COURT FILE NO.: CV-13-113217

DATE: 20130704

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Utradecanada.com Inc., Plaintiff

-and-

Corinna Pollett and Dave Pollett, Defendants

BEFORE: The Honourable Mr. Justice M.L. Edwards

COUNSEL: Emilio Bisceglia, for the Plaintiff

J. Barry Eakins, for the Defendants

HEARD: July 2, 2013

ENDORSEMENT

[1] The defendants seek an order setting aside or staying the order for possession and writ of possession, granted by Vallee J. on April 17, 2013, as well as an order that the plaintiff provide a full and proper accounting of the assets seized from Commander Transportation Services Inc. (“Commander”).

[2] The procedural history leading to this motion is important to obtain an understanding of orders made by Vallee J. on April 17, 2013, as well as the order of Mullins J., dated May 30, 2013 that stayed the execution of the writ of possession obtained as a result of the order of Vallee J.

The Facts

[3] The plaintiff entered into a lease with Commander with respect to property at 1245 Martingrove Road, Toronto, Ontario (the “property”). The plaintiff was the landlord. Commander was the tenant. There is no dispute that Commander defaulted in payment under this lease and as a result the plaintiff and Commander entered into a new lease, dated July 1, 2012 (the “July 2012 lease”).

[4] To secure the obligations arising from the July 2012 lease, a general security agreement was executed by both Commander and Unloaders Inc., as debtors. As further security for the July 2012 lease, the plaintiff obtained a second mortgage against property municipally known as 4135 Midland Drive, Burlington, Ontario (the “Burlington property”).

[5] After the execution of the July 2012 lease and the security documentation referred to above, a further default occurred on September 2012. The terms of the July 2012 lease then required Commander to pay the balance owing for the full term of the lease. With the default, the plaintiff served a notice of sale on September 5, 2012 with respect to the Burlington property. The owner of the Burlington property is Corinna Pollett. Notice was given to Dave Pollett with respect to any potential possessory interest that he may have in the Burlington property, pursuant to the Family Law Act.

[6] A request was made of the defendants to provide information with respect to the location of assets in the security agreement. As a result of the defendants’ alleged refusal to provide such information, the plaintiff commenced an application, bearing court file number CV-12-470784. The defendants were served with the application as well as notices of examination. Examinations in aid of the motion were conducted of both defendants on January 16, 2013. An order of Low J. was made on January 22, 2013, which was made partially on consent of the parties and required that the respondents, Commander, Unloaders, Dave Pollett and Corinna Pollett disclose in writing to the applicant the whereabouts of the assets of Commander, as well as other relief.

[7] The present action was commenced on February 20, 2013. The only relief sought in the statement of claim in this action is payment of the sum of $105,000.00 due under the mortgage, dated May 15, 2012 as well as possession of the Burlington property. The defendants dispute that they were served with the statement of claim, although it is noteworthy that prior to the filing of their affidavits, dated May 20, 2013 in connection with the ex parte motion before Mullins J., the defendants never questioned the fact that they had been served with the statement of claim.

[8] While the original affidavit of service may have contained a typographical error with respect to the location where the defendants were served, I am satisfied based on the affidavit evidence now filed on this motion by Randy Maraj, as well as the affidavit of Jessica Dean, dated June 20, 2013, that in fact, the defendants were served with the statement of claim. Particularly noteworthy is the fact that no request was made to adjourn this motion to conduct a cross-examination of either Mr. Maraj or Ms. Dean and as such the assertions with respect to the service of the statement of claim are unchallenged.

[9] A default judgment was obtained by the plaintiff against the defendants on April 5, 2013, which required the defendants to deliver to the plaintiff possession of the Burlington property and to pay the plaintiff the sum of approximately $108,000.00. Having obtained default judgment on April 5, 2013, the plaintiff then obtained the order of Vallee J., dated April 17, 2013, which provided that the plaintiff was at liberty to issue a writ of possession against the Burlington property. The writ of possession was issued by the court on May 15, 2013.

[10] The sheriff affixed an eviction notice on the front door of the Burlington property on May 23, 2013, advising the occupants of the Burlington property that the eviction would occur on May 30, 2013.

[11] Counsel for the defendants attended on an ex parte basis before Mullins J. on May 30, 2013, at which time an order was granted that the execution of the writ of possession was stayed and “to the extent necessary possession to the defendant shall be reinstated for 7 days to allow for service of the motion record, responding materials, and scheduling of this motion.” In her endorsement, Mullins J. stated:

Given the affidavit evidence that the Statement of Claim was not received by the defendants, this in direct contradiction to the affidavits of service, and given the contention that no notice was given of the amount required to get the 2nd mortgage in good standing, TOTG staying execution of the Writ of Possession and to the extent necessary restoring possession to the defendants for 7 days to allow service of this motion, responding material and scheduling of motions.

