Court of Appeal for Ontario

Date: 2025-05-16
Docket: M55936 (COA-25-CV-0415)
Judge: L. Favreau
Heard: 2025-05-07

Between:
2642948 Ontario Inc.
Plaintiff (Respondent/Responding Party)

and

Jonny’s Antiques Ltd.
Defendant (Appellant/Moving Party)

Appearances:
David Johnson, for the moving party
Manuela Jimenez-Bueno, for the responding party
Chris Stanek, appearing as amicus curiae

Endorsement

Introduction

[1] The moving party, Jonny’s Antiques Ltd., brings a motion for a stay pending appeal.

[2] The underlying proceedings involve a mortgage enforcement. The motion judge below granted an order to the responding party, 2642948 Ontario Inc. (“264”), removing a Certificate of Pending Litigation (“CPL”) and granting 264 possession of the property.

[3] 264 has entered into an agreement of purchase and sale for the property. When the motion before this court was scheduled, the sale was to close two days after the motion, on Friday, May 9, 2025. However, 264 accelerated the closing with the purchaser and the property was sold by the time the motion was heard.

[4] As explained below, I dismiss the motion for a stay. However, given the conduct of 264 in accelerating the sale before the motion could be heard without notifying Jonny’s Antiques, 264 is not entitled to costs.

Background

[5] At the relevant time, Jonny’s Antiques owned a commercial building in Shakespeare, Ontario. The building housed an antiques business operated by David Johnson, a director of Jonny’s Antiques.

[6] In August 2018, Jonny’s Antiques purchased corporate shares from 264, which were financed by an 11-month mortgage on the property. 264 is a single-purpose corporation. Its principal is G-Lien Kwik. The mortgage included the following terms:

• The principal amount was $385,000;
• The mortgage was to mature on July 10, 2019;
• Interest was payable at a rate of 2.5% calculated semi-annually;
• Monthly payments of $802.08 were to be made on the 10th day of each month; and
• The terms of the mortgage incorporated standard terms, including with respect to enforcement.

[7] By the maturity date, the mortgage was in arrears and Jonny’s Antiques had not paid back the principal. Following a series of communications between Ms. Kwik and Mr. Johnson, Jonny’s Antiques made interest-only payments toward the mortgage for approximately three years.

[8] On July 14, 2023, 264’s lawyer wrote to Jonny’s Antiques demanding full payment of the mortgage by October 10, 2023. The letter included the following language:

I am writing on behalf of [264] & Lien Kwik (the “Lender”). The mortgage matured on July 10, 2019. As a courtesy, the Lender did not demand payment at that time and continued to allow monthly payments.

However, the Lender is now requiring that the mortgage be paid in full on or before October 10, 2023. Assuming all payments are made up to and including the October 10, 2023, payment, the balance owing on October 10, 2023, will be $385,000 as the mortgage payments have been interest only.

[9] Jonny’s Antiques did not respond to this demand, nor did it repay the principal owing by October 10, 2023. On December 19, 2023, 264 served a Notice of Sale Under Mortgage and a Notice of Intent to Enforce Security. On February 1, 2024, 264 issued a statement of claim against Jonny’s Antiques.

[10] On April 12, 2024, 264 retained a bailiff who changed the locks on the property. Mr. Johnson made some unsuccessful efforts to regain access to the property. On May 10, 2024, 264 listed the property for sale.

[11] On May 13, 2024, Jonny’s Antiques served its statement of defence and counterclaim. On May 14, 2024, Jonny’s Antiques obtained an ex parte order for a CPL.

[12] On October 31, 2024, 264 accepted an offer to purchase the property for $650,000. The closing date was originally set for January 17, 2025, but was then extended to March 14, 2025, and extended again to May 9, 2025. The evidence is that the buyer would not agree to any further extensions.

[13] On March 31, 2025, 264 brought a motion to vacate the CPL and for a declaration that it is in lawful possession of the property. In a decision released on April 2, 2025, the motion judge granted an order setting aside the CPL and declaring that 264 has possession of the property. In her decision, the motion judge found that Jonny’s Antiques had failed to make full and frank disclosure on the motion to obtain a CPL. In addition, she found that 264 was entitled to possession of the property because it had taken possession peaceably.

