Bonora v. Ivancic, 2019 ONSC 6352

COURT FILE NO.: CV-19-619321

DATE: 20191101

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

NATALINA BONORA AND THE ESTATE OF GIOVANNI BONORA

Applicant

– and –

STEVE IVANCIC

Respondent

Michael Carlson, for the Applicant

Ronald G. Chapman, for the Respondent

HEARD: September 17, 2019 (with supplementary written submissions received on October 1, October 11, October 22 and October 23, 2019¹)

Kimmel J.

REASONS FOR DECISION

1In 1988, the applicant Natalina Bonora and her late husband Giovanni Bonora (the Bonoras) purchased the home in which she still resides, understanding that they received clear title.² It was discovered in 2017 that the respondent had registered a mortgage on title in 1984 that was not discharged, as it should have been, when the applicants purchased their home from the former owners who are the mortgagors. There have been no payments of principal or interest under the mortgage and there is no evidence of any acknowledgment of the mortgage debt by the mortgagors since March of 1985, or by the Bonoras at any time.

2After the applicants asked for a discharge, the respondent issued a mortgage discharge statement in July of 2018 requesting payment of $972,884.82. The applicants seek an order that mortgage instrument RO676053 (the “Charge” or “Mortgage”) is void and of no force and effect and a direction that it be deleted from the title to the Bonoras home. For the reasons that follow, the relief sought in this application is granted.

Chronology and Background

3The events detailed in the following chronology are, for the most part, uncontested. These are the facts as I find them:

a. The Palkowskis, who were the previous owners of the applicants’ home at 1292 Canterbury Road, Mississauga, Ontario (the “Subject Property”), granted the Mortgage over the Subject Property as security for repayment of a loan to the respondent (“mortgagee”) in the principal amount of $80,000.00, plus interest at 8% per annum, to be paid in monthly installments of $610.58 commencing on April 29, 1984 and continuing until February 29, 1987 (the “Loan”).

b. According to the mortgagee, installments were paid under the Mortgage for one year in the amount of $7,200.00, from April 29, 1984 to March 29, 1985, after which the Mortgage went into default.

c. The Bonoras purchased the Subject Property from the Palkowskis in a transaction that was completed on August 25, 1988, following which their lawyer reported to them that they had purchased as joint tenants and they had good and marketable title subject to certain encumbrances that did not include the Mortgage. They did not assume the Mortgage or the Loan.

d. The statement of adjustments and ledger statement that the Bonoras received from their lawyer at the time of their purchase of the Subject Property accounted for the entire purchase price they paid, comprised of their deposit of $15,000.00 and the amount paid on closing of $315,000.00 from funds received either directly from them or from other financing sources (not the respondent).

e. On September 22, 2000, the Bonoras severed their joint tenancy in the Subject Property and it was transferred to them as tenants in common, each as to a ½ undivided interest. There is no evidence that the existence of the registered Charge was brought to the attention of the Bonoras at that time.

f. In 2017, after Mr. Bonora had passed away, a lawyer acting for the Mrs. Bonora in connection with her estate planning was making arrangements for one of their daughters to become a joint owner, with her mother, of the Subject Property and identified the Mortgage on title; he was instructed thereafter to arrange for its discharge.

g. Various attempts were made, unsuccessfully, to locate the files of the lawyers who acted for the Palkowskis and Bonoras on the 1988 purchase and sale transaction.

h. The lawyer for the Bonoras sent an email on December 5, 2017 to a known bilingual contact for the respondent explaining that the Bonoras had paid all the purchase monies for the Subject Property on closing, that the Mortgage was not discharged on closing as it should have been, and that they were seeking assistance to arrange for its discharge.

i. A copy of a July 19, 2018 Mortgage Discharge Statement for $972,884.82 addressed to the Palkowskis was provided to the lawyer for the Bonoras in or about July of 2018.

j. The lawyer for the respondent was advised in the fall of 2018 of the unsuccessful efforts to obtain documents from the files of the lawyers who had acted on the 1988 purchase and sale transaction and that the applicants had no further records about what happened to the purchase monies paid by the Bonoras.

k. The Palkowskis have not responded to demands made of them, commencing in the fall of 2018, by the lawyer for the respondent for payment of the Mortgage and there is no evidence of them having acknowledged the Mortgage or the Loan since 1985.

4According to the respondent, the Palkowskis defaulted in making payments under the Mortgage in April of 1985 and have not made any payments of principal or interest under the Mortgage since March of 1985. The Palkowskis are not parties to this application.

5The Bonoras have never made any payments of principal or interest under the Mortgage or acknowledged owing anything to the respondent.

The Issues to be Decided

6This application raises the following issues:

a. Is the respondent/mortgagee entitled to enforce the Mortgage or have recourse to the Subject Property?

b. Are the applicants entitled to an order for the discharge of the Mortgage and direction for its removal from title?

