SUPERIOR COURT OF JUSTICE – ONTARIO

(COMMERCIAL LIST)

COURT FILE NO.: CV-12-9908-00CL
DATE: 20130710

RE: Royal Bank of Canada, Applicant

AND:

Vinyl Plus Inc., Arie Booi, Pearl Booi, Lev Spitzin and Sofia Weig, Respondents

BEFORE: MORAWETZ J.

COUNSEL:
S. Mitra, for the Royal Bank of Canada, Applicant

D. Saverino, for the Respondents, Arie Booi and Pearl Booi

HEARD: JULY 3 AND JULY 5, 2013

ENDORSEMENT

[1] The positions put forward by the respondents, Arie Booi and Pearl Booi, have no merit.

[2] As a preliminary matter, Royal Bank of Canada (“RBC”) brought an amended motion to add Ms. Booi as a party and to amend the Notice of Application, such that the relief sought would be consistent with the relief sought in the motion originally returnable on April 29, 2013, specifically for judgment under the guarantees, possession of the property and leave to issue a Writ of Possession. Mr. Saverino raised the issue of short service and, hence, the hearing was adjourned from July 3, 2013 to July 5, 2013. No further materials were filed.

[3] A standstill agreement was executed by Vinyl Plus Inc. (“Vinyl Plus”), Mr. Booi and Ms. Booi on November 21, 2012. Ms. Booi had independent legal advice. By executing the standstill agreement and providing the guarantee, Ms. Booi became party to the process. It seems clear that no aspect of this application or the relief sought by RBC comes as a surprise to either Mr. Booi or Ms. Booi. The motion originally returnable on April 29, 2013 sets out the requested relief. I am satisfied that, at all times, both Mr. Booi and Ms. Booi knew of the relief sought by RBC.

[4] With respect to the proposed amendment to the Notice of Application, there is no evidence of prejudice that has been raised by either Mr. Booi or Ms. Booi. As noted, both were aware of the relief sought by RBC.

[5] The motion to add Ms. Booi and to amend the Notice of Application is granted.

[6] Turning now to the merits, the evidence of indebtedness of Vinyl Plus Inc. to RBC is not challenged. In addition, there is no challenge to the allegation that there has been subsequent default by Mr. and Ms. Booi in the standstill agreement.

[7] There is a suggestion that interference by Vinyl Plus’s landlord resulted in an inability of Vinyl Plus to pay monies owing to RBC. This is a matter as between the landlord of Vinyl Plus and Vinyl Plus. It does not impact on the situation as between RBC and these respondents.

[8] It is clear that the standstill agreement is in default. The guarantee is enforceable and RBC is in a position to exercise its remedies pursuant to the terms of the standstill agreement, the guarantees, the mortgage and all other loan documents.

[9] The respondents challenge service of the demand on the guarantee. This challenge is easily met. Notice was provided to counsel. The standstill agreement specifically provides for notices to be sent to counsel. The record contains copies of the correspondence as between counsel. The correspondence specifically involves payment defaults.

[10] The purpose of s. 12 of the guarantee respecting notices is to ensure that the guarantor has clear knowledge of the demand. In this case, there is no question that the respondents were aware that demand on the guarantee was made and sent to their authorized representative.

[11] The second challenge of the respondents concerns the process followed by RBC. The respondents take the position that the originating process should have been by way of action as opposed to application. I do not accept this submission. Rule 14.05(3)(h) permits an application to be brought where it is unlikely that there will be material facts in dispute. I am satisfied, from a review of the record, that there are no material facts in dispute and that proceeding by way of application was appropriate.

[12] With respect to the submission that mortgage actions are commenced by statement of claim pursuant to rule 64, this challenge was addressed by counsel to RBC. The proceeding initiated by RBC does not ask for foreclosure or a judicial sale which are covered by Rule 64, but rather, asks for possession. As such, I am satisfied that rule 64 does not govern the situation.

