Court File and Parties

COURT FILE NO.: CV 17-6771 DATE: 2020/07/28 ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

CAISSE POPULAIRE DE NORTH BAY LIMITÉE Plaintiff Christian Tremblay, for the Plaintiff

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CHRISTI-ANNE MARIE LAFRANCE Defendant Joseph D. Kennedy, for the Defendant

A N D B E T W E E N:

CHRISTI-ANNE MARIE LAFRANCE Plaintiff by Counterclaim Joseph D. Kennedy, for the Plaintiff by Counterclaim

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CAISSE POPULAIRE DE NORTH BAY LIMITÉE Defendant by Counterclaim Michael Beeson, for the Defendant by Counterclaim

HEARD: August 6, 2019 Ellies R.S.J.

Reasons for Decision

Overview

[1] The Caisse Populaire de North Bay Limitée (the “Caisse”) moves for summary judgment in an action in which it seeks possession of a residence owned by Ms. Lafrance, located on Copeland Street, in North Bay. The Caisse alleges that two mortgages registered against title to the property are in default.

[2] The Caisse also seeks an order dismissing a counterclaim brought by Ms. Lafrance in which she seeks damages for the “oppressive conduct” of the Caisse during her dealings with them regarding the mortgages in question.

[3] Finally, the Caisse asks to amend its name in the title of proceedings to reflect a recent merger.

[4] For the following reasons, leave to amend the title of proceedings is granted, as are the motions for summary judgment on both the claim and the counterclaim. However, the Caisse will be required to provide a proper calculation of the amount owing under the first of the two mortgages in issue before it can obtain judgment.

Facts

The Parties

[5] The Caisse is a financial services cooperative. To become a member of the Caisse, one must open an account. Ms. Lafrance became a member in April 2005.

The Mortgages in Issue

[6] The first mortgage is in the principal amount of $204,000. Interest on the principal is expressed to run at the rate of 4.99 percent per year. It was registered against title to the Copeland Street property on August 4, 2011 and matured on September 1, 2015.

[7] The second mortgage is in the amount of $50,000. This mortgage was registered against title to the Copeland Street property on the same date as the first mortgage. It was taken to secure a commercial line of credit for Ms. Lafrance’s business as a paralegal. The line of credit is a demand loan. Under the terms of the loan, interest on the amount advanced was to run at the rate of prime plus 4 percent per year.

[8] According to the Caisse, the first mortgage has been in default since December 2015 and Ms. Lafrance has been in arrears on the loan secured by the second mortgage since December 2014 [1].

Ms. Lafrance’s Bankruptcy

[9] On January 22, 2015, Ms. Lafrance filed an assignment in bankruptcy. Both mortgages were listed as liabilities in her Statement of Affairs. The trustee elected to require the Caisse to file proof of its security, failing which the trustee is empowered by the Bankruptcy and Insolvency Act, R.S.C., 1985, c. B-3 (the “BIA”), to dispose of the secured property.

[10] The Caisse filed a Proof of Claim with respect to both mortgages. Based on an appraisal it had obtained about the value of the Copeland Street property, the Caisse indicated that $220,000 was the amount of its secured claim. It listed the balance of the money owed by Ms. Lafrance on both mortgages, $32,964.57, as an unsecured claim.

[11] After learning of Ms. Lafrance's bankruptcy, the Caisse decided that it would enforce its security under the power of sale provisions contained in the Standard Charge Terms that were incorporated by reference into the first mortgage. However, Ms. Lafrance wanted to keep the home on Copeland Street and the Caisse agreed not to enforce its right to sell it.

[12] On June 22, 2015, the Caisse agreed to amend the terms under which the line of credit had been advanced. The interest rate was lowered from prime plus 4 percent to prime plus 2.14 percent per year. The payment terms were also amended. Rather than paying the interest accrued each month, Ms. Lafrance agreed to pay the fixed sum of $250. Although the agreement was signed by Ms. Lafrance on June 22, 2015, it was expressed to be effective from May 15, 2015.

[13] On September 29, 2015, relying on a clause in the Standard Charge Terms, the Caisse sent Ms. Lafrance a letter in which it advised that it was renewing the first mortgage for a period of one year, at an interest rate of 6.3 percent per year.

[14] Ms. Lafrance was discharged as a bankrupt on October 23, 2015.

