Court File and Parties
COURT FILE NO: CV-19-629030 DATE: 2020-10-19
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HAZELTON HOMES CORPORATION Plaintiff
– and –
MORTEZA KATEBIAN, PAYAM KATEBIAN, HOME TRUST COMPANY, IVAN TERZIEV, ELENA MECHTCHERIAKOVA Defendants
Counsel: Eric Sherkin, for the Plaintiff Peter Smiley, for the Defendants, Morteza Katebian and Payam Katebian Amanda Jackson, for the Defendant, Home Trust Company F. Scott Turton, for the Defendants, Ivan Terziev and Elena Mechtcheriakova Dihim Emami, for the Ontario Securities Commission
HEARD: October 16, 2020
BEFORE: M.D. Faieta J.
REASONS FOR DECISION
[1] The Respondent Morteza Katebian (“Katebian”) is the registered owner of two residential properties, 133 Boake Trail, Richmond Hill (“the Boake Property”) and 11 King High Drive, Vaughan (“the King Property”), collectively referred to as “the Properties”.
[2] The Respondent Home Trust Corporation (“Home Trust”) held the first mortgage on the Properties and the Respondents, Ivan Terziev (“Terziev”) and Elena Mechtcheriakova (“Mechtcheriakova”), collectively the “Second Mortgagees”, held the second mortgage on the Properties.
[3] In October 2018, Hazelton Homes Corporation (“Hazelton”) commenced an Application (CV-18-606723 in Toronto) for, amongst other things, a declaration the Respondent Morteza Katebian (“Katebian”) holds two properties in trust for Hazelton.
[4] Katebian defaulted on the mortgages. The Second Mortgages commenced two actions in the autumn of 2018 to enforce their mortgages on the King Property (Court File CV-18-2904 in Oshawa) and on the Boake Property (Court File CV-18-2905 in Oshawa). Default judgment in each action was granted on December 10, 2018 for payment and possession. A writ of possession was issued on January 14, 2019 in respect of the King Property and the Boake Property. Evictions were scheduled for February 6, 2019.
[5] Hazelton commenced its second Application (CV-19-00612626 in Toronto) on January 15, 2019 seeking, in addition to similar relief requested in the first Application, an order consolidating the second Application with the first Application, and an order permitting Hazelton to: a) set aside the default judgments obtained by the Second Mortgagees; and b) take assignment of and redeem the Second Mortgages.
[6] In addition, on January 24, 2019 Hazelton delivered a motion for leave to intervene in these actions for the purpose of, amongst other things, obtaining a stay of the default judgments and prohibiting the Sheriff from carrying out the evictions. The thrust of Hazelton’s submission was that the Properties were being held in trust by Katebian for Hazelton and thus Hazelton was a mortgagor and entitled to bring the mortgages into good standing, pursuant to s. 23 of the Mortgages Act, R.S.O. 1990, c. M.40. Hazelton advised the court that it had commenced an application against Katebian in Toronto in order to assert its trust claim. For reasons given February 7, 2019 (see Terziev v. Katebian, 2019 ONSC 939), Justice Bale concluded, at paragraph 15, that:
In the end result, and in the unusual circumstances of this case, there will be an interim order granting Hazelton leave to intervene in these actions, pending disposition of the application relating to the validity of the trust agreement, and enforcement of the writs of possession will be stayed upon the following terms:
(i) that Hazelton pay to the plaintiffs all arrears of principal and interest under the second mortgages;
(ii) that Hazelton keep the second mortgages in good standing;
(iii) that when the second mortgages mature, Hazelton pay the entire principal and interest then due;
(iv) that Hazelton pay to the plaintiffs all costs previously awarded in these actions;
(v) that Hazelton pay to the plaintiffs their costs of this motion, and any costs thrown away as a result of the stay, on a substantial indemnity basis;
(vi) that Hazelton pay all amounts owed to the plaintiffs within 20 days of receiving a statement of account providing particulars of the amounts owed;
(vii) that Hazelton pay to Home Trust Company all arrears of principal and interest owing under the first mortgages as of the date those mortgages matured, and all interest accrued since that date;
(viii) that Hazelton pay to Home Trust Company all interest accruing on the first mortgages on an ongoing monthly basis;
(ix) that Hazelton pay to Home Trust Company all costs previously awarded in its actions to enforce the first mortgages;
(x) that Hazelton pay to Home Trust Company its costs of this motion, on a substantial indemnity basis; and
(xi) that Hazelton pay all amounts owed to Home Trust Company within 20 days of receiving a statement of account providing particulars of the amounts owed. [Emphasis added]
[7] Subsequently, Hazelton paid the amounts required by the above Order in order to stay the writs of possession. Specifically, Hazelton paid:
• To Home Trust, the sums of $102,790.16 in relation to its first mortgage on the Boake Property and $85,852.32 in relation to its first mortgage on the King High Property; and
• To the Second Mortgagees, the sums of $64,362.13 in relation to their second mortgage on the Boake Property and $64,469.95 in relation to their second mortgage on the King High Property.
