COURT OF APPEAL FOR ONTARIO

CITATION: Eisen v. 2293398 Ontario Inc., 2021 ONCA 537

DATE: 20210722

DOCKET: M52654 (C69310)

Thorburn J.A. (Motions Judge)

BETWEEN

Melvyn Eisen

Plaintiff

(Respondent/Responding Party)

and

2293398 Ontario Inc.

Defendant

(Appellant/Moving Party)

S. David Hwang, for the moving party, 2293398 Ontario Inc.

James A. Riewald, for the responding party, Melvyn Eisen

Heard: July 19, 2021 by videoconference

ENDORSEMENT

[1] The respondent, Mr. Eisen, is the chargee on a property registered to the appellant and moving party, 2293398 Ontario Inc. Ms. Maggiacomo is the company’s principal.

[2] The appellant brings an urgent motion for an order:

1. Staying the decision of Justice Edward J. Koke (“the motion judge”), dated March 15, 2021, in which he refused to set aside the default judgment signed by the local registrar on January 21, 2021, pending appeal;

2. Staying the writ for possession, dated March 17, 2021, and enforcement of the order to vacate the premises, dated July 13, 2021, pending appeal; and,

3. Allowing the appellant to repossess the property pending appeal.

[3] Since the appellant’s principal has been evicted and is living elsewhere, there is no basis to stay the writ of possession or notice to vacate as the issue is moot: the writ has been executed and the notice to vacate enforced.

[4] The only remaining issue is the request for an order for repossession of the property.

Brief chronology

[5] A brief chronology of the steps taken prior to the appellant’s eviction from the property is set out below:

• In 2012, the appellant corporation charged the property in question for two years and secured the sum of $1.6 million with interest payable at the rate of 8.5% per annum. Ms. Maggiacomo was the sole director of the corporation at the time, but the charge was signed by her common-law spouse, Mr. Haines, who has since passed away. The funds advanced by Mr. Eisen went to pay and discharge existing mortgages registered on the property. The charge was periodically extended.

• By April 2019, significant municipal tax arrears had accumulated against the property. Mr. Eisen entered into an agreement with Ms. Maggiacomo and her son to pay those taxes in return for making ongoing monthly payments toward the tax arrears. There was also an agreement to extend the charge for one year from May 15, 2019 to May 15, 2020. The tax for arrears were paid and several payments were made by the appellant in accordance with the agreement.

• On May 15, 2020, the charge matured but principal, interest, and expenses had not been paid. The respondent claimed that the charge was in default by January 15, 2020 and continues to be in default.

• The respondent sent the appellant a notice of sale and, on November 13, 2020, the respondent served the appellant with a statement of claim for possession. Shortly thereafter, the appellant served a notice of intent to defend. No statement of defence was served.

• On January 15, 2021, the respondent’s counsel requested a defence and advised that he would be seeking immediate possession. No statement of defence was filed.

• On January 21, 2021, default judgment was obtained. The default judgment was served on the appellant on February 3, 2021.

• On February 8, 2021, the respondent filed a motion for leave to issue a writ of possession.

• On February 10, 2021, the appellant advised that it would be moving to set aside the default judgment.

• On March 2, 2021, the respondent was granted leave to issue a writ of possession on the property. The order was sent to the appellant on March 4, 2021, but counsel was advised that no steps would be taken to enforce it until the motion to set aside the default judgment was heard on March 10, 2021.

• On March 15, 2021, the motion to set aside the default judgment was dismissed.

• Thereafter, the appellant took no steps to set aside the writ of possession.

• On April 20, 2021, the appellant filed a Notice of Appeal of Koke J.’s decision refusing to set aside the default judgment.

• The appellant was evicted from the property on July 13, 2021.

The motion judge’s reasons

[6] The motion judge refused to set aside the default judgment as he was not satisfied the appellant had a plausible explanation for the default or an arguable defence on the merits, noting that the respondent did not receive any communication from the appellant’s counsel until 26 days after requesting that the defence be filed immediately.

[7] He also held that setting aside the default judgment would result in significant prejudice to the respondent. He noted that:

As of the oral argument of this motion, the [respondent] had still not received confirmation that [insurance, municipal taxed, and hydro] accounts were in good standing.

Quite clearly, a failure to maintain these accounts would place the [respondent’s] security in jeopardy. A day without essential services such as hydro could expose the property to considerable risk of damage….

