Court File and Parties

Court File No.: CV-10-1745-00SR Date: 2024 05 16 Ontario Superior Court of Justice

Between: BANK OF MONTREAL, Plaintiff K. HOU (on behalf of LIEBERMAN, Mark), for the Plaintiff

- and -

ADAMS also known as STEPHEN Z ADAMS also known as STEPHEN ZELIG ADAMS, Defendant D. HAMSON, for the Defendant

Heard: February 20, 2024

Judgment L. B. STEWART J.

Overview

[1] Motion by plaintiff/creditor Bank of Montreal (BMO) for leave to for an extension of time to issue a writ of seizure and sale in the jurisdiction of the Regional Municipality of York (Newmarket).

Facts and Procedural History

[2] BMO served Mr. Adams with a claim personally on May 30, 2010. Mr. Adams accepts that he was served, but has no recollection of the event.

[3] BMO obtained default judgment on June 24, 2010. Having been noted in default, Mr. Adams was not entitled to notice of further steps in the proceeding. BMO did not serve Mr. Adams with the default judgment [1], [2].

[4] On June 30, 2010, BMO filed a writ of seizure and sale on a property in Durham (the Durham writ).

[5] In late June, 2011, Mr. Adams left Canada to report for his criminal sentence in the US. (The details of Mr. Adams charges and convictions are not relevant this motion so I have not detailed them). His evidence is that he was only permitted to receive communications on two topics while he was incarcerated: the SEC proceedings and the matrimonial proceedings commenced by his former spouse.

[6] Prior to leaving for prison, Mr. Adams gave a power of attorney to his common law spouse in order to deal with his home. The common law spouse retained a lawyer who dealt with the sale, although the date of the retainer is not clear. Mr. Adams was not involved in the process and was not aware of how the proceeds of sale were distributed. At the time, he was not aware that the lawyer negotiated with various creditors, including BMO and that BMO received $2000 and released its writ so the property could be sold (this occurred on December 2, 2011). The writ remained in force against Mr. Adams’ other assets in the jurisdiction. When the writ was released, BMO was aware that Mr. Adams had started serving an eight year sentence in the United States in the summer of 2011.

[7] BMO renewed the Durham writ on May 26, 2016.

[8] Mr. Adams was released and returned to Canada in February, 2017.

[9] From 2017 to 2020, Mr. Adams entered into agreements with CMHC (in which he gave a statutory declaration that all of his debts had been extinguished), BMW car financing (which was contingent on paying off all other debts) and Bank of Nova Scotia mortgage financing. None of these agencies located the BMO judgment. BMO concedes that the judgment did not appear on credit reports obtained by Mr. Adams in 2012, 2017 and 2018.

[10] BMO obtained an updated credit report on Mr. Adams in 2019, but did not find any properties owned by him.

[11] BMO maintains that their counsel tried to call Mr. Adams in December, 2019, March, 2020, October 27, 2020 and December 3, 2021, but were not able to reach him. (See adequacy of evidence section, below).

[12] On May 10, 2022, a further search by BMO revealed a property in Mr. Adams’ name in King City.

[13] BMO first brought this motion on October 21, 2022. The motion was adjourned to permit BMO to file further and better evidence. For reasons that were not explained to the court, this affidavit was not sworn until a year later on October 10, 2023. This motion was returned before the court on February 20, 2024.

Amount of Debt

[14] As of June 24, 2010, the judgment was for @ $30,000, broken down as follows:

a. $3324.35 USD plus interest at 19.5% per year from date of judgment (June 24 2010); b. $23,77921 CAD plus interest at 11.9% per year from date of judgment; and c. Costs of $1230.20 plus interest at 2% from date of judgment.

[15] During oral argument, there was a dispute as to how the interest on the debt was calculated. BMO confirmed that it was using a simple interest calculation (as opposed to compound interest which Mr. Adams assumed) and, as of February 20, 2024, the debt was $68,651.70.