The Legal Proceedings

[15] The Caisse commenced its action against Ms. Lafrance in June 2017. In addition to claiming possession of the Copeland Street property, it seeks payment of the amounts owing under both mortgages, including interest. In the Statement of Claim, the Caisse alleges that over $200,000 is owed under the first mortgage and over $53,000 is owed on the line of credit secured by the second.

[16] Ms. Lafrance maintains that there is no valid first mortgage. She says that, once the first mortgage expired, no valid agreement was reached with respect to the renewal of that mortgage. She disputes the validity of a renewal letter sent by the Caisse on September 29, 2015. In the alternative, Ms. Lafrance contends that the first mortgage was never renewed again after it expired in September 2016.

[17] In the further alternative, she submits that the debt owing under the first mortgage was “stayed and captured” by her bankruptcy, leaving nothing owing by her to the Caisse.

[18] Ms. Lafrance says that, if anything at all is owing on the first mortgage, it is not the amount alleged by the Caisse.

[19] With respect to the second mortgage, Ms. Lafrance maintains that she never agreed to allow the Caisse to secure the entire line of credit of $50,000 against the property. Instead, she says that she only agreed to allow the Caisse to secure the amount by which she had agreed to increase the original $16,500 line of credit.

[20] In a document entitled “Stay of Proceeding” filed by Ms. Lafrance before she retained counsel, she also makes the same argument with respect to the second mortgage that she did with respect to the first: that enforcement of the mortgage was stayed by her bankruptcy.

[21] In the alternative, Ms. Lafrance maintains that the sum of $32,964.57 owing on the second mortgage was discharged by her bankruptcy in January 2015, when this amount was listed by the Caisse as being an unsecured debt.

[22] With respect to both the first and second mortgages, Ms. Lafrance seeks a declaration and claims damages in her counterclaim for conduct on the part of the Caisse that she alleges was “oppressive and/or unfairly prejudicial to and/or unfairly disregards” her interests as a Caisse member.

Adjournment Request

[23] Ms. Lafrance represented herself in these proceedings until July 31, 2019. Then, just days before the motion was to be argued, she retained Mr. Kennedy. At the outset of the motion, Mr. Kennedy requested an adjournment. I reserved on the request until after I had heard argument on the merits of the motion from counsel for the Caisse. Following those submissions, I denied the adjournment request, for reasons to be delivered.

[24] Mr. Kennedy also raised an issue related to r. 11 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which I will address below.

Request for Further Submissions

[25] After the motion was argued and while my decision was under reserve, I requested the parties’ further submissions. In an endorsement dated August 30, 2019 (2019 ONSC 5106), I requested written submissions with respect to the date upon which the first mortgage matured, whether the Caisse was entitled to renew the mortgage unilaterally if that date was September 1, 2015, and, if not, the amount currently owed on the mortgage.

[26] The Caisse’s written submissions were received on September 27, 2019. Ms. Lafrance’s submissions were received on October 17, 2019. On October 21, 2019, however, the lawyers for the Caisse wrote to request leave to respond to submissions made on behalf of Ms. Lafrance relating to the effect of her bankruptcy on the first mortgage – an issue with respect to which I had not requested further submissions. Unfortunately, the letter from the Caisse’s lawyers did not come to my attention until January 2020. In an endorsement dated January 14, 2020, I granted their request. Their submissions were received on February 13, 2020.

The Pandemic Intervenes

[27] Following receipt of the Caisse’s further written submissions, the whole world changed. On March 17, 2020, the Superior Court of Justice suspended regular operations due to the COVID-19 pandemic. At the request of the Chief Justice, judges were asked not to attend at courthouses. Paper that was in the courthouse on March 17 – including the further submissions in this case – stayed there, untouched until only recently. Hence, the delay in delivering these reasons.

Issues

[28] The issues raised in this motion are as follows:

(1) Is the action by the Caisse stayed by operation of r. 11?

(2) Should the Caisse be granted leave to amend its name in the title of proceedings?

(3) Is a trial required to determine:

(a) whether there is a valid first mortgage;

(b) if so, the amount owing on the first mortgage;

(c) whether Ms. Lafrance consented to permitting the Caisse to register a second mortgage for the full $50,000 line of credit;

(d) whether the sum of $32,964.57 owing on the second mortgage was discharged as a result of Ms. Lafrance’s bankruptcy; and

(e) whether the Caisse is liable to Ms. Lafrance as a member of the cooperative for oppression or unfair conduct in relation to the first and second mortgages?

[29] Before I get to these issues, however, I will provide my reasons for denying the adjournment request.