Although I sympathize with the desire of the [appellant] corporation to refinance its building and operations, I am not convinced that it is fair to the [respondent] to permit the corporation to do so while continuing to place the [respondent]’s security at risk.

[8] He concluded that:

The defendant corporation does not dispute the fact that the principal amount of the mortgage has been outstanding since May 15, 2020. Neither does it dispute the fact that it has failed to respond to requests concerning the tax, insurance and hydro accounts. It has not put forth an arguable defence to the claim and in the circumstances, it is my view that a decision dismissing this motion will uphold the overall integrity of the administration of justice. For the above reasons, I am dismissing the defendant's motion to set aside the judgment.

Arguments and conclusion

[9] The overarching consideration in whether to grant a stay or interlocutory injunction pending appeal is the interests of justice: Zafar v. Saiyid, 2017 ONCA 919, at para. 18; Circuit World Corp. v. Lesperance, 1997 CanLII 1385 (ON CA), 33 O.R. (3d) 674, at para. 8. The court considers three factors: (i) a preliminary assessment must be made of the merits of the case to ensure there is a serious question to be tried; (ii) it must be determined whether the applicant would suffer irreparable harm if the application were refused; and (iii) an assessment of the balance of convenience must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits: see M & M Homes Inc. v. 2088556 Ontario Inc., 2020 ONCA 134, 51 C.P.C. (8th) 253, at para. 29; RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at p. 334. These factors are not watertight compartments and the strength of one factor may compensate for weakness of another: Zafar, at para. 18.

[10] The appellant claims irreparable harm would result if an order for repossession pending appeal is not granted, the appellant’s rights could be so severely affected that the appeal will be moot.

[11] In addition to this litigation, the parties are involved in several other matters before the courts. Ms. Maggiacomo claims she is concerned that “private and confidential information related to various ongoing litigation” has been “removed and destroyed.” She also claims that:

Unless immediate relief is obtained by the court, allowing me to access the Property to ensure the integrity of financial information, confidential information and other important assets, my interests will be irreparably harmed and evidence relating to the underlying action subject to appeal another ongoing litigation may be destroyed.

I have important documents concerning the ownership of the Property, email communications between the deceased [i.e. Mr. Haines] and his counsel, personal and corporate financial records, and letters to my counsel. There are other documents I have been able to retrieve since the start of litigation through my family's own investigations and calling old acquaintances.

I also have computers and hard drives that were left on at the time there is information on those computers that are sensitive as well as emails between myself and counsel.

[12] While I am sympathetic to Ms. Maggiacomo’s concern about losing her personal effects and documents, the appellant has not sought an order for return of her personal property.

[13] In her affidavit, Ms. Maggiacomo asserts that this was her primary residence and her son was at the premises when the eviction notice was enforced. Ms. Maggiacomo offered no information about her current residence or circumstances or any information about the possible sale of the property. I am therefore not satisfied that, on the evidence before me, the appellant has demonstrated irreparable harm.

[14] Secondly, with regard to the merits of the appeal, Ms. Maggiacomo claims the motion judge erred in finding there was no arguable defence on the merits when he refused to set aside the default judgment.

[15] Koke J., in his reasons, states that “[the appellant] does not challenge the validity of the mortgage. In any event, I expect that any defect in the execution of the original charge was likely remedied when Ms. Maggiacomo signed the renewal of the mortgage in 2019.”

[16] Ms. Maggiacomo asserts that she was unaware of alleged defects with the charge when she signed the renewal forms in April 2019. In particular, she says she was unaware that Mr. Haines was an undischarged bankrupt when he initially charged the property on the corporation’s behalf. On the motion, counsel informed the court that Ms. Maggiacomo believes that she did not sign the 2019 renewal form and that her signature was a forgery. This argument does not appear to have been put before Koke J. and there is no affidavit evidence in the record to this effect.

[17] In my view, although it is a low threshold, the appellant’s case on the merits is not strong.

[18] Lastly, the balance of convenience favours the respondent. The respondent is at risk of losing his security as there is a long history of arrears.

[19] Taken together, I am not persuaded that it is in the interests of justice to order that Ms. Maggiacomo take repossession of the property.

[20] For these reasons, the motion is dismissed.

“J.A. Thorburn J.A.”