SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-09-388734
DATE: 20130319

RE: Bryan M. de Lima et al., Plaintiffs

AND:

The TD Bank Financial Group (also known as The Canada Trust Company), Defendant

BEFORE: Carole J. Brown J.

COUNSEL:
No one appearing for the Plaintiffs, although properly served
Eric Golden, for the Defendant

HEARD: February 14, 2013

ENDORSEMENT

[1] The defendant, the TD Bank Financial Group (also known as the Canada Trust Company) (hereinafter "CT") moves for an Order:

(a) striking out the purported Trial Record served and filed by the plaintiffs and removing this matter from the Trial List;

(b) setting aside the Order of the Registrar made August 22, 2012, at the behest of the plaintiffs and without notice to CT, setting aside the "Order Dismissing Action for Delay" issued by the Registrar on July 25, 2012, pursuant to Rule 48.14 dismissing this action;

(c) reinstating the Dismissal Order;

(d) compelling the Civil Intake Office of the Motions Scheduling Unit of the Ontario Superior Court of Justice at Toronto to provide CT with the e-mails that Brian de Lima sent to the status hearing office and to Joe Doria, the Supervisor of the Civil Intake Unit, from June 6, 2012 to August 22, 2012, the date the Dismissal Order was set aside; and

(e) its costs in accordance with the terms of the mortgage.

[2] This motion was originally scheduled to be heard November 14, 2012. Following a request for adjournment from the plaintiff, Mr. de Lima, on November 5, 2012 due to illness, the motion was adjourned by Goldstein J. to February 14, 2013, peremptory on the plaintiffs, with costs for that attendance reserved to the motions judge.

[3] At the commencement of the hearing of this motion, counsel for CT provided me with correspondence dated January 30, 2013, from the plaintiff, who had moved to the UK, sometime after 2004, advising that he would be unable to attend court, again due to medical reasons. The plaintiff did not retain either an agent or a lawyer to represent him at this hearing, despite the fact that the adjournment of the motion had been made peremptory on the plaintiffs.

[4] While I am mindful of and do not wish to doubt the plaintiff's illness, nor the seriousness thereof, given the history of this matter as set forth herein, I determined that this Court should proceed to hear the motion.

The Facts

[5] In 1991, the plaintiffs had a mortgage with Royal Trust Corporation of Canada ("Royal Trust") in the amount of $222,000 and 10.5% interest, which mortgage was transferred to the defendant, CT in 1995. In 2003, the plaintiffs stopped paying their municipal property taxes owing on the mortgaged property and, pursuant to the terms of the mortgage, CT added these amounts to the outstanding balance owing on the mortgage. Also in 2003, the plaintiffs defaulted on two other loans held with TD and CT, for which default judgment was obtained in the amount of $18,540.81 plus interest of 7.4% per annum on a line of credit and in the amount of $64,231.96 plus interest of 18.5% per annum on a Visa credit card facility.

The Mortgage

[6] The mortgage held by CT went into default in 2004 and, on October 4, 2005, CT obtained a default judgment against the plaintiffs for possession of the property in payment of $193,641.31 owing under the mortgage, plus interest and costs. Despite having been provided proper notice, the plaintiffs failed to take any steps to have the default judgment set aside, and a writ of possession was issued on October 2, 2006. The defendants did not enforce the writ, due to negotiations entered into by the parties, which subsequently failed. In the interim, the writ had expired.

[7] On June 18, 2008, CT's lawyer advised the plaintiffs that the mortgage would mature on September 1, 2008 and would not be renewed. On September 1, 2008, the balance under the mortgage became due and owing. The plaintiffs alleged that the mortgage did not have a maturity date and brought a motion to set aside the mortgage and default judgment. CT brought a cross-motion for leave to issue a new writ of possession for the property. On October 6, 2008, the plaintiff's motion was dismissed and CT's cross-motion was granted, the judge finding that there was no defence on the merits and that "the defendants [the de Limas] contention that the mortgage agreement was indefinite defies logic".

[8] The plaintiff thereafter brought a motion for an Order staying enforcement of the mortgage, which was dismissed on September 29, 2009. Shortly thereafter, the plaintiff brought a second motion for an Order staying enforcement of the mortgage, which was also dismissed and the plaintiff's application for leave to appeal to the Supreme Court of Canada was denied.