Scheduling of the Motion

[14] Soon after the motion judge issued her decision, Jonny’s Antiques served a notice of appeal and advised counsel for 264 that it intended to bring a motion for a stay.

[15] Mr. Johnson, on behalf of Jonny’s Antiques, sought to schedule the motion for April 22, 2025, but counsel for 264 advised that she was not available that day. The motion was then scheduled for May 7, 2025, which was two days before the anticipated closing for the sale of the property.[2]

[16] At no time, prior to the accelerated closing, did 264 or its counsel advise Jonny’s Antiques that it was accelerating the closing, even while communicating with Mr. Johnson about dates for the motion for a stay. 264 only informed Mr. Johnson of the change in an email dated April 30, 2025, stating that the sale had closed on April 24, 2025.

Test on a Motion for a Stay

[17] On a motion for a stay pending appeal, as held in BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, para 16, the overriding consideration is whether it is in the interests of justice to grant a stay. In making that determination, the court is to consider the following three factors:

• Whether the appeal raises a serious issue;
• Whether there will be irreparable harm if the stay is not granted; and
• Whether the balance of convenience favours granting the stay.

[18] These factors are not watertight compartments. The strength of one factor can compensate for the weakness of another factor: Zafar v. Saiyid, 2017 ONCA 919, para 18.

Serious Issue

[19] The threshold for showing that there is a serious issue to be tried is low: Zafar, at para. 19.

[20] In my view, while the appeal is not devoid of any merit, it has very little chance of success.

[21] In its factum on the motion for a stay, Jonny’s Antiques’ primary argument on the merits of the appeal is that the motion judge failed to consider its position that promissory estoppel precluded 264 from enforcing the mortgage.

[22] A party relying on promissory estoppel must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. In addition, the recipient of the promise or assurance must show that, in reliance on the representation, they acted on it or in some way changed their position: Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50, at p. 57; Lalani Properties International Inc. v. Intact Insurance Company, 2024 ONCA 583, para 102.

[23] In advancing the doctrine of promissory estoppel in this case, Jonny’s Antiques relies on 264’s statement in the July 14, 2023 letter to the effect that: “As a courtesy, the Lender did not demand payment at that time and continued to allow monthly payments.” However, this ignores the fact that the rest of the letter included a demand that Jonny’s Antiques pay the outstanding mortgage by October 10, 2023. There is no evidence that 264 agreed or promised to forego payment of the mortgage indefinitely or even until a specified date. In such circumstances, there would be no basis for finding that promissory estoppel would be available to defeat 264’s entitlement to enforce the mortgage. Therefore, even if the motion judge had explicitly considered the issue of promissory estoppel, there was no evidence before her that would support Jonny’s Antiques’ position that 264 was estopped from enforcing the mortgage based on a promise or assurance that it would not do so.

[24] In its factum, Jonny’s Antiques also submits that the motion judge erred in declaring that 264 was in lawful possession of the property because 264 did not seek declaratory relief in its statement of claim or on the motion. However, 264’s statement of claim seeks possession of the property and its notice of motion seeks a declaration that it is in possession of the property. There is no basis for Jonny’s Antiques’ position that 264 did not seek declaratory relief.

[25] At the hearing of the motion, amicus made an argument beyond those set out in Jonny’s Antiques’ materials. He submitted that in order to grant possession of the property under the standard terms of the mortgage, the motion judge had to be satisfied that Jonny’s Antiques was in default, and she failed to make such a finding. I do not see this as a strong ground of appeal. While the motion judge did not make an explicit finding that Jonny’s Antiques was in default, it is implicit from her decision that she was satisfied that it was in default. Jonny’s Antiques did not repay the principal by the July 10, 2019 deadline in the mortgage. While 264 held off on enforcement and allowed Jonny’s Antiques to pay interest only for a period of approximately three years, the July 14, 2023 letter clearly demanded payment by October 10, 2023. Jonny’s Antiques did not respond to the letter or pay the principal by that specified date. In the circumstances, the default is plain on the record.

