COURT FILE NO.: CV-18-603380 DATE: 2019-04-15

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DEBORAH LONGMORE (aka Deborah Gordon), Plaintiff AND: ELLE MORTGAGE CORPORATION, Defendant

BEFORE: Sossin J.

COUNSEL: Appiah Boateng, Counsel for the Plaintiff Glenn E. Cohen, Counsel for the Defendant

HEARD: April 4, 2019

ENDORSEMENT

OVERVIEW & FACTS

[1] The plaintiff, Deborah Longmore (“Longmore”), brings this motion under Rule 20.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (the “Rules of Civil Procedure”) for summary judgment against the defendant, Elle Mortgage Company (“Elle”), on its claim for various damages relating to a property in Niagara-On-the-Lake (the “property”) owned by Longmore for which Elle had contracted to provide a mortgage.

[2] Elle also brings a motion for summary judgment against Longmore, based on its counterclaim.

[3] In November 2016, Elle, a mortgage financing company, offered to lend Longmore $600,000.00 on a first mortgage, with a net advance of $575,000.00, with a view to Longmore using these funds to pay out her existing mortgage, on which $541,000.00 was owing, in addition to realty taxes.

[4] Due to litigation involving the prior first mortgage, the costs of discharging that mortgage increased and by January 2017, Longmore sought a larger mortgage from Elle and more favourable terms. At this time, Longmore and Elle did not reach an agreement with respect to mortgage financing.

[5] By April of 2017, the first mortgage was in default and the mortgagee issued a notice of sale.

[6] In order to retain the property, Longmore again approached Elle for financing.

[7] In May of 2017, Elle provided a new mortgage loan offer for $630,000.00, which would provide a net advance of $590,000.00.

[8] The mortgage documents were reviewed by both parties, and their counsel, and executed in June 2017. Following execution, Elle registered a charge on the property for $630,000.00.

[9] Due to Longmore’s litigation with respect to the first mortgage and tax arrears, her debt increased. Elle did not provide the advance under its mortgage agreement.

[10] Negotiations between the parties ensued, which appeared to culminate in an arrangement by which Longmore would pay Elle $11,000.00 to have its charge on the property removed, so that Longmore could pursue alternate financing, but this agreement was not finalized.

[11] The property was sold by the first mortgagee, who had taken possession of the property, through a power of sale. This sale resulted in surplus funds of $14,300.00, which were left in the trust account of Richard Belsito, the lawyer for the first mortgagee.

[12] Longmore’s original statement of claim was issued on August 15, 2018, and an amended statement of claim was issued on October 9, 2018. Longmore seeks an order directing Mr. Belsito to pay to Longmore the surplus proceeds from the sale. Longmore seeks general damages for loss of enjoyment of property of $100,000.00, and punitive damages of $50,000.00. She also seeks “special damages” of $30,000.00 for extra costs she incurred putting her belongings in storage.

[13] Elle’s statement of defence and counterclaim was issued on September 26, 2018. Elle’s counterclaim is for a declaration that Elle is entitled to receive the surplus funds, with interest, in addition to payment of $11,000.00, with interest, reflecting the proposed settlement agreement to release its charge on the property.

[14] Longmore’s reply and defence to counterclaim was issued on October 3, 2018.

POSITION OF THE PARTIES

[15] Longmore argues that Elle had no basis on which to refuse to provide the advance and was in breach of the mortgage contract.

[16] As a result of this breach, Longmore submits that she lost possession of her home, which ultimately was sold through a power of sale. Longmore also submits that the conduct of Elle resulting in the loss of enjoyment of her home is an additional breach in tort. Beyond the surplus funds held in trust through that sale, she claims damages for the increase in equity in the home which she lost.

[17] Longmore also claims special damages for expenses relating to storing her possessions and punitive damages for the “high-handed” conduct of Elle.

