COURT OF APPEAL FOR ONTARIO

CITATION: 7084421 Canada Ltd. v. Vinczer, 2020 ONCA 829

DATE: 20201217

DOCKET: M51970 (C68637)

Brown J.A. (Motion Judge)

BETWEEN

7084421 Canada Ltd.

Plaintiff

(Respondent/Moving Party)

and

Attila Vinczer, Peter Vinczer, and Katalin Vinczer

Defendants

(Appellants/Responding Parties)

Gerald Anthony, acting in person and on behalf of the moving party, 7084421 Canada Ltd.

Attila Vinczer, acting in person

Heard: in writing

REASONS FOR DECISION

OVERVIEW

[1] The respondent, 7084421 Canada Ltd. (the “Plaintiff”), moves for various orders designed to move this appeal along and allow the Plaintiff to take possession of two mortgaged properties, 330 Premier Place, Newmarket and 462 Lake Drive South, Keswick (the “Properties”), which are owned by the appellants, Attila Vinczer and Peter Vinczer. I shall refer to Attila and Peter, together with Katalin Vinczer, who guaranteed the mortgages, as the “Defendants”.

THE MORTGAGE ENFORCEMENT ACTION

[2] The essentials of the action underlying this appeal were summarized by Boswell J. at paras. 2, 3, 10 and 11 of his January 15, 2020 reasons (2020 ONSC 217):

The plaintiff loaned the sum of $1,023,448.66 to the defendants on July 31, 2017 on the strength of a blanket first mortgage over two properties: 462 Lake Drive South, Keswick and 330 Premier Place, Newmarket.

The mortgage, as registered, was in the amount of $1,033,157 which was the amount originally negotiated. A slightly lower figure was actually advanced. The term was six months. The mortgage provided for interest to be paid the rate of 12% which worked out to monthly payments of $10,331.57. The interest was fully pre-paid, meaning six months worth of interest payments were deducted from the funds actually advanced to the defendants.

[The mortgage] was not repaid. It went into default in early 2018. The plaintiff sued for payment and possession of the mortgaged premises in August 2018. The defendants failed to serve and file a Statement of Defence.

Default judgment was signed by the registrar of the court on November 9, 2018 for payment of a little over $1.2 million as well as possession of the mortgaged properties.

[3] The Defendants’ motion to set aside the default judgment was brought sometime in the first part of 2019 but not heard by Boswell J. until November 2019. The Plaintiff was represented by counsel. Attila Vinczer appeared in person and argued the motion on behalf of all the Defendants. Peter and Katalin, Attila’s elderly parents, did not appear.

[4] In para. 7 of his reasons, Boswell J. described the positions of the parties on the motion before him:

The manner in which the motions proceeded was not a model of clarity. Though the defendants formally sought an order setting aside the default judgment, it became apparent during argument that what both sides really wanted was for the court to decide the issues between them in a summary fashion and to, if necessary, vary the default judgment accordingly. [Emphasis added.]

[5] Boswell J. found that: (i) the explanation for the Defendants’ default was weak; (ii) the Defendants did not provide a satisfactory explanation about why it took them three months to do anything about the default judgment; and (iii) “for the most part, the Defendants have not raised an arguable defence”: at paras. 40, 42 and 43. He explained his conclusion on whether the Defendants had demonstrated an arguable defence, at paras. 50 and 51:

Canadian common law respects private ordering. That is a fancy way of saying that our law generally respects and enforces agreements reached between competent parties. Parties are free to enter good deals and bad deals. The deal entered into between the plaintiff and the defendants is bad for the defendants. In fact, it is downright ugly. Mr. Vinczer knows that and is trying his best to find a way around some of its worst features. But the fact is, the defendants were desperate at the time they borrowed from the plaintiff. And that desperation led them to enter a mortgage deal that bought them some time but at immense cost.

