Court of Appeal for Ontario

Date: 2018-04-12

Docket: M48951 (C64489)

Judge: Watt J.A. (In Chambers)

Between

B2B Bank Respondent

and

Darrell George Hails Appellant (Moving Party)

Counsel

Darrell Hails, in person

James M. Butson, for the respondent

Heard: March 29, 2018

Endorsement

The Mortgage

[1] Darrell George Hails entered into a mortgage agreement with B2B Bank ("the Bank"). The mortgage was registered on October 29, 2012 in connection with residential property located in Grimsby, Ontario. The mortgage secured the sum of $280,526 at an interest rate of 3.14 percent for a term of five years commencing on December 1, 2012 and maturing on November 1, 2017.

[2] The Standard Charge Terms provided the Bank with remedies on default of payment, including entry upon and sale of the land.

The Default

[3] Mr. Hails defaulted on payment of installments of principal and interest on January 1, 2017. He continued in default until the mortgage matured on November 1, 2017. The mortgage was not renewed or extended.

The Proceedings to Enforce the Mortgage Security

[4] On May 17, 2017 the Bank issued a statement of claim in the Superior Court of Justice. About a week later, the Bank issued a Notice of Sale under Mortgage and a Notice of Intention to Enforce Security. Mr. Hails delivered his statement of defence on June 20, 2017.

The Summary Judgment Motion

[5] After a review of the statement of defence, the Bank considered that the pleadings revealed no genuine issue requiring a trial. As a result, the Bank brought a motion for summary judgment.

[6] The summary judgment motion came on for hearing on September 22, 2017. As a result of Mr. Hails' agreement not to oppose the motion and the imminence of the maturity of the mortgage, the motion judge granted summary judgment to the Bank, but ordered that it could not take possession of the mortgaged property until November 1, 2017, the maturity date of the mortgage. This allowed Mr. Hails a further opportunity to redeem the mortgage or make other necessary financial arrangements.

The Appellate Proceedings

[7] Mr. Hails appealed the order granting summary judgment. He also filed a motion for leave to introduce fresh evidence on the hearing of the appeal.

[8] On two separate occasions, Mr. Hails sought an order staying execution of that portion of the order made on the motion for summary judgment requiring him to deliver vacant possession of the mortgaged property on or before the maturity date. Both motions were dismissed by judges of this court.

The Sale of the Property

[9] On January 29, 2018 the sale of the mortgage property closed. The sale price of $489,900 yielded a net surplus available for distribution of $125,700.45.

[10] On March 21, 2018, the Bank's solicitor contacted the second mortgagee seeking a discharge statement identifying the amount outstanding under the second mortgage.

These Motions

[11] Mr. Hails, who is self-represented, has filed three further motions in connection with his appeal to this court. He seeks an order:

i. appointing "Michael Joseph Albert, Gaboury" as a McKenzie friend;

ii. adjourning the hearing of the appeal to permit the McKenzie friend time to prepare; and

iii. directing the payment of the surplus available from the sale of the property and an accounting in connection with the sale.

[12] In oral submissions, Mr. Hails abandoned his request for an adjournment.

The McKenzie Friend Motion

[13] In support of his motion to have "Michael Joseph Albert, Gaboury" appointed as a McKenzie friend, Mr. Hails relies upon his own affidavit and an affidavit from the proposed McKenzie friend.

[14] For all practical purposes, the supportive affidavits are in identical terms. Each asserts the complexity of the proceedings and the difficulty Mr. Hails has in "keeping up" and organizing his documents as the basis for his request for the appointment of a McKenzie friend. The balance of both affidavits is occupied by descriptions of the qualifications of "Michael Joseph Albert, Gaboury" for his proposed role as McKenzie friend and his prior experience of serving in that capacity.

[15] The proposed McKenzie friend, "Michael Joseph Albert, Gaboury" is a party to what is described as a "pure trust" agreement with Mr. Hails, as grantor, with respect to the mortgaged property. According to the "pure trust", the mortgage property was conveyed unto the trust pursuant to a vote of the board of directors of the "Hails Life Maintenance Foundation". The transfer and trust is dated August 24, 2017 well after default first occurred under the mortgage and the Bank had begun to take steps to enforce its rights.

[16] A further connection between the proposed McKenzie friend and Mr. Hails appears on examination of the address for service Mr. Hails has provided in his materials. The address is the registered address for G.E. Holdings Canada Limited, a company of which "Lord Michael Joseph Albert Gaboury" is the director.