[13] The respondents also submit that a mortgage motion/action is not listed on the list of matters to be considered by the Commercial List pursuant to the Commercial List Practice Direction. This argument is easily disposed of. RBC commenced this matter as a receivership proceeding involving Vinyl Plus and as against guarantors of the indebtedness of Vinyl Plus, namely, Mr. Booi and Ms. Booi. As such, I am satisfied that the matter is eligible to be listed on the Commercial List. In any event, the Commercial List is part of the Superior Court of Justice and this court has jurisdiction to hear this proceeding.

[14] The respondents also take the position that Notice of Power of Sale was not served pursuant to the Mortgages Act. The respondents do not refer to any evidence that would challenge the affidavit of Ms. Chrissy Kassapidis, sworn April 4, 2013 that states that the notice of sale was sent to Arie Booi and Pearl Booi. There is also no credible suggestion that the respondents were not aware of the notice of sale. I am satisfied that the Notice of Power of Sale was properly served. Furthermore, counsel to RBC relies on Royal Trust Corp. of Canada v. Gupta, (1997) CarswellOnt 571 where Wright J. agreed with the submission of counsel for Royal Trust to the effect that Royal Trust was correct in submitting that a mortgagee on default of the mortgage may take possession either before or after the notice of sale period but not during the notice of sale period.

[15] At paragraph 29, Wright J. stated:

This legislation [Land Registration Reform Act] seems to imply that notice to take possession is required. However, the Mortgages Act does not require that notice be given. Therefore, unless the charge specifies that notice is required, possession may be taken without notice. In this case the charge does not require that notice be given prior to taking possession; therefore Royal Trust could take possession without giving notice.

[16] The Standard Charge Terms in this case contains similar language and to the extent necessary, I accept the above statement.

[17] The respondents also take the position that a Writ of Possession may be issued only with leave of the court where the court is satisfied that all persons in actual possession of any part of the land have received sufficient notice of the proceedings the order is sought in. This argument is easily met. The affidavit of Mr. Booi sworn April 24, 2013 at paragraph 4 states:

I am married to Pearl Booi (“Pearl”), a Respondent to the herein Application. Pearl and I share our matrimonial home at the property municipally known as 22 Ingleview Drive, Ingleview, Ontario (the “Property”). We are the owners of the Property. Attached hereto and marked as Exhibit “B” to this Affidavit is a copy of a current title abstract for the Property.

[18] Further, paragraph 1 of the factum contains the following statement:

Arie Booi (“Arie”) is the President of Vinyl Plus Inc. (“Vinyl Plus”). Arie Booi is married to Pearl Booi (“Pearl”). Pearl and Arie share a matrimonial home municipally known as 22 Ingleview Drive, Ingleview, Ontario (the “Property”)….

[19] There is no credible suggestion that there was any other person in actual possession of any part of the land that has not received notice of the proceedings.

[20] I am satisfied that the Applicant has met the requirements of Rule 60.10.

[21] Finally, the respondents take the position that the court order cannot bind individuals who are not parties to the action in which the order was made and that the consent judgments as they pertain to non-parties should not be issued by the court as it exceeds the court’s jurisdiction in purporting to bind non-parties.

[22] This challenge has been addressed by the granting of the Motion to Amend the proceedings. Furthermore, the record clearly establishes the factual basis for the relief sought by RBC. The relief sought by RBC can be granted.

[23] The motion is granted with costs and judgment shall issue in the form submitted, which covers the indebtedness under the guarantee in the amount of $611,000 together with interest as requested, possession of the Property, the issuance of a Writ of Possession, costs and interest.

[24] With respect to costs, the Standard Charge Terms, which apply to the mortgage in question, provide that the bank is entitled to recovery of costs on a solicitor-and-client basis. A bill of costs was submitted in the amount of $21,651.32. Counsel to the respondents takes the position that the amount sought is excessive. Taking into account that there could be some duplication on the part of the two lawyers involved who act on behalf of RBC, a modest reduction is appropriate. Costs are fixed in the amount of $17,500 inclusive of disbursements and HST. In my view, this is a fair and reasonable amount that the respondents’ could expect to pay.

[25] The judgment has been signed.

Morawetz J.

Date: July 10, 2013