ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Deutsche Bank AG, Canada Branch
Plaintiff
- and -
Lewis O’Keefe
Defendant
COUNSEL:
Eric Mayzel for the Plaintiff
Lewis O’Keefe, self-represented
HEARING DATE: June 25, 2012
PERELL, J.
REASONS FOR DECISION
A. INTRODUCTION
1The self-represented Defendant, Lewis O’Keefe, signed a five-year mortgage and made payments for almost three years. He has not made payments for the last year and a half, and his mortgage will come due in a few months. The current holder of the mortgage, Deutsche Bank AG, Canada Branch, seeks to enforce the mortgage, and it brings a motion for summary judgment for payment and possession.
2Largely based on mistrustfulness and his misunderstanding of the law of contract and the complicated law of mortgages, Mr. O’Keefe believes that there are genuine issues for trial and that he has a defence to what is a commonplace mortgage enforcement claim where an assignee of the original mortgagee sues the mortgagor.
3Mr. O’Keefe confronts legal problems that he has not surmounted. Most of his supposed defences have not been pleaded in his statement of defence, most of them have nothing or little to do with the legal rights of Deutsche Bank, and to the extent that they have been advanced to resist the Bank’s motion for summary judgment, the defences are untenable and provide no answer to the Bank’s claim for enforcement of the mortgage it owns.
4By way of a genuine defence, there is only the matter of a proper accounting of the amount of the mortgage debt.
5For the reasons that follow, I grant Deutsche Bank’s motion for summary judgment for possession of the mortgaged property, and pursuant to rule 20.04 (3), I order a reference to determine the amount of the debt.
B. THE AMOUNT OF THE MORTGAGE INDEBTEDNESS
6In the affidavit material prepared for an earlier summary judgment motion in Milton that did not proceed, the Bank claimed that it was owed $270,479.24 as of April 14, 2011, comprised of: (a) $244,955.86 for principal; (b) $10,859.96 for interest arrears; (c) $10,736.42 prepayment penalty; (d) $900 other fees; and (e) $3,000 for legal fees
7In the affidavit material prepared for the motion for summary judgment, the Bank claimed that it was owed $315,859.62 as of September 11, 2011 comprised of: (a) $284,780.47 for principal; (b) $18,087.06 for interest arrears; (c) $4,592.09 prepayment penalty; (d) $900 other fees; and (e) $7,500 for legal fees.
8At the hearing of the summary judgment motion, provided an updated calculation that indicated that the principal amount of the loan had grown to $314,500.
C. FACTUAL AND PROCEDURAL BACKGROUND
9On August 17, 2007, CIBC First Line Mortgages (“CIBC”) issued a mortgage commitment to Mr. O’Keefe. The Canadian Mortgage Housing Corporation (“CMHC”) opened a file and initially approved the CIBC mortgage and agreed to provide mortgage insurance to the lender.
10CIBC, however, cancelled its mortgage commitment, probably because of a mistake about Mr. O’Keefe’s credit worthiness arising from Mr. O’Keefe having gone bankrupt almost seven years earlier when he was a young man. This circumstance is an example, of a matter of concern to Mr. O’Keefe that has nothing to do with the legal rights of Deutsche Bank.
11Mr. O’Keefe needed the mortgage money to close a purchase of a home for his family, and his mortgage broker, Mortgage Architects Inc., arranged a mortgage with MyNext Funding Corporation.
12Mr. O’Keefe believes that the mortgage he obtained from MyNext Funding unjustly enriched MyNext Funding because the mortgage interest rate is higher than the interest rate under the CIBC mortgage commitment.
13In any event, on September 6, 2007 Mr. O’Keefe granted a mortgage to MyNext Funding Corporation on his newly purchased home at 117 Rosethorn Avenue in Toronto, Ontario, in order to finance the purchase. The mortgage secured a loan of $250,173 with interest at the rate of 6.45 per cent per annum. The mortgage had a five- year term and it matures on October 1, 2012. The mortgage was registered on September 7, 2007, as Instrument No. AT1569060.
14The mortgage refers to the Standard Charge Terms No. 20063, and Mr. O’Keefe signed an acknowledgement that he had received a copy of the terms before signing the mortgage. The Standard Charge Terms provided that MyNext Funding could assign the mortgage:
Article 1.1 (u)
“MNFC” means MyNext Funding Corporation, and being the party described in the Mortgage form as the Mortgagee, and the successors and assigns of MyNext Funding Corporation.
Article 7.12
The Borrower agrees that MNFC may securitize, assign or pledge the Mortgage, without the consent of the Borrower. The Borrower irrevocably agrees that MNFC can collect, use and disclose all personal information included in or relevant to the Mortgage (including credit and default information) with respect to the Borrower or any Covenantor in connection with such securization, assignment or pledge, or with respect to collection or enforcement proceedings for the Mortgage.