[17] As I will briefly explain, I am not persuaded that this is a case in which a McKenzie friend should be appointed.

[18] Appointment of a McKenzie friend appears to have originated in a practice developed in England primarily for family law proceedings. In accordance with this practice, self-represented litigants are permitted to have with them in the court room a "friend" who can take notes, make suggestions and give advice. In this way, the self-represented litigant is better able to present their case to the court.

[19] The role of the McKenzie friend does not extend to the functions usually discharged by counsel. Cross-examining witnesses. Advancing argument. The appointment of a McKenzie friend is left to the sound discretion of the court to which the application is made, with each case falling to be decided on its own facts. Even where such an appointment is made, the nature and extent of the assistance authorized must be closely circumscribed, lest the mandate provided to the friend amount to the functional equivalent of that performed by counsel. See, Law Society (Manitoba) v. Pollock, 2007 MBQB 51, at paras. 121-122.

[20] In this case, the record is barren of any credible evidence that Mr. Hails is in need of a McKenzie friend.

[21] These proceedings originate in Mr. Hails' default under a mortgage. The terms of the mortgage required Mr. Hails to make monthly payments of principal and interest. Default began on January 1, 2017 and continued throughout the remaining term of the mortgage. The Bank exercised its rights under the mortgage. It sought and obtained summary judgment without opposition from Mr. Hails. It obtained an order for possession of the property effective on the maturity date of the mortgage. It sold the property, paid out the first mortgagee and is in the process of doing the same in connection with the second mortgagee.

[22] It is difficult to tease out of this factual matrix any support for the claim of complexity Mr. Hails advances as the lynchpin of his claim for appointment of a McKenzie friend. Any complexity is of Mr. Hails' own making.

[23] The few authorities to which I have been referred do not assist Mr. Hails. For the most part, appointment of a McKenzie friend occurs in family law proceedings, not in enforcement proceedings for default under a mortgage. And the range of assistance provided, according to those authorities, such as helping the litigant find the courtroom; organize and locate court documents; take notes; talk to the litigant during submissions; offer suggestions during court recesses; and quietly indicate to the litigant whether all points have been covered during submissions seem not to be what Mr. Hails has in mind for "Michael Joseph Albert, Gaboury" who may be one and the same as "Lord Michael Joseph Albert Gaboury", a director of G.E. Holdings Canada Limited and a party to a "pure trust" agreement in connection with the property.

[24] The motion to appoint a McKenzie friend fails and is dismissed.

The Motion Relating to the Proceeds of Sale

[25] Mr. Hails also seeks directions on disbursement of the excess funds available after sale of the mortgaged property and an accounting of the sale proceeds. Mr. Hails wants the surplus paid into court then disbursed to him for the purpose of paying the second mortgagee.

[26] Section 27 of the Mortgages Act, R.S.O. 1990, c. M. 40 directs the manner in which the person receiving the money from the sale of a mortgaged property is to apply that money.

[27] In this case, the person receiving the money from the sale is the Bank. Thus far, the Bank, in complying with its obligations under the section, has:

i. paid all the expenses incident to the sale;

ii. applied the money in discharge of all interest and costs it has incurred;

iii. paid the principal balance outstanding under its first mortgage;

iv. contacted the second mortgagee in order to determine, then pay the amount due to it under its mortgage; and

v. agreed to remit the remaining surplus to Mr. Hails.

[28] The obligation to pay the second mortgagee from the sale proceeds settles upon the bank under s. 27 of the Mortgages Act. It follows that the direction sought by Mr. Hails – that he receive the current surplus to pay the second mortgagee – would have the effect of circumventing the obligations imposed on the bank by s. 27 of the Mortgages Act. It is not an order that I am prepared to make.

[29] Mr. Hails also complains about the Bank's costs associated with the sale and payments out under its mortgage. He alleges an improvident sale of the mortgaged property. Complaints about costs, governed by s. 43(2) of the Mortgages Act, are to be made to and settled by an assessment officer upon proper notice. And the materials filed by the Bank in response to the motion for directions disclose full particulars of the sale and subsequent disbursements.

Conclusion

[30] In the result, the motion fails in its entirety and is dismissed. The Bank is entitled to its costs which shall be in the cause and determined by the panel hearing the appeal. If the appeal does not proceed, the Bank may make written costs submissions in connection with this motion in accordance with a schedule I will set upon notice that the appeal has been abandoned.

"David Watt J.A."