NEWMARKET COURT FILE NO.: CV-20-2517
DATE: 20201202
ONTARIO
SUPERIOR COURT OF JUSTICE
BARRIE COURT FILE NO.: CV-19-2036
BETWEEN:
RiverRock Mortgage Investment Corporation
Plaintiff
– and –
Anushiyathevi Maheswaran
Defendant
Christopher J. Staples, for the Plaintiff
Anushiyathevi Maheswaran, Self-Represented
NEWMARKET COURT FILE NO. CV-20-2517
AND BETWEEN:
Anushiyathevi Maheswaran
Plaintiff
– and –
RiverRock Mortgage Investment Corporation
Defendant
Anushiyathevi Maheswaran, Self-Represented
Christopher J. Staples, for the Defendant
HEARD: December 1, 2020
REASONS FOR DECISION
CHARNEY J.:
Introduction
[1] The plaintiff, RiverRock Mortgage Investment Corporation (RiverRock), brings this motion for an order setting aside the order of Dawe J. dated October 16, 2020, which stayed the earlier order of McCarthy J. dated June 30, 2020. If the plaintiff is successful, the plaintiff will be able to enforce a writ of possession issued on September 15, 2020.
Facts
[2] The defendant, Anushiyathevi Maheswaran, is the registered owner of a property located on Queue Road, Markham, Ontario. Ms. Maheswaran resides at that property. The property had previously been a matrimonial home, but was transferred to Ms. Maheswaran by court order dated April 18, 2018. That court order related to Ms. Maheswaran’s family law proceedings against her former husband.
[3] On June 19, 2019, Ms. Maheswaran obtained a mortgage on that property from RiverRock. The mortgage was for $796,000 at 9.99% interest for a one year term. RiverRock agreed to accept payment on the 30^th^ day of each month.
[4] The defendant defaulted in making the August 2019 monthly payment under the mortgage. The plaintiff agreed to permit the defendant to make the August 30, 2019 payment on September 27, 2019, but that payment also defaulted.
[5] On September 30, 2019, the defendant brought in a bank draft to cover the August 30, 2019 payment. The plaintiff agreed to permit the defendant to make the September 30, 2019 payment on or before October 11, 2019.
[6] The September 30, 2019 payment was made on October 11, 2019, but was $466.70 short.
[7] The defendant defaulted on her October 30, 2019 payment.
[8] On October 31, 2019, the plaintiff advised the defendant that she had five days to make the mortgage payment, otherwise RiverRock would proceed with legal action. The defendant agreed to make the payment within 5 days, but the defendant did not make the mortgage payment. No payment has been made on the mortgage since that date.
[9] On November 7, 2019, RiverRock, through its lawyers, made demand under the mortgage for the arrears and applicable fees then outstanding.
[10] RiverRock’s lawyer’s conducted a registry search of the property, and discovered that on June 20, 2019, the day after the RiverRock mortgage was registered, a second mortgage for $60,000 was registered in favour of a third party. The registration of this mortgage violated the terms of the RiverRock mortgage which provided that no second mortgage could be registered without RiverRock’s prior written consent, and that any subsequent encumbering would constitute a default under the mortgage.
[11] RiverRock also discovered that the defendant’s 2019 property taxes were in arrears of approximately $2,800. This failure to maintain tax payments is a further breach of the mortgage.
[12] On November 15, 2019, RiverRock issued a Statement of Claim in Barrie against the defendant, seeking payment of $837,900 due under the mortgage and possession of the mortgaged property.
[13] On November 25, 2019, RiverRock caused a notice of sale under the mortgage to be issued and served.
[14] The defendant filed a Statement of Defence on December 31, 2019, denying that the mortgage was in default and alleging that the apparent default was the result of a banking mix up.
Motion for Summary Judgment
[15] On January 15, 2020, RiverRock brought a motion for summary judgment, which was originally returnable on February 18, 2020, and rescheduled for March 31, 2020.
[16] Following service of the motion record, Ms. Maheswaran’s lawyers requested a payout statement for the mortgage, and advised that Ms. Maheswaran was refinancing to pay RiverRock out by March 3, 2020.
[17] By email dated February 21, 2020, Ms. Maheswaran’s lawyer inquired whether RiverRock’s lawyer would agree to the defendant delivering her responding motion record for the summary judgment motion by March 5, 2020 “in the event that our client does not bring the mortgage into good standing by March 3, 2020”. The lawyer for RiverRock agreed to this date for delivery of the respondent’s motion record.