Analysis

The Adjournment Request

[30] When this motion was argued last August, Mr. Kennedy sought an adjournment of the motion until the first date the court had available, which was October 10, 2019. He submitted that the Caisse would suffer no prejudice if an adjournment was granted to that date. However, I was unable to agree.

[31] As I indicated, the Caisse alleges in the affidavit evidence filed that both of these mortgages have been in arrears since at least December 2015. To my knowledge, Ms. Lafrance has not made any payments on them since then. At para. 41 of her responding affidavit, she admits that she only paid under the first mortgage until November 2015.

[32] The Caisse’s action was commenced in June 2017, over two years before the motion was argued. The motion record for summary judgment on Ms. Lafrance’s counterclaim was prepared in September 2018. The motion record for summary judgment on the main claim was prepared in early January 2019. The date for the motion was set in March 2019. The Caisse is losing money every month that the action remains outstanding. As I mentioned above, the last appraisal of the property showed the value of the property as $220,000, which is significantly less than the total amount owing on both mortgages at the time the motion was before me.

[33] In addition, I agreed with counsel for the Caisse that I can take judicial notice of the fact that the property would cost more to heat and maintain if the Caisse became responsible for those costs during the winter. Unfortunately, as far as I know, that is exactly what happened.

[34] Finally, Ms. Lafrance offered no reason for the fact that she retained Mr. Kennedy at the last minute. In her affidavit sworn on March 4, 2019, she stated that she was waiting until March 15, 2019 for an answer on a loan she applied for so that she could retain counsel. Nothing more was said about that in the material she filed subsequently.

[35] Ms. Lafrance had ample time to retain counsel and to instruct him in advance of the motion date.

[36] For these reasons, the request to adjourn was denied.

Is the Action by the Caisse Stayed by Operation of Rule 11?

[37] Rule 11 provides:

11.01 Where at any stage of a proceeding the interest or liability of a party is transferred or transmitted to another person by assignment, bankruptcy, death or other means, the proceeding shall be stayed with respect to the party whose interest or liability has been transferred or transmitted until an order to continue the proceeding by or against the other person has been obtained.

11.02 (1) Where a transfer or transmission of the interest or liability of a party takes place while a proceeding is pending, any interested person may, on filing an affidavit verifying the transfer or transmission of interest or liability, obtain on requisition from the registrar an order to continue (Form 11A), without notice to any other party.

(2) An order to continue shall be served forthwith on every other party.

11.03 Where a transfer or transmission of the interest of a plaintiff takes place while an action is pending and no order to continue is obtained within a reasonable time, a defendant may move to have the action dismissed for delay, and rules 24.02 to 24.05 apply, with necessary modifications.

[38] No order to continue was ever obtained after Ms. Lafrance went bankrupt. Mr. Kennedy submits that r. 11 operates to stay the Caisse’s claim without such an order. I disagree.

[39] Rule 11 applies only to proceedings which have been commenced at the time of the assignment. This is clear from the language of all three subrules (“at any stage of a proceeding”, “while a proceeding is pending”, while an action is pending”). This action was commenced by the Caisse more than one-and-a-half years after Ms. Lafrance was discharged. Therefore, r. 11 has no application to this case.

[40] However, r. 11 does come into play with respect to the Caisse’s request to amend the title of proceedings, to which I will turn now.

Should the title of proceedings be amended?

[41] On January 1, 2018, after this action was commenced, Caisse Populaire de North Bay Limitée, the named plaintiff, amalgamated with several other financial service cooperatives to form the “Caisse Populaire Alliance Limitée”, which assumed all rights and liabilities of the named plaintiff. The Caisse requests an order to continue under r. 11 and that the title of proceedings be amended accordingly. This request is not opposed. It will be granted and the name of the plaintiff in the statement of claim will be amended to reflect the name “Caisse Populaire Alliance Limitée”.

[42] I turn now to the substantive relief requested by the Caisse. However, I believe it would be helpful to preface my analysis with a brief discussion of the rule under which the Caisse has moved: r. 20, the summary judgment rule.

Rule 20

[43] The applicable parts of r. 20 read:

20.01 (1) A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim.

(3) A defendant may, after delivering a statement of defence, move with supporting affidavit material or other evidence for summary judgment dismissing all or part of the claim in the statement of claim.

20.02

(2) In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.

20.04

(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

(2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

(2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

(3) Where the court is satisfied that the only genuine issue is the amount to which the moving party is entitled, the court may order a trial of that issue or grant judgment with a reference to determine the amount.

