OSHAWA COURT FILE NO.: CV-19-2699
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Roderick Wallace
Applicant/Plaintiff
– and –
Lucien Bedford Charles Ayodele 1877359 Ontario Inc. 1449400 Ontario Inc., and 2554758 Ontario Inc.
Defendants/Respondents
Jason Gottlieb and Allison Farley, for the Applicant/Plaintiff
Mahdi Hussein, for Lucien Bedford Vladimira Ivanov, for Charles Ayodele and 2554758 Ontario Inc., Elaine Peritz, for 1877359 Ontario Inc., Unrepresented, for 1449400 Ontario Inc.
HEARD: November 14, 2019
RULING ON MOTION
LEIBOVICH, J.
1The applicant/plaintiff seeks to register a certificate of pending litigation and wishes disclosure of certain transactions. The respondents/defendants all oppose the motion. In addition, defendant 1877359 Ontario Inc. asks that the plaintiff’s action be dismissed against it and the Property municipally known as 407 Ontario Street West, Whitby, Ontario (the "Property") be sold under a judicial sale in the mortgage enforcement action in court file no. 2717/18. Given that they are both applicants I will refer to the applicant Wallace as Mr. Wallace and the defendant 1877359 Ontario Inc. as 187. No one attended on behalf of 1449400 Ontario Inc. For the reasons set out below, I dismiss Mr. Wallace’s motion and I grant 187’s motion and dismiss the action against 187 and order the judicial sale of the Property.
2This matter has a lengthy and somewhat unusual history, but the following facts are not in dispute:
a) The defendant Lucien Bedford (“Mr. Bedford”) is the registered owner of the Property at issue. The Property was placed in his name because Mr. Wallace’s credit rating was low and if he sought to place the Property in his name, he would have paid a higher mortgage rate;
b) Mr. Wallace took possession of the Property and lived there with his family. Mr. Bedford would make the mortgage payments and the applicant would refund him until the summer of 2018 when Mr. Wallace stopped repaying Mr. Bedford;
c) A second mortgage was taken out on the Property and eventually the mortgage was assigned to 187.
d) Mr. Wallace stopped making the mortgage payments and 187 commenced a mortgage action on September 26, 2018. Mr. Wallace and his wife were named as defendants in the mortgage action and received the appropriate notice at each phase of the action. On November 9, 2018, 187 obtained default judgment. Mr. Wallace, in his affidavit in support of his motion to postpone the writ of possession on the mortgage action, stated that he consented to the second mortgage. In his affidavit on this motion, Mr. Wallace stated that he did not defend the enforcement proceeding because he was trying to secure a transfer of the Property from Mr. Bedford to him;
e) 187 issued a Notice of Sale to Mr. Wallace on December 4, 2018. Mr. Wallace refused to vacate possession of the Property and on January 11, 2019, 187 obtained an Order for an expedited Writ of Possession;
f) On February 8, 2019, Mr. Wallace brought an ex parte motion to stay the enforcement of the Order for a Writ of Possession. The court granted Wallace’s motion to stay the enforcement but only until February 28, 2019;
g) Mr. Wallace and his family were removed by the Sheriff in April 2019;
h) Counsel for Mr. Wallace advised the defendants in July 2019 that Mr. Wallace would be bringing an urgent motion for an injunction staying 187’s enforcement proceedings and advised that Mr. Wallace would be instituting an action against the defendants for fraud, conspiracy, theft and other related claims. Mr. Wallace started this action at the end of September 2019;
i) Counsel for Mr. Wallace listed three cautions on the Property. The Property rests on two different lots. The first two cautions, registered on May 30, 2019 and July 16, 2019, were listed on each of the lots while a third caution was listed again on lot 1 on September 20, 2019. A caution cannot be renewed on a Property. Counsel for Mr. Wallace states that the third caution was listed by mistake, as he did not appreciate the restrictions on the number of cautions that could be registered;
j) The Property was initially listed for sale in May 2019, but did not sell, presumably as a result of the cautions that were registered against it. As a result, it was then leased for six months starting September 14, 2019. Mr. Wallace subsequently trespassed on the Property and placed a notice on the front door warning the resident that the landlord was being sued and that a motion will be brought to terminate the lease; and
k) Although Mr. Wallace’s affidavit was sworn on September 3, 2019, the defendants only received it and the motion record on September 27, 2019. An original motion date of October 11, 2019 appears to have been chosen without defendants’ counsel’s input. The October 11th date was adjourned but on consent on that day Justice Corkery directed Mr. Wallace to discharge the caution and to not attend on the Property without prior written consent.
