COURT OF APPEAL FOR ONTARIO

CITATION: Royal Canadian Mortgage Investment Corporation v. 1835923 Ontario Ltd., 2020 ONCA 55

DATE: 20200128

DOCKET: C66207

Hoy A.C.J.O., Doherty J.A. and Marrocco A.C.J. (ad hoc)

BETWEEN

Royal Canadian Mortgage Investment Corporation

Plaintiff (Respondent)

and

1835923 Ontario Ltd. and Dudett A. Kumar

Defendants (Appellants)

No one appearing for the appellants

George Corsianos, for the respondent

Heard and released orally: January 16, 2020

On appeal from the judgment of Justice Gisele M. Miller of the Superior Court of Justice, dated October 30, 2018.

REASONS FOR DECISION

[1] The appellants, 1835923 Ontario Limited (“183”) and Dudett A. Kumar, appeal the judgment of the motion judge in the respondent Royal Canadian Mortgage Investment Corporation’s mortgage enforcement action. The motion judge ordered the appellants to, among other things, pay the respondent $626,719.59 on account of principal money, fees and interest to October 30, 2018 under the mortgage and deliver possession of the mortgaged rental property to the respondent.

[2] On January 13, 2020, the President of this panel denied the appellant 183’s request for an adjournment of this appeal and ordered that if on January 16, 2020 (the date the appeal was scheduled to be heard) Mr. Surinder Kumar or an agent did not appear for 183, and Mrs. Dudett Kumar did not appear, the panel would hear the appeal relying on the written materials that had been filed by the parties. To ensure that the respondent was not perceived as having an advantage over the appellants, counsel for the respondent would not be provided with an opportunity to make oral submissions. Counsel for the respondent was agreeable to this. The order ensured that the matter would be considered on its merits by the full panel.

[3] This morning, Mr. Kumar sent a letter to this court again asking for an adjournment. No one attended for 183 and Mrs. Kumar did not attend.

[4] The history of delay in this matter is set out in the reasons for denying the adjournment request on January 13, 2020: Royal Canadian Mortgage Investment Corporation v. 1835923 Ontario Ltd., 2020 ONCA 45. We will not repeat it.

[5] We have considered the further request for an adjournment and see no reason to depart from the order of January 13, 2020.

[6] Accordingly, we considered the merits of the appeal relying on the written materials filed by the parties without oral submissions from counsel for the respondent.

[7] The appellant 183 arranged a second mortgage on the property with the respondent. Mrs. Kumar guaranteed this mortgage. The first mortgage on the property had matured before 183 arranged the second mortgage and had not been paid. The respondent’s evidence on the summary judgment motion was that the respondent was unaware that the first mortgage had matured and was in default when 183 requested the second mortgage. Mr. Kumar’s evidence on the summary judgment motion was that he was unaware the first mortgage was in default and that the appellants continued to make payments under the first mortgage after securing the second mortgage. While Mr. Kumar made a bald allegation in a supplementary affidavit that the respondents were aware that the first mortgage had matured prior to arranging the second mortgage, there is nothing in the record to substantiate this. Indeed, it would appear to be inconsistent with Mr. Kumar’s own assertion that he thought the first mortgage had been renewed when he arranged the second mortgage.

[8] Default under a prior charge constituted a default under the second mortgage. The respondent paid out the first mortgage and commenced power of sale proceedings.

[9] On appeal, the appellants argue that the second mortgage was void ab initio because: (1) the respondent acted in a predatory manner by entering into the second mortgage knowing that the property was already under power of sale proceedings initiated by the first mortgagee and planning to take possession of the property; (2) in the alternative, the respondent failed to conduct due diligence and confirm that the first mortgage was in good standing before permitting the appellants to enter into the second mortgage; and (3) in the further alternative, because the first mortgage had matured before the second mortgage was issued, the appellant 183 was in default as soon as it granted the second mortgage.

[10] There is no merit to these arguments. It was the appellants’ responsibility and not the respondent’s obligation to ensure that the first mortgage had been renewed and was in good standing.

[11] Accordingly, the appeal is dismissed.

[12] After orally releasing these reasons for dismissing the appeal, we permitted the respondent to make brief oral submissions as to costs. In accordance with the mortgage, the respondent is entitled to costs of the appeal in the amount of in the amount of $6,825.

“Alexandra Hoy A.C.J.O.”

“Doherty J.A.”

“Marrocco A.C.J.S.C. (ad hoc)”