[18] On March 2, 2020, Ms. Maheswaran, through her lawyers, served a notice of intention to act in person. Her lawyers advised: “We have provided all communications and all pleadings including your client’s motion record to Ms. Maheswaran.”
[19] The mortgage was not paid out by March 3, 2020.
[20] On March 3, 2020, counsel for RiverRock emailed the former counsel for the defendant stating: “With receipt of your former client’s Notice of Intention to Act in Person, I assume that you have also advised her of the requirement to deliver responding motion material by March 5. Please confirm.”
[21] Former counsel for the defendant replied on March 4, 2020: “We have advised Ms. Maheswaran accordingly”.
[22] No responding motion record was served or filed.
[23] On March 17, 2020, in-person court appearances were suspended as a result of the COVID-19 emergency. Accordingly, the March 31, 2020 motion date did not proceed.
[24] The plaintiff’s prepared a new Notice of Motion without a return date. Pursuant to the Notice to the Profession – Protocol for Civil Matters in the Superior Court, Central East Region in place in May 2020, the Barrie Court was hearing uncontested motions in writing. Short contested motions could be heard by videoconference or in writing in the discretion of the presiding judge.
[25] The new Notice of Motion was served on Ms. Maheswaran by email on May 25, 2020.
[26] In response to that email, Ms. Maheswaran emailed the lawyers for RiverRock, noting that the mortgage with RiverRock matured on June 19, 2020, that she did not want to renew the mortgage with RiverRock, and that she was seeking refinancing elsewhere. The lawyer for RiverRock replied to this email on May 27, 2020, asking Ms. Maheswaran if she was requesting a mortgage statement. Ms. Maheswaran did not reply.
[27] The plaintiff’s lawyer served the defendant with a new motion record and factum for its summary judgment motion on June 10, 2020. The plaintiff’s lawyer included a letter stating that the plaintiff was “requesting of the Court that a date for a hearing of the motion be set by video or teleconference”.
[28] The motion material was filed with the Barrie court by email dated June 10, 2020. No responding material was served.
Decision of McCarthy J. re: Summary Judgment
[29] On June 30, 2020, the matter came before McCarthy J. as a motion in writing. McCarthy J. issued the following endorsement:
Motion in writing by the Plaintiff for summary judgment. The Defendant has failed to respond or file materials although duly served. The materials filed support the relief sought. There is no genuine issue requiring a trial. The mortgage is clearly in default. The Plaintiff is entitled to the remedies set out in the mortgage contract. In failing to respond to the motion, I would infer that the Defendant does not challenge the assertions, statements and calculations set out in the Plaintiff’s materials. On a motion for summary judgment, a Defendant must put its best foot forward and not simply rely on the denials set out in its pleading. In the absence of some evidence in support of what is set out in the statement of defence or tending to challenge the information in the moving party’s materials, I find there is no genuine issue requiring a trial…Order to go for judgment as sought.
[30] Pursuant to this endorsement, Judgment for $882,871 and possession of the property was granted on June 30, 2020.
[31] On July 30, 2020, RiverRock’s lawyer received a letter from the Ms. Maheswaran’s new lawyer acknowledging the June 30, 2020 judgment, and requesting, on behalf of his client, a “negligible indulgence” of “being allowed until August 31, 2020 to arrange a mortgage for the premises to cover her liability and the mortgage”.
[32] RiverRock did not take any enforcement steps before August 31, 2020. RiverRock was not contacted further by that date regarding refinancing.
[33] Having not heard from Ms. Maheswaran by August 31, 2020, RiverRock submitted a requisition for a writ of possession to the court which was issued on September 15, 2020 and filed with the sheriff’s office for execution on September 22, 2020. The sheriff’s office scheduled an eviction for October 19, 2020. On October 5, 2020 Ms. Maheswaran was served with a Notice to Vacate her house by the morning of October 19, 2020.
Ms. Maheswaran’s Motion
[34] On October 9, 2020, the lawyers for RiverRock received a motion record from Ms. Maheswaran. The style of cause on the motion record reversed the parties: Ms. Maheswaran was identified as the plaintiff, and RiverRock was identified as the defendant in the Notice of Motion. Ms. Maheswaran’s Notice of Motion sought the following relief:
An order granting the plaintiff [Ms. Maheswaran] summary judgment as against the defendant [RiverRock] in accordance with the judgment for possession of land.
An order to dismiss the judgment and notice demanding possession against the plaintiff for possession of lands and not enforce a Writ of Possession.