20.05 (1) Where summary judgment is refused or is granted only in part, the court may make an order specifying what material facts are not in dispute and defining the issues to be tried, and order that the action proceed to trial expeditiously.

(2) If an action is ordered to proceed to trial under subrule (1), the court may give directions or impose such terms as are just ...

[44] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada held that amendments made to r. 20 in 2010 heralded a new approach in which trials are no longer required for all but the most obviously unmeritorious claims. The court called for a "culture shift" towards a more proportionate, more expeditious, and less expensive dispute resolution process.

[45] Rule 20 is mandatory. Where a judge concludes that there is no genuine issue requiring a trial, he or she must make the appropriate final order. In Hryniak, the Supreme Court explained (at para. 49):

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[46] The summary judgment rule permits the motion judge to perform the functions of a trial judge by weighing evidence, evaluating credibility and drawing inferences in order to determine if there is a genuine issue requiring a trial. As the Supreme Court pointed out in Hryniak, the decision to use these powers is a discretionary one (para. 68). The motion judge is not required to use them, but is required not to use them if the "interest of justice" dictates that they be used only at a trial.

[47] In Hryniak, the Supreme Court explained the process a summary judgment motion judge should follow under the Rules by providing the following "roadmap" (at para. 66):

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[48] As I hope to demonstrate, I believe that I can fairly and justly adjudicate all of the issues in dispute between the parties on the basis of the material filed. For the most part, this is a paper case. Where it is necessary to assess the truthfulness of a witness’s evidence, it can be accomplished by reference to the documents.

Is there a valid first mortgage?

[49] Ms. Lafrance purchased the Copeland Street property in August 2010. To do that, she borrowed money from the Caisse, which was secured by a mortgage in the amount of $180,000.

[50] In 2011, the Caisse agreed to lend Ms. Lafrance more money. As a result, on August 4, 2011, a new first mortgage was registered against title to the Copeland Street property. It replaced the original mortgage. The mortgage was for a period of four years from September 1, 2011 to September 1, 2015, at an interest rate of 4.99 percent. There is no issue that this mortgage was valid during that period. The issue is what happened after it matured.

[51] Pursuant to the Standard Charge terms that formed part of the mortgage, the Caisse was entitled to extend the mortgage for a period of up to one year, at the option of the Caisse. The relevant clause is found under the heading “Extensions” in the Standard Charge Terms and reads:

The Chargee [the Caisse] may, prior to maturity, advise the Chargor [Ms. Lafrance] by written notice that it is willing to extend or renew this Charge upon such terms and conditions as may be specified in the notice. In such event, this Charge will be renewed for a term of one year or such lessor term, at the option of the Chargee, in accordance with the terms and conditions set out in the notice unless the Chargor delivers to the Chargee a duly executed renewal form indicating his choice of another renewal period offered in the notice or unless this loan is repaid in full on the date of maturity…

[52] On September 29, 2015, the Caisse sent Ms. Lafrance a letter, advising her that it had renewed the mortgage for a period of one year, but that it had increased the interest rate to 6.3 percent from the previous 4.99 percent. The letter was sent to Ms. Lafrance’s Copeland Street address and, according to both the contents of the letter and the evidence of Mr. St-Amour on behalf of the Caisse, accompanied a document entitled “Mortgage Renewal or Amendment Agreement”.

[53] Ms. Lafrance says that she never received the September 29 letter. While I find that hard to accept for a number of reasons, whether Ms. Lafrance received the September 29, 2015 letter is irrelevant. The Caisse has admitted that, because the first mortgage had already matured at the time it sent the September 29 letter, it had no power to renew the mortgage unilaterally. The question is: what happened then?

[54] Ms. Lafrance maintains that, because there was no mortgage in place, there are no arrears and there is no interest owing. As I understand her response to the motion, Ms. Lafrance says that it “expired”. I disagree.

[55] The first mortgage became due and payable on September 1, 2015. If, as it concedes, the Caisse had no power after that date to renew the mortgage unilaterally then, pursuant to its own terms, the original first mortgage became due and payable on that date. Clause 3 of the Standard Charge Terms provides:

Interest at the rate set out in the Charge on the amounts from time to time advanced, computed from the respective dates of such advances until the interest adjustment date set out in the Charge and interest at the rate set out in the Charge, shall become due and be paid on the interest adjustment date; thereafter, the principle amount and interest thereon shall become due and be paid upon the terms and dates set out in the Charge.

