REASONS FOR DECISION

COURT FILE NO.: CV 20-72786

MOTION HEARD: 2020/05/04

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: NAWAB MOHAMMED ABUL KHAN

Applicant/Moving Party

-and-

MCF MORTGAGE INVESTMENT CORP. AND MCF INVESTMENT SERVICES INC.

Respondents/Responding Parties

BEFORE: Turnbull, J.

COUNSEL: Rajesh Kumar, Counsel, for the Applicant

John Wallace, Counsel, for the Respondents

HEARD: April 30, 2020 by Teleconference Call during the Covid19 Crisis.

Overview of the Issue:

[1] The dispute between the parties in this matter relates to a mortgage given by the applicant to the respondents concerning the property municipally known as 971 Ridge Road, Stoney Creek, Ontario. The mortgage went into default. The disagreement relates to the propriety of mortgage enforcement proceedings commenced by the respondents in early March 2020 and as to the appropriate amount required to bring the mortgage back into good standing. The urgency relates to the stated intention of the respondents to list the property for sale in the week of April 20, 2020. If the property is sold, the applicant argues that he will suffer irreparable harm.

[2] This matter was first considered by Reid J. as Triage Judge during the Covid 19 Crisis when the day to day operations of this court were closed to the public and all matters of an urgent nature were being dealt with remotely. Reid J. deemed this motion to be urgent and allowed it to be heard by this court.

Overview of the Events to this Stage:

[3] The applicant first obtained a mortgage from the respondents in 2017. A copy of the mortgage is affixed to the supporting affidavit of the respondents. Its terms are onerous and the mortgage was not cheap. However, that is not the issue before this court. The applicant signed a mortgage application form and those terms were incorporated in the mortgage registered on title. The mortgage term was for one year. The monthly payments due on the 15th of each month were $3,748.05. It was renewable in annually in the absolute discretion of the mortgagee. If renewed, the contracted renewal fee each year was two per cent of the outstanding principal on the mortgage. Furthermore, the mortgagee reserved the right to charge for property insurance at an expensive but agreed rate in the event that the applicant did not provide required evidence of insurance in place. The mortgagee asserts that it was forced to invoke this clause and not surprisingly, the applicant mortgagor states the opposite. However, he has not affixed evidence of the insurance he says was in place to his affidavit on this motion.

[4] The mortgage was renewed in 2018 and in 2019. The renewal fees and the insurance costs were not demanded from the applicant at the time of renewal but are now claimed in its statement of accounts to redeem the mortgage. The applicant disputes those amounts (which total almost $49,000) plus other amounts claimed by the mortgagee.

[5] In January 2020, the applicant fell three months into arrears in his mortgage payments. As a result, the respondents referred the matter to counsel to begin mortgage enforcement proceedings.

[6] A statement of claim for the mortgage debt and possession of the property was issued in Kitchener Superior Court on January 23, 2020.

[7] The respondents were unable to serve the applicant because he was out of the country. Their process server found the residence on the property unoccupied and was advised by a neighbour at 977 Ridge Road that the Property was vacant.

[8] On February 25, 2020, the respondents’ agent conducted an occupancy check of the property and found it vacant with an eviction order posted in the front window listing the applicant as the landlord.

[9] On February 28, 2020, the respondents’ agent returned to the property and took vacant possession. The heat in the house had been turned off and the house was found to be in significant disrepair. The hydro meter had been removed from the side of the building. Inside, the Property was full of various contents that the respondents believed had been abandoned by the evicted tenant. It was readily apparent to the respondents’ agent that no one was living at the property. Based on the photographs attached to the supporting affidavit of the respondents, I find that was a reasonable assumption which would be made by any responsible owner or mortgagee. The respondents later confirmed with Hydro One that the electricity had been turned off since July 2019.

[10] On March 5, 2020, Mr. Kumar, counsel for the applicant, sent the respondents a letter demanding that the property be turned back over to the applicant and requesting a statement to put the mortgage back in good standing.

[11] On March 10, 2020, once the applicant had returned to Canada and been served with the statement of claim, counsel for the respondents issued a Notice of Sale for the Property with a redemption period expiring on April 17, 2020.

Analysis:

[12] I have no hesitation in dismissing this motion as I am not satisfied on the record before the court that the applicant will suffer irreparable harm if the respondents are permitted to proceed with listing the subject property for sale. I also find that the balance of convenience does not justify granting the relief sought.

[13] In order to obtain an interlocutory injunction, the moving party must show that there is a serious issue to be tried, that the applicant will suffer irreparable harm if the injunction is not granted, and that the balance of convenience favours granting the injunction.[^1]

Irreparable Harm:

[14] The applicant is not at risk of any irreparable harm. All the issues raised on this motion and the underlying Application can be readily assessed in an accounting after a sale of the property and, if proven, compensated with damages.

[15] The applicant has not identified any attributes of the property which make it unique and therefore rendering him incapable of being compensated in damages. The onus of proving the uniqueness of a property rests upon the party asserting that fact. Lax J. of this court dealt with that issue in John E. Dodge Holdings v. 805062 Ontario Ltd. ((2001) 2001 28012 (ON SC), 56 O.R. (3d) 341 (S.C.J.)) where she noted that determining whether a property is unique requires a consideration of the particular property and the particular party in order to determine whether an award of damages would be insufficient to compensate a wronged party. Further, the party claiming that the property is unique has the onus to prove that the property is actually unique. That decision was confirmed on appeal at 2003 52131 (C.A.), 63 O.R.(3d) 304.

