Court File and Parties

BARRIE COURT FILE NO.: CV-19-1850-00 DATE: 20200727 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

COMMUNITY TRUST COMPANY Plaintiff – and – NATALIE THERESA ANDERSON Defendant

Counsel: Christopher Staples, for the Plaintiff Granville Cadogan, for the Defendant

HEARD BY TELECONFERENCE: July 14, 2020

REASONS ON MOTION FOR SUMMARY JUDGMENT

CASULLO J.

Overview

[1] The plaintiff seeks an order granting it summary judgment against the defendant, as a result of the defendant’s default under mortgage. The mortgage provides that upon default, the mortgagee is entitled to possession and sale of the mortgaged property.

[2] The defendant seeks an order permitting her to bring the mortgage back into good standing.

[3] The motion was heard on July 14, 2020. Once complete, the motion was adjourned to afford the parties an opportunity to resolve the matter between themselves. On July 24, 2020, the court was advised that a decision on the motion was required.

Background

[4] By mortgage registered December 9, 2016 between the defendant as mortgagor and the plaintiff as mortgagee, the defendant charged the property at 53 Glenn Abbey Trail, Kleinburg, Ontario for a period of one year commencing January 1, 2017 and securing the principal sum of $1,322,515 and interest at the rate of 4.25% per annum. The defendant lives at the Property with her husband and four children.

[5] The mortgage was renewed on maturity. The latest renewal provides for interest at the rate of 4.59% per annum and monthly payments in the amount of $7,720.20 on account of principal, interest and realty taxes.

[6] The defendant defaulted in making the payment due under the mortgage on September 1, 2019, when the pre-authorized payment from the defendant’s bank account was returned for insufficient funds.

[7] By letter dated September 6, 2019, the plaintiff provided notice of the default and advised the defendant that it would commence legal action if she failed to make the payment.

[8] A second attempt to draw the missed payment was also returned for insufficient funds.

[9] There was a spate of communication between the parties, primarily by telephone. On September 13, 2019 the defendant told the plaintiff her bank would be making the missed payment by September 17, 2019. On September 17, 2019 the defendant asked for more time. On September 20, 2019, the defendant again asked for more time. The plaintiff advised she had until September 26, 2019 to deliver the funds to the plaintiff’s office – if the funds were not received, the plaintiff would start legal action.

[10] Also on September 20, 2019 the defendant advised she was considering another lender, and asked what the penalty would be if the mortgage was paid out.

[11] On September 27, 2019, the defendant advised the plaintiff that she would be in a position to bring the mortgage up to date by October 2, 2019. The plaintiff refused to hold until October 2, 2019, reiterating that the funds were required by 5:00 p.m. that day. The plaintiff later extended the time for payment to September 30, 2019 at 9:00 a.m. The September 1, 2019 payment was never made.

[12] The defendant submits that her bank does not open until 9:30 a.m., and that the 9:00 a.m. deadline prevented her from making the payment on time. According to the defendant, the plaintiff refused to take the September 1, 2019 payment from her account.

[13] The October 1, 2019 payment was also not made. It is not clear whether the plaintiff attempted to draw this payment. However, by October 2, 2019 the mortgage was considered to be two months in arrears, and the plaintiff made demand on the defendant.

[14] In addition to the two defaulted mortgage payments, the plaintiff relied on the fact that the defendant had registered two subsequent mortgages, with another lender, contrary to the terms of the mortgage, when it made demand on the defendant.

[15] On October 18, 2019 the plaintiff commenced this action. On October 23, 2019, the plaintiff caused a notice of sale under the mortgage to be issued and served. The defendant filed her defence and counterclaim on November 22, 2019.

[16] The defendant admits she entered into the mortgage agreement. She also admits that she placed the secondary mortgages, but insists that the plaintiff was aware that she did so. The defendant does not admit to defaulting on the first mortgage payment. Instead, as noted above, she submits the plaintiff refused to accept her mortgage payment on September 30, 2019.

[17] In response to the plaintiff’s summary judgment motion the defendant brought her own motion, seeking an order staying the plaintiff’s actions as an abuse of process, an order that she be allowed to bring the mortgage back into good standing with regular mortgage payments commencing on August 1, 2020 [1], and an order that any amounts outstanding as of the date of the issuance of the notice of sale be incorporated and added to the total amount as contemplated in the renewal notice. [2]

[18] The defendant submits that the plaintiff acted unfairly and in bad faith by refusing to accept the September 1, 2019 payment, and by relying on the “no secondary mortgage” term as a basis for terminating the mortgage agreement.

[19] The defendant advises the court she has qualified for a mortgage to retire the plaintiff’s mortgage. In her affidavit in support of the motion she also advises that since September 2019, she has tendered money to put the mortgage into good standing, although there is no evidence of this before the court.

[20] As of June 4, 2020, $1,345,891.78 was outstanding under the mortgage. The mortgage matures on August 1, 2020, and per diem interest is $161.91.

Test for Summary Judgment

[21] Rule 20.01(1) of the Rules of Civil Procedure, RRO 1990, Reg. 194, provides that a defendant may move for summary judgment dismissing all or part of a plaintiff’s claim.