[56] Ordinarily, the interest adjustment date is the same as the date upon which the balance under the mortgage becomes due. [2] It appears that the interest adjustment date in the mortgage here is incorrect because it refers to the date the mortgage began (September 1, 2011), not the date it matured (September 1, 2015). Nonetheless, the mortgage clearly provides that the “balance due date” is September 1, 2015. By virtue of the clause set out above, that is the date upon which the principle and interest became due.

[57] Contrary to Ms. Lafrance’s position, a mortgage renewal such as the one that the Caisse tried to put in place on September 29, 2015 does not operate to prevent the “expiry” of the mortgage. Instead, it operates to postpone the date upon which the principle becomes due and payable. In effect, when properly done, it constitutes the terms of a further loan.

[58] In my view, there is no issue requiring a trial with respect to whether there is a valid first mortgage. It is clear from the terms of the mortgage itself and the Standard Charge Terms that formed a part of it that Ms. Lafrance is indebted to the Caisse for the outstanding principal and interest owing under the mortgage, together with ancillary fees for which she is liable by its terms, even though the Caisse was not permitted to unilaterally renew the mortgage on any other terms.

What is the amount owing under the first mortgage?

[59] Two other clauses in the Standard Charge Terms are relevant to the issue of the amount owing under the first mortgage. The clause that appears immediately before the clause set out above provides that interest continues to run after maturity as well as before. The clause that appears immediately after the clause set out above provides that compound interest shall be payable on arrears both before and after maturity. These clauses are long and I will not set them out here.

[60] The Caisse submits that the amount owing under the first mortgage as of September 25, 2019 is $225,188.23, calculated as follows:

Principal due on September 8, 2015 $187,085.57 Accrued interest from September 8, 2015 (at 4.99 %) $37,82.66 Administration Fee $300.00 Total $225,188.23

[61] In addition, the Caisse submits that interest runs at the rate of $25.58 per diem.

[62] In response, Ms. Lafrance questions the use of September 8, 2015 as the calculation date, but relies mainly on the submission that anything owing under the first mortgage was “stayed and captured” by her bankruptcy on January 22, 2015. The use of the word “stayed” is clear enough. I understand this submission to be that Ms. Lafrance’s bankruptcy had the effect of staying enforcement of the mortgage. By using the word “captured”, I understand the submission to be that the debt under the mortgage was discharged when Ms. Lafrance was discharged as a bankrupt.

[63] I agree that the September 8, 2015 date has not been explained and seems to bear no significance based on the other evidence. I am also confused by these calculations because they do not appear to reflect Mr. St-Amour’s evidence that Ms. Lafrance made payments until December 2015. However, I do not agree with Ms. Lafrance’s submission that the mortgage was either stayed or discharged by her bankruptcy.

[64] Where a secured creditor has proven its security, as the Caisse did here, it is entitled to deal with its security as provided for in the mortgage, regardless of the debtor’s bankruptcy: BIA, s. 69.3(2). There is no stay of enforcement, as there is with most unsecured debts.

[65] Where a secured creditor is still owed money after “realizing” (selling) its security, the balance owed may be proven by it as an unsecured claim, in the same way as any unsecured creditor: BIA, s. 127(1). As I will explain further, this is why the Caisse completed the Proof of Claim form the way it did.

[66] Thus, as the Caisse correctly submits, upon her bankruptcy, Ms. Lafrance could have walked away from her debt to the Caisse and left the Copeland Street property behind. In that case, any shortfall in the amount realized by the Caisse from the sale of the property would have been discharged on the same terms as other unsecured debt. However, that is not what happened here. Instead, Ms. Lafrance persuaded the Caisse not to enforce its security. Now, she contends, the Caisse is out of luck – no security and no debt. She submits that the “fresh start” principle on which the BIA is built requires that the debt be wiped out by her discharge as a bankrupt: Enchino v. Munro, [2014] A.J. No. 1156 (Alta. Q. B.), at para. 42, citing Moore (Re.), 2013 ONCA 796. That is not correct, nor would it be fair.

[67] Where a party continues to enjoy the benefits of a contract and to make payments on the contract during a period of bankruptcy, the contract will survive the bankruptcy: Dament (Re.), 2015 ONSC 7960, at para. 62. Ms. Lafrance admits in her responding materials that she continued to make payments on the first mortgage until November 2015, after she was discharged from bankruptcy. The emails to which I will refer below show that she made promises to pay even after that. As far as I am aware, she continues to enjoy the use of the Copeland Street property, either for herself or as a rental property.