Adequacy of Evidence

[16] When this motion was first brought on October 21, 2022, the court adjourned the motion because the affidavit in support of the BMO motion was insufficient. Specifically:

The Debtor, Mr. Adams, objected to the Creditor’s supporting affidavit on the motion sworn August 3, 2022 by Jeanette Saliba, a summer law student at Creditor counsel’s law firm, which was made on information and belief. Among other things, Ms. Saliba’s affidavit lacked particulars to fully explain the basis of her understanding as to how events unfolded, omitted relevant supporting documents to corroborate her purported account of events, and contained inadmissible hearsay on contentious matters. For her part, Ms. Hou [BMO counsel] properly conceded that Ms. Saliba’s affidavit featured irregularities. Having regard to Ms. Saliba’s affidavit, I share the concerns expressed by Myers J. in Polgampalage v. Devani, 2021 ONSC 1157 at paras 8 et seq. as to the inadequacies of affidavits with these sorts of difficulties [3].

[17] BMO served another affidavit sworn by a BMO unit manager, Jocelyne Sauve, sworn October 10, 2023. This affidavit solves some, but not all, of the court’s concerns. While Ms. Sauve can speak directly about actions taken by BMO, she also relies on “information and belief” regarding actions taken by BMO’s counsel, but does not append any documents. She makes unsupported statements about counsel’s typical practice of making file notes and her belief that counsel did not deviate from their standard practices.

[18] BMO then tried to address these deficiencies with a third affidavit sworn by Ranka Savic on February 8, 2024. Ms. Savic is a law clerk with BMO counsel and she appended some, but not all of the documents, referred to in Ms. Sauve’s affidavit. However, there were some important documents omitted; specifically, BMO alleges that its counsel:

….placed phone calls to the Debtor from time to time, on or about December 19, 2019, March 2, 2020, October 27, 2020, December 3, 2021; however, they were not able to reach the Debtor. I believe this information between the Creditor’s counsel is required to ensure their staff make a note on file each time they make a phone call attempt and indicate whether they were able to reach the person, whether they can leave a voicemail and what was discussed. I have no reason to believe that the Creditor’s counsel’s office deviated from this practice [4].

[19] Despite this affidavit, BMO has produced no documentation supporting the assertion that attempts were made to call Mr. Adams on four occasions between December, 2019 and December, 2021. Specifically, there is no information about what phone number was called, who (if anyone) was reached, whether a message or messages were left and the content of any messages. Further, Ms. Savic, the law clerk at BMO counsel did not provide any evidence of her firm’s processes and procedures set out in Ms. Sauve’s affidavit. Therefore, for the purposes of this motion, there is no evidence on the attempts to call Mr. Adams between December, 2019 and December, 2021.

Law/Analysis

[20] If six years or more have elapsed since the date of the order, a creditor cannot issue a writ of seizure and sale without leave of the court: Rule 60.07(2), Rules of Civil Procedure.

[21] The court will exercise its discretion if a two-part test is met:

a. Is there evidence explaining the delay such that the court may conclude that the plaintiff has not waived its rights under the judgment or otherwise acquiesced in non-payment of the judgment? b. If yes, can the debtor raise other grounds to convince the court that it would be inequitable to enforce the claim. For example, the defendant could demonstrate that he has relied to his detriment or changed his financial position in reliance on reasonably perceived acquiescence resulting from the delay [5].

[22] The courts have described the first part of the test as a very low evidentiary threshold for a judgment creditor to obtain leave. The plaintiff need only explain the delay such that the court may conclude that the plaintiff has not waived its rights under the judgment or otherwise acquiesced in the non-payment of the judgment. “It would be a rare case when a plaintiff could not meet that test” [6].

Part One of Test: did plaintiff waive its rights or acquiesce in non-payment of judgment?

[23] BMO meets the first branch of the test. As noted above, the first part of the test is a very low bar. BMO filed a writ of seizure and sale in 2010 and renewed it in 2016. BMO did a property search in 2019 and did not find any properties, but acted when a further search in 2022 revealed the King City property. The efforts were sufficient to meet the low bar.

[24] BMO relies on the cases of Genworth and Mohammadi-Kia to argue that they took many more steps towards enforcement than in those cases and therefore meet the test. For instance, leave was granted in Genworth [7], despite no action being taken between 2011 and 2018 (with the original writ of seizure and sale expiring in 2016). In Mohammadi-Kia [8], the creditor stopped attempts to collect between 2005 and 2017 as it knew that the debtor did not have the funds to pay during those years. The creditor sought leave to file a writ after it learned that the debtor owned a property.

