COURT FILE NO.: 17-61132
DATE: 2019-01-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Titan Mortgage Capital Partners Inc.
Sharoon Gill, for the Plaintiff/Defendant by Counterclaim
Plaintiff/Defendant by Counterclaim
- and -
Hidajet Heda Zakuti and Husein Zakuti
Matthew Tubie, for the Defendants/Plaintiffs by Counterclaim
Defendants/Plaintiffs by Counterclaim
HEARD: June 30, September 21 and 28, 2018
REASONS FOR JUDGMENT
P. R. SWEENY J.
Introduction
[1] The issue in this case is the amount owing on a mortgage the defendants gave to the plaintiff. The defendants brought a motion for summary judgment, asserting that the court could determine the amounts owing, if any, on a motion. The matter came before me on June 20, 2018. At that time, I ordered the viva voce evidence be heard to assist me in whether I could make a determination of the issues on the motion for summary judgment or whether the matter must proceed to trial.
[2] The parties appeared before me on September 21 and 28, 2018, and presented evidence. On consent, the parties agreed that the matter would proceed as a trial and that I could rely upon the evidence in the affidavits and cross-examinations on the affidavits. I received written submission from the plaintiff, the defendants, and reply from the plaintiff. The reply was received on November 9, 2018.
[3] I have reviewed the affidavits, the cross-examinations, and heard viva voce evidence from Joseph Trombetta for the plaintiff and Avni Cermjani for the plaintiff and both defendants.
Brief History
[4] In October 2015, the defendants and the plaintiff entered into a mortgage for a loan of $110,000.00 with an interest rate of 8.75 percent per annum. The mortgage included terms for renewal fees and payments owing on default. The mortgage was to be secured by way of a charge registered on two parties: (1) 382 Old Mud Street, Hamilton, and (2) 94 Jackson Street East, Hamilton.
[5] On August 4, 2016, the mortgage was amended at the defendants’ request. The principal sum was increased from $100,000.00 to $350,000.00, all other terms were to remain the same, including the interest rate. Both parties had separate representation when the increase was made. The plaintiff asserts that the defendant acknowledged the amount owing at that time and it was in excess of the $110,000.00.
[6] There were additional advances made on the mortgage over time. The advances occurred from the initial mortgage date of October 6, 2015, to January 13, 2017. On May 31, 2017, the defendant sold the Old Mud Street property and paid $345,000.00 on the mortgage. The net proceeds of sale were $372,000.00. $350,000.00 was paid but $5,000.00 was applied to the costs associated with mortgage enforcement. The plaintiff returned $22,000.00 to the defendants through their counsel. The mortgage continued on the Jackson Street property. The Jackson Street property has now been sold and the net proceeds of sale are held in trust.
[7] Guiseppe Trombetta gave evidence. He is a mortgage broker in Ontario. He is the President and owner of the plaintiff corporation. He has extensive experience in lending.
[8] Avni Cermjani was Mr. Trombetta’s client. He loaned money to him previously. Mr. Cermjani brought the defendants to Mr. Trombetta in 2015. Mr. Cermjani’s brother married Husein Zakuti’s daughter. Mr. Cermjani gave evidence on the plaintiff’s behalf with respect to his interactions and conversations with the defendants.
[9] Husein Zakuti gave evidence through an interpreter. He is from Kosovo. He was primarily involved in the mortgage transactions. Hidajet Zakuti is married to Husein. She is a registered nurse and earns approximately one $120,000 per year. She works at Riviera.
Issue
[10] There is a dispute as to the amount outstanding on the mortgage. The plaintiff asserts that $115,020.61 was owing as of June 1, 2018. The defendants disagree with that number. The onus is on the plaintiff to establish that the funds were advanced on the mortgage. As I understand it, there are six payments are in dispute. The issue for me to determine is whether the following payments were properly added to the mortgage:
(1) $50,000.00, $5,000.00, $24,000.00 and $15,000.00 to Mr. Cermjani;
(2) $5,000.00 to Sevin Zakuti, and;
(3) $18,294.08 for rent.
I shall address each.
$50,000.00 Payment to Mr. Cermjani
[11] I find this payment was made by cheque, payable directly to Mr. Cermjani in the amount of $50,000.00. This was a deposit for the purchase of a property owned by Mr. Cermjani on Upper Gage. I accept the evidence of Mr. Cermjani that he refunded the defendants $26,000.00, representing the amount remaining after Mr. Cermjani deducted funds owed to him for renovations of the basement of the defendants’ home. This is consistent with the defendants’ evidence that the renovation occurred. I find that the $50,000.00 is properly added to the mortgage.