[22] Rule 20.04 mandates that a court shall grant summary judgment if satisfied that there is no genuine issue requiring trial.

[23] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada provides guidance with respect to summary judgment motions 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.

The Court continued, 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.

[24] In these passages, the Supreme Court has effectively articulated a road map for judges to follow in summary judgment motions. First, without using the expanded fact-finding powers, a judge is to determine if there is a genuine issue requiring a trial. If there is no genuine issue requiring a trial, summary judgment is granted.

Analysis

[25] For the reasons that follow, I am satisfied there is no genuine issue requiring a trial. However, I am not prepared to grant the plaintiff’s motion for summary judgment at this juncture.

[26] The defendant’s mortgage was in good standing up to September 1, 2019. She did not have a history of missing payments. While she was in breach of the mortgage term prohibiting secondary mortgages, the plaintiff had, if not waived its rights to enforce, acquiesced to the breach when it renewed the mortgage twice, having knowledge of the secondary mortgages. There is no evidence the plaintiff made any effort to pull the October 1, 2019 mortgage payment. Instead, the plaintiff made demand under the mortgage on October 2, 2019.

[27] The plaintiff’s actions by making demand so early were heavy-handed. It is further troubling that the plaintiff refused to wait two extra days which would allow the defendant to bring the mortgage into good standing by October 2, 2019.

[28] This is not to say the defendant is not without some culpability for what has transpired. I reject outright her submission that the plaintiff refused to accept the September 1, 2019 payment. The plaintiff had made it abundantly clear that it expected to receive funds, by way of either bank draft, money order, or certified cheque, at its office. As the plaintiff’s electronic notes of communications with the defendant establish, the plaintiff never advised the defendant it would be drawing the missed payment from her bank account. Further, as her counsel confirmed during submissions, there is no evidence of the plaintiff refusing to take her payment.

[29] The Mortgages Act, R.S.O. 1990, c. M.40 (the “Act”) provides two avenues of relief to a mortgagor who has fallen in default. Section 22(1) of the Act does not apply, as the within action has already been commenced. However, as s. 23(1) provides:

23 (1) Despite any agreement to the contrary, where default has occurred in making any payment of principal or interest due under a mortgage or in the observance of any covenant in a mortgage and under the terms of the mortgage, by reason of such default, the whole principal and interest secured thereby has become due and payable, in an action for enforcement of the rights of the mortgagee or of any person claiming through or under the mortgagee, the mortgagor, upon payment into court of the sum of $100 to the credit of the action as security for costs, may apply to the court and, conditional upon performance of such covenant or upon payment of the money due under the mortgage, exclusive of the money not payable by reason merely of lapse of time, and upon payment of the costs of the action, the court,

(a) shall dismiss the action if judgment has not been recovered.

[30] The court has the discretion to set the conditions and terms of the order for the mortgagor to perform the covenants of the mortgage and the payment of the arrears: Stewart v. Wilbus Holdings Ltd., [2006] O.J. No. 2619, at para. 11. In Stewart, as well as in Royal Bank v. Range Realty Inc., [1991] O.J. No. 724, the defendants were entitled to s. 23(1) relief, despite not having made the $100 payment prior to the hearing.

[31] I am mindful of the challenges we are all facing during the Coronavirus pandemic. It behooves me to craft a resolution that may allow the defendant to maintain her family home, but that is correspondingly equitable to the plaintiff. I see no prejudice to the plaintiff if the mortgage is brought into good standing, and it is compensated for any necessarily incurred expenses.

[32] Accordingly, upon payment into court of the sum of $100 by the defendant, and upon payment of the money due and owing under the mortgage by August 27, 2020, the action shall be dismissed in accordance with s. 23(1)(a) of the Act. Failing payment of the $100 and the money due and owing under the mortgage, the plaintiff may move, without notice, for judgment.

[33] If there is a dispute as to the amount of money payable by the defendant, the parties may bring a motion to have the issue determined. I am not seized of that issue.

[34] By the terms of the mortgage, the plaintiff is entitled to its costs of the action. Which party is entitled to their costs of this motion, however, remains to be determined. The defendant will be entitled to her costs of the motion if she successfully brings the mortgage into good standing. Should this not transpire, then the plaintiff will be so entitled. If the parties are unable agree on costs, they may make written submissions no later than September 11, 2020.

[35] Written submissions shall be no longer than 3 pages, exclusive of bills of costs, which both parties are required to provide. All written submissions are to be emailed to my judicial assistant at jennifer.beattie@ontario.ca.

[36] If no written submissions are received by September 11, 2020, the parties shall be deemed to have resolved the issue of costs between them.

[37] Alternatively, if the parties do find it necessary to bring a motion to determine the amount of money payable by the defendant pursuant to paragraph 33, they may request that the judge hearing that motion also determine the costs of the action and the summary judgment motion.

Madam Justice A.A. Casullo

Released: July 27, 2020

[1] This formed the basis of the defendant’s counterclaim. [2] The court does not agree that the renewal notice contemplates relief in this manner.