[9] Pursuant to the new writ of possession over the property, CT took possession, provided the plaintiffs with updated payout statements for the mortgage and the default judgments and thereafter, proceeded to sell the property under power of sale. CT commissioned an appraisal for the property which estimated its value at $540,000. The property ultimately sold for $572,500 on December 12, 2009. The proceeds of sale payable to CT following payment of real estate commissions and municipal tax adjustments totaled $546,042.33. The plaintiffs were advised that the surplus proceeds of sale would be disbursed and all third-party disbursements paid, which was done. Surplus proceeds of $261,861.60 remained, from which CT sought to recover the costs of its enforcement proceedings.

The Original Claim

[10] On October 8, 2009, unbeknownst to CT, the plaintiff issued a statement of claim against the defendants with respect to the mortgage, which was served on April 1, 2010. The claim seeks damages of $550,000.

[11] The plaintiffs retained counsel in April of 2010. The plaintiffs took issue with the detailed accounting provided by CT and, on May 7, 2010, advised that they would be amending the original statement of claim, which would be served on or before June 24, 2010. The plaintiffs subsequently served a Notice of Intent to Act in Person on May 31, 2010 and again retained counsel on June 4, 2010.

Procedural History before the Courts

[12] On May 13, 2010, Roberts J. ordered that the amount of $185,000 be paid by the defendants to the plaintiffs, with the sum of $76,000 to be held by the defendants, documentary production to be made and the original statement of claim to be amended, with the fresh as amended claim to be delivered by May 25, 2010. The surplus proceeds were paid to the plaintiffs, documentary production delivered by CT and, on May 25, 2010, a proposed fresh claim was mailed to counsel for the defendants, who advised that they would oppose the plaintiffs' motion to amend the original claim in the form of the proposed fresh claim, at the return of the motion on June 24, 2010, and provided the details of their opposition.

[13] CT's motion to strike the original claim, scheduled for June 24, 2010, was adjourned as plaintiffs’ counsel advised that Mr. de Lima "has very advanced cancer and is in a palliative state of treatment". On August 5, 2010, Roberts J. advised CT that the plaintiff was corresponding directly with the Court. Thereafter, the plaintiffs traveled to Western Australia and returned to the UK.

[14] CT's motion to strike the proposed fresh claim was subsequently heard on October 19, 2011, and, pursuant to the Order of Conway J., four paragraphs were struck without leave to amend, and another 19 were struck with leave to amend. To date, the plaintiffs have not moved to amend the claim. The defendants argue that, in its present state, the statement of claim fails to set forth a sufficient factual basis to support a claim and, accordingly, that the statement of claim discloses no cause of action.

[15] On April 13, 2012, the Registrar issued a Status Notice: Notice Not on Trial List indicating that the action would be dismissed for delay pursuant to Rule 48.14 (10) within 90 days. At that time, the original claim had been struck, the majority of the proposed fresh claim had been struck, some paragraphs with leave to amend, and no fresh amended claim nor any defence had been filed.

[16] The action was dismissed by the Registrar in July 25, 2012, pursuant to Rule 48.14 by an Order Dismissing Action for Delay. It was subsequently learned by the defendants that, pursuant to communications by the plaintiff with the Court Trial Office, the plaintiff had the Dismissal Order set aside and filed a Trial Record consisting of the original claim that had been struck, the proposed fresh claim, the majority of which had been struck, a Jury Notice and the material filed on the motions to strike the original claim in the proposed fresh claim.

[17] This motion ensued.

Analysis

[18] Pursuant to Rule 48.14 of the Rules of Civil Procedure, a Dismissal Order may be issued by the Registrar where an action has not been placed on a Trial List or terminated by any other means two years after the first defence is filed, or 90 days after a Status Notice has been issued where no action has been taken in response to the Status Notice. Pursuant to the Rules, a defence includes a Notice of Intent to Defend and a Notice of Motion in response to an action. In this case, in response to the Status Notice of April 13, 2012, the plaintiff attempted to file a Trial Record. The Record could not be filed, as the pleadings in the action had not closed. The action was thereafter properly dismissed by the Registrar on July 25, 2012, pursuant to Rule 48.14. Counsel for CT received a notice from the Court on October 1, 2012 enclosing the "Certification Form to Set Pretrial and Trial Date" and, upon inquiry, was advised that the plaintiff had spoken with the Trial Coordinator's Office and Civil Intake and had had the Dismissal Order set aside, without notice to CT.