Issue 1: The Request for a Certificate of Pending Litigation
Positions of the Parties
3Mr. Wallace requests a certificate of pending litigation. He claims that there is no dispute that he has an interest in the land and that he will be prejudiced if the Property is sold to a third party. He states that, if successful, damages cannot adequately compensate him as the house is a unique heritage house. He states the balance of convenience favours him and that if he is unsuccessful in his litigation there is more than enough equity in the house to satisfy the defendants’ damages.
4The defendants oppose the request for a certificate of litigation. They state that the Property is properly in the hands of the second mortgagee, who is attempting to recover debts incurred by Mr. Wallace, which are secured against the Property. They state that there is scant evidence that the house is unique and that damages can more than adequately remedy the matter. They state that Mr. Wallace’s opportunity to maintain possession of the house was when 187 launched the mortgage action against it. They also state that there is a concern with delay as there is no certainty in the real estate market. Finally, if Mr. Wallace truly wanted to maintain possession of the house, all he has to do is redeem the mortgage pursuant to s. 23 of the Mortgages Act.
Law and Analysis
5The relevant principles relating to whether a certificate of pending litigation (“CPL”) should be granted were set out by Master Glustein (as he then was) in Perruzza v. Spatone, 2010 ONSC 841 and have been adopted by many courts since, most recently in Caroti v Kegalj, 2019 ONSC 5772, [2019] OJ No 5084. The following are the applicable principles as set out in Perruzza v. Spatone at para. 20:
(i)The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) ("Homebuilder) at para. 1);
(ii)The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 20555835 Ontario Ltd, 2007 CarswellOnt 756 (Ont. S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commerical List]) at para. 62);
(iii)The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont. C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (vii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and
(v)The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc, 1991 CarswellOnt 460 (Ont. Gen.Div).); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).
6In addition, the timing of the CPL is a relevant factor for the courts to consider; Nanton v. Julien 2019 ONSC 68 at para. 30, and Wilanmar Holdings Ltd. v. Meredith 2008 CanLII 63166 [2008] O.J. No. 4821 and Caroti v Kegalj.
7Having regard to all the relevant factors, in my view, this is not an appropriate case for a certificate of pending litigation for the following reasons:
a) Any damages can be easily ascertained, and Mr. Wallace is in fact seeking damages in his statement of claim;
b) There has already been a judgment entered against Mr. Wallace allowing the second mortgagee, defendant 187, to take possession of the Property and recover the debts owed to them by Mr. Wallace. Mr. Wallace has admitted to consenting to that mortgage and agrees that he owes 187 money.
