COURT FILE NO.: 5772/08 (Milton)
DATE: 2019 08 09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GENWORTH FINANCIAL MORTGAGE INSURANCE COMPANY CANADA
Cristina Internicola, for the Plaintiff
Plaintiff
- and -
TAUSIF UMAR FAROOQI
Shahzad Siddiqui, for the Defendant
Defendant
HEARD: March 26, 2019, in Milton
REASONS FOR JUDGMENT
BARNES J.
[1] Genworth Financial Mortgage Insurance Company Canada’s (“Genworth”) motion seeking leave to issue one or more Writs of Seizure and Sale and Notice of Garnishment against Tausif Umar Farooqi is granted.
BACKGROUND FACTS
[2] Mr. Farooqi defaulted on a mortgage (“the mortgage”) in favour of the Bank of Montreal (“BMO”) registered against the property with the municipal address of 129 Guinevere Road, Markham, Ontario (“the property”). As a consequence of obtaining the mortgage, Mr. Farooqi agreed to be bound by Standard Charge Terms which formed part of the agreement.
[3] On March 10, 2010, BMO obtained summary judgment against Mr. Farooqi. Mr. Farooqi was ordered to pay $375,660.14 to BMO, plus interest at the rate of 5.501% per annum and costs in the sum of $4,500.00. He was further ordered to pay interest at 2% per annum from the date of the judgment, plus possession of the charged property. BMO registered a Writ of Seizure and Sale of the land with the Sherriff of the Regional Municipality of York.
[4] BMO obtained possession of the property and sold it for $390,000.00. This amount was insufficient to satisfy the judgment and the associated costs contemplated in the Standard Charge Terms. Thus, there was a financial shortfall to BMO.
[5] The mortgage to BMO was insured by Genworth. Pursuant to the terms of the insurance, Genworth paid the total shortfall to BMO. As of March 28, 2011, the total deficiency incurred by BMO ─ inclusive of principal, interest and associated costs owing pursuant to the judgment and sale of the charged property ─ was $53,677.72. Mr. Farooqi has failed to make any payments pursuant to the judgment or deficiency. As of January 16, 2014, the total amount owing was $76,750.40, including interest accrued.
[6] The judgment was obtained by BMO on or about March 10, 2010. On January 10, 2011, it was assigned to Genworth. By a consent order dated November 14, 2018, Genworth replaced BMO as the plaintiff in this action. A writ was registered in the name of BMO on March 25, 2010. The writ expired on or about March 25, 2016.
[7] Rule 60.07(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 require a party seeking to enforce an expired writ of seizure and sale to seek leave of the court to do so. Rule 60.08 imposes the same requirement for the enforcement of expired notices of garnishment. Genworth seeks leave pursuant to these two rules. Mr. Farooqi is opposed on the basis that Genworth’s attempt to enforce the judgment after almost nine years of inaction will cause him noncompensable prejudice.
[8] Genworth’s ability to enforce the judgment is not in issue. In Canada v. Palmer-Virgo 2003 CanLII 17331 (ON SC), Belleghem J. held that a judgment can remain in effect for 20 years. This common law rule has been overtaken by s. 16(1)(b) of the Limitations Act, 2002, S.O. 2002 c. 24, which imposes no limitation period in respect of:
16(1)(b) a proceeding to enforce an order of a court, or any other order that may be enforced in the same way as an order of a court.
[9] Section 27 of the Mortgage Act, R.S.O. 1990, c. M40 (“Mortgage Act”) governs how funds are to be distributed on closing. There is no issue with BMO’s compliance with s. 27 of the Mortgage Act. There is no issue that Mr. Farooqi is bound by the Standard Charge Terms. Genworth calculates the amounts owing in accordance with the judgment and the provisions of the Standard Charge Terms, in particular, provisions 2.8.2, 7.8, 10.10, 11.2, 11.14.3 and 12.15.
[10] Mr. Farooqi expected that the proceeds from the sale of the property would be sufficient to cover the outstanding balance of the mortgage and associated costs. As was the case in Peoples Trust Company v. Atlas, 2010 ONSC 2403, at para. 10, however, Mr. Farooqi failed to account for the costs payable under the Standard Charge Terms and the interest that has accrued.
[11] Mr. Farooqi initially took issue with BMO’s accounting. He abandoned this position after counsel’s cross-examination of Genworth’s representative, Mr. Joseph Lio. In any event, s. 43(2) of the Mortgages Act outlines a procedure for resolving accounting disputes and mandates that such disputes shall be settled through an assessment officer and not through the courts. He now takes the position that leave should not be granted, and in the alternative, that interest should be granted from the date of the judgment.
[12] The main issue for me to determine is whether leave should be granted after almost nine years’ delay.
analysis
[13] The court’s decision on whether to grant leave is discretionary. It is apparent that Mr. Farooqi was aware of the action and chose not to defend it. He was also contacted, at least once, by a debt collection company seeking to recover the debt pursuant to the judgment. He did not inquire further. Mr. Farooqi subsequently checked his credit report, found no record of the debt and moved on with his life. This is not surprising since, pursuant to s. 9(3) of the Consumer Reporting Act, R.S.O. 1990, c. C.33, a reporting agency is not permitted to report debt over seven years old, unless it confirms with the creditor and/or the creditor’s agents that the debt remains unpaid.
[14] It is also apparent that Genworth did not use its best efforts in attempting to collect the funds owed by Mr. Farooqi. I reach the same conclusion as in Burns v. Ontario Society for Prevention of Cruelty to Animals, 2012 ONSC 339, at para. 12, as follows:
This Court is satisfied that not to grant leave to issue an alias Writ of Seizure and Sale would be unjust and would deprive the Moving Party of the fruits of their judgment by way of a Writ of Seizure and Sale (subject to the rights of any intervening third parties). Accordingly, this Court uses its discretion and orders that leave is granted for the Moving Party to issue an alias Writ of Seizure and Sale to take effect the day that it is issued out of the Sheriff’s office.
[15] It is also unjust for Mr. Farooqi to be penalized with interest accrued over several months as a result of Genworth’s inaction in collecting the debt and enforcing the writs. In giving effect to this factor, I am mindful of the debtor’s obligation to pay, however, the consequences of inaction by Genworth cannot be discounted. A creditor cannot simply rely on years of its own inaction to accrue interest to the detriment of the debtor. Mr. Farooqi does not currently own a property. Except the passage of time, he has not identified any articulable prejudice sufficient to justify a decision to deny leave.
conclusion
[16] I grant Genworth leave. The judgment was obtained on March 10, 2010, the writ on March 25, 2016. The amount set out in the Writ of Seizure and Sale will be limited to amounts outstanding on the judgment, together with interest and costs up to three years after the judgement was obtained, i.e. up until March 10, 2013. In effect, no interest shall accrue after March 10, 2013.
[17] Under the circumstances, there will be no order as to costs.
Barnes J.
Released: August 9, 2019
COURT FILE NO.: 5772/08 (Milton)
DATE: 2019 08 09
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
GENWORTH FINANCIAL MORTGAGE INSURANCE COMPANY CANADA
Plaintiff
- and -
TAUSIF UMAR FAROOQI
Defendant
REASONS FOR JUDGMENT
Barnes J.
Released: August 9, 2019