Equitable Bank v. Mundulai, 2016 ONSC 5526
Court File and Parties
COURT FILE NO.: CV-15-00535180 ENDORSEMENT RELEASED: 2016-09-06
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Equitable Bank v. Aliamisse Omar Mundulai and Ying Huang
BEFORE: Master B. McAfee
COUNSEL: Aliamisse Omar Mundulai, Defendant in Person, Moving Party J. Fried and B. Whealen for the Plaintiff, Responding Party
DATES HEARD: 2016-05-10, 2016-08-03
Reasons for Decision
[1] This is a motion brought by the defendants for the following relief:
(i) An order declaring the statement of claim a nullity because at the time of filing the plaintiff’s rights to enforce the mortgage were suspended pursuant to s. 22(3) of the Mortgages Act, R.S.O. 1990, c.M.40, as amended (the Act);
(ii) An order declaring the statement of claim a nullity because the plaintiff failed to comply with the requirement for service of the notice of sale pursuant to s. 33(1) of the Act;
(iii) An order striking out the statement of claim for being a nullity and for failing to plea sufficient material facts of the alleged breach of the mortgage contract to enable the court to determine crucial questions of law and fact so as to ascertain whether the relief of possession of property is appropriate in the circumstances of the case;
(iv) An order discharging the mortgage upon payment of $119,286.76 into court pursuant to s. 12(3) of the Act; and
(v) An order that the plaintiff cease and desist from collecting rent of the mortgaged property, effective immediately, and to cease interfering in the relationship between the defendants and the tenant, including return of monies for rent collected in the amount of $11,554.25.
[2] This action involves the default on a mortgage granted by the plaintiff to the defendants on an office condominium unit. The mortgage was most recently renewed by a Mortgage Renewal Agreement dated June 4, 2012. The remaining principal at the time of renewal was $120,958.35. The interest rate was 6.45%. The total monthly payments were $1,507.41. The maturity date was May 5, 2015.
[3] On March 11, 2015, the plaintiff advised the defendants in writing that the mortgage would not be renewed on maturity.
[4] The within action was commenced on August 26, 2015, seeking possession of the mortgaged property because the mortgage matured and was not paid out on the maturity date.
[5] On October 13, 2015, the plaintiff obtained default judgment for possession of the mortgaged property.
[6] On November 25, 2015, the defendants brought a motion to set aside default judgment and to extend the time for service of the statement of defence. The motion was granted.
[7] On December 4, 2015, the defendants served the statement of defence.
[8] On January 26, 2016, the parties attended civil practice court and were given June 3, 2016, as the return date for the plaintiff’s motion for summary judgment. To give the defendants time to pay out the mortgage, the parties were to re-attend civil practice court on February 16, 2016, to set a timetable for the summary judgment motion, if the mortgage was not paid out.
[9] The defendants then unilaterally scheduled a motion returnable before a Master on March 14, 2016, for the relief sought on the within motion.
[10] On February 16, 2016, the parties attended civil practice court and a timetable for the summary judgment motion returnable June 3, 2016, was approved. The summary judgment motion has now been adjourned pending the outcome of the within motion.
(i) Request for a declaration that the statement of claim is a nullity because at the time of filing the plaintiff’s rights to enforce the mortgage were suspended pursuant to s. 22(3) of the Act
[11] Section 22(3) of the Act provides as follows:
22(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 to do so 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).
[12] Section 22(2) of the Act provides as follows:
22(2) The mortgagor may, by a notice in 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.
[13] Following the defendants’ default under the mortgage, the defendants made requests for payout figures. In many of the instances the requests for statements were more disagreements with the statements provided. The plaintiff responded to the requests save for a specific response to the defendants’ August 24, 2015, request.
[14] It is the plaintiff’s position that the plaintiff did answer the defendants’ request of August 24, 2015, in the plaintiff’s prior responses of August 6, 2015, and July 6, 2015. I agree that the plaintiff did provide the information in response to the August 24, 2015, request previously on August 6, 2015 and July 6, 2015. It was not necessary to respond further in these specific circumstances. If I am wrong and the August 24, 2015, request was not responded to, the plaintiff had a reasonable excuse not to respond. The statement was previously provided.
[15] The defendants are not entitled to suspend the plaintiff’s rights under this section of the Act by questioning the responses provided by the plaintiff (Double D Developments Ltd. v. Green).
[16] I am not satisfied that the plaintiff’s rights were suspended at the time of the issuance of the statement of claim.
