COURT FILE NO.: CV-12-0108358-00

DATE: 20121207

ONTARIO
SUPERIOR COURT OF JUSTICE

BETWEEN:

Hermie Abraham, for the Plaintiff

JEFFREY DAVID SHATFORD Plaintiff – and – JAY MASON Defendant

Crystal O’Donnell, for the Plaintiff

Jay Mason, Self-represented

William Chalmers for the Mortgagee, Fraser Mason

HEARD: December 5, 2012

endorsement

gilmore j.

Overview

[1] The mortgagee of the subject property in this matter, Mr. Fraser Mason (“Fraser Mason”), seeks an adjournment. Fraser Mason is not a party to this action but was served with the materials because his rights as mortgagee are affected by the relief requested by the moving party judgment creditor in this matter.

[2] Fraser Mason seeks an adjournment without terms. The plaintiff seeks terms of the adjournment given the relief sought and the intention of Fraser Mason to seek possession of the subject property on December 17, 2012.

[3] The judgment debtor, Jay Mason, had no material before the court. He attempted to file a four-page single-spaced letter which appeared to be in the form of an Affidavit but was not sworn. He produced this document on the day of the motion and did not give it to counsel until he was about to make submissions. Jay Mason was not entitled to make submissions in the circumstances.

Background

[4] The history of this matter is somewhat complex and bears explanation in order to full understand the reason for the adjournment. The judgment creditor in this matter, Jeffrey Shatford, has brought a motion for various relief. The relief sought includes:

(a) Directions regarding the enforcement of a writ of seizure and sale filed with the Sherriff’s Office in Newmarket on June 6, 2012;

(b) An order for directions regarding the Notice of Garnishment issued June 19, 2012 related to the enforcement of the judgment;

(c) An order for examination under oath of Jay Mason and Fraser Mason regarding enforcement of the judgment;

(d) An order that the motion relating to the judgment creditor’s rights be heard with or one after the other, the related motions in the Family Court proceedings, being FC-11-38820-001, the mortgage action being court file CV-12-460968, and the motion for costs in the discontinued action being court file CV-12-109977;

(e) An order that these motions be heard together or one after the other in Newmarket by the same judge; and,

(f) An order that any proceeds of sale of the assets of the debtor be paid into court pending resolution of this proceeding.

[5] The judgment debtor and his spouse, Stephanie Mason (“Stephanie Mason”), are the owners of a home located at 51 Maurovista Court in Stouffville, Ontario. Stephanie and Jay Mason have separated. There is a court order in the Family Law proceeding requiring that their matrimonial home (the “subject property”) be listed and sold. Although there was an Agreement of Purchase and Sale in the summer, that sale was aborted for various reasons. A term of a family court consent agreed upon by the parties requires that they rotate in and out of the house on a week-about basis pending sale.

[6] Fraser Mason is the father of Jay Mason. Fraser Mason held a mortgage on the matrimonial home with a principal of $550,000.00 when it was first purchased by the parties on May 19, 1996. That mortgage was subsequently assigned to the Royal Bank on May 24, 1996. The mortgage continued to be in favour of Royal Bank at the time that the judgment creditor filed a writ on June 6, 2012. However, on July 17, 2012 the mortgage was assigned back to Fraser Mason. During that time that the mortgage was held by the Royal Bank no payments were made on the mortgage nor (in accordance with the assignment from Fraser Mason) were payments required to be made unless requested. None were requested.

[7] Fraser Mason has commenced an action for power of sale on the mortgage. Jay Mason has not defended. Stephanie Mason has defended the power of sale proceeding. A motion is scheduled in Toronto for December 12, 2012 on that matter.

[8] Stephanie Mason did not appear at the hearing on December 5, 2012 in Newmarket although she was given notice of it. She is self-represented. She provided an Affidavit which the solicitors for Jeffrey Shatford attempted to file on December 5, 2012 in order to provide the court with information on Ms. Mason’s position on the adjournment request. Counsel for Fraser Mason objected to the filing of the Affidavit. As a result of the objections and for timing reasons, Stephanie Mason’s Affidavit was not accepted or reviewed by the court. As such, Stephanie Mason’s position on the adjournment is not known.

[9] Fraser Mason was served with this motion material pursuant to rule 37.07. The judgment creditor is concerned that as a result of Fraser Mason’s stated intention to take possession of the subject property on December 17, 2012, their rights to enforce on their writ of seizure and sale may be affected. The judgment creditor states that there are many issues outstanding relating to the priority of Fraser Mason’s mortgage. They are ultimately seeking to bring a motion under rule 16.08 and conduct cross-examinations regarding priority of the mortgage.

[10] In order to protect the judgment creditor’s rights and pending the determination of priorities under the mortgage, the judgment creditor consents to the adjournment sought by the Fraser Mason but with a term that in the event the home is sold, any proceeds of sale would be paid into court.

[11] Fraser Mason seeks an adjournment without terms so that he may file further and better material and cross-examine. However, his counsel takes the position that ordering the house sale proceeds to be paid into court is akin to injunctive relief which has not been requested by the judgment creditor. Fraser Mason’s counsel argues that the judgment creditor has not met the test for injunctive relief and that the court may not prevent him from receiving the mortgage, principle, interest and other charges to which he is entitled as per the Standard Charge Terms.