[68] Based on this evidence, there is no genuine issue requiring a trial to determine what is owed on the mortgages in question. The only remaining issue is how the Caisse has calculated the amounts owing. That issue can be resolved by having the Caisse file a further affidavit.

Did Ms. Lafrance consent to a second mortgage for $50,000?

[69] In April 2009, the Caisse agreed to make a commercial loan to Ms. Lafrance and to provide a commercial line of credit for her paralegal business in the amount of $16,500. On April 16, 2009, the parties signed a loan offer which provided that Ms. Lafrance would give the Caisse a general security agreement to secure the $16,500, which she did.

[70] The parties later agreed to increase the line of credit from $16,500 to $50,000. On August 4, 2011, the same day as the first mortgage was registered, a second mortgage was also registered against the Copeland Street property in favour of the Caisse. Pursuant to that mortgage, interest was to run at prime plus 4 percent and Ms. Lafrance was to pay the minimum monthly interest.

[71] Ms. Lafrance maintains that she never agreed that the entire line of credit should be secured against her property. I do not accept that.

[72] The loan offer of August 4 clearly provides that, in addition to the general security agreement already given, Ms. Lafrance would be required to provide an assignment of monies receivable and a “2nd Collateral mortgage on the property”. Nothing in the loan offer could be construed as limiting the amount of the mortgage to the original loan amount of $16,500. Indeed, two things in the loan offer make it clear that it was intended that the mortgage be for the full $50,000.

[73] The first is that the document begins with the words:

By this offer, [the Caisse] agrees to [sic] commercial line of credit in the amount of $50,000 to [Christi-anne Lafrance o/a Legal Department], under the following conditions:

[74] There is no mention anywhere in the document of the sum of $16,500.

[75] The second is the presence of a condition which requires Ms. Lafrance to provide the Caisse with an appraisal showing a minimum value for the property of $255,000. This is almost precisely the combined amount of the money secured by the first mortgage ($204,000) and the money secured by the second. The value would have been $33,500 less if only the $16,500 was to be secured. That is not a small sum. It is enough to have put most people on notice. One would have expected Ms. Lafrance to have said something about it before signing it, yet her signature appears at the bottom of the page.

[76] Ms. Lafrance does not deny that she signed it. However, she deposes that:

I did not agree to the entire amount of the line of credit to be applied to the property. I was called back to the bank advising that they missed having papers signed. I without reading or dating the documents signed.

[77] Ms. Lafrance’s evidence refers to documents being signed on different dates. That appears to be true. The loan offer was signed on August 4 and there was another document signed the day before. The problem with her evidence, however, is that the document she signed the day before, one which she does not deny reading, made it just as clear that the line of credit was to be secured with a mortgage for the full $50,000.

[78] According to the date on the document itself, on August 3, 2011, Ms. Lafrance signed a “Collateral Mortgage Schedule”. This document states:

AND WHEREAS the chargor’s [Ms. Lafrance’s] liability under this charge shall be limited to the sum of FIFTY THOUSAND DOLLARS ($50,000), with interest thereon at the rate hereinafter set out…

[79] Even if Ms. Lafrance signed both the loan offer and the mortgage schedule in a hurry at the same time, it is no defence to the Caisse’s action to say that she did not read the documents. This is not a case involving someone who does not speak or read the English language. Not only was Ms. Lafrance completely capable of reading what she was being asked to sign, as a paralegal, she ought to have done so.

[80] Ms. Lafrance deposes that, as soon as she learned that the entire line of credit “was to be added”, which I interpret to mean that it was all to be secured with a mortgage, she advised Mr. St-Amour directly. There is no other evidence to support this. If it were true, one would expect a paralegal like Ms. Lafrance to question why there was no further paperwork. At the very least, one might expect her to send a follow-up email or letter confirming the conversation and her present evidence that, following her discussion with Mr. St-Amour, she understood that “the line of credit was never registered against the property”.

[81] More importantly, Ms. Lafrance offers no evidence whatsoever to explain how it came to be that Lorieann Whittaker, a lawyer purporting to act on Ms. Lafrance’s behalf, came to register a mortgage against the Copeland Street property for the full $50,000 on August 4, 2011.

[82] I conclude from all of this evidence that there is no genuine issue requiring a trial with respect to whether Ms. Lafrance consented to a second mortgage being registered for the full $50,000 line of credit. I conclude that she did.