c) Mr. Wallace’s request for a certificate of pending litigation is based on his assertion that he cannot be adequately compensated in damages because of the unique nature of the Property. The evidence that this Property is unique is extremely thin. Mr. Wallace, in his affidavit, merely states that “the Property is unique in that it is a double lot located in the heritage district of Whitby. The Property was listed at a sale price of $720000”. In oral submissions, counsel for Mr. Wallace states that there is no sentimental attachment to the house, but it is a unique house on a double lot with an indoor pool. Counsel also relies on the appraiser’s report set out tab N of defendant Charles Ayodele’s affidavit. I have gone through that report. In my view, it does not assist the debate on this issue. The best that could be said is that the house at issue is a very nice house. There are other nice houses;
d) As will be elaborated upon below the action against the defendant 187 should be dismissed;
e) Mr. Wallace and his family no longer reside in the Property;
f) When one looks at the history of the proceedings from the start of the defendant 187’s mortgage enforcement action, one is left with the undeniable impression that Mr. Wallace is simply trying to game the system. I say this for the following:
i. Mr. Wallace’s explanation for not defending the original mortgage enforcement action is illogical. He states that he was distracted and trying to arrange for a transfer of title from Mr. Bedford to himself. It makes no sense that Mr. Wallace, while actively dealing with the Property at issue, would fail to defend the action if he had a defence;
ii. Mr. Wallace did not easily vacate the Property after the default judgment. Default judgment was issued in November 2018, and Mr. Wallace and his family were evicted in April 2019. He did not remove his possessions and they are now being stored off site by 187, who is currently paying those storage costs;
iii. Mr. Wallace, after being evicted and while represented by counsel, trespassed on the Property and put up signs which can only be viewed as an attempt to intimidate the new tenant; and
iv. Given that there has already been a judgment with respect to the same Property issued against him, one would have expected that Mr. Wallace would have moved with some haste to launch this new action. Yet, counsel for Mr. Wallace warned of this action in July 2019, but did not file it until the end of September 2019 and picked a date to argue his motion for October 11, 2019 without checking counsel’s availability, knowing that it would inevitably have to be adjourned, delaying the matter even more.
g) Mr. Wallace had three cautions registered against the Property, contrary to the Land Titles Act, which prohibits renewals of Cautions after they expire 60 days from registration. Accepting counsel’s explanation that these were innocent mistakes, at the end of the day cautions have been registered on the land for five months instead of two months; and
h) There is another route available to Mr. Wallace to stop the sale of the house. Pursuant to s. 23 of the Mortgages Act, the court may stay a mortgage enforcement conditional upon payment of the money due under the mortgage. The court has the discretion to set the conditions and terms for the payment. Mr. Wallace has not offered to bring the mortgage into good standing, nor has he offered to redeem the Mortgage, nor does it seem that he has the ability to do so; Armanasco v. Linderwood Holdings Inc., 2016 ONSC 1605 at paras. 44-46 and 48-50;
Cross-examination of Mr. Wallace
8Counsel for Mr. Wallace in an email to the defendants dated September 24, 2019 stated that:
I also confirm that we will NOT be entertaining requests to examine our client prior to the scheduled return date. You will each have every opportunity afforded by the Rules to examine Mr. Wallace after the initial issues are addressed by the court. [ capitals in the original]
9The defendants in their written material stated that they should be entitled to cross-examine Mr. Wallace before his motion was heard. The request was not renewed at the hearing of the motion but the defendants did complain about the applicant’s position. Accordingly, I was not asked to make any order. However, I must note that the respondents had the right to cross-examine Mr. Wallace on his affidavit. Counsel for the applicant should not have taken such a dogmatic position. While I have not struck the applicant’s affidavit, I do note the following passage by the Court of Appeal in Ontario (Attorney General) v. Paul Magder Furs Ltd., 1992 CanLII 7704 (ONCA) :
Crown counsel continued to be courteous and professional in pursuing his right to cross-examine. He took out an appointment for the cross-examination of the deponent on his affidavit, which appointment was duly served. With complete disregard for the Rules of Practice which govern the cross-examination of a deponent on his or her affidavit, counsel for the appellant refused to permit the deponent to be cross-examined and, because of that, this court struck the affidavit from the record. Thus, the record reveals no evidence to support counsel's assertion as to the appellant's financial condition.
