Court File and Parties
COURT FILE NO.: CV-19-632415 MOTION HEARD: 20200228 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Gheorghe Stetco, Plaintiff AND: 1788046 Ontario Limited, Richard Price, Matthew Price and Muhammad Aslam Khan, Defendants
BEFORE: Master Jolley
COUNSEL: John Ekpenyong, Counsel for the Moving Party Plaintiff Ryan Atkinson, Counsel for the Responding Party Defendants Richard Price and Matthew Price Muhammad Aslam Khan, in person No one appearing for 1788046 Ontario Limited
HEARD: 28 February 2020
Reasons for Decision
Background
[1] On 20 January 2020, I granted the plaintiff leave to have issued a temporary certificate of pending litigation to expire on 26 February 2020, when the motion was to return before me on notice to the defendants. As a result of the motion being confirmed late, it was adjourned from 26 February 2020 to February 28 with the CPL remaining in place for two extra days.
[2] The plaintiff alleges that he is the owner of 119 Nelson Street, Toronto (the “Property”) which he purchased in 2012. He alleges that, unbeknownst to him, the defendant 1788046 Ontario Limited (“178”) took out a mortgage on the Property in 2012. He alleged that he recently learned that 178 obtained judgment against him without notice to him and was moving to evict him based on that foreclosure judgment. The plaintiff argued that 178 had no interest in the Property and that he had been the subject of mortgage fraud. In the face of that eviction threat, I granted the CPL until the motion could be argued on a complete record.
[3] The purpose of providing the intervening period from 20 January 2020 to 26 February 2020 was to give the plaintiff time to obtain information about the pending foreclosure proceeding. He was also required to put the defendants on notice of this motion, as he was aware that they had counsel and he had not informed them of the motion. With the CPL set to expire, the plaintiff seeks a further CPL.
[4] The plaintiff did not give Mr. Khan notice of this motion. The plaintiff determined that Mr. Khan’s evidence was not relevant to the issues before the court on this motion and decided not to serve him. Mr. Khan was advised of the motion by the co-defendants and filed materials and attended before me. There was also a dispute about whether Mr. Ekpenyong served the Price defendants with my endorsement as he was ordered to do. It is very likely that, through inadvertence or otherwise, Mr. Ekpenyong served only the first page of my endorsement and not the second, which set out the obligation of the plaintiff to serve the defendants with the motion record, the order and the endorsement.
[5] What was also disclosed today is that Mr. Ekpenyong spoke to Katherine Lee, counsel in Mr. Atkinson’s office with carriage of this matter for Michael Price, about this very file on the morning of February 20 before he attended before me in ex parte court. While he advised her that he was going to take steps to protect his client, he did not advise her that he was heading to ex parte court after he hung up the phone to obtain the CPL order. It was entirely inappropriate not to advise Ms. Lee that this motion was being brought and to invite her to attend should she wish to speak to the matter.
[6] Counsel for the Prices was served with the motion record on or about 20 February 2020, not “immediately” after the January 20 attendance, as required by my endorsement. Nonetheless, counsel for Matthew Price filed a responding record and attended today. The plaintiff did not file reply materials and did not cross-examine any of the defendants’ affiants.
Analysis
[7] To succeed on this motion, the plaintiff must show there is a triable issue with respect to his claim to an interest in the Property (Pacione v. Pacione 2019 ONSC 813 at paragraph 20). I now have a record more complete than what was before me on 20 January 2020. In addition to the plaintiff’s original motion record, I have reviewed a new motion record from the plaintiff, including a further affidavit from him, an affidavit from the defendant Mr. Khan and affidavits from David McGee and Andrea Mauti filed on behalf of the defendant Matthew Price. I also heard submissions from counsel for the plaintiff, from counsel for Matthew Price and from Mr. Khan on his own behalf.
[8] Based on the evidence before me, and accepting that the threshold is a low one, I find that the plaintiff has not established that he has a reasonable claim to an interest in the Property and his motion for a CPL is denied.
[9] In his affidavit sworn 20 January 2020, the plaintiff alleged that his lawyer Mr. Khan asked him to take a second mortgage “since he did not think I had enough funds to complete the transaction in 2012 and I agreed.” He argued that he met all his obligations to 178 by making the payments due. He further deposed that “on July 21, 2015 my property was unlawfully and fraudulently transferred to 178 without any notice to me.” Lastly, he deposed that “on November 17, 2016 it appears that 178 obtained a foreclosure order against me without notice to me.”