Mr. Vinczer’s arguments otherwise focused on two elements of the balance claimed by the plaintiff: the imposition of three months’ bonus interest and a management fee in excess of $50,000. I find that there are arguable defences to both, grounded in the terms of the contract itself and in the law of unconscionability.

[6] After weighing the appropriate factors, Boswell J. concluded that he should not set aside the default judgment stating, at para. 55:

On balance, I am not persuaded that the default judgment should be wholly set aside. My conclusion is based on the following summary of the prevailing circumstances:

(a) The defendants offered a weak explanation for not defending the plaintiff’s claim;

(b) The defendants failed to act expeditiously to set aside the default judgment once it came to their attention;

(c) While the defendants have arguable defences to some of the fees charged after default, these fees represent only a small fraction of the amount outstanding;

(d) The mortgage has been in default for almost two years. The parties are agreed that the court is able to determine any live issues between them on the current evidentiary record and the court was invited to do so.

In my view, it is in the interests of justice to accept the parties’ invitation to resolve the live issues and to otherwise leave the judgment, amended as appropriate, in place.

[7] Boswell J. then proceeded to determine the “live issues” between the parties. He found, at paras. 62 and 63:

The original principal amount is conceded. The correct principal outstanding is $1,023,448.66.

In terms of the other two disputed issues, I find that the plaintiff is not entitled to the three months’ bonus interest, but is entitled to the management fees as charged.

[8] In the result, by order dated January 15, 2020 (the “Boswell Order”), Boswell J. refused to set aside the default judgment but varied its amount stating, at paras. 81 and 82:

In summary, for the reasons expressed, I am not prepared to set aside the default judgment. I am prepared to vary it, again for the reasons expressed. I find the following amounts outstanding on the mortgage:

(a) Principal $1,023,448.66

(b) Accrued interest to January 15,

2020 (714 days @12%) 240,244.06

(c) Management Fees 51,172.43

Total $1,314,865.15

The plaintiff is entitled, therefore, to judgment in the amount of $1,314,865.15 and to possession of the mortgaged premises. The judgment will continue to accrue interest at 12% per annum.

THE APPEAL OF THE BOSWELL JUDGMENT TO THE DIVISIONAL COURT

[9] The Defendants thereupon appealed the Boswell Judgment to the wrong court. On February 6, 2020 they filed a notice of appeal to the Divisional Court. I do not understand why the Divisional Court accepted the appeal. The judgment under appeal was for over $1.3 million, vastly in excess of the jurisdiction of the Divisional Court: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 19(1.2).

[10] In her August 14, 2020 reasons (2020 ONSC 4853), to which I shall come shortly, J. Speyer J. stated: “The procedural irregularities surrounding this motion are numerous, likely because the appellants are self-represented, but also because it appears from the materials filed that the court has contributed to the state of affairs that caused the appellants to bring this motion.” For, upon accepting the notice of appeal, the Registrar of the Divisional Court in Oshawa issued, on requisition by the Defendants, two certificates of stay: the first dated February 6, 2020, and a slightly amended one dated February 10, 2020 (collectively the “Certificate”). The Certificate certified that the Boswell Order had been stayed by delivery of the notice of appeal. The Certificate, apparently prepared by Attila Vinczer, contained a major omission; it did not state, as required by r. 63.03(5), whether the stay was under r. 63.01(1) (the automatic stay of an order for the payment of money) or by order under r. 63.02(1).

[11] The automatic stay rule did not apply to the Boswell Order because it was, in its essence, an order that refused to set aside a default judgment: r. 63.01(2). Accordingly, to obtain a stay of the Boswell Order, the Defendants were required to obtain an order from a judge: r. 63.01(2) and 63.02(1). They had not obtained such an order. Consequently, the Registrar should not have issued the Certificate; it was a mistake to do so.

[12] Notwithstanding the Certificate, the sheriff’s office in Newmarket sought to enforce the Boswell Order by evicting the Defendants from the mortgaged Premises.

