Court File and Parties

COURT FILE NO.: CV-14-3121-00 DATE: 20170913 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SEAN WILSON, Plaintiff / Moving Party AND: SHARON GOODEN-ALLEN and DESMOND ALLEN, Defendants / Respondents AND: SEAN BROWN, Intervener on Motion to Stay

BEFORE: EMERY J.

COUNSEL: PATHIK BAXI and AMRITA MANN, for the Plaintiff ROBERTO R. CUCCI, for the Defendants AMANDEEP SIDHU, for the Intervener Sean Brown

HEARD: May 14, May 21, June 16, June 23, July 14, July 30, September 11, December 7, 2015; January 19, May 2, June 21, November 8, December 9, 2016; January 30, February 22, March 17, July 25 and in writing on August 18, 2017

REASONS FOR DECISION

[1] There is an old house in north Brampton, Ontario that sits on two thirds of an acre at 11483 Hurontario Street, a few blocks from the city centre (the “property”). At one time the house was the home of Colonel Bertram, the namesake of Colonel Bertram Drive that runs nearby. Because of its location and its lot size, the property has development potential to spare.

[2] The owner, Sharon Gooden-Allen, purchased the property in 2007. Ms. Gooden-Allen and her husband Desmond Allen (collectively, the “Allens”) have lived in the house at times, and at times all or part of the house has been rented out to tenants.

Overview

[3] In 2011, the Allens were having difficulty with servicing a first charge they had granted to Royal Bank of Canada against title to the property. They arranged for a loan of $200,000 from a neighbor, Surrinder Jass. Ms. Gooden-Allen granted Mr. Jass a second charge against title for six months as security for the loan. Under the second charge, the Allens were to repay the full $200,000 to Mr. Jass by September 27, 2011, complete with interest calculated at a rate of 6% per annum.

[4] The Allens could not repay the loan from Mr. Jass by September 27, 2011. They therefore fell into default under the second charge.

[5] Mr. Jass and the Allens agreed to extend the term of the loan for a further one year, to September 27, 2012. In September 2012, the Allens implored Mr. Jass to give them a further extension of two months. They gave Mr. Jass a cheque dated September 23, 2012 for $1,000 as an extension fee. That cheque was not honoured by the Allen’s bank for insufficient funds on September 26, 2012.

[6] Monthly cheques written by the Allens later in 2012 to keep their obligations current, and larger cheques written at various times throughout 2013 and 2014 to make up for past defaults, were all returned NSF. Finally, Mr. Jass issued a Notice of Sale dated August 8, 2014 under the charge and pursuant to the Mortgages Act.

[7] Mr. Jass transferred the second charge to Sean Wilson on June 3, 2015. Mr. Wilson then entered an Agreement of Purchase and Sale dated June 4, 2015 (the “APS”) to sell the property to Sean Brown.

[8] The Allens challenge the validity of the assignment of the second charge from Mr. Jass to Mr. Wilson to give him the right to sell the property under the second charge. The Allens also challenge the propriety of the sale to Mr. Brown.

[9] There are three irrefutable facts that are central to the decision the court must make.

[10] The first fact is that the Allens have not made one payment under the second charge since September, 2012.

[11] The second fact is that Mr. Jass commenced an action against the Allens to enforce the second charge on July 19, 2014. He obtained summary judgment on the claims made in that action, with the consent of the Allens, from Justice Donohue on December 9, 2014. Under the Minutes of Settlement filed, the Allens were to pay $250,000 to Mr. Jass by January 30, 2015. In the event they failed to make that payment, they were to deliver up vacant possession of the property on or after February 28, 2015 and gave their consent to a Writ of Possession.

[12] The Allens did not pay any amount towards this judgment. They vacated the property when the sheriff executed the Writ of Possession on or about May 22, 2015.

[13] The Allens were also in default under the first charge on the property held by Royal Bank of Canada. The first charge was ultimately paid out on June 30, 2015. Whether it was Mr. Jass or Mr. Wilson who paid out the first charge held by Royal Bank has become an issue that will be discussed later in these reasons.

[14] Third, Mr. Jass transferred the second charge to Sean Wilson for valuable consideration. Mr. Wilson then entered the APS to sell the property, without conditions, as vendor of the property to Sean Brown as purchaser on June 4, 2015. Under the APS, Mr. Brown agreed to pay Mr. Wilson $850,000 for the property when the transaction closed under the APS on June 10, 2015. From this amount, Mr. Wilson would have to pay out Royal Bank as holder of the first charge.