[16] This motion for an interlocutory injunction is weak when the analysis turns to sections 22 and 23 of the Mortgages Act and the question of whether the applicant’s right to redeem is still extant. Sections 22 (1) and 23 (1) provide remedies for a mortgagor in default prior to a sale under the mortgage and after an action has been commenced.

[17] The applicant still has the opportunity to redeem the mortgage. Perell J. of this court dealt with the rights of a mortgagor to redeem in the case of Armanasco v. Linderwood Holdings Inc., 2016 ONSC 1605. That decision with others referenced therein clearly confirm that the law in Ontario is that a mortgagee acting in good faith and without fraud will not be restrained. from selling the mortgaged property subject to a mortgagor’s right to bring a mortgage back into good standing or to redeem. At para. 52, Perell J. cited the Ontario Court of Appeal’s support of that statement:

The Court of Appeal agreed with this interpretation of s. 22(1)(a) of the Act in Theodore Daniels Ltd. v. Income Trust Co. (1982), 1982 1757 (ON CA), 37 O.R. (2d) 316 (C.A.). On behalf of the court, Justice Lacourcière stated at para. 319:

The relief granted to the mortgagor may be obtained pursuant to s.[22(1)(a)] at any time before sale under the mortgage. Thus, the mortgagor may perform the covenant or pay the arrears, etc., before any action is commenced, after a notice of exercising power of sale has been served but before the actual sale. Sale in this context has been interpreted as meaning acceptance of an offer. See Re Mission Construction Ltd. and Seel Investments Ltd., 1973 396 (ON SC), [1973] 2 O.R. 190 at p. 191, 33 D.L.R. (3d) 286.

[18] On the record before this court, and without prejudice to the applicant in other proceedings in which he may choose to enforce his rights, I am not satisfied that there is sufficient evidence to find that the respondents have not acted in good faith or have acted in a fraudulent manner. There is no question that their mortgage renewal rates are high, but they are part of the contract signed by the mortgagor. The same comment is applicable to the insurance costs claimed by the mortgagee. Those concerns are not sufficient to warrant the court’s intervention at this stage to prevent the mortgagee from proceeding.

Balance of Convenience:

[19] Counsel for the applicant agreed in submissions that there are currently $15,900 of mortgage arrears (four months). In other words, the mortgage is unquestionably in default and was in default at the time the underlying enforcement action was commenced. The search of title affixed as an exhibit to the respondents’ affidavit also shows that there are two tax liens registered against title by the Minister of National Revenue, totaling approximately $40,000. The unchallenged affidavit of the respondents’ representative indicates that the hydro at the residence was disconnected and the house abandoned. The photographs also affixed to the respondents’ affidavit show the interior of the house to be in a state of total disarray.

[20] The mortgagee has moved pursuant to its rights contained in paragraph 9 of the Standard Charge Terms. On the record before this court on this motion, the balance of convenience certainly does not warrant restraining the mortgagee from moving to exercise its legal, contracted rights.

[21] Presently, this province is in the midst of a virtual economic shutdown due to Covid19. If the property is listed for sale, the real probability is that it will take some time to find a purchaser as economic activity is significantly reduced at this time and great uncertainty exists as to the direction real estate values will go. The mortgagee will have to be cautious in accepting any offer too quickly and without valid market evidence of the reasonableness of the price obtained. The applicant still has time to redeem the mortgage and can reserve his rights with respect to the reasonableness of the mortgagee’s claims for insurance and for the 2 per cent renewal fees, as well as any other expenses he chooses to contest.

Conclusion:

[22] The motion is dismissed, with costs payable to the respondents. I encourage counsel to resolve the issue of costs and to advise me if that occurs. Failing agreement, I will accept costs submissions (which are to be served on counsel for the applicant) including dockets from counsel from the respondents on or May 10, 2020. The applicant may serve and file responding submissions on or before May 20, 2020. If necessary, counsel for the respondents may serve and file brief reply submissions on or before May 27, 2020.

[23] The Chief Justice and all judges of the Superior Court of Justice are extremely cognizant that the temporary suspension of court proceedings due to the Covid 19 crisis significantly affects the rights of many litigants to have a matter heard in a timely manner. We have been directed to do all possible to avoid a party being unduly prejudiced due to the present circumstances affecting the province of Ontario.

[24] In his supporting affidavit, Mr. Khan indicated that in the application before the court (as opposed to this motion), he was seeking the assistance of the court in determining what amount should be paid into court to enable him to obtain a discharge of the mortgage. I consider that to be an urgent matter within the meaning of the Regional Practice Directions of March 2 and 6, 2020. If the applicant chooses to bring that application forward with details of his ability to discharge the mortgage (including commitment letters) and/or to make payment of sums into court, I grant him leave to bring that application before me and I will arrange with the office of the Regional Senior Justice to arrange a mutually convenient time for the matter to be heard. However, this is without prejudice to the respondents being able to list the property for sale and to accept an offer in the interim. In other words, the applicant should understand that the clock is ticking.

Date: May 4, 2020

Turnbull, J.

[^1]: RJR MacDonald v Canada (Attorney General), 1994 117 (SCC), [1994] 1 SCR 311.