An order to give discount from the balance owing and give extra time for the plaintiff to get mortgage and pay off the mortgage with discount.
[35] In her affidavit in support of this motion, Ms. Maheswaran stated that she needed until the end of October 2020 to get a new mortgage. She stated: “Please give one court order that I need until end of October to get a mortgage and do not take any action against my property…”.
[36] The Notice of Motion indicated that the proposed method of hearing for the motion was that “the motion is to be heard orally”. The Notice did not include a return date or a court file number, and indicated that it was returnable in Newmarket, not Barrie where the action was commenced and judgment had been granted. Ms. Maheswaran also emailed RiverRock’s lawyer on October 9, 2020 to advise that the court file number for the Notice of Motion was CV-20-2517. There is no corresponding originating process filed under this court file number.
[37] Counsel for RiverRock responded to this email on October 9, 2020, asking Ms. Maheswaran if she had a Statement of Claim in this proceeding, and, if so, requesting a copy.
[38] Ms. Maheswaran responded on October 13, 2020, indicating that she filed the motion record and was waiting to hear from the court about a court date. She indicated that she was “not planning to move and I want to take the mortgage. I need time and some discount and trying to get my mortgage as soon as possible.”
[39] Three days later, on October 16, 2020, the motion came before the court as an urgent ex parte written motion. Dawe J. noted that Ms. Maheswaran’s Notice of Motion expressly stated that she was requesting an oral hearing, and that RiverRock was not aware that her motion was proceeding in writing on an urgent basis.
[40] Dawe J. reviewed Ms. Maheswaran’s affidavit, and determined that Ms. Maheswaran’s complaint was that she had been expecting to receive notice of the virtual hearing date before McCarthy J., and was, therefore, taken by surprise when summary judgment was granted against her without a hearing. He stated that, on the evidence before him, Ms. Maheswaran might have failed to respond to RiverRock’s motion for summary judgment “by mistake because she was misled…into believing that the motion would be heard by video teleconference at a later date, rather than in writing, and that she accordingly thought she would be able to present her response orally”.
[41] With respect to the relief sought, Dawe J. stated:
While Ms. Maheswaran seeks various forms of relief in her own notice of motion, I think her motion is best characterized as a motion under Rule 37.14(1)(b) of the Rules of Civil Procedure to set aside or vary McCarthy J.’s June 30, 2020 Judgment.
[42] Dawe J. concluded that this was an appropriate case to exercise the court’s inherent jurisdiction to make an interim order temporarily staying the execution of the writ of possession until Ms. Maheswaran’s motion could be heard on its merits.
[43] On receipt of Dawe J.’s order the eviction was cancelled.
[44] Since the release of that decision, Ms. Maheswaran has not served a notice of return of motion. Nor has RiverRock or its lawyer been contacted regarding the refinancing of the mortgage. No originating process has been served or filed with respect to the Newmarket proceeding.
Issues
[45] RiverRock brings this motion to set aside the order of Dawe J. dated October 16, 2020, and thereby permit RiverRock to proceed with the enforcement of the judgment of McCarthy J. dated June 30, 2020, and enforce the writ of possession against the mortgaged property.
[46] “If required” RiverRock also seeks an order dismissing the Ms. Maheswaran’s motion originally brought before Dawe J. on October 16, 2020.
Position of the Defendant
[47] Ms. Maheswaran has filed a response to RiverRock’s motion.
[48] Ms. Maheswaran’s response repeats her allegation that she believed that the plaintiff’s summary judgment motion would proceed by way of video conference and she would have an opportunity to explain to the court her reasons for missing the mortgage payments during that video conference.
[49] Ms. Maheswaran’s response does not dispute the plaintiff’s allegation that she has defaulted on her mortgage. Rather, she repeats her position that she requires more time to obtain refinancing. She has requested that RiverRock reduce the interest rate to be paid to 6.99% and discount the other charges and fees owing under the mortgage. RiverRock has refused this request, and this refusal has prevented her from being able to refinance the mortgage. She alleges that she agreed to pay the interest rate of 9.99% in June 2019 because her mortgage broker assured her that after three months he would change the mortgage to a different lender at only 5% interest, but after three months the mortgage broker would not answer her phone calls. The mortgage broker is not a party to this action and is not identified in her response.
[50] In her response, Ms. Maheswaran states that her motion has been scheduled to be heard in Newmarket in January 2021. It appears that her motion has indeed been scheduled for January 27, 2021, although RiverRock was not served with a Notice of Return of Motion and counsel for RiverRock advised that he was not consulted and had no knowledge of this return date. Ms. Maheswaran asks that the court not take any action until the court hears her motion on January 27, 2021.