[15] There are two motions for the court to decide. The first is the motion the Allens have brought to “stay” the sale of the property under the APS between Mr. Wilson and Mr. Brown. The outcome of this motion will have one of two results: it will either confirm the right of Sean Wilson to enforce the second charge by selling the property to recover the amounts the Allens have defaulted on paying under the charge, or it will allow the Allens to redeem and to bring the second charge into good standing.

[16] Mr. Wilson obtained an order to continue from the registrar in the course of this proceeding, once he became the transferee of the second charge. Mr. Wilson has brought the other motion that the order to continue be made effective nunc pro tunc. The Allens oppose that motion.

[17] Even though the Allens seek a stay of the APS to Mr. Brown as the purchaser, this litigation is all about who has the right to sell this valuable property, and to benefit from that sale.

Standing and Position

[18] Mr. Wilson obtained an order to continue the action in his own name under Rule 11.02 of the Rules of Civil Procedure as the plaintiff. Mr. Wilson has an interest in continuing the action in his own name not only because Mr. Jass transferred the charge to him, but also because Mr. Jass obtained judgment in excess of $250,000 on the covenant against the defendants on December 9, 2014, along with a Writ of Possession for the property.

[19] Mr. Brown has been added as an intervener on the defendants motion by order of this court for reasons given on November 23, 2015.

Positions of the Parties

[20] Only Desmond Allen has sworn affidavits in support of the motion to stay the APS, and in response to Mr. Wilson’s motion to make the order to continue nunc pro tunc. Even though only Ms. Gooden-Allen took title to the property in 2007, I have treated the affidavits of Mr. Allen as providing evidence on behalf of them both, and as agent for Ms. Gooden-Allen. Otherwise, there would be no evidence from them on either motion.

[21] The Allens allege that Mr. Jass never made a proper assignment of the charge to Mr. Wilson, arguing that he has transferred the charge to a third party to insulate himself from liability on any challenge. They also allege notice of the assignment was not given so that it is not effective in law. They make these arguments to assert that Mr. Wilson never had the legal right to sell the property in the first place. This argument puts the transaction between Mr. Jass and Mr. Wilson in issue.

[22] The Allens also challenge the bona fides of the APS between Mr. Wilson and Mr. Brown as a contract. They submit that Mr. Wilson and Mr. Brown are one and the same, or fellow employees at the same employer and that one is acting as agent for the other. The Allens challenge the nature and terms of the APS, arguing that the property was sold one day after it was listed for sale, and that it was sold for a price far below its fair market value. The Allens consider the APS to have all the hallmarks of a sham transaction.

[23] Mr. Wilson and Mr. Brown deny the assertion that the assignment is deficient. They rely on the affidavits of Mr. Wilson filed on the motion as evidence of what Mr. Jass intended when the transfer of charge was made.

[24] Mr. Wilson and Mr. Brown maintain that Mr. Jass made a legal or an equitable assignment when he transferred the second charge to Mr. Wilson, and which Mr. Wilson has registered on title. Upon that assignment, Mr. Wilson had the contractual right to sell the property to Mr. Brown, subject to prior encumbrances and the provisions of the Mortgages Act. Mr. Wilson and Mr. Brown each take the position that the APS to sell the property to Mr. Brown is a bona fide transaction, and that the Allens’ motion for a stay has been brought too late. They make the submission that the right of a mortgagor/chargor to redeem under a mortgage/charge ceases when the property is sold by virtue of section 22(1)(a) of the Mortgages Act. They further submit as a matter of law that a property is sold when the chargee enters an agreement of purchase and sale with a purchaser with no conditions, and reserves no right of redemption to the chargor.

[25] Mr. Wilson brings a motion to vary the order to continue he obtained in the course of these motions to make it applicable on a nunc pro tunc basis. The Allens oppose that motion, arguing that the validity of the assignment of the second charge is inextricably intertwined with the determination of whether sale is valid. The remedies they seek will in effect block the sale to Mr. Brown, and place them once more in control of selling the property on their terms.

Analysis

The APS Bar

[26] A chargor may put a charge in good standing “at any time before the sale under the mortgage” under section 22(1)(a) of the Mortgages Act.