[18] Elle asserts that the advance was not provided because the terms of the mortgage contract were not fulfilled, as Elle discovered new and increased costs associated with the prior, first mortgage. The amount needed to discharge the first mortgage had increased from $541,000.00, to $602,350, including costs of $42,000.00 relating to Longmore’s unsuccessful challenge to the first mortgagee taking possession of the property. In addition, Elle discovered other expenses were higher than expected, such as $11,728.00 tax arrears. As Elle states in its factum (at para.11), “Walman [on behalf of Elle] worked to try to complete the mortgage transaction but was unable to do so because there was too much registered debt.”

[19] Elle also disputes that there was any actual loss by Longmore based either on her pleadings or on the evidence on which she relies for this motion.

[20] Elle further submits that the issues in dispute were settled on the basis of the payment of $11,000.00 which Longmore to pay to Elle in order to release the charge on the property. Elle prepared a release on the basis of this agreement, but it was not signed by Longmore.

ANALYSIS

[21] Under Rule 20.04 of the Rules of Civil Procedure, I must consider whether there is a genuine issue requiring a trial. In determining whether there is a genuine issue for trial, I am to consider if the summary judgment process (1) allows me to make the necessary findings of fact, including any necessary findings of credibility; (2) allows me to apply the law to the facts; and, (3) if summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49.

[22] If I find that there are genuine issues requiring a trial, and the motion record is not sufficient for those issues to be decided, I must consider if I can decide the issues using the enhance tools under the summary judgment rule.

[23] As both Longmore and Elle bring motions for summary judgment, each asserts that there are no genuine issues requiring a trial. Each asserts an entitlement to judgment based on the record before this Court.

[24] Indeed, there are very few facts in dispute. The dispute lies, rather, in the parties’ interpretation of the mortgage agreement, and in each’s account of the context surrounding that agreement and actions taken under that agreement.

[25] Elle relies on the following provisions of the mortgage agreement:

Covenant to Pay Broker Fee/Referral Fee/ Lender/ Legal Fee/ Costs Upon registration of this Charge, and where the Chargor is unable to or unwilling to receive the monies secured hereby, the Chargor shall not be entitled to a discharge of this charge until the mortgage brokers fees or real estate brokers fees or referral fees, as the case may be, the lenders fees, and the legal costs incurred by the Chargee, on behalf of the Chargor herein are paid in full.

Standard Charge Terms 200033 Clause 7

No obligation to Advance. Neither the preparation, execution or registration of the Charge shall bind the Chargee to advance the principal amount secured, nor shall the advance of a part of the principal amount secured bind the Chargee to advance any unadvanced portion thereof, but nonetheless the security in the land shall take effect forthwith upon delivery for registration of the Charge by the Chargor. The expenses of the examination of the title and of the Charge and valuation are to be secured by the Charge in the event of the whole or any balance of the principal amount not being advanced, the same to be charged hereby upon the land, and shall be, without demand therefor, payable forthwith with interest at the rate provided for in the Charge, and in default the Chargor’s power of sale hereby given, and all other remedies hereunder, shall be exercised.

(Emphasis added.)

[26] Elle asserts that it abided by these terms of the agreement. Elle determined that once Longmore’s indebtedness increased so that additional funds would be required to discharge or assign her indebtedness under the first mortgage, and once she no longer had possession of the property, Longmore was no longer “able” to receive the advance in relation to the mortgage agreement with Elle, even though she may have been willing to do so.

[27] Further, once Longmore’s indebtedness exceeded the charge under the mortgage agreement, Elle could no longer obtain its fees under the mortgage agreement through the amounts secured by the charge on the property.

[28] Longmore dispute’s this characterization of these provisions of the agreement. She argues at no time was she “unable” or “unwilling” to receive the advance, and that Elle was or ought to have been aware of Longmore’s additional financial obligations.

[29] In support of her interpretation, Longmore points to the fact that certain provisions of the mortgage agreement were amended by hand prior to executing the agreement, to indicate, for example, that tax arrears were owing.

[30] As Longmore indicates in its factum (at para. 22-23), “It makes no business sense that the [sic] Longmore will consent to pay any fees that were premised on the advance of a loan, if the loan was never advanced… Elle should not be entitled to its security as the agreement is harsh and unconscionable…”

[31] Longmore alleges that Elle had been advised of Longmore’s financial situation at the time the mortgage agreement was signed, and that it should have completed its title search and any other investigations into the property before entering into the agreement.