[8] Hazelton paid the above amounts to Home Trust and the Second Mortgagees even though it indicated through Mr. Stroh’s letter dated March 1, 2019 that it disputed the validity of various fees included by the Second Mortgagees in the default judgment for the Properties.
[9] This question of the validity of the fees charged by the Second Mortgagees, along with other issues related to Justice Bale’s February 7, 2019 decision, was raised before Justice Bale on March 15, 2019. He ruled as follows:
With respect to the second mortgages, Hazelton requests that the default judgments obtained by the plaintiffs be varied, on the ground that certain fees added to the mortgage principal, and included, in the judgments, are contrary to s. 8 of the Interest Act. As the defendant does not contest these fees and the issue will be moot if Hazelton is unsuccessful in proving an interest in the properties, it is appropriate that this issue be adjourned to a date to be set, if necessary, following disposition of the Toronto application. In the meantime, the funds relating to this issue, and delivered to Mr. Turton in trust, may be released to the. plaintiffs. [Emphasis added]
[10] Hazelton’s two applications, filed in Toronto, were consolidated and converted into this action in July, 2019: See Hazelton Homes Corporation v. Katebian, 2019 ONSC 4015.
[11] In the within action, in addition to claiming that it is the beneficial owner of the Properties, Hazelton also claims against Home Trust and the Second Mortgagees for the return of the payments that it made towards both mortgages on the basis of unjust enrichment as well as a declaration that fees of $29,600 paid to the Second Mortgagees violate s. 8 of the Interest Act, R.S.C. 1985, c. I-15.
[12] Specifically, the Statement of Claim states:
In the event this Honourable Court finds that Hazelton was not the beneficial owners of the Trust Properties, Hazelton states that both Home Trust and the Second Mortgagees would be unjustly enriched by Hazelton in respect of the Home Trust Payments and the Second Mortgagee Payments with no juristic reason for the enrichment. Hazelton, therefore seeks restitution in equity for these payments.
Further, of the Second Mortgagee Payments, the impugned Fees of $29,600 violate s. 8 of the Interest Act.
[13] Home Trust and the Second Mortgagees bring this motion for an order dismissing Hazelton’s claim against them on the basis that it raises no genuine issue requiring a trial pursuant to Rule 20 of the Rules of Civil Procedure, R.R.O.1990, Reg. 194, and, alternatively, pursuant to Rule 21 on the basis that the claim against them is frivolous, vexation and an abuse of process.
ANALYSIS
[14] Rule 20.04(2) states that a court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[15] In Hryniak v. Mauldin, 2014 SCC 7, 1 S.C.R. 87 at para. 49, the Supreme Court of Canada stated that:
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.
[16] Rule 20.04(2.1) provides that in determining whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and 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 trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[17] 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: see Rule 20.02(2). Each side must “put its best foot forward” and the court is entitled presume that the evidentiary record is complete and that there will be nothing further if the issue were to go to trial: Broadgrain Commodities Inc. v. Continental Casualty Company, 2018 ONCA 438, at para. 7.
[18] Partial summary judgment should only be granted in the clearest of cases where the issue on which summary judgment is sought is clearly severable from the balance of the case and thus avoids the risk of inconsistent findings: Larizza v. Royal Bank of Canada, 2018 ONCA 632, paras. 26-29.
[19] Hazelton submits that:
To dismiss or strike Hazelton’s claim against the moving Defendants at this stage, prior to a determination as to whether Hazelton was in fact the beneficial owner of the Properties at the relevant times, would deprive Hazelton of the opportunity to assert this claim against the mortgagee defendants if it fails in its claim against the Katebians.
It may be proper that this matter be bifurcated in order to address the ownership question prior to addressing the issue as to the payments to Home Trust and the Second Mortgagees.
[20] This is an appropriate case for partial summary judgment. First, the determination of this motion for summary judgment does not turn on evidence which is in dispute. Second, the issue on this motion for summary judgment, namely, whether Hazelton’s unjust enrichment claim against Home Trust and the Second Mortgagees raises a genuine issue requiring a trial is clearly severable from the Hazelton’s claim against Katebian which is whether Katebian held the properties in trust for Hazelton. There are no findings on this motion which inform Hazelton’s claim against Katebian. Finally, in these circumstances, there is no good reason to delay adjudicating the merits of the claim against the mortgagees and good reason to do so if it ends this litigation for them.
Unjust Enrichment
[21] A plaintiff asserting a claim for unjust enrichment must show that:
(1) The plaintiff gave something to the defendant that enriched the defendant;
(2) The plaintiff has suffered a corresponding deprivation; and
(3) The defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason: Moore v. Sweet, 2018 SCC 52, at para. 35.
[22] In Moore, at para. 37, the Supreme Court of Canada stated:
Broadly speaking, the doctrine of unjust enrichment applies when a defendant receives a benefit from a plaintiff in circumstances where it would be “against all conscience” for him or her to retain that benefit. Where this is found to be the case, the defendant will be obliged to restore that benefit to the plaintiff. As recognized by McLachlin J. in Peel (Regional Municipality) v. Canada, 1992 21 (SCC), [1992] 3 S.C.R. 762, at p. 788, “At the heart of the doctrine of unjust enrichment . . . lies the notion of restoration of a benefit which justice does not permit one to retain.”