[27] The acceptance of an Offer to Purchase constitutes a “sale” with the effect that the chargor at that point in time loses his or her right to redeem the charge under section 22(1)(a). This statement of law was initially framed in those terms by Justice Lieff in Remission Construction Ltd. v. Seel Investments Ltd., [1973] 2 O.R.190 (High Court), and recently confirmed by Justice Perell in Armanasco v. Linderwood Holdings Inc., 2016 ONSC 1605, [2016] O.J. No. 1174.

[28] The point in time at which a chargor loses the right to redeem the charge is also important from the perspective of a purchaser under an agreement of purchase and sale. The Court of Appeal in the Logozzo v. Toronto Dominion Bank, 1999 CarswellOnt 3477 took the opportunity to restate the rule and its implications in the following way:

26 Almost 90 years ago, before there was legislation on the subject, the court considered whether a mortgagor could redeem the property after the mortgagee had accepted an offer to purchase the property which was being sold under power of sale: Standard Realty Co. v. Nicholson (1911), 24 O.L.R. 46 (K.B.). In this case, the mortgagor presented the mortgagee with a certified cheque for the sum due on the mortgage, which the mortgagee rejected as the land was subject to an agreement of purchase and sale, which was later completed.

27 Riddell J. allowed the purchaser's action against the mortgagor, Nicholson, for possession of the property. It was significant to him that the purchaser had acquired rights under the contract it had entered into with the mortgagee. At p. 55 he stated:

A binding contract for sale being entered into by the mortgagee, before any notice of any intention to redeem, I think that Mrs. Nicholson lost any right she previously had so to redeem.

In Kenney v. Barnard (1910), 17 O.W.R. 889, 2 O.W.N. 470, the second mortgagee, on the day of a sale under the first mortgage, called on the purchaser and offered him the amount of his deposit and $25 for his trouble - he also made a legal tender to the first mortgagee of the amount due, etc. Mr. Justice Sutherland says (17 O.W.R. p. 900): "The tender made after the sale was so made at a time when both vendor and purchaser were bound by the agreement that had been made ... The vendor would have been willing to cancel the sale and permit the plaintiff to redeem. The purchaser ... was unwilling to forgo his bargain ... He declined, and could not, I think, be compelled to do so." An action brought by the second mortgagee was dismissed with costs. I follow this decision, and wholly agree in my learned brother's conclusion.

28 In addition, Riddell J. discussed the distinction between a mortgagor's right to redeem after a final order of foreclosure, and the right to do so after a sale under power of sale. He pointed out, at pp. 55-6, that the authorities permit a final order of foreclosure to be opened up in appropriate circumstances to allow a mortgagor to redeem. This right, however, depends on the exercise of a discretion by the court depending upon the circumstances of each particular case. On the other hand, to permit a mortgagor to redeem after the property has been sold upon power of sale, as in this appeal, would require the court to interfere with rights accruing to the purchaser and the mortgagee under their contract of purchase and sale. In other words, it would interfere with the mortgagee's contractual right to sell under power of sale contained in the mortgage entered into with the mortgagor, as well as the contractual rights of the mortgagee and the purchaser arising from the contract of sale under power of sale.

[29] There is no evidence before the court that the APS was entered in suspicious circumstances with Mr. Brown, apart from the fact the property was sold one day after it was listed, and any alleged shortfall in the sale price.

[30] Prior to listing the property for sale, Mr. Wilson obtained the following opinions of market value for the property:

a. From Krystle Mitchell-Bryson dated June 3, 2015, in the range of $875,000 to $975,000; b. From Alykhan Nathoo dated June 3, 2015, in the amount of $850,000 to $950,000.

[31] Mr. Wilson deposes that when he visited the property prior to listing it for sale, he found it in extremely bad shape. He deposes that the property would require extensive repairs to sell it within the higher range of its market price. Accordingly, he listed the properly on the MLS on an “as is where is” condition for $929,000.

[32] Mr. Allen obtained and relies upon the appraisal from C. Esposito & Associates Limited giving a market value of $1,400,000 for the property as of May 15, 2015, subject to the terms and limiting conditions set out by the appraiser.

[33] Mr. Wilson obtained further reports on an urgent basis in response to the evidence commissioned by the Allens, including the appraisal from C. Esposito and Associates. The further appraisals of the property filed by Mr. Wilson are:

a. By Edjline Appraisal Services dated June 30, 2015, for $750,000; and b. By G.R. Carruthers Consulting Limited dated June 30, 2015, for $790,000.

[34] On June 4, 2015, Mr. Wilson received an unconditional offer from Mr. Brown for $850,000. This became the APS when he accepted that offer.