[12] Fraser Mason relies on the case of Arnold v. Bronstein , 1970 245 (ON SC) , [1971] 1 O.R. 467-470 (Ont. H.C.). In that case, a mortgagor in possession of a hotel brought an application for an interim injunction to restrain Bronstein, a first mortgagee, from selling under a power of sale contained in his mortgage. Specifically, Mr. Fraser Mason points to an excerpt in that case citing Standard Realty Co. v. Nicholson , (1911), 24 O.L.R. 46 at pages 56-57 :

… there is a marked difference in the power of the Court to interfere where it is a question of rights arising under its own decree, and where it is a question of rights arising from a contract… It appears that Courts have refused to interfere with the proper exercise of a power of sale in all but the most extreme and exceptional cases… The Court has no jurisdiction to restrain a mortgagee from selling under a power of sale, provided he keep within the terms of the power and no case of fraud be made out… The general rule developed from numerous cases is that a mortgagee, acting in good faith and without fraud, will not be restrained from a proper exercise of his power of sale, except upon tender by the mortgagor of the principal moneys due, interest and costs.

[13] There mortgagor Jay Mason has not defended and therefore issues related to payout of the mortgage no longer relate to him. As for Stephanie Mason, there is no evidence that she has tendered payment of the principal, interest and costs due in order to put the mortgage back in good standing.

[14] As mentioned earlier, there was a previous Agreement of Purchase and Sale that was aborted. That sale was to close on July 23, 2012. In anticipation of sale, a discharge statement for the subject mortgage was sent to Jay and Stephanie Mason. The discharge letter dated June 7, 2012 indicates that the total principal balance as of May 19, 2012 was $739,738.29. Accrued interest to July 23, 2012 resulted in a total owing of $746,307.38. The principal that was assigned from the Royal Bank mortgage to Fraser Mason was $550,000.00. There is a concern by the judgment creditor that there would be no funds available for its judgment given the amount owing on the mortgage. The judgment creditor is also concerned that the previous mortgage in favour of RBC did not require that payments be made on the mortgage except at the request of RBC. When the mortgage was assigned to Fraser Mason he required that all outstanding payments be made.

Ruling on Adjournment

[15] There are issues and questions that have arisen in this proceeding which would lend themselves to granting an adjournment. The issue for this court to decide is whether a term of the adjournment should include the requirement that all proceeds from the sale of the subject property be paid into court. The mortgagee strenuously objects to this as interfering with his rights where there is a bona fide mortgage and no evidence of fraud.

[16] Notwithstanding the discontinuance of the judgment creditor’s claim alleging a fraudulent mortgage, there is no reason why this court cannot consider some of the questions and concerns that arise as a result of these various transactions. Having reviewed the material, the concerns of this court are as follows:

1. This is not an arms-length mortgage. The mortgage is held by Mr. Fraser Mason who is the father of the mortgagor, Jay Mason. Jay Mason has not defended the power of sale proceeding. He is in litigation with his wife Stephanie Mason. The Family Law litigation is bitter as Jay Mason was charged with assault and removed from his home. The Family Law litigation is ongoing. One cannot ignore the fact that if the mortgage is paid out entirely to Fraser Mason, not only will the judgment be unable to be executed but Stephanie Mason may receive no equalization payment since the subject property is the main asset of Stephanie and Jay’s marriage;

2. The timing of the assignment of the mortgage from RBC to Mr. Fraser Mason cannot be ignored. The assignment took place after the judgment creditor obtained their judgment and shortly after the writ was registered on the subject property in early June, 2012.

3. There are now four outstanding proceedings in this matter. The within proceeding by the judgment creditor against Jay Mason, the Family Law proceeding between Jay and Stephanie Mason, the costs issue remaining from the discontinuance of the claim by the judgment creditor against Fraser Mason and the power of sale proceeding by Fraser Mason against Jay and Stephanie Mason. It may be inefficient and indeed, unrealistic to have all of these proceedings carrying on in different directions. There may be some valid argument to support consolidating them in all of the circumstances;

4. There are things about previous transactions that simply do not make sense. For example, why was Fraser Mason’s lawyer sending a discharge statement in relation to the sale of the subject property prior to the assignment of the mortgage from RBC to him?

5. What is the effect of Fraser Mason’s possession of the subject property on the writ of seizure and sale registered by the judgment creditor?

6. Jay Mason is an employee and shareholder of Home Technology Solutions Inc. (“HTS”). He holds himself out as President and C.E.O. of HTS. HTS was a registered partnership between Jay Mason and his father Fraser Mason. In December, 2011, HTS was registered with only Fraser Mason as a registered Director.

[17] I do not agree with Mr. Chalmers that the effect of requiring the sale proceeds to be paid into court is the same as injunctive relief. All of the parties involved in these various legal proceedings including Stephanie Mason, the judgment creditor, and Fraser Mason’s rights will be affected by such an order. In effect, it prejudices all of them but there can be no other reasonable resolution pending the determination of the questions I have raised and many others which are raised by the motion material of the judgment creditor.

[18] Finally, although there is a Family court order requiring the subject property to be listed and sold, the home has not sold. Indeed, there is a possibility that the house may not sell before these matters are resolved and that it will not be necessary to pay the proceeds into court.

[19] Given all of the above, I make the following order:

1. The judgment creditor’s motion shall be adjourned to a date agreed upon by counsel; and

2. In the event that the subject property at 51 Maurovista Court, Stouffville, Ontario is sold, the proceeds of sale shall be paid into court to the joint credit of this action and to the credit of the mortgage action, being CV-12-460968. The parties may then determine a schedule for filing further Affidavit material and conducting cross-examinations.

[20] If the parties and Fraser Mason cannot agree on costs for the adjournment hearing they may file a two page summary exclusive of any offer to settle or Bill of Costs on a 7 day turnaround starting with the judgment creditor on December 21, 2012.

Justice C.A. Gilmore

Released: December 7, 2012