Court File and Parties

Court File No.: CV-11-420056
Date: 20120316
Superior Court of Justice – Ontario

Re: COMMUNITY TRUST COMPANY and B2B TRUST, Plaintiffs

AND:
ALEXIS PETROU and ALEX PETROU, Defendants

Before: Low J.

Counsel:
Michael A. Katzman , for the Plaintiff

Angela Assuras , for the Defendants

Heard: March 14, 2012

Endorsement

[ 1 ] The defendants seek an injunction to restrain the execution of a writ of possession obtained pursuant to the plaintiffs’ judgment for possession and payment in a mortgage action.

[ 2 ] The defendant Alexis Petrou is the daughter of the defendant Alex Petrou and is the owner and mortgagor of a residential property. Alex Petrou is the guarantor of the mortgages to the plaintiffs. The owner does not reside in the property. The property is occupied by the defendant guarantor and his wife.

[ 3 ] Following default on the mortgage, the plaintiffs issued a statement of claim on February 11, 2011 for payment and possession. The defendants did not defend and judgment issued on March 15, 2011 granting possession to the plaintiffs and requiring payment of $496,055.33 plus costs and post-judgment interest at 8%.

[ 4 ] A writ of possession was issued in May 2011 and was executed on May 25, 2011. On May 30, the parties entered into a forbearance agreement. A payment of $30,000 was made by the defendants toward arrears, fees, legal fees and outstanding principal and Alex Petrou and his spouse were permitted back into the house. The period of forbearance was one month, terminating on June 30, 2011. A term of the forbearance agreement was that the defendants were to immediately list the property for sale with an agent approved by the lender (plaintiffs) or their mortgage manager.

[ 5 ] The defendants did not list the property for sale.

[ 6 ] When the period of forbearance terminated the judgment remained unsatisfied but the defendants did not return possession to the plaintiffs.

[ 7 ] A second writ of possession was issued on August 30, 2011 and the Sheriff’s Notice to Vacate was issued September 1, effective September 19, 2011 and pursuant to which the plaintiffs took possession again.

[ 8 ] On September 27, 2011, a solicitor acting for the defendants sought a discharge statement, indicating that the defendants were working on a refinancing. The defendant Alex Petrou indicated to the plaintiffs on November 30, 2011 that the refinancing was to close in the next few days. It did not. In the interim, the defendants had been permitted to go back into possession on a second forbearance upon payment of a further $25,000 on account.

[ 9 ] On January 25, 2012, the plaintiffs obtained a third writ of possession. The sheriff has given notice that the writ is to be executed on March 14, 2012. The defendants brought a motion served on the plaintiffs on March 13 and which I permitted to be argued on short notice for an injunction to restrain the execution of the writ.

[ 10 ] The defendants ask that the court intervene to restrain the plaintiffs from enforcing their rights under the writ of possession because they have made arrangements for refinancing that cannot come to fruition until after the defendants have litigated and obtained a decision on a motion that they have brought against a third mortgage to determine the amount owing on the third mortgage and thereafter to discharge the third mortgage. It is the defendants’ contention that the third mortgagee is holding them to hostage by demanding an unjustifiable sum for discharge of the third mortgage.

[ 11 ] Mr. Petrou deposes that that motion is to be heard on April 12, 2011 with the date peremptory to the third mortgagee. I note, however, that the endorsement of the court at Newmarket dated January 25, 2012 requires all cross-examinations to be completed by March 31, undertakings to be complied with by April 30, and that “the matter can be brought back on for a regular motion date by either party on 7 days notice after May 1, 2012. The next return date is peremptory on the responding party….” In my view, however, whether the motion is returnable on April 12 or some time after May 1 is of no great significance.

[ 12 ] The defendants’ argument is that waiting another month more or less is not going to prejudice the plaintiffs because interest will continue to run, whereas Alex Petrou and his spouse being dispossessed of their home in the interim will be devastating to them and they would surely lose all of the equity in their home.

[ 13 ] On March 2, 2012, Katherine Petrou and Timonthy Petrou, Alex Petrou’s wife and son respectively, made an offer to purchase from “866806 Ontario Ltd., Second Mortgagee under Power of Sale”. 866806 Ontario Ltd. is not a party in this action and its status is not clear on the evidence as it is not shown as having an interest in the parcel register appended as Exhibit R to Mr. Petrou’s affidavit. The offer was for $650,000, the high end of the appraisals obtained by the lenders, and an uncertified cheque for $5,000 was tendered as a deposit, drawn on the account of “KP Billing Medical Inc.”.

[ 14 ] The defendants are critical of the plaintiffs for not accepting the offer, arguing that had it been accepted, the plaintiffs would have been completely paid out. If it should transpire that the plaintiffs ultimately sell the property for a lesser amount, there may be an issue as to whether they acted in a commercially reasonable way in turning away this offer. Given the failure of the defendants to refinance, there are legitimate questions as to whether the offer was a genuine and viable one or merely a delaying tactic.

[ 15 ] The defendants also argue that if the writ is executed, the plaintiffs will be entitled under the guarantee given by Alex Petrou to charge $750 per day for the administration, maintenance and securing of the property whereas if they were permitted to remain in occupation until their litigation with the third mortgage is concluded and their arrangements for replacing the first and second mortgage financing are in a position to proceed, that additional expense would be avoided.

[ 16 ] It is common ground that there is no agreement for a forbearance at this time. The evidence is conflicting concerning a discussion about a third forbearance on payment of $30,000. According to Mr. Petrou’s evidence, the plaintiffs demanded a $30,000 payment for a third forbearance. According to the evidence filed by the solicitor for the plaintiffs, Mr. Petrou offered a payment of $30,000 if the plaintiffs would forbear a third time, but he failed to produce the payment. In either case, it is clear that there is no agreement to forbear.

[ 17 ] In my view, there is no basis for an injunction.

[ 18 ] The defendants have not identified a right that the plaintiffs have interfered with or that they will interfere with unless restrained. The plaintiffs have a right to possession. The defendants do not. The defendants ask the court to mandate an indulgence in their favour but there is no legal basis for it.

[ 19 ] There is of course no pleading because the judgment went on default.

[ 20 ] The defendants seek, in addition to injunctive relief, an order vacating the writ of possession. There is no evidentiary basis to support such a claim. In argument, counsel alluded to the defendants’ position that the spouse of Alex Petrou should have been served with the statement of claim because the property was her matrimonial home. Apart from the significant issue that Alex Petrou’s spouse is not the spouse of the mortgagor/owner, there is no evidence that she was not served.

[ 21 ] More significantly, in relation to the claim for an injunction, there is no identified right of the defendants that can be said to be in jeopardy of interference by the plaintiffs.

[ 22 ] Given my views about the absence of a serious issue, it is unnecessary to deal with the other two factors in RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311 but I would note that the contemplated results of loss of possession by the defendants under the writ and which are said to be irreparable harm to them are all compensable and calculable in damages.

[ 23 ] The motion is therefore dismissed. Costs to the plaintiffs, fixed at $4,500, payable forthwith.

Low J.

Date: March 16, 2012