Court of Appeal for Ontario

Citation: Dramel Limited v. Multani, 2023 ONCA 540

Date: 2023-08-14

Docket: M54420 (COA-23-CV-0675)

Sossin J.A. (Motion Judge)

Between

Dramel Limited

Plaintiff (Respondent/Responding Party)

and

Gurnam Multani and Surjit Multani

Defendant (Appellants/Moving Parties)

Counsel:

Eliyahu Smolarcik, for the moving parties

Madison Robins and Katelyn Leonard, for the responding party

Heard: August 11, 2023 by videoconference

Endorsement

[1] The appellants, Gurnam Multani and Surjit Multani, move for a stay of enforcement proceedings arising from the endorsement of Chalmers J. in February 2023, and specifically a notice to vacate the appellant’s residence. The respondent, Dramel Limited (“Dramel”), holds a second mortgage on the appellants’ residence on Parkview Hill Crescent, which has been in default for many years.

[2] On March 12, 2018, Dramel obtained a default judgment in respect of the Mortgage on the appellant’s residence in the amount of $196,044.62, plus costs. Despite being duly served, the appellants have never pursued any attempt to set aside the default judgment.

[3] In separate proceedings, Dramel sought remedies in relation to a mortgage registered on a commercial property owned by the appellants at 1430 Gerrard Street East (the “1430 Mortgage”). The 1430 Mortgage, in turn, is secured by and registered on five other properties owned by the appellants: 1421, 1431, 1433, and 1460 Gerrard Street East, and the residence on Parkview Hill Crescent. In an endorsement related to action on the 1430 Mortgage, dated May 16, 2023, Chalmers J. found that a forbearance agreement signed by the parties in 2018, acknowledging an aggregate indebtedness of $16,803,723.73, was valid and binding. Consequently, he lifted interim stays on enforcement proceedings by Dramel in relation to the appellants’ properties, including the Parkview Hill Crescent residence.

[4] Following this judgment, Dramel took steps to obtain possession of the Parkview Hill Crescent residence, resulting in a writ of execution and notice to vacate for July 17, 2023 (which Dramel has agreed to hold in abeyance pending the outcome of this motion). This enforcement action by Dramel prompted the appellants’ to bring this motion. The appellants seek an interim stay of enforcement of the writ of execution issued against 81 Parkview, pending the outcome of their appeal, pursuant to r. 63.02 of the Rules of Civil Procedure.

[5] According to the appellants, the enforcement proceedings by Dramel to take possession of the appellant’s residence flows from the default judgment which is not under appeal and therefore no stay is available from this court in relation to the notice to vacate. Alternatively, they argue a stay is not justified.

[6] This court has jurisdiction to determine interim relief under s.134(2) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”). The test under s. 134(2) is the same as that for granting a stay pending appeal pursuant to r. 63.02(1): Sub-Prime Mortgage Corporation v. Kaweesa, 2021 ONCA 215, at para. 46. It is based on the test for an interlocutory injunction set out by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311, at p. 334. Under this test, the moving party must establish that it is in the interests of justice to impose a stay, given the relative strengths and weaknesses of the following criteria:

1. there is a serious question to be adjudicated on appeal;

2. the moving party would suffer irreparable harm if the relief were refused; and

3. the balance of convenience favours the moving party (i.e., the moving party would suffer greater harm if the relief were not granted than would the responding party if the relief were granted).

[7] With respect to the serious question to be adjudicated, I would not accept Dramel’s argument that the enforcement proceedings leading to the writ of execution and notice to vacate relate to matters not under appeal. It is clear the mortgage in relation to the Parkview Hill Crescent residence was part of the aggregate indebtedness determined by Chalmers J.’s endorsement which in turn forms the core of the appellants’ appeal. While Chalmers J. recognizes the earlier default judgment, his inclusion of the Parkview Hill Crescent residence in the aggregate indebtedness makes it part and parcel of the matters at issue in the appeal. In short, I conclude there is a serious question to be adjudicated.