[19] On the basis of all of the evidence before me, of which I have set forth a significant portion, above, I am satisfied that the Dismissal Order was properly issued and that the action was not properly set down as there was no statement of claim which had been properly amended or filed, such that CT was unable to deliver a statement of defense. Thus, the pleadings had not closed. It is clear that the plaintiff should have properly amended the statement of claim to set forth material facts to support a cause of action , that the plaintiff should have had that claim served and filed with the Court, following which CT would have been able to serve and file a statement of defence. This was not done. Further, upon receiving the Status Notice, the plaintiffs did not moved to schedule a Status Hearing in order to accomplish the foregoing steps. I am satisfied on all of the record before me that the defendant's motion should be granted.

CT's Costs

[20] CT seeks its cost of this entire mortgage action in the total amount of $80,087.20. Counsel for CT have provided me with the detailed bills of cost for each stage of action commencing April 1, 2010 to September 30, 2012. As early as April of 2010, CT offered to settle the plaintiff's original claim on payment out of the surplus proceeds, waiving costs of the original claims in return for a full and final release of said claims, seeking further to put the plaintiffs on notice of its enforcement proceedings costs to April 6, 2010, in the amount of $64,231.96 all-inclusive. It further advised that, if the claim were to go forward, CT would seek payment from the surplus proceeds of all of its costs. The plaintiffs did not accept CT's offer and, accordingly, CT now seeks its full costs of these proceedings.

[21] The standard charge terms of the mortgage allowed CT as chargee or mortgagee to distrain for arrears of interest, overdue principal and "any other sums payable under the charge" and to collect all costs and expenses as between solicitor and client incurred by the mortgagee endeavoring to collect any monies overdue under the mortgage whether or not legal proceedings are instituted.

[22] The plaintiff argues that the surplus proceeds currently in trust, which presently amount to $77,894, equates to a distraint of an asset to pay the costs owing under the mortgage, and that it should be awarded its full indemnity costs pursuant to the terms of the mortgage. It argues that the wording of the mortgage clause providing for solicitor and client costs is not limited to foreclosure or collection actions, but is applicable in situations where the mortgagee is defending its security interest by resisting motions or actions brought by the mortgagor. While the defendant recognizes that costs remain always in the discretion of the Court, it admits that generally, where there is a contractual right to costs, the Court will exercise its discretion to reflect those rights, and an award of costs on a partial indemnity basis in such circumstances may constitute an error in principle, relying on Bossé v Mastercraft Group Inc. [1995] O.J. No. 84 (Ont. C.A.), MCAP Financial v Fernicola [2010] O. J. No. 20 (S.C.J. ).

[23] I find, based on the evidence, including the notice by CT to the plaintiffs that full costs would be sought if the plaintiffs chose to go ahead rather than settling the claim, which at that time amounted to $64,231.96, that the plaintiffs would reasonably have expected to pay the amounts now sought by CT. I further find that CT's costs are proportional to the full amounts in issue.

[24] Accordingly, I order as follows:

(1) that the Order of the Registrar dated August 22, 2012, without notice to CT, setting aside the Order Dismissing Action for Delay issued by the Registrar on July 25, 2012 be set aside and the Dismissal Order re-instated;

(2) that the Trial Record dated July 1, 2012, served and filed by the plaintiffs, be struck and this matter removed from the Trial List;

(3) that CT's costs of the entire action, including this motion and the motions previously adjourned, be paid by the plaintiffs pursuant to the terms of the mortgage, in the total amount of $80,087.20, inclusive of disbursements and HST, to be paid from the trust account containing the remaining surplus proceeds of sale of the property, as originally ordered by Roberts J., the balance to be paid by the plaintiffs.

Carole J. Brown J.

Date: March 19, 2013