[35] Mr. Allen has deposed in his affidavit that Ms. Gooden-Allen received an offer for the property from Hanh Nguyen made on July 10, 2015 for $1,320,000. Mr. Nguyen is described by Mr. Allen as the neighbor to the north who operates Hanh Spa, and who should have a practical idea of what the property is worth.

[36] Mr. Allen has also attached an offer he received from one Glenroy Brown on November 11, 2014 for $1,500,000, with $5,000 down. That offer provides that the buyer would assume all existing tenancies on closing.

[37] The Court of Appeal in Piechocki v. Costa, 2009 ONCA 88, places the onus on the mortgagor/chargor to show that the sale was at such an undervalue as to amount to fraud or bad faith. At paragraph 17, the court explained that:

17 In the present case, the appellant has listed a series of facts that, in her view, lead to the conclusion that the purchase was a sham and that the purchaser is not bona fide. Other than seeking to deprive the appellant of any equity she may have remaining in the property, no motive was advanced or is apparent for perpetrating what, in effect, is alleged to be fraud. If it is simply an improvident sale, the mortgagor can later seek damages from the mortgagee.

[38] Justice Perell in Armanasco v. Linderwood Holdings Inc. applied the reasoning of the Court of Appeal in Logozzo v. Toronto Dominion Bank, where Justice Borins wrote that the court will not interfere with a sale even though the sale price is very disadvantageous to the chargor, unless the price is so low as to evidence fraud.

[39] This holding is consistent with the views expressed by Justice Lieff in the Mission Construction case. In Mission Construction, the fact that the purchase price was sufficient to pay off the first and second mortgages, and one half the amount owing on the third mortgage did not make it an improvident sale. Justice Lieff held that the rights of a mortgagor to redeem the mortgage came to an end pursuant to (then) section 21(a) of the Mortgages Act upon the acceptance of the offer to purchase, subject to the mortgagors rights, if any. The “rights if any” proviso in the statute referred only to those rights not terminated by the sale of the property, such as the right to redemption upon proof that the sale was fraudulent or improper.

[40] I do not find the purchase price for the property to be so low as to constitute fraud or bad faith. The purchase price under the APS was sufficient to payout the amounts owing under the first charge in default as well as the amounts owing under the second charge. At the same time, the purchase price falls within the estimates of value Mr. Wilson obtained from realtors before he listed the property for sale, and the appraisals he obtained in response to those filed by the Allens.

[41] If the defendants continue to take the view that the purchase price is improvident to the extent that Mr. Wilson as the holder of the second charge has breached his duty owed to the Allens to obtain the fair market value for the property, they may take separate action to seek damages against Mr. Wilson for making an improvident sale. However, they have no grounds to stay or set aside the APS to Mr. Brown on this basis.

[42] Although the Allens argue that the events leading up to the APS between Mr. Wilson and Mr. Brown follow Piechocki v. Costa like a script, I find no objective evidence in the record to support that position except for the Allens challenge of the transfer of charge as a legitimate assignment. It is to that issue I now turn.

Whether the Transfer of Charge was Genuine

[43] The Allens challenge the transfer of the second charge from Mr. Jass to Mr. Wilson as being a sham. They say that the timing of the transfer of charge on June 3, 2015 (the “transfer date”) was designed to frustrate their ability to redeem the second charge because it enabled Mr. Wilson to enter into the APS with Mr. Brown without giving them an opportunity to redeem the charge.

[44] The Allens make several arguments that the transfer of the charge to Mr. Wilson is not genuine.

[45] First, they state that Mr. Jass remained the true owner of the second charge because he paid out the first mortgage held by Royal Bank on the property after the transfer date. Mr. Cucci relies upon an email sent by Erin Smith at Gowlings (WLG) on behalf of Royal Bank to Mr. Allen dated June 16, 2016 that confirms the mortgage to Royal Bank, along with all legal fees, had been paid in full through Mr. Somal’s office on behalf of Mr. Jass.

[46] Mr. Cucci argued that Mr. Jass would have no reason to pay out the first charge to Royal Bank if he did not remain the owner of the second charge.

[47] This submission has no merit, as I find there is no evidence to support this position before the court. The email from Ms. Smith is hearsay evidence from a third party. Under the principled approach in R. v. Khelawon, 2006 SCC 577, a party must show that evidence is both necessary and reliable for that evidence to come from a source other than the person who could give that evidence directly. Here, no explanation was provided in Mr. Allen’s affidavit about why Ms. Smith could not give an affidavit herself. If Mr. Allen could not obtain an affidavit from Ms. Smith, counsel could have examined Ms. Smith under Rule 39.03 of the Rules of Civil Procedure to have a transcript of her evidence available at the hearing.