The Cash Advances to Mr. Cermjani
[12] There are three alleged cash advances to Mr. Cermjani in the amounts of $5,000.00, $18,000.00, and $15,000.00.
[13] With respect to the initial $5,000.00 advance, I am satisfied that the plaintiff has established the advance was made on March 30, 2016. This is based, in part, on the handwritten notes identified as Exhibit 10 at the trial. These notes were made prior to increase in the face amount of the mortgage and there is documentary evidence to confirm the $5,000.00 advance was made. That amount will be added to the mortgage.
[14] With respect to the additional cash payments of $24,000.00, the plaintiff says that it was for legal fees paid to the defendants for legal fees to defend their son on serious criminal charges. The plaintiff’s evidence was that the defendants needed cash. Mr. Cermjani provided the cash to them. The plaintiff then reimbursed Mr. Cermjani for the cash. Mr. Cermjani was called a witness on behalf of the plaintiff. He did not provide any evidence to support the cash advances he made other than his viva voce evidence. The defendants deny they receive the money. On the cross examination of the defendant Husien Zakuti, an undertaking was given to providing details of the amounts paid for legal fees. This undertaking was not fulfilled. While the defendant provide one bank draft for $50,000 payable to a law firm, there were no other details provided. On this issue, and given that the funds were understood by the plaintiff to be for legal fees, I draw an adverse inference from the failure of the defendants to provide details of the amounts paid for legal fees. Therefore, this amount was properly added to the mortgage.
[15] With respect to the $15,000.00 cash advance to Mr. Cermjani, I am not satisfied the plaintiff has established that it should be added to the mortgage. The plaintiff is a sophisticated mortgage lender. The plaintiff failed to obtain any written authorization for adding this to the mortgage. The check stub has been modified with words scribbled out and Husein added to it. The plaintiff did not provide the original document. Defendants deny requesting this money. In the circumstances, the $15,000.00 will not form part of the mortgage.
The $18,000.00 Rent
[16] The plaintiff asserts the defendant agreed to pay $18,000.00 for rent arrears on a property which was owned by a corporation which was owned by Mr. Trombetta, the plaintiff’s principal. The defendants assert that they did occupy the premises and were making leasehold improvements, and there was no agreement to pay any rent. There was no document, lease or otherwise, signed to confirm the amount of rent. Mr. Trombetta gave evidence that he forwarded the lease to the Zakutis but it was never executed.
[17] On this issue, I accept the evidence of the defendants that there was no agreement to pay rent. The defendants were occupying the premises on the understanding that once the renovation was done, rent would be payable. I reject Mr. Trombetta’s evidence that the defendants agreed to pay the rent. I note the initial amount claimed on the mortgage did not include the $18,000.00 for rent, which was added afterwards.
[18] The plaintiff has not established the defendants’ consent to pay $18,000.00 and accordingly it will not be added to the mortgage.
The $5,000.00 to Sevim
[19] The defendants’ son, Sevim was the subject of serious criminal charges and retained counsel to defend him on those charges. Significant legal fees were paid. The actual amount is not in evidence. Mr Cermjani testified that Sevim had issues with drug abuse and that he received treatment for his addiction. I note that the check to Sevim does not have “advance” or “loan” in the Re: line. I accept the defendants’ evidence that they would not consent to a cheque being made payable to their son for $5,000.00. This amount is not properly added to the mortgage.
Conclusion
[20] In the result, the amount claimed on the mortgage is to be reduced by the following amounts:
(1) The alleged $15,000.00 cash advance;
(2) The alleged $18,000.00 rental payment; and
(3) The alleged $5,000.00 payment to Sevim.
[21] I trust that the parties can agree on the actual amount owing as a result of this decision.
[22] If the parties are unable to agree upon costs, I will accept written submissions from the plaintiff by February 8, and from the defendants by February 15. The submissions are to be limited to five pages together with any offers to settle and bills of costs. If submissions are not
received by February 8, the issue of costs deemed settled.
Sweeny J.
Released: January 29, 2019
COURT FILE NO.: 17-61132
DATE: 2019-01-29
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Titan Mortgage Capital Partners Inc.
Plaintiff/Defendant by Counterclaim
- and –
Hidajet Heda Zakuti and Husein Zakuti
Defendants/Plaintiffs by Counterclaim
REASONS FOR JUDGMENT
PRS:mw
January 29, 2019