Was $32,964.57 discharged by Ms. Lafrance’s bankruptcy?

[83] As I stated earlier, the Proof of Claim (Form 31 under the BIA) filed by the Caisse showed that it had a secured claim of $220,000 and an unsecured claim of $32,964.57. Ms. Lafrance contends that, if anything is owing under the second mortgage, it has been reduced by this amount due to her bankruptcy. Once again, this is not correct.

[84] The Caisse completed the Proof of Claim the way it did because of the provisions of the BIA to which I referred earlier. As I explained, a secured creditor is free to realize its security after a debtor’s bankruptcy. If the creditor is still owed money after doing so, the balance of the secured debt becomes an unsecured one. When completing the Proof of Claim form, the secured creditor must set out a value for the asset against which the debt is secured, rather than setting out simply the amount of the debt. The same thing is done on behalf of the bankrupt when completing the statement of liabilities. Thus, in this case, when the trustee was completing the Statement of Liabilities on Ms. Lafrance’s behalf, it broke down the total secured debt owed to the Caisse of $254,000 by showing that, of the $204,000 secured on the first mortgage, $195,000 was secured and $9,000 was unsecured, and of the $50,000 owing on the line of credit, all of it was unsecured. This is because, at the time it was completed, the trustee valued the Copeland Street property at only $195,000.

[85] As I have explained, had Ms. Lafrance simply walked away from the Copeland Street property, whatever shortfall the Caisse suffered after selling the property would have been discharged, as she now maintains it was. But as I have also explained, that is not what she did. After Ms. Lafrance went bankrupt, the Caisse agreed to vary the terms of the line of credit. This agreement had the effect of allowing the full amount owed under the line of credit to survive Ms. Lafrance’s discharge as a bankrupt. As Kershman J. explained in Dament (at para. 63):

[T]here is no difference in principle between a situation where a debtor continues to make payments on a contract through the period of bankruptcy, and a situation where the debtor, making payments at the start of the bankruptcy period, promises during the period of bankruptcy to continue to make such payments until the debt is paid, but then stops. The Court also finds no difference between these situations and a situation where a debtor, though not making payments at the time, promises during the bankruptcy period to make ongoing payments. In those cases, the parties agree to continue the contract through the period of the bankruptcy, notwithstanding the existence of a claim provable in bankruptcy. In those cases, the debtor continues to enjoy the benefits of the contract.

[86] If I am correct in my conclusion that there is a typographic error in the Caisse’s materials and that Ms. Lafrance has been in default on the second mortgage since December 2015, rather than 2014, she falls within the first scenario described in the excerpt above. Even if I am not correct and Ms. Lafrance has been in default since 2014, she made a promise during her bankruptcy and, therefore, falls within the second scenario described above. In either scenario, the full debt survives the bankruptcy.

[87] Like the other issues dealt with above, there is no genuine issue requiring a trial to determine whether the sum of $32,964.57 was discharged by Ms. Lafrance’s bankruptcy. The evidence clearly shows that it was not.

Is the Caisse liable for oppressive or unfair conduct?

[88] The Caisse heard nothing from Ms. Lafrance after sending her the September 29, 2015 renewal letter to her until December 29, 2015, when she wrote by email to Ms. Gallant, enquiring about renewing her mortgage.

[89] On January 7, 2016, Ms. Lafrance wrote again to Ms. Gallant to acknowledge receipt of what I conclude from close examination was not the same mortgage renewal document that had been sent on September 29, 2015 but was identical in its terms. The document proposed that the first mortgage be renewed for one year at 6.3 percent interest, but that it be “open”, which I interpret to mean repayable at any time within the year, without penalty, as reflected in the definition of “Open Fixed Rate” set out in the document and marked with an “X”.

[90] The documents filed as exhibits by both parties show that, following Ms. Lafrance’s January 7 email, Ms. Lafrance and Ms. Gallant engaged in negotiations regarding the terms upon which the first mortgage would be renewed. Ms. Lafrance alleges in her counterclaim that the Caisse engaged in oppressive and unfair behaviour in those negotiations. That allegation is not borne out at all by the evidence.

[91] Rather than accepting the Caisse’s renewal terms, Ms. Lafrance sought to renew the mortgage for a term of 10 years (twice the term of the matured first mortgage and ten times the term of the proposed renewal) at an interest rate of 3.04 percent (less than half of what the Caisse proposed). As the Caisse advised her, it did not offer mortgages for 10-year terms. Instead, it proposed a compromise: a five-year term.