Did Hazelton Enrich Home Trust and the Second Mortgagees?
[23] Mr. Smiley submitted that there is no evidence that any of the funds paid to Home Trust and the Second Mortgagees were paid by Hazelton. The motion record shows that the bank drafts delivered in respect of the amounts claimed by Hazelton were paid by Skymark Capital Corporation. Hazelton did not deliver any evidence to explain how, in these circumstances, it enriched the moving parties. I find that there is no evidence that Hazelton made any payments that enriched Home Trust and the Second Mortgagees.
Has Hazelton Suffered a Corresponding Deprivation?
[24] Hazelton did not suffer a corresponding deprivation. The evidence shows that family members of Hazelton’s principal resided in each of the two properties at the time the writs of possession were issued. It is impossible to say that the Home Trust and the Second Mortgagees enriched themselves at Hazelton’s expense. Assuming for this purpose that the payments were made by Hazelton, it was under no obligation to make these payments. Such payments were made because Hazelton did not want their family members evicted and thus wanted a stay the writs of possession. See Terziev v. Katebian, 2019 ONSC 939, para. 11. As counsel for the Second Mortgagees submitted “Paying for something and getting what you paid for is not a deprivation”.
Was there a Juristic Reason for the Enrichment and Corresponding Deprivation?
[25] In Moore, at para. 54, the Supreme Court of Canada adopted the following statement:
The third element of an unjust enrichment claim is that the benefit and corresponding detriment must have occurred without a juristic reason. To put it simply, this means that there is no reason in law or justice for the defendant’s retention of the benefit conferred by the plaintiff, making its retention “unjust” in the circumstances of the case . . . .
[26] The juristic reason for the enrichment and corresponding deprivation was the Order of Justice Bale, dated February 4, 2019, which required such payment as a condition of granting the stay sought and obtained by Hazelton.
[27] Accordingly, I dismiss Hazelton’s claim in unjust enrichment against Home Trust and the Second Mortgagees as I find that there is no genuine issue requiring a trial in respect of that claim.
Declaration that Fees Violate Section 8 of the Interest Act
[28] In asking for the dismissal of Hazelton’s claim for a declaration that the fees of $29,600 paid to the Second Mortgagees violate s. 8 of the Interest Act, the Second Mortgagees rely on Rule 21.01(3)(d) which states that a party may move before a judge to strike a claim on the ground that the action is frivolous or vexatious or is otherwise an abuse of the process of the court.
[29] In Currie v. Halton (Region) Police Services Board (2003), 2003 7815 (ON CA), 233 D.L.R. (4th) 657 (Ont. C.A.), at paras. 14-17, the Ontario Court of Appeal considered the meaning of the phrase “frivolous or vexatious or is otherwise an abuse of the process of the court” found in Rule 21.01(3)(d). A “frivolous” action lacks legal merit. A “vexatious” action is an action instituted without any reasonable ground such as an action that seeks to determine an issue which has already been determined by a court of competent jurisdiction. The doctrine of abuse of process “engages the inherent power of the court to prevent the misuse of its procedure in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute”. The Court of Appeal for Ontario concluded, at para. 17:
It is apparent that there is a degree of overlap in the meaning of the terms frivolous, vexatious and abuse of process. What I take from the authorities is that any action for which there is clearly no merit may qualify for classification as frivolous, vexatious or an abuse of process. The common example appears to be the situation where a plaintiff seeks to relitigate a cause which has already been decided by a court of competent jurisdiction.
[30] The Second Mortgagees submit that the Hazelton’s assertion that the fees that it has charged contravene the Interest Act are the subject of the actions that it commenced in Oshawa and will be determined in those proceedings given that Hazelton has already advanced this position in those actions and that Justice Bale, as noted above, has adjourned the determination of such dispute until this action in Toronto has been resolved. It is an abuse of process for Hazelton to have included in this action the question of whether certain fees charged by the Second Mortgagees contravenes the Interest Act when it is before the court in Oshawa and awaiting determination pending the resolution of the main issue in this action which is whether Katebian held the Properties in trust for Hazelton.
CONCLUSIONS
[31] The motion by Home Trust and the Second Mortgagees is granted. Hazelton’s claims against Home Trust and the Second Mortgagees in this action are dismissed. Any party claiming costs may deliver their costs submissions by October 27, 2020. Responding costs submissions shall be delivered by November 2, 2020. Any reply costs submissions shall be delivered by November 5, 2020. All costs submissions shall be no more than three pages exclusive of any settlement offers and outline of costs.
Mr. Justice M. D. Faieta
Released: October 19, 2020
COURT FILE NO.: CV-19-629030 DATE: 20201019
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
HAZELTON HOMES CORPORATION Plaintiff
– and –
MORTEZA KATEBIAN, PAYAM KATEBAIAN, HOME TRUST COMPANY, IVAN TERZIEV, ELENA MECHTCHERIAKOVA Defendants
REASONS FOR DECISION
Mr. Justice M. D. Faieta
Released: October 19, 2020