15Mr. O’Keefe had legal representation for the purchase of his home and for the financing transaction with MyNext Funding. The mortgage transaction closed, and there appears to have been no problem for approximately two and a half years.
16During this time, the mortgage was being administered by MyNext Mortgage Company Ltd. or MCAP Service Corporation, which entities collected the mortgage payments and which later directed the enforcement of the mortgage. There is no evidence that Mr. O’Keefe has not been given credit for the payments that he made.
17I pause here to say that, unfortunately, MyNext Mortgage and MCAP Services’ roles have been a source of misunderstanding and confusion and their involvement and the involvement of their lawyers in collecting and enforcing mortgages that are owned by others aroused Mr. O’Keefe’s suspicions and feelings of being unfairly treated and wronged.
18As the discussion below will reveal, although from a legal perspective, Mr. O’Keefe is mistaken in believing that he has been wronged, it is quite understandable that he might feel unfairly treated. As an instance, while it was not illegal it was certainly not a nice or a decent thing for the Plaintiffs to have commenced the action to enforce a mortgage on a property in Toronto, Ontario, against the self-represented Mr. O’Keefe in a court in Milton, Ontario, where he does not live, especially when they knew about his objections to the mortgage. The enforcement action was eventually transferred to Toronto., Ontario.
19Returning to the narrative, on May 31, 2010, MyNext Funding transferred the mortgage to Computershare Trust Company (“Computershare Trust”) by Transfer of Charge registered as Instrument No AT2395495.
20On July 7, 2010, Mr. O’Keefe defaulted in payment of the mortgage.
21In August 2010, Mr. O’Keefe wrote the Vice President of Underwriting at MyNext Mortgage inquiring how it was that it was enforcing a mortgage that was now registered as owned by Computershare Trust. An answer was provided, but Mr. O’Keefe was not satisfied with the answer.
22Mr. O’Keefe made partial payments on September 16 and 22, 2010, but he did not bring the mortgage into good standing.
23On September 21, 2010, Computershare Trust commenced an action against Mr. O’Keefe claiming payment plus interest and costs and possession of the mortgaged premises. The statement of claim was served on September 23, 2010.
24Around this time, MyNext Mortgage’s lawyer spoke to Mr. O’Keefe and told him that the mortgage would not be enforced for 60 days to provide Mr. O’Keefe with an opportunity to bring it into good standing. Mr. O’Keefe did not take up this opportunity and has not made any mortgage payments since September 2010.
25On October 20, 2010, Mr. O’Keefe delivered a Statement of Defence and Counterclaim. For present purposes, the pertinent paragraphs of the pleading are as follows:
O’Keefe submits that the Plaintiff does not have standing as they act as title custodian, this by their own admission, and has not suffered damages as they do not retain an obligation on said property (mortgage agreement) and puts the Plaintiff to the strictest proof thereof.
O’Keefe states that the Plaintiff is not entitled to collect for mortgage payments made by the Defendant and leaves the Plaintiff to the strictest proof thereof. ….
COUNTERCLAIM
The Defendant, Lewis O’Keefe (“O’Keefe”), Plaintiff by Counterclaim, claims:
That the Plaintiff does not have standing as they act as title custodian and do not retain any obligation or mortgage agreement, and, that they cannot lawfully receive mortgage payments, this by their own admission. As such, the Plaintiff has not suffered any damages nor can they rightfully make this claim.
The Defendant maintained good standing regarding mortgage payments to myNext Funding Corporation (“myNext”), while myNext retained title to the property.
On or about July 12, 2010, O’Keefe became aware of the transfer of title through his lawyer’s office without any prior notification from any parties to the transaction.
On or about August 11, 2010, O’Keefe contacted the Plaintiff to arrange for mortgage payments. The Plaintiff notified O’Keefe regarding the direction on making payments to myNext.
On or about August 16, 2010, O’Keefe received the results of an investigation started by Stewart Title Guaranty regarding several transactions on title completed and processed without notification to the Defendant.
On or about August 18, 2010, O’Keefe contacted myNext requesting disclosure in an effort to clarify matters.
15.On or about August 25. 2010, O’Keefe received his first response to questions posed on August 18, 2010. Several e-mails ensued in an effort to clarify matters.
On or about September 7, 2010, O’Keefe received advice from Tracy Cox, General Counsel, myNext, to “retain independent legal advice regarding this matter.”
On or about September 14, 2010, O’Keefe delivered a money order in the amount of $1,488.30 to the offices of myNext. A second money order was made and delivered in the amount of $1,255.00 on or about September 17, 2010, at which point arrangements for remaining balance of $1,726.60 be delivered on September 21, 2010.
On or about September 21, 2010, O’Keefe received notice that a claim was filed by the Plaintiff.