[48] I therefore conclude the email from Erin Smith is inadmissible. Even if it were not, the email was not tendered as a business record and there is no basis to accept the truth of its contents.

[49] Out of an abundance of caution, Mr. Wilson filed an affidavit in the event that the email from Ms. Smith was permitted. In that affidavit, Mr. Wilson described how the email itself proves that he paid out the first charge for the simple reason that Mr. Somal acts for him, and not Mr. Jass. Mr. Walia acted for Mr. Jass on the transfer of the charge.

[50] There is evidence that the first charge was subsequently deleted from title. I make no comment on this payout and the arrangements behind it except to observe that it was likely paid by Mr. Wilson as he has claimed.

[51] The Allens also argue that there is no written assignment of the second charge from Mr. Jass to Mr. Wilson. Despite Mr. Allen’s evidence that Ms. Mann at first volunteered a document relating to the transfer and then declined to put it in evidence, I consider there to be sufficient evidence given for me to find as a matter of law that Mr. Jass made an equitable assignment of the second charge to Mr. Wilson on the transfer date.

[52] Mr. Wilson deposes that he paid Mr. Jass $305,160.09 for the transfer of charge. Mr. Wilson attaches the bank draft dated June 2, 2015 in the amount of $300,000 to Walia Law Office in trust for Mr. Jass as an exhibit to his affidavit. Mr. Wilson deposes that he paid the balance directly to Mr. Jass pursuant to the discharge statement he has put into evidence.

[53] The evidence of Mr. Wilson’s payment for the transfer of the charge is not disputed or contradicted by other evidence. I do not consider it necessary for an equitable assignment to be made in writing: Nadeau v. Caparelli, 2016 ONCA 730. In Nadeau, Justice Brown confirmed that equity does not require a particular form of transfer to effect a valid assignment. However, whatever form is used must clearly show an intention that the assignee is to have the benefit of the debt or chose an action that has been assigned. The court adopted the following quote from Michael Furmston in Cheshire, Fifoot and Furmston’s Law of Contract, 16th ed. (Oxford: Oxford University Press, 2012) at page 636:

The transaction upon which the assignee relies need not even purport to be an assignment nor use the language of an assignment. If the intention of the assignor clearly is that the contractual right shall become the property of the assignee, then equity requires him to do all that is necessary to implement his intention. The only essential and the only difficulty is to ascertain that such is the intention. [Citations omitted.]

[54] There is cogent evidence before the court that Mr. Wilson paid the second charge held by Mr. Jass in full for the transfer of charge to meet the test for the court to find an equitable assignment. In exchange, he received a Transfer of Charge in registerable form. He acted as the holder of the second charge when he paid out Royal Bank’s first charge.

[55] This evidence provides the basis to conclude that Mr. Wilson was acting as the transferee of the second charge. This evidence stands in contrast to the portrayal of Mr. Jass as an exasperated neighbor who just wanted the Allens to repay him the money they had borrowed.

[56] Even if this case required clear and unequivocal evidence that Mr. Jass had done “all that is necessary to implement his intention” to transfer the second charge to Mr. Wilson, that deficiency is cured by section 78(4) of the Land Titles Act, R.S.O. 1990, c. L.5, which reads as follows:

(4) When registered, an instrument shall be deemed to be embodied in the register and to be effective according to its nature and intent, and to create, transfer, charge or discharge, as the case requires, the land or estate or interest therein mentioned in the register.

[57] Once a transfer of charge has been registered as an instrument, the effect of that registration confers upon the transferee the ownership of that charge under section 101(3):

(3) The transfer, when registered, confers upon the transferee the ownership of the charge free from any unregistered interests therein, and the transfer of part of the sum secured by a charge confers upon the transferee the ownership of such part free from any unregistered interests therein.

[58] I therefore find on the evidence that Mr. Jass made a valid and subsisting assignment of the second charge to Mr. Wilson on June 3, 2015.

Motion that the Order to Continue be *nunc pro tunc*

[59] The question of whether Mr. Jass as the initial holder of the second charge or Mr. Wilson as the transferee of that charge could be the true vendor of the property is a question between that vendor and the ultimate purchaser as to which of them can give good title to the property.