[26] I am satisfied that the grounds of appeal are weak.

Irreparable Harm

[27] Jonny’s Antiques has failed to put forward any evidence of irreparable harm. There is no evidence that it would be able to obtain alternative financing to avoid the sale. There is no evidence that the business cannot be run from another location. There is no evidence that it was prevented from retrieving any valuables still on the property or that there are in fact any valuables left at the property.

[28] Amicus argues that, when assessing irreparable harm, the court should consider 264’s conduct in selling the property before the motion was heard. While this conduct is of concern, I am not convinced that it is relevant to the issue of irreparable harm. In assessing irreparable harm, the issue is whether Jonny’s Antiques will suffer irreparable harm if the stay is not granted – in other words, if 264 is allowed to sell the property. Whether the sale occurred before or after the motion was heard is irrelevant to this inquiry. In the absence of any evidence of irreparable harm from Jonny’s Antiques, the fact that the sale occurred before the motion was heard is of no moment.

Balance of Convenience

[29] I am satisfied that the balance of convenience favours 264.

[30] As reviewed above, Jonny’s Antiques has not established that it will suffer irreparable harm if the property is sold. In contrast, 264 has waited over five years for payment of the outstanding mortgage. Jonny’s Antiques has provided no evidence that it is in a position to pay the principal. Moreover, if 264 is not allowed to sell the property until the appeal is heard, it will lose its current buyer.

[31] Again, amicus argues that 264’s conduct in accelerating the date of the closing should affect the balance of convenience analysis. I disagree. While any inconvenience to 264 after or as a result of the sale of the property is not relevant to the inquiry, the sale does not tip the balance of convenience in favour of Jonny’s Antiques.

Conclusion

[32] Having regard to weak grounds of appeal, the lack of evidence of irreparable harm and the balance of convenience, I conclude that it is not in the interests of justice in this case to grant a stay.

Costs

[33] As indicated above, the fact that 264 accelerated the closing of the sale of the property to a date before the hearing of the motion does not affect my conclusion that the motion should be dismissed. However, it does affect my decision on costs.

[34] Under the terms of the mortgage, 264 would normally be entitled to its full costs of the motion. However, given its conduct in accelerating the closing to before the motion was heard without notice to Jonny’s Antiques, this is an appropriate case for ordering that 264 is not entitled to costs. In fact, if Jonny’s Antiques had been represented by counsel, I may have considered granting costs to Jonny’s Antiques despite its loss on the motion.

[35] Mr. Johnson sought to schedule the motion before the anticipated May 9, 2025 closing date. 264’s counsel was aware that he intended to bring a motion for a stay. In negotiating the dates for the motion, she advised that she was not available on April 22, 2025, but she did not advise Mr. Johnson that the closing date was being accelerated to April 24, 2025. Mr. Johnson therefore scheduled the motion for May 7, 2025, assuming that this was before the anticipated closing date of May 9, 2025.

[36] When I raised this issue with counsel for 264 on the motion, she submitted that there was nothing improper in accelerating the closing date given that there was no stay in place. While this is technically correct, knowing that Jonny’s Antiques intended to bring a motion for a stay before the anticipated closing date, 264 or its counsel should at the very least have given notice to Jonny’s Antiques of the accelerated closing date. Whether the failure to do so was intentional or inadvertent, it was completely inappropriate and warrants a costs sanction.

[37] In the circumstances, despite 264’s success on the motion, I decline to order any costs payable to 264.

Disposition

[38] The motion is dismissed. No costs are awarded.

[39] I wish to add that, while Jonny’s Antiques was not successful on the motion, Mr. Johnson and the court greatly benefitted from the submissions of amicus.

“L. Favreau J.A.”

Footnotes

[1] Mr. Johnson is a director of Jonny’s Antiques and was given leave to act on its behalf by order of Perfetto J. dated January 31, 2025, pursuant to r. 15.01(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[2] These dates and interactions were not in the record on the motion. However, they were not in dispute. Amicus provided this information based on emails Mr. Johnson had shared with him. Counsel for 264 confirmed that the information was correct when asked about it.