[10] Plaintiff’s counsel handed up a memo that he advised was created by a legal aid clinic that summarized the plaintiff’s situation. It stated that the plaintiff appeared to be the victim of mortgage fraud. It further stated that “unbeknownst to [the plaintiff], a numbered corporation took out [sic] second mortgage on his home in 2012… [The plaintiff] has no knowledge or prior involvement with [178].” The memo was not attached to any affidavit.
[11] These statements are not borne out by the evidence, which the plaintiff did not challenge through a reply affidavit or cross-examination.
[12] The evidence demonstrated that the plaintiff required a second mortgage in the amount of $45,000 to close the purchase of the Property in 2012 and he obtained the second mortgage from the defendant Richard Price (“Richard”) for that reason. Richard advanced $45,000 to the plaintiff and the second mortgage was registered on title on 6 September 2012.
[13] The plaintiff signed mortgage documentation including a promissory note that confirmed the indebtedness and the mortgage terms, as well as an acknowledgement and direction, to which the charge/mortgage was attached. The mortgage required the plaintiff to make interest only payments of $450 per month. The plaintiff made those monthly payments and then renewed the mortgage when it came due in March 2013.
[14] It was not explained why the plaintiff would make mortgage payments to an entity he was unaware of and whom he did not know held a mortgage, or why he believed the mortgage to be a fraud when he received the mortgage proceeds.
[15] The plaintiff defaulted on his June 2014 mortgage payment and then stopped making the mortgage payments entirely as of 1 August 2014. After a year of not receiving any payments, on 21 July 2015 Richard transferred his second mortgage to 178 upon its payment to him of $47,563.08. The plaintiff points to this date in his affidavit as the date when the Property was “unlawfully and fraudulently transferred to 178”, a statement I relied on to grant the original CPL. Now having the benefit of a full record, it is clear that the Property was not transferred, let alone fraudulently, to 178 on that date. It was only the second mortgage that was transferred from Richard to 178 and that transfer of the mortgage was registered on title to the Property on 21 July 2015.
[16] The plaintiff deposed that he met his obligation to 178 by making payments to it. This is not borne out by the evidence. As noted, the plaintiff made no payments on the second mortgage after July 2014. Further, the property taxes and water charges had been outstanding since 2013 and the plaintiff took no steps to bring them current.
[17] The plaintiff deposed that 178 obtained a foreclosure order against him without notice to him, which I also relied on to grant leave to issue the CPL. Again, without the need to make any credibility findings, the benefit of the full record does not support this allegation. On 12 May 2016, 178 commenced its action for possession based on the plaintiff’s failure to make any second mortgage payments after July 2014. The plaintiff denied being served with the statement of claim and took the position stated that the affidavit of service reflecting service on him on 17 May 2016 was false. What the complete record showed is that, not only was the plaintiff aware of the claim, he retained counsel to respond to it.
[18] Plaintiff’s counsel wrote to 178 on 30 May 2016 and enclosed a notice of intent to defend. He noted that he had been engaged on behalf of the plaintiff to try and effect a resolution of this matter. The plaintiff’s lawyer and 178 then entered into negotiations which ultimately failed. On 14 June 2016, 178 advised the plaintiff’s lawyer that if the parties could not come to terms, the Property would be sold under power of sale. Shortly thereafter, a new claim was issued to correct a typographical error in the spelling of the plaintiff’s name and it was served on the plaintiff. Neither the plaintiff nor his counsel responded to that claim or the earlier claim or pursued further negotiations.
[19] On 17 November 2016, 178 obtained default judgment and, on that date, the plaintiff’s right to redeem the Property was foreclosed. His ownership rights in the Property were transferred to 178 and it became the legal owner registered on title. After that date, the plaintiff continued to reside in the Property but had no ownership interest.
[20] On 6 July 2017, 178 attached a notice to vacate to the door of the Property. The notice was addressed to the plaintiff and to all occupants and stated that 178 had obtained judgment for foreclosure and possession of the premises, of which the plaintiff and the occupants may be in actual possession. The notice required the occupants, including the plaintiff, to vacate by 21 July 2017.