[60] It is important to remember the issues to be decided on these motions. I am not required to decide questions of title, or the requirements to convey good title to the property. I have only to decide if the party acting as the vendor has the capacity of a vendor to sell the property to the other party who is purchasing, and that the transaction does not have the trappings of a fraud or a sham.

[61] Mr. Cucci argues that Mr. Wilson would be required to show he was in a position to sell the property in the first place for the Agreement of Purchase and Sale to be valid. He states that this would necessarily require:

1. The existence of a valid transfer of charge document; and
2. Since the steps taken were pursuant to a judicial order, there must have been a continuation order in place to validate the purported sale.

[62] Mr. Cucci states that the APS entered on June 4, 2015 cannot be valid unless Mr. Wilson is successful in having the order to continue granted by the registrar on August 19, 2015 varied to make it nunc pro tunc.

[63] The basis for the sale of property by a chargee under the covenants of a charge can be found in the terms of the charge as a matter of contract, or under the statutory powers to sell a property for the recovery of the unpaid principle owing pursuant to section 24 of the Mortgages Act. Provided that all technical aspects of the Mortgages Act are met, the chargee is in a position to sell the property at law upon giving all proper written notice under section 31, subject to any prior encumbrances.

[64] The chargee must bring an action to obtain judgment from the court on the covenant for the balance owing under the charge, and for possession of the property. An action is the only way to obtain those remedies.

[65] In the statement of claim issued on July 9, 2014 to enforce the second charge, Mr. Jass claimed payment of all amounts due on the covenant, possession of the property under the charge, interest and costs. These are the remedies he requested on the motion for summary judgment. He was granted judgment on December 9, 2014 for $250,000.00 against each of the defendants for defaulting on the charge, as well as an order for possession of the property. These orders were made on consent.

[66] The defendants failed to comply with Justice Donohue’s order to pay the amount agreed upon as due and owing under the charge by January 31, 2015. Possession of the property was taken pursuant to the Writ of Possession on May 22, 2015.

[67] Mr. Jass as the original plaintiff did not seek an order for sale under section 24 of the Mortgages Act as relief in the statement of claim.

[68] The ability to sell the property (by Mr. Jass or by a legitimate assignee or transferee of the second charge) does not depend on the action. The fact that the charge has been assigned and that an order to continue has been obtained relates only to which person is in a position to collect the monetary amount awarded by Justice Donohue on summary judgment, and which of them is entitled to enforce a Writ of Possession to obtain possession of the property. This may give the true chargee the right to occupy, lease or collect rents for the use of the property, but it does not give that chargee the power to sell the property without seeking a further court order, or satisfying the requirements under Part III of the Mortgages Act.

[69] I make this observation in the context of the claim that Mr. Jass had already been reduced to judgment before he transferred the second charge to Mr. Wilson. Those remedies granted in the judgment do not relate to the essence of the sale of the property by either Mr. Jass or Mr. Wilson to Mr. Brown under the APS.

[70] The Supreme Court of Canada in Green v. Canadian Imperial Bank of Commerce, 2015 SCC 60 recognized that the power of a Superior Court to make an order nunc pro tunc is an exercise of the inherent jurisdiction of the court. The court took that opportunity to set out a non-exhaustive list of six factors for the court to consider where a nunc pro tunc order is requested:

1. whether the case is one where the opposing party will not be prejudiced by the order sought;
2. where the order sought would have been granted had been sought at the appropriate time, so that the timing of the order is an irregularity;
3. that the irregularity is not intentional;
4. that the order will effectively achieve the result sought;
5. that the delay has been caused by the act of the court; and
6. the order would facilitate access to justice.

[71] The principle enshrined in the Latin maxim “actus curiae neminem gravabit”, that “what the court might do ought not to prejudice a litigant” is reflected in the first factor set out in Green v. CIBC. An example of circumstances in which a nunc pro tunc order could be made was described in Silver v. IMAX Corp., 2012 NSC 4881, where the order may be granted to avoid an injustice that would otherwise flow from the delay in the court beyond the control of the court, counsel and the litigants.

[72] I brought the decision of the Court of Appeal in Nadeau v. Caparelli, 2016 ONCA 730 to the attention of counsel, on which I invited and I received further submissions. On the application of the maxim actus curiae neminem gravabit, it was found that it did not matter that the lender or any assignee had been named as co-plaintiffs of a promissory note. The debtor in that case owed one or the other, depending on the date the payment was due. Analytically, the debtor was not harmed or prejudiced by the nunc pro tunc order because he would owe someone, let it be to one party or the other.