[32] Longmore argues that Elle never intended to advance the funds promised, and has engaged in a pattern of taking advantage of homeowners in financial distress by registering charges, refusing to advance the funds promised, and subsequently extracting payments to remove charges.

[33] To support this allegation, Longmore referred to another circumstance in which Elle refused to provide an advance on a mortgage loan and sought fees prior to agreement to remove its charge on the property, but this is not evidence of a pattern of improper conduct.

[34] Similarly, Elle alleges that Longmore was found to have engaged in mortgage fraud in relation to this same property in an earlier transaction. I also find no significance to this incident in relation to the interpretation of the mortgage agreement in this case.

[35] While Elle’s conduct may well have been “harsh,” it was not unconscionable. Both Elle and Longmore were represented by counsel throughout the period of negotiating and executing the mortgage agreement. Longmore could have insisted on amending the standard charge terms or other terms of the agreement to ensure the funds were advanced notwithstanding the increased costs associated with the first mortgage, modified the covenant relating to fees, or simply pursued financing from another lender on more favourable terms.

[36] The mortgage agreement is clear that there were conditions precedent to the provision of an advance, which were not met on the facts of this case. Elle was entitled to rely on the terms of the mortgage agreement in not advancing the funds until Longmore was able to meet her obligations under the agreement.

[37] Additionally, the cover letter from counsel for Elle, enclosing the mortgage agreement for Longmore, stated that the document was “FOR COMPLETION, EXECUTION AND RETURN IN DUPLICATE FOR IMMEDIATE REGISTRATION AND PRIOR TO ADVANCE OF ANY FUNDS .” (Emphasis added.)

[38] In a summary judgment motion, the parties are required to put their “best foot forward.” As Justice Brown stated in Tropper v. RBC Life Insurance Company, 2013 ONSC 2135, at para. 12-13:

[12] In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial. The court may, where appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. The motion judge is entitled to assume that the record contains all the evidence that would be introduced at trial. It is not sufficient for the responding party to say that more or better evidence will or might be available at trial. The responding party to a summary judgment motion must "lead trump or risk losing".

[13] A summary judgment motion cannot be defeated by vague references as to what may be adduced in the future, if the matter is allowed to proceed to trial. Such a proposition would undermine the rationale of Rule 20. The motion must be judged on the basis of the pleadings and materials actually before the judge, and not on suppositions about what might be pleaded or proven in the future. The requirement that the parties put their "best foot forward" goes together with the requirement that the motion judge "take a hard look at the merits of the action at this preliminary stage" to determine whether the moving party has succeeded in establishing that there is no genuine issue requiring a trial.

[39] Assuming the pleadings and record reflects Longmore’s “best foot forward,” she has not provided sufficient evidence to support an entitlement to damages through breach of contract. I find Elle was entitled to rely on the mortgage agreement to register a charge on the property and to delay advancing funds until Longmore was in possession of the property and able to receive the funds. I find that Elle also was entitled to rely on the mortgage agreement to seek its fees in order to remove its charge.

[40] Longmore also has not established tortious conduct with respect to her enjoyment of property in these circumstances. Interference with the “enjoyment of property” is part of the tort of nuisance (see e.g. Joyce et al v Government of Manitoba, 2018 MBCA 80, at paras. 12-21), the elements of which have not been alleged in this case.

[41] Longmore also has not specified evidence to support the actual quantum of general, special and punitive damages it has claimed.

[42] For the reasons above, and in light of there being no genuine issue requiring a trial, the plaintiff Longmore’s motion for summary judgment on its claim is dismissed, and the defendant Elle’s motion for summary judgment on its counterclaim is granted.

[43] Elle is entitled to $11,000.00, plus pre-judgment interest from August 8, 2017, to be paid out of the surplus funds from the sale of the property, currently held in trust by Richard Belsito.

COSTS

[44] If the parties cannot come to an agreement with respect to costs of this motion, I will accept brief written submissions (no more than three pages), from the parties within 30 days of this judgment.

Sossin J. Released: April 15, 2019