Court of Appeal for Ontario

Date: 2025-10-01 Docket: COA-25-CV-0021

Judges: Gillese, Favreau and Rahman JJ.A.

Parties

Between

Jay Patel Plaintiff (Respondent)

and

2811230 Ontario Ltd., Alisa Chaly, The Corporation of the City of Niagara Falls, 1000247710 Ontario Inc. and AMB X Energy Inc. Defendants (Appellants*)

Counsel

Alisa Chaly, acting in person for the appellants

Glenn Cohen, for the respondent

Hearing and Appeal

Heard: September 26, 2025

On appeal from: the judgment of Justice Robert B. Reid of the Superior Court of Justice, dated December 3, 2024, with reasons reported at 2024 ONSC 6731.

Reasons for Decision

Introduction

[1] 2811230 Ontario Ltd. ("281") and Alisa Chaly (together, the "appellants") failed to pay a mortgage when it fell due. The respondent started a foreclosure action, after which he successfully moved for summary judgment. The appellants appeal against the ensuing judgment.

[2] After hearing from the appellants at the oral hearing of the appeal, the court found it unnecessary to call on the respondent. We advised the parties that the appeal was dismissed with brief reasons to follow. These are the promised reasons.

Facts in Brief

[3] The respondent, Jay Patel, holds a first mortgage in the principal sum of $392,000, registered against a residential property in Niagara Falls (the "Property"). The Property is owned by 281. Ms. Chaly is 281's sole officer and director; she guaranteed the mortgage.

[4] By letter dated January 26, 2022, the respondent committed to lend 281 the sum of $392,000, secured by a charge against the Property (the "commitment letter"). The funds were advanced and the charge was registered. The appellants and the respondent were represented by legal counsel throughout the transaction. Ms. Chaly accepted the terms of the commitment letter. After signing the commitment letter and initialling each page, she provided it to the appellants' lawyer. Based on the record, the appellants' lawyer then forwarded the signed and initialled commitment letter to the respondent's lawyer. However, it appears the respondent failed to sign the commitment letter, as the space over his printed name on the commitment letter is blank.

[5] The appellants made the required payments during the one-year term of the mortgage which matured and came due on February 2, 2023.

[6] The mortgage was not renewed. At the time of the summary judgment motion, the appellants had made no payments after the mortgage came due on February 2, 2023. Thus, the mortgage remained unpaid, with interest accruing and compounding monthly after maturity.

[7] 281 had purchased the Property as an investment for resale. The appellants made improvements to the Property and listed it for sale. The respondent knew the Property had been listed for sale and took no immediate enforcement steps after the mortgage matured because he anticipated the Property would sell and he would be paid out.

[8] When no sale took place, the respondent started an action for payment of the mortgage and possession of the Property in July of 2023. A default judgment was obtained but set aside for improper service of the statement of claim.

[9] At one point, the respondent directed a process server to take possession of the Property on his behalf by changing the entrance door locks. The appellants had the locks changed again and retook possession of the Property.

[10] Ms. Chaly deposed that she moved into the Property as her residence in the first week of June 2024. She also stated that at around that time, a tenant/roommate moved into the Property's second bedroom. She filed a lease form in his name dated September 27, 2024.

[11] On the summary judgment motion, the respondent obtained orders for foreclosure, payment of the debt, possession of the Property, and leave to issue a writ of possession.

The Decision Below

[12] In his reasons, the motion judge addressed and decided all of the issues the appellants had raised. A brief summary of his reasons for so deciding follows.

[13] The appellants claimed that because the mortgage commitment was not signed by the respondent, the debt obligation was negated and its terms did not apply. The motion judge rejected this claim because he found that the commitment had been fully executed, as evidenced by payment of the money and registration of the charge. The lack of the respondent's signature on the commitment letter was irrelevant.

[14] The appellants also claimed that the lack of signature may have been intentional and was an indication of civil fraud or conspiracy. They further claimed that a distorted copy of the respondent's driver's license appended to his affidavit was an alteration or forgery. In addition, the appellants suggested that the respondent was not a real person and the summary judgment motion was brought to avoid exposing that he did not exist.

[15] The motion judge rejected these claims because the appellants failed to provide evidence to support them, noting they were obliged to "put their best foot forward" on the motion. (We observe that an updated scan of the respondent's driver's license was appended to a supplementary affidavit.)

[16] The appellants maintained that the lease with the tenant was a possible bar to foreclosure and, as such, raised a genuine issue requiring a trial. The motion judge rejected this submission, stating that whether there was a lease was not a question for the court because foreclosures relate to the relationship between the chargor and chargee, and any order would be subject to the possessory rights of a legitimate tenant.

[17] The appellants claimed that due to the lack of signature on the commitment letter, the standard charge term permitting the chargee to take possession on default should not apply. The motion judge found this argument failed based on his prior finding that the commitment letter was valid.

[18] The appellants claimed that the respondent's taking of possession was not done peaceably. The motion judge found no suggestion of violence or the threat of violence and, further, that any potential claim in trespass was not relevant to the foreclosure action.

[19] The appellants also claimed the respondent failed to act with due diligence in advising them whether the charge would be renewed after maturity. As they had improved the Property at their cost, the appellants claimed it would be unfair to permit the respondent to reap the benefit of those improvements.

[20] The motion judge rejected this claim because the commitment letter did not contain a provision that the charge would automatically renew and there was no evidence that the appellants had been misled about a renewal. The fact no enforcement steps were taken immediately after the mortgage matured was explained by the respondent anticipating the imminent sale of the Property.

[21] The appellants had counterclaimed, alleging that the respondent's lack of information regarding renewal meant they could not decide whether to renew and it was not possible to find an alternative lender. The motion judge found no evidence to support the appellants' counterclaim and dismissed it.

The Issues on Appeal

[22] The appellants raise essentially the same issues on appeal as they did on the motion below.

Analysis

[23] At the oral hearing of the appeal, the appellants focused on their primary ground of appeal, namely, that the mortgage was invalid because the respondent had not signed the commitment letter and, therefore, its terms did not govern the transaction.

[24] We do not accept this submission. The appellants do not challenge the motion judge's findings that: the funds were advanced to the appellants; the charge was registered against title to the Property; and the appellants paid the monthly charges during the term of the mortgage. The appellants do not point to any alleged errors of fact or law in the motion judge's determination of this matter. They simply reiterate the arguments made below that the absence of the respondent's signature renders the mortgage invalid. We reject this submission for the reasons of the motion judge.

[25] In terms of the other grounds of appeal raised by the appellants in their factum, none provide a basis for appellate intervention with the decision below.

Disposition

[26] The motion judge addressed all of the issues the appellants raised. He resolved those issues in accordance with the correct legal principles, as applied to the factual findings he made, all of which were fully open to him on the record. We view the motion judge's reasons as excellent and adopt them in whole.

[27] Accordingly, the appeal is dismissed with costs to the respondent fixed at $4,000, all inclusive.

"E.E. Gillese J.A."

"L. Favreau J.A."

"M. Rahman J.A."