justice of the case favour a dismissal of this motion.

[3] I raised with counsel the issue of the jurisdiction of this court over the appeal. The parties seemed content to proceed in this court, but jurisdiction cannot be conferred by consent or on the basis of being unopposed. That said, I am satisfied that there is an arguable case to be made that this court has jurisdiction.

[4] I will briefly outline the background facts related to the question of whether this court has jurisdiction over the proposed appeal.

[5] The application judge’s endorsement dated December 23, 2020 discloses that Ms. Martin bought her house in 2010 for $289,000 with mortgage financing from TD Bank. By 2019, the property was worth $575,000 and the mortgage had been reduced to $160,000. She then obtained a second mortgage for $65,000 from 2148468 Ontario Ltd. (“214”). 214 assigned the mortgage to 110 but Ms. Martin was unaware of this. 110 served her with a claim for foreclosure. She thought the claim was from 214 and confused the meaning of foreclosure with power of sale, thinking she would ultimately receive the net proceeds following the sale. The application judge estimated these to amount to about $350,000. Unbeknownst to her, 110 obtained default judgment against her and then sold the property to 267 for $425,000 when it was worth $575,000. 267 obtained a mortgage of $465,000 on the property.

[6] Ms. Martin brought an application to set aside the default judgment obtained in the foreclosure action and also sought other monetary relief. The application judge granted Ms. Martin’s application. On December 23, 2020, he ordered that: the default judgment be set aside, the property forthwith be listed for sale, net proceeds over $425,000 be paid to Ms. Martin, and 110 pay her the proceeds it received from the sale that were in excess of the amount set forth in its statement of claim. He also dispensed with a formal typed order, saying that his endorsement was deemed to be an order in the circumstances of COVID-19.

[7] In essence, the effect of the application judge’s order is that Ms. Martin recovers her equity in the property net of the mortgage and other obligations. In exercising his discretion, he relied on equity, absence of prejudice to 267, whom he found was not a bona fide purchaser for value without notice, and the absence of notice of assignment, which meant that the default judgment was irregularly obtained.

[8] 267 then moved under r. 59.06(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, arguing that a new fact had been discovered: 110 had sent Ms. Martin notice of the assignment by registered mail. On January 29, 2021, the motion judge dismissed the motion on the basis of lack of due diligence and in any event, his earlier decision was based primarily on equity and not on the absence of any notice of assignment. He again determined that given the pandemic, his endorsement was deemed to be the order without any need to obtain a formal, typed order.

[9] 267 is now appealing from these two orders and a costs endorsement dated February 23, 2012.

[10] The Court of Appeal’s website states that:

An issued and entered order is required for the purpose of an appeal to the Court of Appeal for Ontario in civil proceedings. For information on obtaining an order from the Ontario Superior Court of Justice during the COVID-19 pandemic, please see section D.5 of the Superior Court's Consolidated Notice to the Profession, Litigants, Accused Person, Public and the Media.

Thus, an issued and entered order is required for the purpose of an appeal to the Court of Appeal for Ontario in civil proceedings. I would recommend that our Registry Office staff advise the moving parties that they should obtain and file an issued and entered order prior to the hearing of this motion.

[11] The December 23, 2020 order has both interlocutory and final elements. An order setting aside a default judgment is an interlocutory order: Laurentian Plaza Corp. v. Martin (1992), 89 D.L.R. (4th) 50 (Ont. C.A.) at p. 53. As such, leave to appeal to the Divisional Court pursuant to s. 19(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43 and r. 62.02(1) of the Rules of Civil Procedure would be required, leave that may not be granted by this court.

[12] However, the remaining portions of the December 23, 2020 order are final in nature and the order finally disposed of the application.

[13] In Lax v. Lax (2004), 239 D.L.R. (4th) 683 (Ont. C.A.), at para. 9, this court held that leave to appeal from an order of a judge of the Superior Court is not required where the issues in an appeal from an order having final and interlocutory aspects are so interrelated that leave would inevitably have been granted. In that case, the defendants moved for summary judgment seeking to dismiss the plaintiff’s action as being statute-barred by the applicable limitation period. The motion judge determined that the action was not statute-barred. This determination gave rise to a final order on the authority of Abbott v. Collins (2002), 62 O.R. (3d) 99 (C.A.). The motion judge went on to hold that even if the limitation period applied, there was a discoverability issue that required a trial. As Feldman J.A. noted on behalf of the court, the second determination was interlocutory:

Although the second issue would, if brought as a stand-alone appeal to the Divisional Court, require leave of that court, because the two issues are so interrelated, we were able to proceed to hear the two appeals together in accordance with s. 6(2) of the CJA, on the basis that once the first issue was before this court, leave would inevitably have been granted on the second.

[14] This court proceeded to hear and determine both issues.

[15] Lax has since been followed in Azzeh v. Legendre, 2017 ONCA 385, 135 O.R. (3d) 721, leave to appeal refused, [2017] S.C.C.A. No. 289. This court acknowledged that para. 1 of the formal order, which granted leave to add the City of Sudbury and others as defendants, was interlocutory. Paragraph 2, which made other amendments consistent with the addition of the defendants, was also interlocutory. However, para. 3, which granted a declaration that the action was not statute-barred, was final. While normally leave must be obtained from the Divisional Court before an appeal from an interlocutory order can be combined with an appeal from a final order, leave was not required as this case was similar to Lax. The court explained: “[w]hether the City was properly added as a defendant depends on whether the action against it is statute-barred. Therefore, both aspects of the appeal were heard by this court”: at para. 26. See also Abbasbayli v. Fiera Foods Company, 2021 ONCA 95, at para. 17; 2099082 Ontario Limited v. Varcon Construction Corporation, 2020 ONCA 202, 97 C.L.R. (4th) 26, at para. 17; and Cooper v. The Laundry Lounge, Inc., 2020 ONCA 166, at para. 2.

[16] As for the January 29, 2021 order, an order dismissing a motion under r. 59 to set aside or vary an order is interlocutory: Antique Treasures of the World Inc. v. Bauer. However, again, the issues raised by that order are closely related to those in the December 23, 2020 order.

[17] In the circumstances, given the interrelationship of the issues engaged by the two orders the moving parties seek to appeal, and based on the aforementioned authorities, I conclude that it is at the very least arguable that this court has jurisdiction over the appeal.

[18] As such, it is appropriate for me to adjourn the motion to a new date as requested by the responding party. I am adjourning the motion to April 28, 2021, a date agreed upon by the parties, to permit the responding party to respond to the motion. I am satisfied that the request is legitimate given the abbreviated service and the absence of any materials from the responding party. The costs of today are reserved to the judge hearing the motion.

“S.E. Pepall J.A.”