Court File and Parties
Court File No.: CV-19-00613590-000 Date: 2019-05-29 Ontario Superior Court of Justice
Between: VAN THI TUYET DUONG and CUONG TAN LE, Plaintiffs And: ANH NGUYEN a.k.a. ANH THI TU NGUYEN, Defendant
Counsel: Ryan Atkinson and Rachel Mester, counsel for the Plaintiffs Ari A. Lokshin, counsel for the Defendant
Heard: May 15, 2019
Before: G. DOW, J.
Reasons for Decision
[1] The plaintiffs seek summary judgment against the defendant subsequent to her defaulting on a $250,000.00 mortgage. Ms. Nguyen entered into the mortgage with Khanh Duong Tran on a residential property, known municipally as 265 Symington Avenue, Toronto. The Charge provided for interest only payments at 10% per annum or $2,083.33 per month for one year ending April 7, 2016. It also contained the Standard Charge Terms, the key ones in this matter being in agreement to pay the 10% per annum rate of interest negotiated “before and after default in judgment” (in clause 6) and “all costs, charges, legal fees (as between solicitor and client) and expenses which may be incurred in taking, recovering and keeping possession of the land” (at clause 8). An extension was admittedly entered into by Ms. Nguyen on the same terms extending to April 7, 2017.
[2] In what I would describe as a preliminary evidentiary issue, counsel for Ms. Nguyen objected to use by the plaintiffs of its evidence tendered by a lawyer in the firm representing the plaintiffs on the basis of her “review of the files”.
[3] On that basis, it was hearsay and not in accordance with the developments in the law subsequent to Hryniak v. Mauldin, 2014 SCC 7 released January 23, 2014. In support of that position, counsel for Ms. Nguyen relied on comments from Justice Myers in Ferreira v. Cardenas, 2014 ONSC 7119 (at paragraphs 17 and 18) which addressed that summary judgment motions go to the merits of the despite and lawyer affidavits based on “review of the file” are problematic. Justice Myers states such evidence can shield a party from cross-examination, is not particularly credible and in some situations, “can be ignored on motions for summary judgment”.
[4] Justice Diamond, in Forestall v. Carroll, 2015 ONSC 2732 (at paragraphs 28 to 30) and Justice Favreau in Expresso Tax Credit Fund III Limited Partnership v. Arc Stainless Inc., 2018 ONSC 415 (at paragraph 24) agreed with the this concern. I do as well.
[5] I heard submissions from plaintiffs’ counsel regarding this problem and counsel proceeded by relying on the exhibits in the plaintiffs’ materials and evidence tendered by the defendant. This included acknowledgment of the debt of $250,000.00 secured by the real property and that payments of $2,083.33 had been made to September, 2018. Ms. Nguyen’s affidavit evidence, not cross-examined on, was she had not signed any further extensions after April, 2017 and understood that the charge or mortgage continued on a month to month basis “with no set maturity date” (at paragraph 9). Thus the defendant admits and there will be judgment for $250,000.00 and the nine missed payments of $2,083.33 each from September, 2018 to May, 2019 (or $18,749.97).
[6] The plaintiffs, who assumed the debt from the original chargee, Khanh Duong Tran in January, 2019, sought to recover additional amounts, including interest of 24% after September, 2018, service fees and legal fees relying on exchanges between counsel and further extension requests which Ms. Nguyen expressly denied in her uncontested affidavit evidence as having occurred. In the circumstances, it was clearly the better evidence available and is thus accepted. It is obvious the plaintiffs have incurred some additional expenses in attempting to collect the debt such as issuing a Notice of Sale. However, the proof of same is limited to a letter between counsel for the original chargee and counsel for the plaintiffs instead of the actual invoices or accounts. In the face of Ms. Nguyen’s uncontested evidence, I am unable to include these claims.
[7] The parties also raised whether the plaintiffs were entitled to three months of interest under Section 17 of the Mortgages Act given payments are in arrears. The plaintiffs rely on an interpretation of Mastercraft Properties Ltd. v. El EF Investments Inc. (1993), 14 O.R. (3d) 519 (C.A.) which permitted same. Counsel for Ms. Nguyen relied on the contrary conclusion reached in 58 Cardill Inc. v. Rathcliffe Holdings Limited, 2017 ONSC 6828; 2018 ONCA 672. My reading of that decision (including the appeal reasons) is such a claim is not permissible when a receiver has been appointed. No receiver has been appointed in the matter before me. In fact, Ms. Nguyen has deposed the property has been sold as of March 21, 2019 for $650,000.00 and is scheduled to close on July 26, 2019. (By that time, I was advised by counsel for Ms. Nguyen that the six tenants Ms. Nguyen deposed to be currently residing in the property will have moved out which gives the purchaser vacant possession). As a result, I conclude Section 17 of the Mortgages Act applies and the plaintiffs is entitled to judgment for an additional three months of interest or, $6,249.99.
