Court File and Parties

Court File No.: CV-17-1153-00 Date: 2017-03-28 Superior Court of Justice – Ontario

Between: SAID ATTALLA and MIREILLE ATTALLA, Applicants Counsel for the Applicants: P. Mano

And: JOANNE MOODY, MARLENE KLEWANS, WILRIOCHE INVESTMENTS LIMITED, RANDI SILVERSTEIN, MELANIE MITZ COHEN and 2195521 ONTARIO INC., Respondents Counsel for the Respondents: J. Kukla Counsel for the Purchasers: M. Simaan

Heard: March 23, 2017

Reasons for Judgment

TRIMBLE J.

[1] The Applicants, the Attallas, seek a declaration that they be permitted to redeem the Respondents’ third mortgage. They also seek an injunction preventing the mortgagees’ sale to their purchaser.

[2] This motion, to any rational, thinking lawyer, is a long motion. It was brought, however, on a regular motions list. This motion, to any rational, thinking lawyer, is an emergency motion. It was brought, however, bypassing the procedure for emergency motions.

[3] Why was an emergency, long motion brought on a regular motions list? Because the mortgagee is selling the property under power of sale, the sale was to close on February 28, 2017 (now extended to March 30), and the mortgagees placed a caution on title on February 27 thereby frustrating the sale. Since then, the Applicants have not moved with speed. It took them 16 more days to serve its Application Record (March 15) which they served on March 16. The Responding Record was filed on March 20. The facta and books of authorities of both parties and the Record filed by the mortgagee’s purchaser were all passed up at the March 23 hearing.

[4] Counsel booked 50 minutes for the hearing. Because of the March 30 closing date, the matter could not be put over to a long motion date. Hence, I advised counsel that I would allot each party 25 minutes (the mortgagee’s purchaser requested no time), after which I would cut them off and decide the matter based on the written and incomplete oral submissions. I advised them that I would address the alleged urgency of this motion in costs.

Facts

[5] The Applicants own 2901 Mississauga Road. They gave a third mortgage to the Respondents for $1.1 million at 11.75 percent, on June 17, 2015 for a term of one year at which time principal and interest were to be paid unless the mortgage was renewed. The Attallas never notified the mortgagees about any intention to renew. The mortgage matured. The full principal and interest remains outstanding. From the date of maturity, the mortgage has been and remains in default.

[6] The third mortgage provides under the heading “Additional Fees”, the following:

The Chargor agrees that should the Chargee issue either a Notice of Sale or Statement of Claim, that the Chargee, at its option, shall be entitled to charge an additional fee equivalent to three (3) months interest.

The Chargor agrees that should the charge not be renewed or discharged on the maturity date that the Chargee, at its option, shall be entitled to charge an additional fee equivalent to three (3) months interest.

[7] On July 7, 2016, the mortgagee issued its Statement of Claim and served it. The amount claimed was $1,132,962.99. On July 8, the mortgagees issued their Notice of Sale. Both of these included $32,962.99 as the additional fee equivalent to three month’s interest stipulated in the first paragraph under “Additional Fees” in the mortgage, since the mortgagee had to commence enforcement proceedings. The Notice of Sale expired on August 16, 2016.

[8] The Attallas never defended the action. Default Judgement issued on August 23 for $1,149,740.11. An order for a Writ of Possession was issued on September 29, 2016. The Writ itself was issued on October 14, 2016 and sent to the sheriff for enforcement on November 8, 2016.

[9] On November 3, the Attallas sent the mortgagees a copy of an agreement of purchase and sale scheduled to close November 15. At the Attallas’ request the eviction was stayed in exchange for the Attallas’ undertaking to grant vacant possession if the deal did not close. A Discharge Statement was provided on November 7.

[10] The sale did not close. The Attallas did not advise the mortgagees of this fact and did not grant vacant possession, so the sheriff evicted them on December 7.

[11] At no point up to December 7 did the Attallas indicate that they were ready, willing and able to redeem the Mortgage.

[12] On moving into possession, the mortgagees discovered that the house was in need of significant repair. The gas had been locked off because the heat exchangers on the furnaces in the house were cracked. There was significant damage to the house. It was clear that no one had lived in it for some time. Based on documents, the mortgages say that the owners had lived elsewhere for approximately 6 months.