THE DEFENDANTS’ EX PARTE MOTION BEFORE J. SPEYER J.

[13] Attila Vinczer brought an ex parte motion in writing before J. Speyer J. to stay the eviction, who granted an order dated August 14, 2020 (the “Speyer Order”). I would observe, parenthetically, that I do not understand why the motion judge entertained an ex parte motion in the circumstances. The Plaintiff loaned the Defendants a significant amount of money, had taken security, was faced with a default, and sought possession of the secured Properties. The Plaintiff was entitled to be heard on Mr. Vinczer’s motion.

[14] In any event, the motion judge concluded that the Defendants’ appeal of the Boswell Order was in the wrong court. Pursuant to CJA s. 110, the motion judge transferred the appeal to this court and directed the Defendants to serve and file an amended notice of appeal to this court by August 21, 2020. The Defendants did not do so until September.

[15] Second, the motion judge concluded that she need not entertain the Defendants’ request for an interim stay order of the Boswell Order because the Certificate “is an order of the Superior Court, and it is binding until and unless it is set aside”: at para. 15. With respect, that is not the case. The Certificate is not an order. If a r. 63.03(4) certificate is issued where the stay is under r. 63.01(1), the automatic stay rule, then the certificate simply certifies the fact that the order under appeal is subject to the automatic stay rule.

[16] However, in the present case the Boswell Order is, in essence, an order refusing to set aside a default judgment. For such an order, a stay first requires an order of a judge under r. 63.02(1) which, if given, would permit the Registrar to certify that such an order had been made. The Defendants never sought a stay order from a judge. The Certificate should not have been issued without such an order. Consequently, the Certificate is of no effect.

THE APPEAL

[17] The Defendants’ appeal has been transferred to this court and a file opened for the appeal: C68637.

[18] The Defendants’ notice of appeal contains approximately 60 grounds of appeal. None take issue with the simple reality that the Defendants owe the Plaintiff at least the amount of the funds advanced, approximately $1 million. Most relate to the Defendant’s dispute about the precise repayment amount due under the mortgages which, of course, grows with every passing day. Ground 54 identifies the true magnitude of the dispute:

The court erred in law by failing to address and recognize the triable issues being beyond merely fees that are not insignificant, but over $80,000.00. A substantial amount.

[19] I have read the affidavits filed by Gerald Anthony and Attila Vinczer on this motion. Based on that review, Boswell J.’s observation that the mortgage deal was “bad” for the Defendants who were trying “to find a way around some of its worst features” captures the essence of the position laid out by Mr. Vinzcer in his affidavit. Mr. Vinczer admits that the Plaintiff advanced mortgage funds but takes issue with several mortgage terms that increased the discharge amount.

[20] In his affidavit, Mr. Vinczer identifies some of the repayment charges in the mortgages with which he takes issue. He characterizes the mortgages as “frauds”. He also paints himself as a victim of fraud by the Plaintiff. At the same time, Mr. Vinczer offers no plan about how or when the Defendants will repay any part of the amounts they concede were loaned to them by the Plaintiff.

[21] I will now consider the specific relief requested by the Plaintiff on this motion.

THE RELIEF SOUGHT ON THIS MOTION

Representation of the parties

[22] Mr. Anthony, the president and sole shareholder of the Plaintiff, seeks leave under r. 15.01(2) to represent the corporation. He is a former paralegal. His materials are focused. I am satisfied he has the ability to represent the corporation on this appeal and I so order.

[23] The Plaintiff also seeks an order that Peter and Katalin Vinczer be represented or be removed from the appeal. I will not make such an order. They are parties to the default judgment and are named appellants.

[24] However, it appears that Attila Vinczer is preparing and filing all the Defendants’ materials. To ensure that Peter and Katalin Vinczer are aware of these proceedings, I order that Attila, Peter, and Katalin Vinczer each sign the factum the Defendants will file on the appeal.

