CITATION: 1806700 Ont. Inc. v. Dmuchowski, 2017 ONSC 6626
COURT FILE NO.: CV-12-5383-SR
DATE: 2017 11 03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
1806700 ONTARIO INC.
J. Chahal, for the Plaintiff
Plaintiff
- and -
MARIAN DMUCHOWSKI and LEONILA FAJARDO
Defendants
MUHAMMAD ASLAM KHAN
M. Khan, Self-Represented
Third Mortgagee
S. Hussein, for previous Third Party Mian
SANDEEP SINGH JOHAL
R. Glass for Intervener
Intervener
HEARD: October 30, 2017
REASONS FOR JUDGMENT
Justice Thomas A. Bielby
[1] The third mortgagee, Mr. Khan, has before the court a motion to set aside part of the Reference Report of Ricchetti J. He asks that the surplus monies resulting from the mortgage sale, in the amount of $17,300.29, be paid to him, that he not be required to pay costs to any other party, and that he be awarded his costs of this proceeding.
[2] The plaintiff was the second mortgagee on property known as 67 Emeline Court, Markham. The mortgagors went into default and the plaintiff commenced Power of Sale proceedings as well as an action on the covenant and for possession.
[3] The property was sold and issues arose as to the distribution of funds. Mr. Khan claims that he is now the holder of a third mortgage on the property, by assignment and seeks payment of the surplus funds.
[4] In June, 2016, Snowie J. heard a 30.10 motion which sought disclosure from Mr. Khan, who was the lawyer for the alleged third mortgagee, Mr. Mian, at the time the mortgage was advanced.
[5] An issue arose within that motion as to whether or not there was a valid third mortgage. There was a suggestion of mortgage fraud.
[6] Justice Snowie, on July 20, 2016, released her order and required Mr. Khan to provide disclosure, including a copy of the cheque advancing the funds. Costs submissions were sought and an order for costs was released on April 21, 2017, and required Mr. Khan to pay costs to the plaintiff in the amount of $14,672.
[7] On September 26, 2016, Ricchetti J. signed a consent order, a portion of which is as follows:
Justice Donohue's order of July 16, 2014, was set aside.
The motion to appeal the order of Donohue J. was noted abandoned without costs.
Justice Snowie's order was to be complied with.
The motion to appeal Snowie J.'s order was abandoned without costs.
The alleged third mortgagee was order to make a number of productions.
The Reference as to the amount of the outstanding indebtedness on the second mortgage was to be heard by Ricchetti J. based on the evidence before him.
All other motions in this matter were to be before Ricchetti J.
Costs of the proceeding were reserved until after the conclusion of the Reference, which was to be heard on December 5, 2016.
[8] I point out that the reference to costs in the order was in regards to the proceeding and not the Reference.
[9] The Reference proceeded on December 5th and Ricchetti J. released his Report (ruling) the same day and in part ordered:
On consent the second mortgage is valid.
The amount owing to the second mortgagee was $572,250.25 leaving a sale surplus of $17,300.29.
[10] Ricchetti J. then ordered that there remained two issues, being the costs of the proceeding and the validity of the third mortgage which included the issue of who is entitled to the surplus monies.
[11] Costs were to be decided first and a timeline was provided for cost submissions.
[12] Finally, after costs have been decided, if the court needed to determine the validity of the third mortgage either party may schedule an attendance before Ricchetti J.
[13] In January, 2017, Mr. Khan filed his costs submissions which included a request for an order for costs personally against Mr. Johal, former counsel to the plaintiff. Mr. Johal then applied for intervener status.
[14] In an action in Toronto involving some of the same parties, Mr. Johal brought a motion to strike out Mr. Khan's second amended claim. The claim was struck on March 7, 2017, with leave to amend. However, the claim was temporarily stayed pending determination of this Brampton matter.
[15] Mr. Khan was ordered to pay $15,000 in costs.
[16] Mr. Khan tried unsuccessfully to appeal the March 7th order.
[17] On April 27, 2017, there were at least two motions before Ricchetti J. There was Mr. Khan's motion to distribute the surplus funds and a motion of Mr. Johal for leave to intervene.
[18] Neither were issues on the Reference.
[19] When the parties appeared in court Mr. Khan withdrew his claim for costs against Mr. Johal personally and no longer opposed the addition of Mr. Johal.
[20] On May 8, 2017, Ricchetti J. released his endorsement in regards to the matters before him on April 27, 2017. Therein, at paragraph 33, the issues that needed to be decided were set out as follows:
Costs of the Rule 30.10 motion.
Costs of this proceeding.
Costs of the April 27, 2017, hearing.
Costs of Mr. Johal's motion.
Whether this court should decide the validity of the third mortgage.
[21] Justice Ricchetti declined to interfere with the cost order of Snowie J. on the Rule 30.10 motion.
[22] The plaintiff's costs of the proceeding were assessed at $17,300, together with interest, and Ricchetti J. ordered that these costs were to be added to the debt under the second mortgage. This effectively reduced the surplus to zero.
[23] Costs of the April 27, 2017, hearing were awarded to the plaintiff on a substantial indemnity basis, against Mr. Khan for $4,500 all-inclusive and payable forthwith.
[24] Costs of $6,000 all-inclusive were awarded to Mr. Johal, payable by Mr. Khan forthwith for having to bring the motion and appear in court.