[13] The mortgagees also discovered that the first and second mortgages were in default. They paid $21,421.08 and $16,385.19, respectively, to bring those mortgages into good stead. The mortgagees have maintained the first and second mortgages in good stead ever since.

[14] The mortgagees discovered that the Attallas’ fourth mortgage is in default, and that property taxes are in arrears for 2016 and 2017 totalling $83,202.70. Finally, the mortgagees discovered that the Toronto Dominion Bank has judgment against the Attallas of $49,025.44, for which it registered a Writ of Seizure and Sale.

[15] Between June 2016 and January 31, 2017, the Attallas tried to refinance the property. In June, a company called MJ Capital said it would refinance. It never demanded a discharge statement and never contacted the mortgagees again.

[16] In August, the Attallas’ lawyer requested a discharge statement because they had arranged a new second mortgage. A statement was provided on August, 15. No payment or other communication received in respect of this refinancing.

[17] On September 6, the Attallas’ lawyer asked for copies of the Judgment and Affidavits of Service as he was trying to arrange new financing. They were sent. A request was made for a Discharge Statement. It was provided by letter of September 7, 2016. The mortgagees heard nothing after that.

[18] On January 8, 2017 a lawyer purporting to act for new lenders provided an authorization from the Attallas permitting the mortgagees to provide a Discharge Statement. Counsel for the mortgagees and purported new lenders spoke the next day. The lenders’ lawyer said that in doing due diligence for his clients he found newspaper articles which said that Mr. Attalla had committed professional misconduct as a pharmacist, and had abandoned properties in the US, which lead to 3 warrants for his arrest. He indicated that the new lenders would not proceed with the financing. Consequently, the mortgagees did not provide the Discharge Statement.

[19] On December 23, 2916, the mortgagees listed the property for sale. The Attallas allege it was listed $1.1 million below market value. The mortgagees say it was listed after assessment by and on the advice of an independent real estate broker. On December 23, the mortgagees received an offer which the mortgagees signed back. There was no response and the offer died. Because the offer died, the mortgagees did not notify the Attallas of the offer.

[20] On December 28, the mortgagees received another offer. After negotiation, it was accepted on December 30, 2016, and was to close on February 28, 2017.

[21] On January 5, the Attallas requested a Discharge Statement. It was not provided. The conditions on the sale were either waived or fulfilled by January 11, and the mortgagees’ sale became firm.

[22] At 4:47 p.m., February 27, 2017, the mortgagor, Said Attalla, registered a caution on title stating that he had an interest in the land based on the existing owner’s equity of redemption. On March 3, the purchasers registered their own caution as intended purchasers.

Positions of the Parties:

1) The Attallas:

[23] The Attallas have two positions:

a) The Bank’s enforcement under power of sale is null because of a defect in the Notice of Sale.

b) The Bank has breached s. 22 of the Mortgages Act by not providing a discharge statement as requested on January 5, 2017.

[24] With respect to the first argument, the mortgagors say that the additional charge of three months’ interest is a fine or penalty and violates s. 8 of the Interest Act, RSC 1985, c. I-55. Therefore the Notice of Sale containing the three months’ interest amount is defective, and the mortgagees’ enforcement null.

[25] With respect to the second argument, the mortgagees provided no Discharge Statement in response to the Attallas’ January 5 request or the putative lender’s request of January 8. The mortgagee was only relieved of this obligation to provide a Discharge Statement under s. 22(1)(a) of the Mortgages Act once there was a final agreement of purchase and sale. The sale to the purchasers was not final until all conditions were waived on January 11.

2) The Mortgagees:

[26] The mortgagees say:

a) With respect to s. 22 of the Mortgages Act, the mortgagees are only obliged to provide a Discharge Statement if the request is made “before sale under the mortgage”. The sale referred to under s. 22(1)(a) is any sale, conditional or firm. Therefore, it is not in breach of the section.

b) With respect to the request for a Discharge Statement on January 8, the request itself was void once the lawyer for the purported lenders said it would not be lending because of the concerns it raised.

c) With respect to the Attalla’s request on January 5, the mortgagees were not obliged to provide a Discharge Statement as the property was subject to an agreement of purchase and sale. Once the mortgagee has an agreement of purchase and sale, the equity of redemption expires. The APS contained a clause that gave the mortgagee, at its sole discretion, the right to void the sale if a party with the right to redeem wishes to redeem. Since the Attallas are not parties to the contract, they have no right to enforce that clause.

d) Before the Attallas can exercise their equity of redemption, they must indicate that they are ready, willing and able to close, by tendering. They did not tender. On the evidence, they were not ready, willing and able to close as the financing they had was deficient to discharge the second through fourth mortgages, and Mr. Allatta’s statement that he could cover the balance was a bald statement.