Review of the Speyer Order

[25] The Plaintiff seeks an order extending the time for serving a motion for a panel review of the Speyer Order. As J. Speyer J. was sitting as a judge of the Divisional Court, any such motion would have to be brought before a panel of the Divisional Court, not this court: CJA, s. 21(5). I cannot grant such an order.

Security for costs

[26] The Plaintiffs’ notice of motion seeks an order for security for costs. The Plaintiff is, in essence, self-represented, so its recoverable costs of the appeal would be low. In any event, the Plaintiff’s materials do not contain a bill of costs so there is no basis on which I could order security for costs.

Dismissal of the appeal

[27] The Plaintiffs seek an order dismissing the appeal. Quite apart from the issue of my jurisdiction as a single judge to make such an order, I think the more appropriate approach is to fix a date for the perfection of the appeal.

[28] This is an appeal from a final order of a motion judge. Any required transcripts are ready. The Defendants initiated their appeal, albeit in the wrong court, in early February but still have not perfected it. That is unacceptable. Even making allowance for the suspension of filing deadlines enacted in response to he pandemic, the Defendants’ conduct has all the hallmarks of “stall tactics”. Accordingly, I order the Defendants to perfect this appeal on or before January 15, 2021. If they do not do so, then I order that the Defendants are barred from bringing any further motion in this court without leave of a judge, and it will be open to the Plaintiff to move in writing before a panel for the dismissal of the appeal.

Setting aside the Certificate

[29] The Plaintiff seeks an order setting aside the Certificate. He is entitled to that order. As explained above, the Registrar should not have issued the Certificate because the Defendants had appealed to the wrong court and a stay of the Boswell Order required an order of a judge. I set aside the Certificate.

[30] If the Defendants wish to seek a stay of the Boswell Order pending appeal, they must bring the appropriate motion under r. 63.02(1). If the Defendants bring such a motion, no doubt the judge of this court will review the Defendants’ evidence to see whether they disclose (i) why they are not repaying the significant sum of money they concede the Plaintiff lent to them, and (ii) the details of their current financial situation so that the court can assess their explanation for not repaying any of the monies advanced.

Writ of Possession

[31] The Plaintiff seeks writs of possession for 330 Premier Place, Newmarket and 462 Lake Drive South, Keswick. Para. 2 of the default judgment ordered that vacant possession of the two properties “is hereby granted to the Plaintiff forthwith.” The Boswell Order did not set aside para. 2 of the default judgment, which remains in operation; no order has stayed its operation pending the appeal.

[32] However, a court may grant leave to issue a writ of possession only where it is satisfied that “all persons in actual possession of any part of the land have received sufficient notice of the proceeding in which the order was obtained to have enabled them to apply to the court for relief”: r. 60.10(2). The “order” is the “order entitling a party to possession”: r. 60.10(1). The order entitling the Plaintiff to possession arose from a proceeding in the Superior Court of Justice. There is nothing in the record on this motion regarding proof of service to persons in actual possession of the Properties in the proceeding from which the default judgment and Boswell Order arose. Consequently, I cannot grant a writ of possession. The Plaintiff must seek such writs from the Superior Court of Justice.

DISPOSITION

[33] By way of summary, I grant the Plaintiff’s motion in part and make the following orders:

(i) Gerald Anthony, the president and sole shareholder of the Plaintiff, may represent the corporate Plaintiff on this appeal;

(ii) Attila, Peter, and Katalin Vinczer must each sign the Defendants’ factum;

(iii) The Defendants must perfect this appeal on or before January 15, 2021. If they do not, then I order that the Defendants are barred from bringing any motion in this court without leave of a judge, and it will be open to the Plaintiff to move in writing before a panel for the dismissal of the appeal; and

(iv) The Certificate is set aside.

[34] I decline to grant the other relief requested in the notice of motion.

[35] The Plaintiff is entitled to its costs of the motion from the Defendants, which I fix in the amount of $500, payable by the Defendants by December 31, 2020.

“David Brown J.A.”