[8] With respect to irreparable harm, where, as here, the affected party has known they have no right to remain in their residence for a long period of time (in this case, since at least the default judgment and forbearance agreement of 2018 and potentially earlier given how long the subject mortgage has been in default), any potential harm is arguably a result of the appellants’ own failure to take reasonable steps to deal with the reality of defaulting on the mortgage. This court dealt with a similar scenario in Starkman v. Home Trust Company, 2015 ONCA 436, where Brown J.A. stated, at paras. 17-18:

[17] I do not accept Ms. Starkman’s submission that her eviction from the property would cause her irreparable harm. The issue of irreparable harm must be assessed in the context of the specific facts of this case. Home Trust and ING lent money to Ms. Starkman on the security of the mortgages which she granted on her property. As part of those standard mortgage transactions, Ms. Starkman agreed that if she defaulted on her obligations to repay the mortgages, the mortgagees could take possession of her property, sell it, and then account to her for the net proceeds from the sale.

[18] While it is true that Ms. Starkman now faces the prospect of losing her residential property as a consequence of her serious defaults under the mortgages, the loss of her home simply results from the promise which she made to the mortgagees when she borrowed money from them. Against the background of those promises, I see no irreparable harm to Ms. Starkman in permitting the mortgagee to execute the writ of possession on the security it holds and requiring Ms. Starkman to find a new place to live once the mortgagee takes possession of the property: Granite Mortgage Corp. v. Jurcevic, 2011 MBCA 59, at paras. 9-10; Kal Lady Investment Corp. v. Montgomery (August 7, 2013), Toronto M42745 (C.A.), at para. 9.

See also: Morguard Residential v. Mandel, 2017 ONCA 177, at paras. 22-24.

[9] Indeed, Chalmers J. considered similar arguments in relation to Dramel’s entitlement to have the previous stay lifted, enabling it to obtain a writ of possession over the Parkview Hill Crescent property, and concluded:

[75] The Plaintiff obtained default judgment against the Defendants with respect to action no.: CV-17-588728. The Plaintiff is entitled to pursue its rights to enforce the judgment including proceeding with a writ of possession.

[76] The only argument raised by the Defendants to stay the writ of possession is that it is governed by the stay ordered by Archibald J. For the reasons set out above, I have ordered that the stay be lifted. Therefore, there is no basis for an order staying the enforcement of the default judgment. The Defendants’ motion is dismissed.

[10] While the appellants live in the residence with their children, those children are adults and there is no evidence in the record that leaving the residence would result in significant disruption to the family, beyond the disruption accompanying any residential move. Finally, while the appellants may hold out the hope that some refinancing of their residence is possible if they are successful on the appeal, that eventuality is purely speculative. There is no remedy sought on appeal which would result in the appellants thereby obtaining any rights to remain in their residence.

[11] In light of these circumstances, I am unable to conclude that the appellants would suffer irreparable harm if forced to vacate the residence pursuant to the enforcement proceedings which are now underway.

[12] With respect to the balance of convenience, the appellants argue that the Dramel is pursuing selective enforcement of the aggregate debt found by Chalmer J., and that Dramel could recover far more by focusing such enforcement on the commercial properties rather than the Parkview Hill Crescent residence. Dramel submits in response that there are other complications and encumbrances with the commercial properties, some of which is in the record and some not (including tax debts and liens, and a potential expropriation) and that commencing enforcement proceedings against the appellants’ residence is a reasonable step in recovering the debt owed to Dramel.

[13] In my view, both the appellants and Dramel have reasonably strong balance of convenience arguments.

[14] Dramel has not claimed that it could not commence enforcement proceedings in relation to the commercial properties, or that it would be significantly prejudiced by a delay in enforcement on the Parkview Hill Crescent mortgage.

[15] By the same token, the appellants appear to have taken no steps in recognition that they have no right to remain in their residence and must plan to live elsewhere. Further, as noted by Dramel, the appellants have provided no undertaking as to damages. Finally, Dramel argues the appellants do not come to court with clean hands with respect to this matter, and were subject to a finding by Chalmers J. that they had misled the court.

[16] On balance, I conclude the balance of convenience does not favour a stay.

[17] In light of this analysis of the three-part test for a stay, in my view, the interests of justice do not favour a stay. Therefore, the appellants’ motion is dismissed.

[18] I would defer any costs order in relation to this motion to be determined by the panel hearing the appeal.

“L. Sossin J.A.”