Decision:

[27] The Application is dismissed. Costs are to be addressed in writing as detailed below.

Analysis:

1) Is the Notice of Sale Deficient?

[28] No. In this case, the fees charged by the mortgagees do not offend s. 8 of the Interest Act. The Attalla’s fail the first and third parts of the test set out in P.A.R.C.E.L., discussed below. The fees charged by the mortgagees are neither fines, penalties nor interest, nor do they increase the charge on the arrears.

[29] The Attallas say that because the Notice of Sale contained a fee equalling 3 months interest, above the interest charged on the mortgage, the Notice of Sale is defective. That charge, say the Attallas, is in violation of s. 8 of the federal Interest Act and is therefore void. They rely on Tomell Invest. Ltd v. East Marstok Lands Ltd., [1978] 1 S.C.R. 974. In my view, Tomell is instructive, but is distinguishable, and in any event, has been the subject of much discussion in the jurisprudence.

[30] Any analysis of the effect of s. 8 of the Interest Act begins with a review of P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 331, in which the Court of Appeal set out the following analytical approach to determining whether a charge in a mortgage is prohibited by s. 8:

[53] Given the protective purpose of s. 8 of the Interest Act, in what circumstances is the section triggered? There are several prerequisites to the application of s. 8 of the Interest Act. First, as this court explained in Mastercraft Properties Ltd. v. EL EF Investments Inc. (1993), 14 O.R. (3d) 519, 64 O.A.C. 308, at pp. 521 – 22, s. 8 requires a finding that the covenant in question imposes a “fine”, “penalty” or “rate of interest”. If it does not, then s. 8 is not engaged.

[54] Second, the “fine”, “penalty” or “rate of interest” must relate to “any arrears of principal or interest secured by mortgage on real property” (emphasis added). The arrears may arise on default occurring before or after maturity of the relevant debt instrument: Beauchamp v. Timberland Investments Ltd. (1983), 44 O.R. (2d) 512, 1 O.A.C. 73 (C.A.), at p. 516.

[55] Third, assuming that the covenant stipulates for a “fine”, “penalty” or “rate of interest”, the covenant must also have the prohibited effect of “increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears”. In other words, the covenant “must both stipulate for a ‘fine’, ‘penalty’ or ‘rate of interest’ and have the prohibited effect”: Mastercraft, at p. 522 (emphasis in original).

[56] Finally, the arrears of principal or interest must be “secured by mortgage on real property”.

[31] With respect to question 4 of the test, the Court said:

[61] … Section 8 of the Interest Act simply refers to a “fine, penalty or rate of interest … on any arrears of principal or interest” that are “secured by mortgage on real property”, provided that the fine, penalty or rate of interest “has the effect” of increasing the charge on the arrears “beyond the rate of interest payable on principal money not in arrears”.”

[32] In P.A.R.C.E.L., the lender loaned money and documented the loan by both an unsecured promissory note and a mortgage. The Court held that s. 8 of Interest Act applies to a promissory note if the lender under the promissory note is in fact a mortgagee on real property.

[33] With respect to “Additional Fees”, the mortgagee, Acquaviva charged the following additional fees for late payments/defaulting (see paras 11 and 12):

N.S.F. FEE PROVIDED the Mortgagee shall be entitled to an administrative fee of $300.00 cumulatively in the event any payment hereunder shall be returned unpaid by the Mortgagor’s bank for any reason or payments [are] not received on payments due date(s)[.] …

LATE PAYMENT CHARGE PROVIDED that the Mortgagee shall be entitled to a late charge of $10.00 per day in the event that the mortgage payments are received by the Mortgagee later than the regularly scheduled payment date.

ADDITIONAL PROVISIONS Our current schedule of administration and servicing fees includes the following charges: … $300.00 Missed [P]ayment Fee: Payable for each missed or late instalment and for processing each NSF cheque or other returned payment.