[92] Ms. Lafrance’s response was to propose an even lower interest rate: 2.99 percent. The Caisse responded by letter dated December 29, 2016, offering to renew the first mortgage for five years at an interest rate of 4.74 percent, providing Ms. Lafrance make certain payments towards the indebtedness secured by both mortgages, among other things. Ms. Lafrance did not accept those terms and failed to make any payments on the mortgages during the negotiations.

[93] Ms. Lafrance seems to take the position that she did the Caisse a favour by agreeing not to “include” the mortgages in her bankruptcy. As I have explained above, however, Ms. Lafrance was the one being done the favour. Rather than realizing its security, the Caisse agreed to renegotiate the demand loan on terms more favourable to Ms. Lafrance and attempted to renew the first mortgage, rather than requiring payment in full. At the time that Ms. Lafrance was negotiating over the renewal of her first mortgage, she was over $13,000 in arrears under it and over $3,000 in arrears under the demand loan, not including an overdraft of over $400.

[94] None of the terms proposed by the Caisse were unreasonable, especially in light of the fact that Ms. Lafrance had just gone bankrupt and was still in substantial arrears under the mortgage.

[95] Rule 20 requires Ms. Lafrance to “put her best foot forward” to overcome the Caisse’s motion for dismissal of her counterclaim. The evidence adduced by her falls far short of establishing that a trial is required with respect to her claim of oppression. She argues that she should be given a chance to examine Mr. St-Amour for discovery. However, her evidence on the motion fails to show why his evidence could give rise to an issue requiring a trial. Instead, it leaves me satisfied that a trial is unnecessary.

Conclusion

[96] There are no genuine issues requiring a trial in either the claim or the counterclaim.

[97] When the parties were unable to reach an agreement on the terms of a renewal after the first mortgage matured on September 1, 2015, the principle and interest remained due and payable as of that date, with interest payable afterwards as provided for by the mortgage. The Caisse did not act oppressively or unfairly during the failed negotiations.

[98] Ms. Lafrance agreed to allow the Caisse to register a second mortgage for the full $50,000 line of credit.

[99] Neither mortgage was stayed by Ms. Lafrance’s bankruptcy, nor was any part of either mortgage discharged by it. The payments Ms. Lafrance made on the first mortgage and the agreement she reached with the Caisse to amend the terms of the line of credit secured by the second mortgage during her bankruptcy allowed her to retain the Copeland Street property and had the effect of allowing those debts to survive her bankruptcy.

[100] Accordingly, an order will issue permitting the Caisse to change its name in the title of proceedings to “Caisse Populaire Alliance Limitée”, granting judgment on its claim, and dismissing Ms. Lafrance’s counterclaim. However, before judgment can be entered in favour of the Caisse, it will have to submit a proper calculation of the amounts owing under both mortgages. The calculation must be contained in an affidavit, preferably that of Mr. St-Amour. The affidavit must be accompanied by a draft order.

[101] Ms. Lafrance will have 20 days from the date of service of the affidavit within which to file any objection to the calculation or the terms of the draft order.

Costs

[102] Written costs submissions will be entertained once a judgment is entered. The Caisse will have 20 days thereafter to file submissions, limited to five type-written pages, exclusive of attachments. Ms. Lafrance will have 10 days from the date of service to file any response she wishes to make. Her response will be similarly limited in length.

[103] All further documents submitted in this matter will be submitted electronically through the generic email address for the court in North Bay (northbaycourthouse@ontario.ca). They must comply with the guidelines for electronic document filing set out in the Notice to the Profession for the Northeast Region, posted on the court’s website at https://www.ontariocourts.ca/scj/notices-and-orders-covid-19/notice-ne/.

Ellies R.S.J. Released: July 28, 2020

COURT FILE NO.: CV 17-6771 DATE: 2020/07/28 ONTARIO SUPERIOR COURT OF JUSTICE CAISSE POPULAIRE DE NORTH BAY LIMITÉE – and – CHRISTI-ANNE MARIE LAFRANCE REASONS FOR decision Ellies R.S.J. Released: July 28, 2020

[1] I believe that this may be a typographic error in the written materials. The second mortgage was not taken out until after December 2014. I suspect the date should be December 2015, as with the first mortgage.

[2] See, for e.g., the original first mortgage in the amount of $180,000, attached to the affidavit of Mr. St-Amour sworn on January 8, 2019 as exhibit “C”.