(ii) An order declaring the statement of claim a nullity because the plaintiff failed to comply with the requirement for service of the notice of sale pursuant to s. 33(1) of the Act
[17] The defendants argue that the defendant Ying Huang was not served with the notice of sale.
[18] Section 33(1) of the Act provides as follows:
33(1) A notice of exercising a power of sale shall be given by personal service or by registered mail addressed to the person to whom it is to be given at the person’s usual or last known place of address, or, where the last known place of address is that shown on the registered instrument under which the person acquired an interest, to such address, or by leaving it at one of such places of address, or, where the mortgage provides for personal service only, by personal service, or, where the mortgage provides a specific address, to such address.
[19] The defendants were served with the notice of sale by registered mail (affidavit of R. Gallo, para 70). The defendants were served at the address for service stated in the mortgage registered as instrument number AT1438991.
[20] I am not satisfied that there was a failure to comply with the requirement for service of the notice of sale.
(iii) An order striking out the statement of claim for being a nullity and for failing to plea sufficient material facts of the alleged breach of the mortgage contract, to enable the court to determine crucial questions of law and fact so as to ascertain whether the relief of possession of property is appropriate in the circumstances of the case
[21] At paragraphs 5 to 7 of the statement of claim, the plaintiff pleads the terms of the mortgage. At paragraph 15 of the statement of claim, the plaintiff pleads the amounts due as of the date of the issuance of the statement of claim. At paragraph 8 of the statement of claim, the plaintiff pleads the relevant provision of the standard charge terms that the plaintiff relies upon to obtain possession. At paragraph 14 of the statement of claim, the plaintiff pleads that the defendants defaulted in payment of principal and interest on May 5, 2015, when the mortgage matured and was not renewed.
[22] In Prudential Assurance Co. (Trustee of) v. 90 Eglinton Ltd. (1994), 1994 ONSC 7256, 18 O.R. (3d) 201 (Ont.Gen.Div.), the court stated at page 207, “the right to possession is a prima facie right of a mortgagee available upon breach of any covenant by a mortgagor: see Carrique v. Pilgar (1914), 6 O.W.N. 101 at p. 102, 26 O.W.R. 77 (H.C.J.).”
[23] I am not satisfied that the statement of claim ought to be struck for being a nullity and for failing to plead sufficient material facts in the circumstances.
(iv) An order discharging the mortgage upon payment of $119,286.76 into court pursuant to s. 12(3) of the Act
[24] The defendants seek an order that the amount of $119,286.76 be paid into court to obtain a discharge of the mortgage. I am not satisfied that the amount proposed by the defendants to obtain a discharge is a reasonable amount.
[25] The amount proposed by the defendant does not include any amount for the payment of condominium fees, for the payment of two cost orders previously made concerning other actions involving prior defaults on the within mortgage or for the payment of interest since March 2016. All of these amounts are at issue. The amount proposed does not protect the plaintiff’s interest (1414391 Ontario Ltd. v. Graff, 2015 ONSC 7201 (Ont.S.C.J.) at paragraphs 23-24). In addition, the mortgage would not be discharged until costs were assessed and paid.
[26] The plaintiff submits that an order should be made that the sum of $129,866.07 ($137,546.07 less $7,680.00 for staff time) plus whatever amount I deem just for costs and staff time should be paid to the plaintiff and that I should order the plaintiff to discharge the mortgage once the payment is made. The plaintiff made no submission as to what would be a fair and reasonable amount for costs. The plaintiff submits that whatever amount I order for costs including staff time will be acceptable to the plaintiff and the plaintiff will not attend the pending assessment of costs.
[27] In my view, the just, most expeditious and least expensive determination of the matters remaining at issue between the parties is as suggested by the plaintiff. If the plaintiff pays the amounts I determine to be payable, the mortgage would be discharged. There would be no need to attend the pending motion before a Judge or to attend the pending assessment of costs.