[34] With respect to these fees, the Court held:

[92] The appellants contend that the Late Payment Charges ($11,110) and the Default Fees ($7,200) allowed by the motion judge also offend s. 8 of the Interest Act.

[93] The Mortgage provides that the respondents are entitled to a late charge of $10 per day in the event of their late receipt of monthly payments due under the Mortgage. It also provides for the payment of a $300 “Missed [P]ayment Fee” if payments under the Mortgage are missed or late or returned for payment. The appellants submit that the Late Payment Charges and the Default Fees awarded by the motion judge, which are based on these provisions of the Mortgage, constitute “fine[s]” or “penalt[ies]” prohibited under s. 8 of the Interest Act.

[94] I agree.

[95] The respondents [mortgagees] point to no evidence on the record before this court demonstrating that they incurred any actual losses as a result of late or missed payments under the Mortgage, apart from the amount of the non-payment itself. This is not a case where it is alleged that payments made by or on behalf of Parcel under the Mortgage were returned “NSF” or otherwise rejected for payment, giving rise to administrative costs for the respondents.

[96] In the absence of evidence that the charges in question reflect real costs legitimately incurred by the respondents for the recovery of the debt, in the form of actual administrative costs or otherwise, the only reason for the charges was to impose an additional penalty or fine, apart from the interest otherwise payable under the Mortgage, thereby increasing the burden on the appellants beyond the rate of interest agreed upon in the Mortgage. The courts have not hesitated to disallow similar charges on the basis that they offend s. 8 of the Interest Act: see for example, Chong v. Kaur, 2013 ONSC 6252, at paras. 54 – 56; Bhanwadia v. Clarity Financial Corp., 2012 ONSC 6393, at paras. 43 – 46; NBY Enterprises Inc., at para. 29; 2088300 Ontario Ltd. v. 2184592, 2011 ONSC 2986, at paras. 22 – 23 (Mast.); Nesci v. Ramrattan, at para. 28.

[97] Accordingly, I would set aside the impugned Late Payment Charges and Default Fees.

[35] We are also instructed by the Supreme Court of Canada that in determining whether the mortgagee’s additional fee or charge violated s. 8, one looks at the effect of the fee or charge, not the label applied. Where the effect of the fee is to “…increase the charge on the arrears beyond the rate of interest payable on principal money not in arrears” s. 8 is violated (see Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18, para. 25 – 26 and 31). I pause to note that Krayzel dealt with a discount offered.

[36] How have other courts treated similar kinds of levies?

[37] In Mastercraft Properties Ltd. v. El Ef Investments Inc. (1993), 14 O.R. (3d) 519, [1993] O.J. No. 1704 the Ontario Court of Appeal said that for s. 8 of the Interest Act to apply, the fee or charge must be a fine, penalty, or rate of interest imposed on money in arrears.

[38] One of the mortgage covenants under consideration in Mastercraft provided for a "bonus". That bonus, the Court held, was not a penalty for breaching the mortgage contract. Rather, it was a payment required so that the mortgagor could pay arrears without the necessity of giving the three months' notice contracted for. The Court of Appeal held that this contractual term is not what is contemplated by s. 8 of the Interest Act. The Court said that the mortgage covenants here required notice before repayment with interest at the rate payable under the mortgage during the notice period. If the borrower wanted to pay arrears before the end of the notice period, he was required to make the payment equal to three months’ interest, in addition to the interest which would otherwise be payable. That charge was made for the privilege of prepayment. Further, the Court held that the “bonus” was not a “rate of interest” charged on “arrears of principal or interest.” The covenants at issue “…deal merely with an amount of money calculated with reference to the mortgage rate.”

[39] In a similar vein, in Bankers Mortgage Corporation v. Plaza 500 Hotels Ltd., 2017 BCCA 66, the B.C. Court of Appeal held that an “exit fee” paid to the broker does not fall within s. 8. It is not a charge exacted on the arrears.