Procedural Irregularities
[51] Before considering the merits of RiverRock’s motion, some comment should be made about the several procedural irregularities that have arisen in this case.
[52] For example, Rule 37.03 required that Ms. Maheswaran’s motion be brought in Barrie, since that was where the original proceeding was commenced. Instead, she brought her motion in Newmarket because she lives closer to Newmarket and cannot travel to Barrie. Also, Ms. Maheswaran’s family law proceedings were based in Newmarket, and she believes, incorrectly, that her family law proceeding is somehow related to the mortgage proceeding because it was through the family law proceeding that she obtained sole ownership of the property that she subsequently mortgaged.
[53] By bringing her motion in Newmarket, Ms. Maheswaran obtained a second court file number for this proceeding, so that the Order of Dawe J. has a different court file number than the Order of McCarthy J.
[54] These procedural irregularities have resulted in some confusion, but may be forgiven because Ms. Maheswaran has been self-represented through most of these proceedings. It was not her intention to create a multiplicity of proceedings, she was simply trying to file her court documents in the most convenient court office.
[55] These procedural irregularities and others may be overlooked for the purposes of the proceeding before me. Since the motion before me is heard virtually by Zoom conference, Ms. Maheswaran does not have to travel to Barrie to participate in this motion. I have been provided with both the Barrie and the Newmarket court files.
[56] No separate Newmarket proceeding has been commenced.
[57] For the purposes of this motion, Ms. Maheswaran’s motion in Newmarket File No. CV-20-2517 is consolidated with Barrie File No. CV-19-2036.
[58] As indicated above, Ms. Maheswaran has scheduled her motion in Newmarket for January 27, 2021. On its face, her motion is a collateral attack on the summary judgment decision of McCarthy J. dated June 30, 2020. Having lost that motion for summary judgment, Ms. Maheswaran cannot commence a new action against RiverRock in relation to the same matter seeking summary judgment against RiverRock. Her choice at this point was to appeal the decision of McCarthy J., or, as advised by Dawe J., to bring a motion to set aside the decision under Rule 37.14.
Analysis
Rule 37.14
[59] Rule 37.14 of the Rules of Civil Procedure authorizes a court to set aside an order if the defendant failed to appear at a motion “through accident, mistake or insufficient notice”. The Rule states:
37.14 (1) A party or other person who,
(b) fails to appear on a motion through accident, mistake or insufficient notice; …
may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.
(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just.
[60] I agree with Dawe J. that Ms. Maheswaran’s motion is best characterized as a motion under Rule 37.14(1)(b). It is not clear to me, however, why the motion before Dawe J. proceeded on an ex parte basis.
[61] Proceeding with a motion on an ex parte basis is an extraordinary process. Ex parte proceedings affecting the legal rights of persons not before the court should only occur where there is good reason to believe that the defendant, if given notice, will act to frustrate the process of justice (e.g. by removing, hiding or disposing of assets) before the motion can be decided, or if there is simply no time or means to provide notice: Robert Half Canada Inc. v. Jeewan, 2004 CanLII 1532; 71 OR (3d) 650 (ON SC), at paras. 30-38; Sprott Resources Lending Corp (Re), 2013 ONSC 4350, at para. 9; Komarnycky v. Laramee, 2012 ONSC 6503, at paras. 19 and 22; Planet Paper Box Group Inc. v. McEwan, 2018 ONSC 6991, at para. 15.
[62] Neither of those conditions applied to this case. The identity of the plaintiff’s lawyer was known to the defendant and to the Court, and there was no reason why the plaintiff could not be given an opportunity to provide submissions to the court, even on short notice.
[63] Moreover, Ms. Maheswaran had knowledge of the Judgment against her since June 30, 2020, and retained a lawyer to negotiate an “indulgence” until the end of August, 2020. If she was of the view that she did not have proper notice of the summary judgment motion, she could have brought a motion under Rule 37.14 much earlier. Defendants should not be permitted to manufacture urgency by delaying their motion for relief until a few days prior to enforcement.
[64] Finally, Rule 40.02 provides that an interlocutory injunction (which would include the stay ordered by Dawe J.) may be granted on motion without notice for a period not exceeding 10 days. This recognizes the inherent unfairness of an ex parte proceeding and is intended to give the court an opportunity to reconsider the merits of the motion with the benefit of evidence and argument from both sides once the immediate urgency has been dealt with. The stay ordered by Dawe J. was of indeterminate duration.