Issue 2: Disclosure request
10Mr. Wallace seeks “Full Disclosure of all files and documents regarding and relating to any and all real estate transactions with respect to the Property from January 1, 2015 to the present.” Counsel for Mr. Wallace only dealt with this request in his reply submission. The only reason that I have been provided for seeking a judicial order as opposed to operating in the normal course is that time is of the essence and a disclosure order would be quicker. The defendants have stated that no order is necessary as they will comply with the regime set out in the Rules of Civil Practice for the disclosure of documents. I see no basis to make an order at this time. There has been no refusal by the defendants to provide any documents. They have both sworn in their affidavits that they are content to do so. Furthermore, Mr. Wallace is not well positioned to argue that the matter is suddenly urgent given the delay so far, as set out in paragraph 7(f)(4). If there is an issue with respect to the production of documents then the appropriate motion can be brought.
Issues 3: Defendant 187’s Motion to Dismiss the Action and request for a judicial sale
11187 asserts that the action against them should be dismissed on the basis that:
The claim reveals no cause of action and is an abuse of process;
The issue with respect to them have already been decided in the mortgage action and is res judicata;
The claim does not support any relief sought for a stay of the mortgage proceedings or an injunction; and
The claim is statute barred.
12Counsel for Mr. Wallace does not strongly resist 187’s motion to dismiss and spent the bulk of his submissions distinguishing Mr. Bedford and Mr. Ayodele from 187.
13While 187 has a strong argument with respect to each of their basis to have the action dismissed, this request can be dealt with on the basis of res judicata. The doctrine of res judicata has two aspects: issue estoppel and cause of action estoppel. The common law developed two doctrines to deal with “problems of unfair relitigation, consistency of result and finality.” As stated by the Supreme Court of Canada in R v. Mahalingan, 2008 SCC 63 at para. 15:
The first branch of res judicata is sometimes called cause of action estoppel in the civil context, or double jeopardy in the criminal context. An argument on this basis asserts that the cause of action in a current proceeding is the same as the cause of action in a proceeding previously litigated, with the result that the current action should not proceed. In criminal law, the double jeopardy principle finds expression in the pleas of autrefois acquit and autrefois convict.
14The policy rationale for the rule was explained by Abella J. in British Columbia (Workers' Compensation Board) v Figliola, 2011 SCC 52 at para.1:
Litigants hope to have their legal issues resolved as equitably and expeditiously as possible by an authoritative adjudicator. Subject only to rights of review or appeal, they expect, in the interests of fairness, to be able to rely on the outcome as final and binding. What they do not expect is to have those same issues relitigated by a different adjudicator in a different forum at the request of a losing party seeking a different result. On the other hand, it may sometimes be the case that justice demands fresh litigation.
15Abella J. also stated at para. 30 that:
In other words, the harm to the justice system lies not in challenging the correctness or fairness of a judicial or administrative decision in the proper forums, it comes from inappropriately circumventing them (Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 46).
16This action by Mr. Wallace is clearly an attempt by him to relitigate the mortgage action. He claims that 187’s mortgage should be set aside yet this court has ordered judgment against him with respect to the very same mortgage. Mr. Wallace, haven chosen not to defend the first action, cannot simply turn around and challenge the very same mortgage in a new action. Further, I do not accept, for the reasons set out above, the explanation proffered by Mr. Wallace as to why he did not defend the first action. Mr. Wallace’s action with respect to 187 is dismissed. I further direct that the property municipally known as 407 Ontario Street West, Whitby, Ontario be sold under a judicial sale. 187 shall prepare a draft order.
17The defendants shall have one week from the release of these reasons to submit to me their submissions with respect to costs. Those submissions shall not be longer than one page. Mr. Wallace shall have a week thereafter to submit his submissions with respect to costs. Mr. Wallace’s submissions shall not be longer than two pages.
The Honourable Justice H. Leibovich
Released: November 25, 2019
OSHAWA COURT FILE NO.: CV-19-2699
DATE: 20191125
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Roderick Wallace
Applicant/Plaintiff
– and –
Lucien Bedford Charles Ayodele 1877359 Ontario Inc. 1449400 Ontario Inc., and 2554758 Ontario Inc.
Defendants/Respondents
RULING ON MOTION
The Honourable Justice H. Leibovich
Released: November 25 2019