“It is an independent obligation, albeit arising on default under the loan. It does not form part of the arrears nor is it stipulated for, taken, reserved or exacted on the arrears secured by mortgage. It is not enforceable as part of the arrears. It does not have the effect of increasing the charge on those arrears in the sense that it increases the amount of money required to pay off the arrears of the secured loan or to discharge the mortgage and redeem the property. To put the same point slightly differently, the exit fee is not secured as part of the arrears recoverable under the mortgage and part of the secured debt that must be paid to discharge the mortgage and redeem the property.”

[40] The Attallas argue, in essence, that any charge made by the mortgagee aside from interest, offends s. 8. I disagree. In Bankers Mortgage, supra, the B.C. Court of Appeal dealt with a similar argument and said beginning at para. 37:

[37] The appellants accept s. 8’s purpose as articulated in Krayzel, but their contention rests on the proposition that an obligation triggered by default, albeit not forming part of the arrears required to be paid to redeem, is captured by s. 8 because it nonetheless increases the borrower’s overall obligations arising out of the transaction. The appellants argue that it is sufficient that there is a relationship between the obligation and the mortgage (e.g., triggered by default, arising out of the same transactional context), and that it is not necessary that the impugned obligation form part of the amount secured by the mortgage that must be paid to redeem or that it be owed to the lender. As occurred here, the third-party unsecured creditor (the broker) may obtain judgment for the exit fee and register the judgment against title to the property, effectively increasing the encumbrances on the borrower’s equity. They rely on the clause “or to protect their equity” in para. 53 of Reliant.

[38] I cannot accede to this proposition. In my view, the wording of s. 8 is plain and clear that the impugned charge must be on the arrears, and have the effect of increasing the charge on the arrears. The clause “or to protect their equity”, in my view, refers to the borrower’s equity of redemption and equity “at stake” due to the foreclosure proceeding; that is, s. 8 protects the right to redeem and thereby prevents the equity in the property from being foreclosed. It is not to protect their equity in the property generally from any outstanding unsecured obligations the borrower may have, any of which may be reduced to judgment and enforced by ordinary execution methods, such as registration against property. In my opinion, the appellants’ contention goes well beyond the purpose of the legislation and is incompatible with the plain language of the section read in light of the legislative purpose. To give effect to the argument advanced on appeal would inject legal and commercial uncertainty into lending practices rendering it virtually impossible for parties to lending transactions to predict what kind of relationship would be sufficient to trigger the application of s. 8.

[39] In sum, the legal relationships engaged here do not trigger s. 8. The obligation to pay the exit fee is owed to the broker, not to IMOR (the lender). The lender cannot enforce payment of the exit fee. The exit fee is not secured and is not part of the mortgage debt. Failure to pay the exit fee impeded neither payment of the balance owing to IMOR to redeem nor the discharge of the mortgage by redemption. The exit fee was not part of the arrears. Although triggered by default on the mortgage loan, it is not “exacted on” the arrears.

[41] Applying the P.A.R.C.E.L. and Krayzel analysis to the Attallas’ case, like in Bankers Mortgage, supra, the fee charged by the mortgagee is not a fine, penalty or rate of interest, nor is it a discount as discussed in Krayzel. It is an independent fee arising on default, when the mortgagee is required by the default of the debtor/mortgagor to begin enforcement proceedings. While there is no evidence of the specific fees that the mortgagee incurred in issuing its Notice of Sale and Statement of Claim, there is no doubt that fees and expenses were incurred. In this case, while the amount of the fee is determined by a fixed number of months of interest, it is not, itself, an interest charge.

[42] Further, Brokers Mortgage draws a distinction between charges and fees which Krayzel does not address; namely, whether the charge at issue is a charge on the property and therefore impairs the mortgagor’s ability to protect his equity.

[43] In this case, the additional fee for having to issue a Notice of Sale and Statement of Claim is not secured by the mortgage. Other fees, for example the charges listed under “Administration Fee”, are chargeable against the property as they “… will be added to the principal amount outstanding if not paid within five (5) days of demand for payment of same.” The fee charged in this case does not increase the charge on the arrears in the sense that it does not increase the amount required to pay off the arrears and discharge the mortgage and redeem the property. In the covenant at issue, the fee applied by the mortgagee is not enforceable against the equity. The right of enforcement of this aspect of the mortgagee’s claim is against the mortgagors on the covenant, not against the security in the property.

[44] While the charge at issue in this matter does not offend s. 8 of the Interest Act, it is relevant to this motion. The only rational purpose of the charge is offset costs of enforcement. Therefore, I will consider it in terms of costs.