[73] On Mr. Wilson’s motion to make the order to continue nunc pro tunc to the date of the transfer of the charge, I find the similarities with Nadeau to be sufficient to apply the same reasoning. The Allens would owe either Mr. Jass or Mr. Allen the amount owing to payout the full amount due under the charge. I have already found that Allens knew that Mr. Jass had transferred the charge to Mr. Wilson, and that it would be Mr. Wilson they would have to pay in order to redeem, or to obtain a discharge. It would be Mr. Wilson they will have to pay to satisfy the judgment obtained against them on December 9, 2014. In my view, they would suffer no harm or prejudice if the court makes the order to continue nunc pro tunc so that Mr. Wilson is able to receive money under the charge as the judgment creditor.

[74] I do not accept Mr. Cucci’s argument that it was the abuse of process for the plaintiff to obtain the order to continue from the registrar, without notice, in the course of hearing these motions rather than from a judge and Rule 11.02 of the Rules of Civil Procedure specifically provides that an order to continue may be obtained from the registrar without notice to any other party.

[75] The requirement of an order to continue had not only been disclosed to the Allens before it was obtained, the court adjourned the hearing of the motions on July 30, 2015 to enable Mr. Wilson to bring motions to establish his standing under the order to continue. I consider the evidence to support the request that the order to continue be made nunc pro tunc. The fact it was not made nunc pro tunc in first instance is an irregularity that was not intentional by Mr. Wilson or his counsel. I conclude it is an order that would have been made had the order being brought before me at the time.

[76] I also consider that to grant the order now would provide access to justice to Mr. Wilson as the transferee of the charge. He would then have the benefit of the judgment granted by Justice Donohue. To decide otherwise would continue to involve Mr. Jass in the action in which he no longer has an interest. This would be inconsistent with the intention of the parties, and cause the type of confusion to the Allens as the chargees in default that the authorities are united in seeking to avoid.

[77] The plaintiff’s motion for an order that the Order to Continue be made nunc pro tunc is therefore granted.

Proper remedy on the Motion to Stay

[78] Mr. Cucci also argues that neither Mr. Jass or Mr. Wilson has given a mortgage payout statement for the second charge to the Allens pursuant to section 22(3) of the Mortgages Act, despite their requests. A sale under mortgage is suspended until a payout statement is provided under a request.

[79] Mr. Harit Nagra, a law clerk in Mr. Walia’s office, gave an affidavit that the Allens requested a payout statement for the second charge from Mr. Jass on May 25, 2015. A payout statement for that second charge was provided by Mr. Walia on behalf of Mr. Jass on May 28, 2015. This statement shows $305,160.09 owing as of that date under the charge. No amounts were ever paid by the Allens towards this outstanding balance.

[80] The submission made by Mr. Cucci that Mr. Jass failed to provide a payout statement within the required fifteen days is not supported by the evidence. Therefore, Mr. Cucci’s submission that any enforcement of a related charge is suspended until that payout statement is given under section 22(3) of the Mortgages Act carries no weight.

[81] Mr. Wilson relies upon Stewart v. Wilbus Holdings Ltd. as authority to support the position that the power of the court to stay proceedings under section 106 of the Courts of Justice Act is curtailed after judgment has been obtained against the chargors in a mortgage enforcement action. In Stewart, the court also held that the court does not have the power to grant an injunction to restrain a chargee from enforcing a Writ of possession. In any event, a chargee acting in good faith and without fraud should not be restrained from exercising his power of sale in a proper manner except upon tender of the amount outstanding under the charge: Arnold v. Bronstein, [1971] 1 O.R. 467 (H.C.) and Armanasco v Linderwood Holdings Inc., 2016 ONSC 1605, at paragraphs 45 and 46.

[82] I do not consider the circumstances here warrant the exercise of any power to stay the action or the judgment granted by Justice Donohue. Mr. Wilson is entitled to recover on his judgment both in terms of money due, and to exercise his rights under the judgment as a chargee in possession.

[83] The difficulty with the remedy that the Allens have requested on their motion is with asking for a stay of the sale itself.

