Court of Appeal for Ontario

Docket: C63431

Justices: Sharpe, van Rensburg and Brown JJ.A.

Between

Krates Keswick Inc. Plaintiff (Respondent)

and

Steven Crate, Gregory Crate and Lynn Joanne Marko Defendants (Appellants)

Counsel

Gregory Sidlofsky, for the appellant

Mark Dunn and Kirby Cohen, for the respondent

Heard and released orally: November 23, 2017

On appeal from: the order of Justice Glenn A. Hainey of the Superior Court of Justice, dated January 23, 2017.

Reasons for Decision

[1] The respondent, Krates Keswick Inc., purchased and took assignments of three loans made to the appellants and some Crate family companies, which went into receivership. Loan 1 was guaranteed by the appellants. Loan 2 was made to the appellants as borrowers; it was not secured. Loan 3 was guaranteed by the appellant, Marko. The guarantors provided collateral security for their guarantees, which included mortgages on 210 Wynhurst and the Marko Lands. The Respondent sought and obtained Judgment against the appellants on the loans. The motion judge also granted the respondent possession of the Marko Lands. The motion judge dismissed the appellants' counterclaim and refused to stay the enforcement of the Judgment. The appellants appeal.

[2] We see no error in the motion judge granting Judgment in the amounts specified for Loans 1, 2 and 3. Nor do we see any error in the Judgment granting possession of the Marko Lands to KKI and dismissing the counterclaim.

[3] However, in respect of the motion judge's refusal to stay the enforcement of the Judgment concerning the amounts of Loans 1, 2 and 3, important facts concerning the lands that stand as security for Loans 1 and 3 have emerged in two recent decisions of Myers J. This information was not before the motion judge.

[4] By reasons dated November 17, 2017 Myers J. vested in the respondent title to 210 Wynhurst, one of the properties that stands as security for Loan 1. He also valued that land at $1.09 million and allocated 50% of the remaining Receiver's fees to that land. There is no dispute that the resulting net value of 210 Wynhurst will reduce the amount outstanding under Loan 1.

[5] By reasons dated October 17, 2017 Myers J. held that beneficial title to the Marko Lands was held by the appellants on resulting trust for one of their family companies and, as a result of the receivership proceedings, is now held on resulting trust for the respondent. The parties disagree as to whether the appellants will be able to establish any credit against the amount of Judgment in respect of Loans 1 and 3 for the value of the Marko Lands. A further proceeding is required to determine that issue.

[6] Given this new information, we conclude that it would be just and reasonable to stay the enforcement of paras. 1 and 3 of the Judgment relating to the secured Loans 1 and 3 until it is determined what, if any, reduction in the amounts payable under the Judgment the appellants may be entitled to by reason of the value of the Marko Lands. Consequently, we would stay the enforcement of paras. 1 and 3 of the Judgment until such determination has been made. Since Loan 2 was unsecured, we would not interfere with the motion judge's refusal to grant a stay of enforcement of the amount of that loan, as set out in para. 2 of the Judgment.

[7] There shall be no costs of the appeal. We see no basis to interfere with the costs of the motion below.

Robert J. Sharpe J.A. K. van Rensburg J.A. David Brown J.A.