[21] Plaintiff’s counsel took the position in court that either his client did not get the notice or did not understand it. Again, the record does not support this argument. To the contrary, what the record does show is that the plaintiff retained the same lawyer whom he had used in 2016 to serve the notice of intent to defend to provide him with legal advice about the notice to vacate. On 14 July 2017 the plaintiff’s lawyer sent an email to 178 confirming that the plaintiff had received the notice to vacate and requesting a copy of the order referenced in it. Although the plaintiff was aware of the demand for vacant possession, neither he nor his lawyer took steps to set aside the judgment.
[22] In November 2016, after it became the registered owner of the Property, 178 obtained a mortgage from Matthew Price (“Matthew”) for $169,000. In July 2018, 178 defaulted on its mortgage payments to Matthew. In December 2018, Matthew commenced an action against 178 for possession of the Property. 178 did not defend and Matthew obtained judgment for possession on 1 April 2019. Pursuant to his judgment, on or about 24 July 2019 Matthew sent a demand for possession to 178 and to all the occupants of the Property, including the plaintiff, requiring vacant possession within three business days.
[23] On 8 August 2019, Matthew served the plaintiff with a letter advising him that the Property was being sold pursuant to a Notice of Sale and demanding vacant possession. The plaintiff did not respond to that demand. On 22 August 2019 Matthew obtained an order for leave to issue a writ of possession, which the plaintiff also received on or about 27 August 2019, as referenced in the legal aid clinic memo.
[24] The plaintiff argued that he has a reasonable claim to an interest in the Property as he has continued to pay the first mortgagee. He argued that he would only be required to pay that mortgage if he remained an owner of the Property. That does not follow. The plaintiff received $296,000 from CIBC as a loan, which was secured by a first mortgage on the Property. Whether or not the plaintiff continued to own the Property, he still had an obligation to repay the debt owing. Simply keeping the first mortgage in good standing would not guarantee the plaintiff’s ownership of the Property when there were unpaid second and, I am told, now further subsequent mortgagees. The plaintiff’s payments to CIBC cannot establish a reasonable claim to an interest in the Property.
Conclusion
[25] Any claim the plaintiff had to an interest in the Property was extinguished by the judgment for possession that 178 obtained in November 2016. The plaintiff retained counsel to respond to that claim for possession in 2016, so his argument that he was unaware of the claim cannot be supported. He was also aware of the notice to vacate in 2017 and went back to that same lawyer for legal advice on his rights. He did not defend the action in 2016 and did not take steps to set aside the judgment when he received the notice to vacate in 2017.
[26] Matthew obtained judgment for possession and entered into an agreement of purchase and sale which has been extended a number of times, most recently due to the caution registered by the plaintiff against the Property in November 2019. The closing is now set for 20 March 2020.
[27] The plaintiff now wishes to bring the second mortgage current. That mortgage is not the operative mortgage driving the pending sale. The relevant mortgage on which Matthew moved and obtained possession was his mortgage to 178 which secured his loan to 178 in the amount of $169,000, not 178’s mortgage to the plaintiff.
[28] Even if 178 were still the owner of the Property, which it is not, it would not be appropriate for the plaintiff to use a certificate of pending litigation for the purpose of buying time to bring the second mortgage into good standing, some years after judgment for possession was obtained. The time has passed for the plaintiff to attempt to right the defaults under the mortgage from 2014 and restore title to himself. Further, such an action would represent a collateral attack on the 2016 foreclosure judgment (Wilson v. The Queen at page 599).
[29] The plaintiff has not established a triable issue with respect to his claim to an interest in the Property. The certificate of pending litigation granted on 20 January 2020 and then extended to the date of the release of this decision is hereby discharged and the plaintiff’s motion to continue the certificate of pending litigation past 2 March 2020 is denied. The representations of the plaintiff upon which I granted the certificate of pending litigation on an ex parte basis have been demonstrated to be unsupportable in the light of a full record.
[30] If the parties cannot agree on costs by 20 March 2020, the defendants shall serve and file costs submissions no more than four pages in length, along with a bill of costs. The plaintiff shall then have 20 days to serve and file responding costs submissions. Submissions shall be delivered to me by email to my assistant trial co-ordinator, Ms. Meditskos at christine.meditskos@ontario.ca.