[8] The plaintiffs shall have judgment against the defendant for ($250,000.00 + $18,749.97+ $6,249.99 =) $274,999.96.
[9] The plaintiffs also sought a Writ of Possession. This fails as there was no evidence of compliance with Rule 60.10(2) of the Rules of Civil Procedure and that sufficient notice has been provided to “all persons in actual possession” of the property.
[10] The plaintiffs also requested they be awarded possession as the chargee/mortgagee. This was not sought in the notice of motion and was opposed by Ms. Nguyen. I conclude it would not be equitable to award same in the circumstances.
[11] The plaintiffs also sought pre-judgment and post-judgment interest at the 10% rate as contained in the terms of the charge and agreed to by Ms. Nguyen. Regarding pre-judgment interest, this would be compound interest and significantly in excess of the 2% interest provided for in Section 128 of the Courts of Justice Act. Regarding post-judgment interest, the rate mandated by Section 129 of the Courts of Justice Act is 3% per annum.
[12] As I explained to counsel for the plaintiffs, there is merit in awarding interest on the basis agreed to between the parties. However, upon issuing a claim in the Superior Court of Justice, the plaintiffs are attempting to access the enforcement tools available in this Court and not available to them as part of their contract. Save special circumstances, I conclude the plaintiff shall only be permitted to recover interest at the rate prescribed by the Courts of Justice Act.
[13] As a result, pre-judgment interest is awarded at 2% per annum on the amounts awarded which I fix to be $1,705.00. This was calculated on the basis of the amounts owing as of the date of issuance of the Statement of Claim, being January 30, 2019 and the additional amounts owing each month to the date of this judgment.
[14] Post-judgment interest will accrue at 3% per annum. I make this decision in accordance with the discretion afforded me under Section 130 of the Courts of Justice Act.
Costs
[15] Counsel for Ms. Nguyen provided a Costs Outline for the motion in the event of success that, with the appearance on May 15, 2019, I totaled to be $7,000.00 inclusive of fees on a partial indemnity basis, HST and disbursements. To the contrary, counsel for the plaintiffs’ Costs Outline neglected to include the expenses incurred other than that related to the motion and totaled $9,595.65 for partial indemnity fees, which attracts $1,247.43 of HST. The claim of $1,135.65 was made for disbursements inclusive of HST. The total is $11,978.73.
[16] Counsel for the defendant accepted there should be consideration for an additional $1,200.00, inclusive of fees, HST and disbursements for drafting and issuing the Statement of Claim and reviewing the Statement of Defence before work began on the summary judgment motion. Counsel for Ms. Nguyen objected to the use of junior counsel to prepare for and attend the motion which was claimed for 8 hours at 60% of $210.00 per hour or $1,008.00 plus HST. I support and encourage intermediate and senior counsel to not only mentor but have junior counsel attend in a support role before the court as part of the development of their advocacy skills and furthering their legal education. However, it cannot be completely at the expense of the other side. I was satisfied junior counsel was more than just observing and, from oversights detailed above, will be more skilled in the future. This benefits her clients, counsel on the other side and the court. To that end, I would only modestly reduce the claim for fees on this basis.
[17] Counsel for Ms. Nguyen sought costs on the basis his client acknowledged the principal debt and unpaid amounts from September 18, 2018. Thus, it was largely successful in dismissing the ancillary claims. In the absence of an offer to settle, the more persuasive submission is that of plaintiffs’ counsel who succeeded in obtaining judgment for the bulk of the amount claimed. Thus, they will be awarded the bulk of their costs which I assess and fix at $9,000.00 inclusive of fees, HST and disbursements.
[18] In summary, the plaintiffs shall recover from the defendant damages in the amount of $274,999.96, pre-judgment interest in the amount of $1,705.00 and costs fixed in the amount of $9,000.00 inclusive of fees, HST and disbursements.
[19] This judgment shall accrue post-judgment interest at the rate of 3% per annum.
Mr. Justice G. Dow