[12] It is readily apparent that the stay order granted by Mullins J. was granted largely on the basis that the defendants had sworn in their affidavits, in support of their motion before Mullins J., that they had not received the statement of claim. What is equally clear is the fact that Mullins J. was not given complete disclosure with respect to the prior litigation history, concerning these defendants. I have every confidence in believing that had the complete procedural history been put before Mullins J. there would have been a strong likelihood that the motion would not have been granted on an ex parte basis - rather, an order would have been made requiring service upon the plaintiff, pending any order of the court staying the writ of possession.

[13] Counsel for the defendants argues that the jurisdiction for the granting of the stay can be found in section 22(2) and section 22(3) of the Mortgages Act[^1] (the “Act”) which provides:

Statement of arrears, expenses, etc.

(2) The mortgagor may, by a notice of writing, require the mortgagee to furnish the mortgagor with a statement in writing,

(a) of the amount of the principal or interest with respect to which the mortgagor is in default; or

(b) of the nature of the default or the non-observance of the covenant,

and of the amount of any expenses necessarily incurred by the mortgagee.

Idem

(3) The mortgagee shall answer a notice given under subsection (2) within fifteen days after receiving it, and, if without reasonable excuse the mortgagee fails so to do or if the answer is incomplete or incorrect, any rights that the mortgagee may have to enforce the mortgage shall be suspended until the mortgagee has complied with subsection (2), R.S.O. 1990, c. M.40, s.22.

[14] Counsel for the defendants submit that until such time as the mortgagee (i.e., the plaintiff) has complied with section 22(2) of the Act, any attempt to enforce the mortgage is suspended and as such, the writ of possession which flows from the mortgage is stayed, pending compliance with section 22(2) of the Act.

[15] If the plaintiff had not been in compliance with section 22(2) of the Act, then there may be some merit to the argument that section 22(3) of the Act would, in fact, entitle the defendants to the stay now being sought.

[16] The evidence, however, makes clear that the plaintiff has, in fact, complied with its obligations under section 22(2) of the Act and has provided to the defendants the amount of the principle due as of November 29, 2012. A notice of sale was given to the defendants on November 29, 2012. The defendants are not entitled to any further relief, pursuant to the provisions of section 22(3) of the Act.

[17] There is no other specific jurisdiction granted to this court to grant the relief sought by the defendants provided for in the Rules of Civil Procedure (the “Rules”). While it was not advanced in argument, by counsel for the defendants, I nonetheless consider whether or not this court should exercise any inherent jurisdiction that it might have to grant a stay of a writ of possession in circumstances where justice requires that someone facing eviction should be entitled to a stay. If this court did have such inherent jurisdiction, the facts of this case do not warrant this court exercising such jurisdiction to grant a stay. The defendants maintain that they never were served with the statement of claim in the within action. The affidavits of service that are now before this court make clear that the defendants were served. The defendants have been well aware of the dire circumstances in which they now find themselves, and in moving to obtain the order that they did before Mullins J., they were under an obligation to provide the court with complete disclosure of all prior legal proceedings and prior court orders. The defendants failed in their obligations in that regard. In making this finding, I should make clear, however, that the conduct of Mr. Eakins who argued the motion before Mullins J. is not in question.

[18] The defendants assert that they have not been provided with a complete accounting with respect to the assets that have been distrained upon. There is, however, evidence before this court to the effect that the plaintiff to date has been successful in recovering approximately $97,000.00 as a result of a distraint made by the bailiff, as well as a distraint made with respect to certain accounts receivable. A partial accounting with respect to what has been distrained upon was filed before this court. If the defendants have an issue with respect to an accounting and any amount realized upon by the plaintiff on assets seized, the defendants have their recourse.

[19] A review of the history of this matter makes quite clear that the defendants have failed in their obligations to the plaintiff and there is no reason now why the plaintiff should not be entitled to realize upon its security. The defendants have not put any evidence before this court that would suggest that they have a defence on the merits to the plaintiff’s claim, as the defendants would be required to do if they were moving to set aside a default judgment. At the very least, where the defendants are seeking an indulgence from this court to stay the enforcement of a writ of possession, they were under an obligation to place some evidence before the court that would at least raise some doubts in their favour that they had a defence on the merits. No such defence has been filed. The defendants are not entitled to the relief that they seek. The defendants motion to stay the writ of possession, granted by Vallee J. on April 17, 2013, is therefore dismissed.

[20] If the parties are unable to resolve the issue of costs, they may make written submissions to the court, limited to three pages in length to be received within fifteen days from receipt of these reasons.

Justice M.L. Edwards

Released: July 4, 2013

[^1]: R.S.O. 1990, c. M.40, as amended.