ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WINCHESTER FINANCIAL CORPORATION
Plaintiff
– and –
MARYANNE RUGGIER-CASSELMAN and PATRICK URIAH a.k.a. PATRICK IRIAH
Defendants
AND BETWEEN
WINCHESTER FINANCIAL CORPORATION
Plaintiff
– and –
PATRICK URIAH a.k.a. PATRICH IRIAH and YASSIM KASSAM
Defendants
Doug Bourassa, Counsel for the Plaintiff
Patrick Iriah, Self-Represented
Doug Bourassa, Counsel for the Plaintiff
Patrick Iriah, Self-Represented
HEARD: March 31, April 1, 2 & 3, 2014
REASONS FOR JUDGMENT
1When this matter was called for trial on March 31, 2014, Mr. Iriah asked for adjournment so he could retain counsel. I declined this request. The matter had been listed for trial four times previously. Mr Iriah had been represented by counsel from October 24, 2012 to July 17, 2013, when counsel was removed from the record. Mr. Iriah had had plenty of time to secure counsel if that was his wish. He did not suggest when he would be able to secure counsel. I had to consider the interests of the other party, Winchester, as well as the interests of Mr. Iriah. In the result, I proceeded with the trial.
2The two actions before me were tried together, and essentially involved the same issue: the validity of a second mortgage purportedly held by the plaintiff, Winchester Financial Corporation, on what was at one time the matrimonial home of the defendant, Patrick Iriah and his wife, Yassim Kassam.
3In the first action, Maryanne Ruggier-Casselman is also a defendant, but she is a discharged bankrupt and the plaintiff no longer seeks any relief against her. Indeed, she was called as a witness by the plaintiff. Mr. Iriah’s wife, Yassim Kassam, is a named defendant in the second action, but the plaintiff no longer seeks any relief against her.
4While a good deal of evidence was called, much of it is not relevant to the issue I have to decide. Thus, I will keep my description of the relevant facts relatively brief.
5As noted, the issue relates to the validity of a second mortgage held by the plaintiff, Winchester.
6Ultimately, the property was sold and funds are now being held in trust pending the outcome of this litigation. It is not in dispute that the proceeds of sale are insufficient to cover the mortgage, assuming its validity. If the plaintiff’s actions succeed, the funds held in trust will be released to the plaintiff. If the action fails, there may be creditors of Mr. Iriah that will have a claim against the fund. Thus, if the action fails, it may be necessary to hear further evidence and/or submissions as to the proper disposition of the funds.
Background
7Mr. Iriah and his wife resided at the matrimonial home at 3 Hiram Road in Richmond Hill, together with their children. There were several mortgages on the property. Ultimately, they were all in default. Mr. Iriah was in danger of losing his home.
8Mr. Iriah became acquainted with Maryanne Ruggier-Casselman, a neighbour. He also became acquainted with Aurelio Baglione, the principal of the plaintiff, Winchester.
9Mr. Iriah, Mr. Baglione, and Ms. Ruggier-Casselman came up with a scheme that would allow Mr. Iriah to remain in his home. It was agreed that Winchester would purchase the existing mortgages at a discount; Winchester would exercise the power of sale under the first mortgage and sell the property to Ms. Ruggier-Casselman; sufficient financing would be obtained in order to allow Ms. Ruggier-Casselman to purchase the property from Winchester; and Mr. Iriah would live in the home as a tenant of Ms. Ruggier-Casselman.
10The existing first mortgage on the property was held by the Toronto-Dominion Bank. The second mortgage was held by Frank Strittnatter. The third mortgage was held by Gary Kuchar, who was the solicitor for Mr. Strittnatter.
11Mr. Strittnatter had taken an assignment of the first mortgage from the Toronto-Dominion Bank.
12A numbered company owned by Mr. Baglione purchased the three mortgages for the sum of $522,000. The numbered company entered into an agreement of purchase and sale with Ms. Ruggier-Casselman for a sale price of $590,000. Ms. Ruggier-Casselman arranged a first mortgage with CIBC in the amount of $520,000, of which $500,000 would be advanced. Mr. Iriah supplied a deposit of $10,000. That left a shortfall, which had to be made up somewhere.