[84] The right to sell a property under a charge arises under contract or is given by statute. For a judicial sale, section 24 of the Mortgages Act provides as follows:

Powers incident to mortgages after default

24. Where any principal money is secured by mortgage of land, the mortgagee, at any time after the expiration of three months from the time of default in the payment of any money due under the mortgage or after any omission to pay any premium of insurance that by the terms of the mortgage ought to be paid by the mortgagor, has the following powers to the like extent as if they had been in terms conferred by the mortgage:

Power of sale

1. A power to sell, or to concur with any other person in selling, the whole or any part of the mortgaged property by public auction or private contract, subject to any reasonable conditions the mortgagee may think fit to make, and to buy in at an auction and to rescind or vary contracts for sale, and to resell the land, from time to time, in like manner without being answerable for any loss occasioned thereby.

[85] The forty-five days’ notice required by section 24 must be given to those persons specified by categorical description in section 31.

[86] Mr. Brown has filed the affidavit of Nav Shokar, a lawyer at the firm representing him on the Allens motion. Mr. Shokar has deposed that Mr. Sidhu of that firm received the Notice of Sale served by Mr. Jass, as well as registered mail receipts from Mr. Amritpal Mann, who represented Mr. Jass up to the time the motions were brought.

[87] The registered mail receipts appear to show that Ms. Gooden-Allen was served with the Notice of Sale. The receipts do not show the actual address to which any document was actually sent, nor do they describe the document that was mailed. While I accept that Mr. Jass did not have written notice of any tenants who may have resided in the house at any time during or after the term of the charge, Mr. Wilson is required by law to prove that Ms. Gooden-Allen had been served with the Notice of Sale.

[88] There was no other evidence provided to prove any other person to whom the Notice of Sale is directed was ever served, or sent a copy by registered mail. For instance, there is no evidence that Desmond Allen received the Notice of Sale. He would be a person having an interest that Mr. Jass would have notice about from the second charge itself if Mr. Allen had signed it as a spouse, and if the property was considered a matrimonial home under the Family Law Act.

[89] The evidence attaching the Notice of Sale and registered mail receipts does not provide sufficient proof of service of the Notice of Sale upon Ms. Gooden-Allen, her spouse or other occupants at 11483 Hurontario Street. Without that proof, I cannot find that Mr. Wilson is in a position to sell the property under the Notice of Sale served in August 2014 because I cannot conclude one way or another if Mr. Jass satisfied section 31 as required: Lee v. Korea Exchange Bank of Canada (1999), 44 O.R. (3d) 366 (SCJ).

[90] The question of whether an assignee of a mortgage, or transferee of a charge, as here, can sell the property under a Notice of Sale served under section 24 by the assignor, or if the assignee/transferee must serve a new Notice of Sale is addressed in at least two cases. In Lee v. Korea Exchange Bank of Canada, Justice Cullity held that where the assignment of the charge has not been served on the chargor, the assignee must serve a new Notice of Sale. The reason a new Notice of Sale must be served is to put the chargor on notice what party is the appropriate party for the chargor to deal with to redeem the mortgage. On the other hand, Justice Patillo in 2272045 Ontario Inc. (Re), 2011 ONSC 5900, [2011] O.J. No. 4547, held that the assignee need not serve a new Notice of Sale on the charger, provided that notice of the assignment has been served on the mortgagor.

[91] Mr. Wilson entered the APS for the sale of the property to Mr. Brown within 24 hours of giving notice of the transfer of charge to the Allens. Directly or through their lawyers, the Allens were fully informed of the person they were to deal with in order to payout or to redeem the charge. I consider the Notice of Sale served by Mr. Jass on August 14, 2014 remained the basis for him, or his assignee to enter an APS for the sale of the property to Mr. Brown.

[92] It is for these reasons that I am dismissing the Allens motion for a stay of the APS between Mr. Wilson and Mr. Brown. A stay is not the proper remedy for the Allens to seek to enjoin the sale of the property under the Notice of Sale. I make no findings, and decline to grant any relief to the Allens under section 23 of the Mortgages Act as their motion was not argued under that section, and there is no evidence they posted any money to the credit of the action as security for costs.

Costs

[93] If either party seeks costs on these motions, they may file written submissions consisting of no more than three pages by September 29, 2017. The other party shall then have until October 16, 2017 to file responding materials limited to the same extent. No submissions in reply shall be permitted, without leave. All written materials may be sent by fax to my judicial assistant, Ms. Kim Williams, at 905-456-4834 in Brampton.

[94] If no written submissions are received by October 16, 2017, the parties shall be deemed to have resolved the issue of costs between them.

Emery J DATE: September 13, 2017