The Mortgagee’s Rights of Enforcement or Recourse to the Subject Property

7Section 23(1) of the Real Property Limitations Act, (the “RPLA”) prevents the mortgagee from bringing an action to recover out of the Subject Property any sum of money secured by the Mortgage if more than ten years have passed since the right to receive that money accrued, or if more than ten years have passed since the last payment of principal or interest or acknowledgment in writing of the mortgagee’s right to payment of such.

8The mortgagee’s original rights under the Mortgage accrued and commenced on April 29, 1984, more than ten years ago. The last payments of principal and/or interest under the Mortgage were also made more than ten years ago, in March of 1985. There is no evidence of any acknowledgement from the Palkowskis or the Bonoras of any right of the respondent to payment of principal or interest, in writing or otherwise, aside from what is specified in the Mortgage itself.

9More than ten years has elapsed since the RPLA limitation period was triggered. I find that the respondent is thus precluded from taking steps to realize upon the Mortgage to recover amounts outstanding and payable under the Loan, if any.

10Section 43 of the Land Titles Act similarly bars any action by the Mortgagee upon the covenant contained in the Mortgage for repayment of the whole or any part of money secured by it, more than ten years after the cause of action arose (upon default, which occurred in April of 1985).

11Section 15 of the RPLA reinforces that a determination that the ten years for bringing an action has elapsed under s. 23 has the effect of extinguishing the mortgagee’s right and title to the Subject Property, if he ever had any.

12The mortgagee’s ability to have recourse to the Subject Property under the Mortgage has been statutorily extinguished three different ways and could not be clearer. I find that the mortgagee is not entitled to enforce the Mortgage or have any recourse to the Subject Property, the applicable limitation periods having expired back in 1995. Any right or title that the mortgagee had to the Subject Property has been extinguished. See Behmanesh v. Kaplan, 2000 CarswellOnt 781, 31 R.P.R. (3d) 48 (C.A.), at paras. 20-21.

The Current Owners’ Rights to Clear Title

13Section 20 of the Mortgages Act, R.S.O. 1990, c. M.40, establishes a statutory scheme setting out the rights as between a mortgagee and a mortgagor or assignee of a mortgage. It does not apply in this case because there was no assignment or conveyance or grant of the Mortgage to the Bonoras.

14The court is being asked to grant declaratory and discretionary relief to expunge the Mortgage from title to the Subject Property. Where the equities are present to support the making of an order for such relief, it may be granted. See Stetler v. Stetler, 2015 ONSC 3014, at para. 50; citing: Craddock v. Harstone, 1981 CanLII 1668 (ON CA), 1981 CarswellOnt 511, 32 O.R. (2d) 339 (S.C.), aff’d 1981 CanLII 1971 (ON CJ), 33 O.R. (2d) 870 (C.A.).

15When a mortgagee loses title to the land by operation of a limitation period, the statute of limitations can be used by an applicant to support a claim to clear title. Affirmative relief may be granted based on the operation of a statutory limitation period, which has resulted in a mortgagee no longer having any right to assert any title to the land either in law or in equity. See Craddock, at paras. 31-34.

16The respondent contends that equity does not support granting the relief requested by the applicants because they (or their lawyer) did or should have discovered the Charge on title nineteen years ago, back in 2000 when the Bonoras’ joint tenancy was split into a tenancy in common. The respondent contends that this unexplained delay is reason not to exercise my discretion in favour of the applicants.

17I disagree. The mortgagee was not involved at all in that conveyance in 2000 and does not allege any reliance upon it. This is not a matter of strategic delay by the Bonoras in the enforcement of their rights nor does it amount to an acknowledgment of the Mortgage by silence. There is no evidence that the applicants became aware of the Mortgage at that time. Even if they had become aware of it, they would be in the same position and would have the same rights as they do now, because the applicable limitation periods had by then extinguished any rights that the mortgagee had in and to the Subject Property. That transfer in 2000 is irrelevant to the issues that I must decide. I do not find it to raise any equities that go against granting the relief sought.

18The respondent also argues that the equities did not favour the applicants because they have not attempted to bring the Palkowskis into this proceeding or sought to examine them to determine what happened to the purchase monies paid for the Subject Property back in 1988 and why those funds were not used to pay off the Mortgage. The applicants correctly observed that there is no property in a witness and that the respondent could also have sought to examine the Palkowskis. Nor am I persuaded that information about the distribution of the purchase monies in 1988 would have changed anything on this application (except perhaps if it was to demonstrate that the respondent’s Mortgage had in fact been paid down). For example, if one of the lawyers had absconded with the monies that had been earmarked to pay out the Mortgage that would not change the timeline for the expiry of the applicable limitation periods against the respondent. No suggestion has been made that any of these sale proceeds found their way back into the hands of the applicants.