13Ultimately, Winchester agreed to provide a second mortgage (the mortgage that is in issue in these actions) in the amount of slightly more than $93,000.
14The transaction closed, and Mr. Iriah occupied the home. It was not long before the mortgages went into default.
15The CIBC took proceedings to evict Mr. Iriah and ultimately Winchester took an assignment of the first mortgage. It then sought to enforce both mortgages against Mr. Iriah and/or Ms. Ruggier-Casselman.
16When Winchester sought to enforce its second mortgage, Mr. Iriah took the position that that mortgage was not binding on him. He alleged Ms. Ruggier-Casselman was a bare trustee, and that he was the real owner of the property. He alleged that the second mortgage had been executed without his knowledge, and it was not binding on him. That is the essence of the dispute before me.
17As noted earlier, ultimately the property was sold. There is a deficiency. The funds are being held in trust awaiting the disposition of these actions.
Submissions
18Mr. Bourassa, counsel for Winchester, submits that the second mortgage is valid. It was entered into between Winchester and Ms. Ruggier-Casselman who, at the time, was the purchaser of the property and its owner. As far as Winchester knew, Mr. Iriah was to be a tenant in the property. As it happened, Mr. Iriah was fully aware of all of the details of the transaction, so that even if he was the true owner he is bound by the second mortgage.
19Mr. Bourassa submits that since there is a deficiency in the amount required to satisfy the second mortgage, Winchester is entitled to all of the funds held in trust.
20Mr. Iriah submits that the second mortgage is not binding on him.
21Mr. Iriah submits that Ms. Ruggier-Casselman was never intended to be the owner of the property. At all times, she held the property in trust for him. Indeed, after the transaction closed he made attempts to have Ms. Ruggier-Casselman sign a bare trust agreement which she ultimately declined to do. Nevertheless, at all times she held the property as a bare trustee for him.
22Mr. Iriah submits that he did not know anything about the second mortgage. He submits that it was entered into, without his knowledge, between Ms. Ruggier-Casselman and Winchester. He submits that at all times he thought the purchase price of the property was $532,000, and that the amount to be obtained from the first mortgagee, CIBC, would be sufficient to buy the property. He understood that the initial purchase price, $590,000, was simply a negotiating position, and that the final purchase price would be $532,000. It was not until the first mortgage went into default that Mr. Iriah discovered that there was a second mortgage on the property.
Analysis
23I do not accept that Mr. Iriah is not bound by the second mortgage.
24Even if I accept that Mr. Iriah was the true owner of the property, I am satisfied that at all times he was fully aware of the second mortgage and it is binding on him.
25I do not accept that the purchase price of the property was intended to be $532,000. Mr. Baglione, in his testimony was candid in saying that his intention in entering into the transaction was to make money. If the purchase price was $532,000, he would not make any money. At $590,000, he would make some money.
26Mr. Baglione testified that he discussed the $590,000 purchase price with Mr. Iriah. He testified that the agreement of purchase and sale, with a purchase price of $590,000, was signed in the presence of Mr. Iriah and Ms. Ruggier-Casselman. I accept his evidence.
27Mr. Baglione testified that it was never suggested that Ms. Ruggier-Casselman would hold the property as a trustee. He testified that if there had been such a suggestion, he would not have entered into the deal. I accept his evidence. Mr. Baglione testified that he agreed to provide $93,000 on a second mortgage in order to allow the transaction to close, and he had a telephone conversation about it with Mr. Iriah. I accept his evidence.
28I do not accept Mr. Iriah’s evidence that he knew nothing about the mortgage.
29Having regard to the financial situation of Mr. Iriah, I find it hard to believe, in fact I do not believe, that Mr. Iriah did not know everything about the various transactions that were required in order that he could keep living in the home. It makes no sense that Mr. Baglione would engage in the transaction without any prospect of earning anything. It defies comprehension that Ms. Ruggier-Casselman would execute a second mortgage for $93,000 without Mr. Iriah’s full knowledge. There would have been simply no reason for her to do so without the full knowledge of Mr. Iriah.