[45] Even if the Notice of Sale was defective as the Attalla’s argue, the defect is minor. Where there is a minor error that can be cured by a subsequent accounting, the Notice of Sale is not invalid (see Toronto-Dominion Bank. v. Pallett Dev’ts Ltd. (1984), 47 O.R. (2d) 251 (Div. Ct.), para. 11-13). A Notice of Sale is not void for including additional fees (see O’Shanter Dev’t Co v. Gentra Canada per Saunders, J., page 9,).

2) Is Enforcement Stayed by s. 22 of the Mortgages Act?

[46] No. The mortgagee did not fail to provide a discharge statement since, at the time the Attallas made the demand, the mortgagees had a sale of the property, although only conditional.

[47] The relevant portions of the Mortgages Act provide:

Relief before action

22. (1) Despite any agreement to the contrary, where default has occurred in making any payment of principal or interest due under a mortgage or in the observance of any covenant in a mortgage and under the terms of the mortgage, by reason of such default, the whole principal and interest secured thereby has become due and payable,

(a) at any time before sale under the mortgage; or

(b) before the commencement of an action for the enforcement of the rights of the mortgagee or of any person claiming through or under the mortgagee,

the mortgagor may perform such covenant or pay the amount due under the mortgage, exclusive of the money not payable by reason merely of lapse of time, and pay any expenses necessarily incurred by the mortgagee, and thereupon the mortgagor is relieved from the consequences of such default.

Statement of arrears, expenses, etc.

(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.

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.

[48] The Attallas say that s. 22 provides that they may redeem the mortgage at any time until the mortgagee enters into a firm and irrevocable agreement of purchase and sale. The Attallas say that Logozzo v. Toronto-Dominion Bank, [1999] O.J. No. 4088, 45 O.R. (3d) 737 (C.A.) supports this proposition.

[49] The Attalla’s reliance on s. 22 is misplaced simply because the mortgagees have commenced an action in enforcement. Once the mortgagee begins proceedings by issuing an action for enforcement redemption is no longer available (see 1175945 Ont. Ltd. v. Michael Wade Construction Co. Ltd., 2010 ONSC 3732, para. 22).

[50] Further, their faith in Logozzo is misplaced. In that case, the Court of Appeal held that in order to redeem the mortgage, the mortgagor had to tender the amount required to redeem or discharge the mortgage. Tendering is a condition precedent. The Attallas have not tendered or otherwise made the funds available to redeem the mortgage. Based on the evidence, it is not clear that they have the funds. Only tendering or payment into court would satisfy this requirement.

[51] Logozzo does say that the exception to the right of redemption (that the mortgagee has entered into a sale of the property) required that the sale had to be firm. That decision, however, is relevant only because the sale in Logozzo contained a clause which said that the sale was subject to the mortgagor’s right of redemption. The ratio does not extend beyond the facts of the case.

[52] Is a conditional agreement of purchase and sale sufficient under s. 22(1) to end the mortgagors’ right of redemption, or must the sale be final and irrevocable?

[53] Perell, J. performed an exhaustive review of the case law on both sides of this subject in Armanasco v. Linderwood Holdings Inc., 2016 ONSC 1605, at para.s 51 to 59. I agree with the learned Justice when he said that even a conditional sales contract ends the mortgagor’s right of redemption, while recognizing that it may revive if the conditions fail and the conditional sales agreement ends.

[54] The Attallas also argue that since the mortgagees did not provide a Discharge Summary to them when demanded on January 5, or to a putative lender on January 8, under s. 22(3), their enforcement is stayed, and the Attalla’s right of redemption is preserved.

[55] The mortgagee was not obliged to provide a discharge statement to either person, since, as indicated, the mortgagees had an agreement of purchase and sale. Further, the Attalla’s argument on the effect of s. 22(3) also fails because, at the time, an action had been commenced.

Costs:

[56] If the parties cannot agree as to who pays whom costs, and in what amount, I am prepared to decide the subject on written submissions, limited to 3 double spaced pages (excluding bills of costs and cases). The Respondents are due within two weeks of the release of these reasons and the Applicants’ within three weeks of the release of these reasons.

TRIMBLE J. Released: March 28, 2017