[25] Mr. Adams argues that the Genworth and Mohammadi-Kia cases are distinguishable because, in those cases, the creditors immediately brought the judgment to the debtor’s attention. On the facts of this case, this is a distinction without a difference. Mr. Adams was very clearly aware of his debt to BMO as evidenced by his payments from 2008 to 2011.

Part Two of Test: can the debtor show that he relied to his detriment or changed his financial position in reliance on reasonably perceived acquiescence resulting from the delay?

[26] Mr. Adams’ had no knowledge of the BMO judgment until the bank served its original motion materials in 2022. He has also demonstrated that had he known about the judgment earlier (prior to his incarceration in 2011 or after his release in 2017) he would have and could have paid the debt.

[27] From 2017 to 2020, Mr. Adams obtained two credit reports which did not show the judgment. Those credit reports include an address and a landline phone number. Another agency (CMHC) was able to contact Mr. Adams in 2018.

[28] Mr. Adams made considerable efforts to clear his debts and reorganize his financial life after his release from prison in 2017. However, that evidence falls short of the threshold of detrimental reliance. As noted above, had Mr. Adams known about the debt, he would have paid it. However, his evidence does not assert that he cannot pay the debt because of the other financial steps he took not knowing about the judgment.

[29] Further, Mr. Adams did not provide any evidence as to why he made no efforts to inquire about the debt in 2017, despite making payments towards it from 2008 and 2011. In addition, there is no evidence as to why Mr. Adams did not make inquiries of his former common law spouse regarding the disposition of the home referred to above. Such inquiries would have revealed the judgment and the writ.

[30] Although part two of the test is not met, like the court in Genworth, I find it is unjust for Mr. Adams to be penalized with interest accrued as a result of BMO’s slow action: “in giving effect to this factor, I am mindful of the debtor’s obligation to pay, however, the consequences of inaction by Genworth cannot be discounted” [9].

[31] As noted above, CMHC was able to contact Mr. Adams by phone in 2018. BMO expected Mr. Adams to be released in the summer of 2019. In my view, more robust efforts would have resulted in contact with Mr. Adams.

Result

[32] For the reasons set out above, I grant BMO leave for an extension of time to issue a writ of seizure and sale. The amount set out in the writ of seizure and sale will be limited to the amounts outstanding on the judgment, together with interest and costs up to December 31, 2019.

Costs

[33] At the conclusion of oral argument, I reserved my decision on this motion. I did not hear submissions on costs as counsel advised that there had been an offer or offers which may impact their position.

[34] The parties are both sophisticated litigants. The amount in dispute was @ $69,000 on the date of oral argument. In my view, this motion could have and should have been resolved.

[35] As the successful party, BMO is entitled to its costs. The parties are urged to agree on costs. If agreement will not be reached, the parties may serve, file and upload costs submissions on the following schedule:

a. BMO submissions: June 20, 2024 by 4pm b. Adams submissions: July 4, 2024 by 4pm

[36] The submissions will be four pages, maximum (not including the Bill of Costs, offers and authorities) and will be double spaced and 12-point font.

L.B. Stewart J. Released: May 16, 2024

Footnotes

[1] Between 2008 and 2011, Mr. Adams made small payments towards his outstanding credit card debts. BMO describes these payments as being partial payments towards the judgment. Mr. Adams says that he did not have any notice of the judgment until 2022, when this motion was served and that those payments pertained to credit card debt which he knew was outstanding.

[2] Although there is no requirement to serve the default judgment, several recent cases have noted that giving notice is a best practice: Petgrave v. Merlin, 2022 ONSC 3570.

[3] From October 21, 2022 endorsement.

[4] Sauve affidavit, October 10, 2023, paragraph 19.

[5] Royal Bank of Canada v. Correia at paragraph 6.

[6] Adelaide Capital Corporation v. 412259 Ontario Ltd. at para. 13.

[7] Genworth Financial Mortgage v. Farooqi, 2019 ONSC 4729.

[8] City of Toronto v. Mohammadi-Kia, 2020 ONSC 1540.

[9] Genworth, para. 15.