O’Keefe therefore claims:
a. without prejudice to any other remedies available to the Defendant, $71,736.96 which represents the repayment made by the Defendant since September 2007, including interest at a rate of 6.45 per cent.
b. all costs of this action, including the Defendants time-based on pro se representation; and
c. such further and other relief as the Honourable Court may deem just.
26As appears from his statement of defence, Mr. O’Keefe seems to have been mystified by how it can be that an assignee of a mortgage can enforce a mortgage. This, of course, is not unusual and Mr. O’Keefe’s concerns indicate that he does not understand the normal operation of the standard mortgage terms that he had acknowledged.
27Mr. O’Keefe became further confused when he made inquiries and learned that CMHC’s records indicated that it was providing mortgage insurance for Mr. O’Keefe’s mortgage.
28This information, however, was incorrect and was simply another source of confusing Mr. O’Keefe. While there is evidence that CMHC would have insured a loan from CIBC, there is no evidence that it was involved in the mortgage transaction that is the subject matter of this action. Similarly, despite Mr. O’Keefe’s concerns that CIBC will sue him for payment, there is no basis for this concern.
29On November 24, 2010, Computershare Trust Company transferred the mortgage to Deutsche Bank by Transfer of Charge registered as Instrument AT2558903.
30I pause again to say that this transfer is an example of another confusing act that stirred up Mr. O’Keefe’s suspicions as it would appear odd to him that Deutsche Bank would acquire a mortgage already in default.
31On April 20, 2011, pursuant to rule 11.02, on the requisition of Computershare Trust, it was ordered that the action continue with the Deutsche Bank as Plaintiff.
32A notice of transmission, of course, is not an uncommon procedural phenomenon. However, this sort of thing causes Mr. O’Keefe to ask questions and he wants to know more about the relationships between the mortgage brokers, and the series of mortgage lenders and also about their relationships with mortgage and title insurers. He also wants a review of the conduct of all the lawyers involved by the Law Society of Upper Canada to determine whether they may breached their ethical obligations. He submits that these matters raise genuine issues for trial.
D. DISCUSSION
33There are no genuine issues for trial. There is no doubt that Mr. O’Keefe borrowed $250,173 and agreed to repay it with interest at the rate of 6.45 per cent per annum. There is no genuine issue for trial that the mortgage went into default and the mortgage has remained in default since the summer of 2010. As a legal matter, that the mortgage has been assigned and is being enforced by an assignee is unexceptional, and this circumstance does not provide Mr. O’Keefe with any defence to his obligation to repay the loan.
34Mr. O’Keefe’s pleaded defences are untenable as are the unpleaded defences he provides to the motion for summary judgment. The defences appear to be based on misunderstandings of the operation of the law.
35For example, apart from the fact that the defence has not been pleaded and, therefore, cannot be relied upon, there is no genuine issue for trial that the mortgagees have not been unjustly enriched.
36I agree with Deutsche Bank’s argument set out in paragraph 7 of the Bank’s reply factum as follows:
- Contrary to paragraph 10 of Mr. O’Keefe’s affidavit neither MyNext Mortgage, nor its assigns, including Deutsche Bank, have been unjustly enriched. The basis for Mr. O’Keefe’s allegation in this regard is that the applicable insurance premium and lending rate in his current mortgage are higher than those proposed by the cancelled CIBC mortgage commitment. MyNext Mortgage was not under any duty to match the terms of the cancelled mortgage commitment, which offered an entirely different mortgage product. …. Mr. O’Keefe was free to accept or reject the terms of the Mortgage issued by MyNext Mortgage. He accepted the mortgage, in the presence of his lawyer. The mortgage constitutes a juristic reason for any alleged enrichment or detriment (which is denied), and prevents the possibility of any unjust enrichment.
37The only genuine matter of doubt is what is the proper amount owing to the Bank.
38I am satisfied that Deutsche Bank is owed the outstanding principal and interest for the loan. However, I am not satisfied that it has correctly calculated the amount of that principal and interest and Mr. O’Keefe may be able to challenge the amounts claimed for a prepayment penalty, other expenses, and legal fees.
E. CONCLUSION
39I am, therefore, granting the Bank summary judgment for possession and pursuant to rule 20.04 (3), I order a reference to determine the amount of the debt.
40If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Bank’s submissions within 20 days of the release of these Reasons for Decision, followed by Mr. O’Keefe’s submissions within a further 20 days.
41Judgment accordingly.
Perell, J.
Released: July 4, 2012
COURT FILE NO.: 11-CV-436620
DATE: July *, 2012
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Deutsche Bank AG, Canada Branch
Plaintiff
‑ and ‑
Lewis O’Keefe
Defendants
REASONS FOR DECISION
Perell, J.
Released: July 4, 2012.