30What is most telling, in my view, is email correspondence between Mr. Iriah and Mr. Baglione after the second mortgage went into default. If Mr. Iriah actually knew nothing about the second mortgage, one would have expected him to vigorously protest as soon as Winchester made demands for payment. Nothing of the kind happened. Instead, Mr. Iriah behaved as if he knew all about the mortgage, and he assured Mr. Baglione that it would be paid. For example:
(a) in an email dated December 16, 2009, Mr. Iriah said he was in the process of getting a loan through Laurentian Bank. He stated “things are going relatively well and part of the proceeds coming in will pay down the balance owing to you on the mortgage.”
(b) in an email dated February 23, 2010, Mr. Iriah stated “please accept my apology for not calling, for I had nothing to report to you. Attached is how I intend to pay you back very soon.” Attached is a document regarding an apparent stock offering for Broadpoint Telecommunications Inc., a company apparently owned by Mr. Iriah.
(c) in an email dated April 15, 2010, Mr. Iriah stated, to Winchester’s lawyer, “sorry for the delay, as promised attached is the document as agreed.” The document states:
“I Patrick Iriah will attempt to obtain sufficient fund to pay all amount owing to Winchester financial Corporation on or before April 30, 2010.
If payment is not made on before April 30, 2010 then I Patrick Iriah will vacate the property on April 30, 2010 unless I obtain an extension from Winchester Financial Corporation.”
(d) In an email dated April 26, 2010 to Mr. Iriah from Charles Ashton, counsel for Winchester, Mr. Ashton states, in part, as follows:
“Patrick, the breakdown of the monies owing is as follows:
Principal of Winchester’s mortgage $93,876
Interest from August 18/08 – July 9/09 $15,231.06
Payments to CIBC $20,280.31
Interest March 3/09- July 9/09 $1,280.16
Payments to CIBC $8,442
Legals $2,500
All of which was on Notice of Sale under mortgage dated July 9, 2009 of $141,609.53 that was served on you previously.”
(e) In an email from Mr. Iriah to Charles Ashton dated May 4, 2010, Mr. Iriah enclosed correspondence from a mortgage broker with respect to potential financing on the property. He states “If I can be assured of an indulgence until the end of May, I have an alternate source of funds to take Winchester out.”
31I have no difficulty in finding that Mr. Iriah was at all times fully aware of the second mortgage, and indeed he was instrumental in obtaining it. When confronted with arrears on the mortgage, he made assurances that the mortgage would be paid.
32Thus, whether the true owner was Ms. Ruggier-Casselman or Mr. Iriah, the mortgage is binding and enforceable.
33For these reasons, I hold that the funds being held in trust belong to Winchester.
34I will entertain brief written submissions with respect to costs, not to exceed three pages, together with a bill of costs. Mr. Bourassa will have five days to file submissions, and Mr. Iriah will have five days to respond. Mr. Bourassa will have three days to reply.
35Once the costs are fixed, judgment may issue. Mr. Bourassa may forward a copy of the draft judgment to me and Mr. Iriah. Mr. Iriah will have five days to provide submissions to me as to the form of the judgment, which I will take into account. I will advise Mr. Bourassa of any changes to the draft judgment, after which Mr. Bourassa may have the judgment taken out without any further approval as to form by Mr. Iriah.
Gray J.
Released: April 29, 2014
COURT FILE NO.: 185/10 and 2317/11
DATE: 2014-04-29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WINCHESTER FINANCIAL CORPORATION
Plaintiff
– and –
MARYANNE RUGGIER-CASSELMAN and PATRICK URIAH a.k.a. PATRICK IRIAH
Defendants
AND BETWEEN
WINCHESTER FINANCIAL CORPORATION
Plaintiff
– and –
PATRICK URIAH a.k.a. PATRICH IRIAH and YASSIM KASSAM
Defendants
REASONS FOR JUDGMENT
Gray J.
Released: April 29, 2014