[28] If the defendants wish to obtain a discharge of the mortgage at this time, the amount to be paid by the defendants to the plaintiff is set out in this paragraph and the paragraphs that follow:
| Item | Amount |
|---|---|
| Principal balance as of May 5, 2015 | $111,044.07 |
| Accrued interest at 6.45% from May 5, 2015 to Aug. 3, 2015 | $9,132.36 |
| Late payment interest | $818.94 |
| February rental income ($2,310.85 - $112.50 bank costs for stop payments) | $(2,198.35) |
| March-July rental income | $(11,554.25) |
| Replacement of broken thermostat | $203.40 |
| Tax account balance | $8,899.64 |
| Small claims court order | $1,859.16 |
| Small claims court order-reimbursement for lock change | $(628.83) |
| Payment of condo arrears and admin/NSF fees up to Apr 1/16 | $1,453.57 |
| Payment of May & June condo arrears and admin/NSF fees | $1,711.81 |
| Payment of July condo fees | $757.03 |
| Subtotal | $121,498.55 |
[29] In addition to the subtotal amount of $121,498.55, would be added the sum of $7,329.85 ordered payable by the defendants to the plaintiff pursuant to the order of Justice Archibald and the sum of $1,000.00 ordered payable by the defendants to the plaintiff pursuant to the order of Justice Brown.
[30] An additional 34 days have passed since the hearing of the motion that amounts to interest of $3,412.09, a further amount to be added to the subtotal.
[31] I award the plaintiff the all inclusive sum of $3,500.00 for costs and fees inclusive of costs of this action, costs of this motion and staff time, which in my view is a fair and reasonable amount that the defendants could expect to pay for costs in all of the circumstances of this matter. This brings the total to $136,740.49 ($121,498.55 plus $7,329.85 plus $1,000.00 plus $3,412.09 plus $3,500.00).
[32] I do not know if the plaintiff collected rent for August or September 2016. If the plaintiff collected further rent, the further rent would be deducted from the total. If the plaintiff paid any condominium fees for August and September, those fees would be added to the total.
[33] If the defendants wish to obtain a discharge at this time, the defendants shall pay to the plaintiff the sum of $136,740.49 less any further rent collected for August and September 2016 plus any condominium fees paid by the plaintiff for August and September 2016. Upon payment, the plaintiff shall discharge the mortgage. If the defendants are not agreeable to paying this amount to the plaintiff, the mortgage will not be discharged at this time and the action will proceed.
[34] Whether the amounts in paragraph 33 have been collected or paid is not known to the court. Should there be any issue with respect to the calculation of the final total number the parties may schedule a re-attendance before me at 9:30 am for one half hour by contacting assistant trial coordinator, Graye McGrath (tel. 416-212-9784).
(v) An order that the plaintiff cease and desist from collecting rent of the mortgaged property, effective immediately, and to cease interfering in the relationship between the defendants and the tenant, including return of monies for rent collected in the amount of $11,554.25.
[35] The defendants argue that there is no authority under the Act for the plaintiff to collect rent.
[36] Section 47(1) of the Act is referenced in the Notice of Attornment of Rents dated January 14, 2016. Section 47(1) provides as follows:
47(1) A person who becomes the mortgagee in possession of a mortgaged residential complex which is the subject of a tenancy agreement between the mortgagor and a tenant or who obtains title to the residential complex by foreclosure or power of sale shall be deemed to be the landlord under the tenancy agreement.
[37] Section 47(1) of the Act was referenced in the Notice of Attornment of Rents in error. The tenancy at issue is not residential.
[38] The mortgage incorporates standard charge terms 8651. Pursuant to section 44 of the standard charge terms, the rents were assigned to the plaintiff.
[39] I am not satisfied that there is a basis to grant the order sought by the defendants concerning the collection and return of rent.
Order
[40] Order to go as follows:
- If the defendants wish to obtain a discharge at this time, the defendants shall pay to the plaintiff the sum of $136,740.49, less any further rent collected for August and September 2016, plus any condominium fees paid by the plaintiff for August and September 2016. Upon payment, the plaintiff shall discharge the mortgage.
- The motion is otherwise dismissed.
Master B. McAfee DATE: September 6, 2016
cited_cases: legislation: - title: "Mortgages Act, R.S.O. 1990, c.M.40" url: "https://www.ontario.ca/laws/statute/90m40" case_law: - title: "Double D Developments Ltd. v. Green" url: "https://www.canlii.org/en/on/onsc/doc/1979/1979canlii2065/1979canlii2065.html" - title: "Prudential Assurance Co. (Trustee of) v. 90 Eglinton Ltd., 1994 ONSC 7256" url: "https://www.canlii.org/en/on/onsc/doc/1994/1994onsc7256/1994onsc7256.html" - title: "1414391 Ontario Ltd. v. Graff, 2015 ONSC 7201" url: "https://www.canlii.org/en/on/onsc/doc/2015/2015onsc7201/2015onsc7201.html"