[25] Finally, Ricchetti J. found there was no reason to embark upon a determination of the validity of the third mortgage or the entitlement thereunder as there were no monies left to distribute. The final sentence of the endorsement reads,
"This action was for possession and judgment against the defendants/mortgagors. All of the claims in this proceeding are now spent."
[26] I agree with counsel for the plaintiff and for Mr. Johal that Mr. Khan, in effect, now seeks to have the issues heard by Ricchetti J. reconsidered or be considered issues on appeal. Mr. Khan does not contest the findings of the amount owed under the second mortgage or the amount of the surplus. Rather, he seeks relief from the costs orders against him, that costs be made payable to him, and an order that the surplus monies be paid to him.
[27] Mr. Khan argues that the Reference Report was not confirmed until May 8, 2017, the date of the last order. He, within 15 days thereafter, brought his motion to oppose confirmation of the Report and sought to set aside, in part, the May 8th endorsement. He submits therefore he is in compliance with Rule 54.09 and can challenge the Reference Report.
[28] I disagree and find that the Reference Report was issued December 5, 2016, the same day the Reference was conducted.
[29] The purpose of the Reference was to determine the monies owing under the second mortgage. On December 5th Ricchetti J. made that determination and issued his Report, thereby completing the Reference.
[30] The order of May 8, 2017, dealt with issues which were not before Ricchetti J. on the Reference.
[31] If when the Reference was ordered it included a requirement for the referee to report back, the Report could only be confirmed on a motion to the judge who ordered the Reference (Rule 54.08).
[32] The order for the Reference did not include a requirement for a report back (Rule 54.08).
[33] Accordingly, the Report would be automatically confirmed 15 days after it was served on the parties (in fact the Report was released the same day as the Reference), unless during that period, a motion was served opposing confirmation of the Report (Rule 54.09).
[34] Mr. Khan's motion was brought months after the expiry of the 15 day window and the automatic confirmation of the Report.
[35] It was suggested to the court by Mr. Khan and Mr. Hussein, who acted for Mr. Mian when he held the alleged third mortgage, that when before Ricchetti J. on September 26, 2016, it was the understanding that any costs order of Snowie J. would not be binding. It was further suggested that a review of the transcript would confirm this understanding.
[36] I can find no evidence of such an understanding in any of the motion materials before me, nor were the relevant portions of the transcript produced. Counsel for the plaintiff advised the court that no such understanding exists and is not referenced in the transcripts. Finally, on this point Ricchetti J.'s order of September 26th, stated, as noted above, that the order of Snowie J. was to be complied with.
[37] The order of Snowie J. stood on its own and her order as to costs could have been appealed to the Court of Appeal, with leave (Courts of Justice Act, R.S.O. 1990 c. C.43, s. 133).
[38] Mr. Khan also submitted that the order of Snowie J. has not been issued and entered and therefore the court remains seized with the matter. Accordingly, it is argued that the subject matter of the order can be reconsidered. I disagree. I do not have the authority to vary the order in any substantive way. It would be a matter of appeal.
[39] Mr. Khan relies on Rule 59.06, which allows an order to be set aside or varied on the ground of fraud or on facts arising or discovered after the order was made.
[40] No such grounds for intervention exist. Contrary to the submissions of Mr. Khan, the order of Ricchetti J. cannot be considered facts arising or discovered after the order was made.
[41] If I am wrong in regards to the date of the Report, a motion to oppose confirmation is to be dealt with substantially, as an appeal. Before I could interfere with the Report an error in principle must be demonstrated or some absence or excess of jurisdiction (Reservoir Group Partnership et al v. 1304613 Ontario Ltd. et al, 2008 31423, citing Jordan v. McKenzie (1987) 26 C.P.C. (2d) 193, aff'd 39 C.P.C. (2d) 217).
[42] In a motion to oppose the confirmation of a Report under Rule 59.09, the court is not to interfere with the Report if the findings were within the scope of the order directing the Reference and were supported by the evidence (Thompson v. Hermon 1988 4651, p. 2).
[43] Within the portion of the Report that Mr. Khan challenges there was no error in principle nor any issue as to jurisdiction. The finding was within the scope of the order directing the Reference and was support by the evidence.
[44] Ricchetti J. properly assessed the costs of the proceeding and ordered the costs of the proceeding to be added to the mortgage debt.
[45] Taking into account all of the above, Mr. Khan's motion is dismissed.
[46] On the issue of costs I will accept written submissions. They shall be limited to three pages, double spaced together with a bill of costs. The submissions of Mr. Johal and the plaintiff shall be received within 15 days of the release of this endorsement. Mr. Khan may respond to the submissions in the same manner within 10 days of receiving the submissions of Mr. Johal and the plaintiff.
Bielby J.
Released: November 3, 2017
CITATION: 1806700 Ont. Inc. v. Dmuchowski, 2017 ONSC 6626
COURT FILE NO.: CV-12-5383-SR
DATE: 2017 11 03
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
1806700 ONTARIO INC.
Plaintiff
– and –
MARIAN DMUCHOWSKI and LEONILA FAJARDO
Defendants
– and –
MUHAMMAD ASLAM KHAN
Third Mortgagee
– and –
SANDEEP SINGH JOHAL
Intervener
REASONS FOR JUDGMENT
Bielby J.
Released: November 3, 2017