19The mortgagee is the proper target (respondent) in this case because he is the one with the ability to consent to the removal of the Charge from the title to the Subject Property, but he has declined to do so.

20I find the equities favour granting the relief sought. I start with the same first principles affirmed in Craddock (at para. 31), citing Farwell J. from Lewis v. Plunket, [1937] Ch. 306, at pp. 310-311: “I start with this, that prima facie a person who is in possession of land with an indefeasible title ought to be put into possession of the title deeds of that land.”

21The equities clearly favour the applicants, who should not be deprived of clear title to the Subject Property by someone who has no right to enforce the Mortgage and appears to be seeking to hold them for ransom.

22The equities that I have considered are those that were presented in the materials that were available for consideration at the hearing of the application. Respondent’s counsel objected to certain references made in the responding supplementary submissions on behalf of the applicants that attempted to introduce new facts on the equities or the justice of the case. It was made clear at the conclusion of the hearing on September 17, 2019 that any further written submissions were to be restricted to the specific identified statutory provisions. I previously advised counsel that I agree with the respondent that the new references contained in the applicants’ supplementary written submissions should be struck, and they have not been considered by me.

23Pursuant to s. 159 of the Land Titles Act, since I have decided that the applicants are entitled to an absolute estate or ownership interest in the Subject Property, unencumbered by the Mortgage, I am directing the registrar to rectify the registry to remove the Charge. I consider that order to be just in the circumstances.

24While s. 100 of the Courts of Justice Act may also give me the ability to vest out any interests of the mortgagee in the Subject Lands (see Third Eye Capital Corporation v. Resources Dianor Inc./Dianor Resources Inc., 2019 ONCA 508, 435 D.L.R. (4th) 416, at paras. 40-41), I do not need to invoke this power as the necessary orders to rectify title can be made under the authority of the Land Titles Act. I would have been prepared to grant such a vesting-out order in this case should it have been necessary. The equities that apply to the granting of such an order are the same as have already been discussed.

Disposition

25For the foregoing reasons, I:

a. Declare that the Charge/Mortgage under instrument number RO676053 is void and of no force and effect;

b. Direct the registrar of the Land Registry Office for the Land Titles Division of Peel (LRO 43) to delete instrument number RO676053 from the registry of title to the Subject Property legally identified as:

PT LTS 206 & 207, PL F20MS, PT 2, 43R7559; Mississauga PIN: 13470-0174

Costs

26The applicants are entitled to their costs of this application. Their costs outline seeks $13,651.17 in substantial indemnity costs or $11,100.16 in partial indemnity costs. It also discloses the full costs of the application to be $16,462.61. These amounts include the disbursements of $648.26 and applicable taxes but would not include work done on the supplementary written submissions since the Costs Outline was provided at the hearing.

27The respondent’s Costs Outline estimated a total of $6,802.58 for full indemnity costs including disbursements and applicable taxes. At the conclusion of the hearing counsel for the respondent argued that costs of $5,000.00 all inclusive would be consistent with what would have reasonably been expected for costs on a partial indemnity scale for an application such as this.

28The reasonable expectations of the losing party are a relevant consideration in the exercise of my discretion to award costs under s. 131 of the Courts of Justice Act R.S.O. 1990, c. C.43. See also Rule 57.0(0.b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.) The costs outline of counsel for the respondent in this case can provide some guidance as to what he might have expected to pay if he lost, since it is intended to be reflective of what he is being charged by his own lawyer.

29However, there are other relevant considerations, including that I can consider if the conduct of the losing party unnecessarily lengthened the proceeding or if he refused to admit something that should have been admitted (see sub-rules 57.01(e) and (g)). The respondent’s position on this application was unreasonable. He had no right to seek any payment from the applicants and his refusal to agree to the discharge of the Mortgage and continued opposition to this application after having taken no steps to enforce the Mortgage for over thirty years was unreasonable.

30I am awarding the applicants their costs, payable forthwith, fixed in the amount of $13,651.17. This is what they claimed for their substantial indemnity costs, but it is not the applicants’ actual substantial indemnity costs since it does not include the time for their further written submissions. I consider this to be a fair and reasonable amount of costs in the circumstances. While it is more than what the respondent’s lawyer claimed in his costs outline, I consider it to be an objectively reasonably amount that a losing party could expect to pay on an opposed application such as this.

Kimmel J.

Footnotes

1. 1At the conclusion of the hearing counsel were afforded the opportunity to make submissions about the applicability and effect of s. 100 of the Courts of Justice Act, s. 159 of the Land Titles Act, and were also subsequently asked to make submissions about the applicability and effect of s. 15 of the Real Property Limitations Act.
2. 2Free and clear subject to only certain identified encumbrances that did not include the subject mortgage.