[65] With that introduction, I will consider the issue of whether the stay granted by Dawe J. should be continued or set aside.
[66] In Ontario (Attorney General) v. 15 Johnswood Crescent, 2009 CanLII 50751 (ON SC), Strathy J. (as he then was) outlined the purpose of Rule 37.14 (at para. 29):
…to prevent unfairness or, worse, a miscarriage of justice, where a party’s inadvertence or the absence of sufficient notice has resulted in an order being obtained without that party being afforded an opportunity to present his or her case. A party who does not appear in these circumstances will usually be given a chance to present evidence and to argue the motion on its merits, assuming he or she moves promptly and provided there are no countervailing considerations.
[67] Strathy J. set out the following factors to be considered in the court’s exercise of its discretion in the application of Rule 37.14 (at para. 34):
(1) Proof of accident or mistake: The moving party must establish a failure to appear on the original motion through accident, mistake or insufficient notice. This is a precondition to relief under the rule. A party who has simply chosen not to appear on a motion cannot complain later if he or she does not like the outcome.
(2) The party must move forthwith after the order comes to his or her attention: This is also a precondition to relief under the rule, but there is room for flexibility in the interpretation of “forthwith”, depending on the circumstances…
(3) The length of the delay and the reasons for it: In considering whether to set aside an order, the court will consider whether there has been delay in bringing the motion and the reason for it. All other things being equal, the longer an order has been in effect, particularly where parties have acquired rights or changed their positions as a result of the order, the less likely it will be that the court will set it aside.
(4) The presence or absence of prejudice: The court should consider whether a party will be prejudiced by setting aside the order or by failing to set aside the order. There will always be prejudice if an order is made against a party without sufficient notice and there will always be some kind of prejudice to the other party if the order is set aside. Nevertheless, the exercise of the court’s discretion may require an examination of the relative prejudice to the parties.
(5) The underlying merits of the moving party’s case: It may be necessary to consider the underlying merits of the moving party’s case in weighing the various factors, balancing the interests of the parties, and determining what is just in the circumstances. Lengthy delay in bringing the motion may be more readily forgiven if the moving party has a very strong case on the merits. It will be less readily forgiven if the party’s case appears frivolous.
[68] See also: Battistella v. Italian Home Bakery, 2011 ONSC 4964, at para. 34.
[69] While I have considered all of these factors, in my view the most significant factors are numbers 1, 2 and 5, and I will address these factors individually. Applying those factors to the present case, it is my view that the stay issued by Dawe J. should be set aside.
1) Proof of Accident or Mistake
[70] The application of Rule 37.14 must be considered within the context of the proceeding at issue. This was a summary judgment motion by the plaintiff. It is now well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9). Parties cannot simply rely on the allegations in their pleadings, but must present evidence to support their position.
[71] Pursuant to Rule 20.02, summary judgment motions proceed by way of affidavit evidence. Oral evidence is only permitted in the court’s discretion if the presiding judge decides to hold a “mini-trial” if there are genuine issues requiring a trial (Rule 20.04).
[72] A responding party to a motion for summary judgment cannot decline to file any responding material and expect to appear at the motion to give oral evidence in support of her position. That is not how motions for summary judgment work.
[73] In the present case, the defendant had agreed to file her responding motion material by March 5, 2020. This date was confirmed by her previous counsel. She did not file any responding material and did not request an extension of time to file her responding record.
[74] In the absence of any responding material, McCarthy J. concluded that there was no genuine issue requiring a trial.
[75] Ms. Maheswaran has not provided any explanation for not filing a responding motion record by March 5, 2020, or any time subsequent to that date.
2) Moving Forthwith
[76] Summary judgment against Ms. Maheswaran was granted on June 30, 2020. As indicated, Ms. Maheswaran retained a lawyer to negotiate an “indulgence” on enforcement until the end of August 2020. She did not bring her motion until October, 2020. If she was of the view that she did not have proper notice of the summary judgment motion, she could have brought a motion under Rule 37.14 much earlier.
5) Underlying Merits
[77] Ms. Maheswaran has provided affidavit evidence explaining her reasons for defaulting on her mortgage and requesting more time to refinance the property with a different lender. She has been requesting “one more month” for more than a year now. Ms. Maheswaran’s affidavit explains the difficulties she has faced trying to refinance the property. She has also provided some historical context, explaining how she obtained this property as part of her family law proceedings, and how much money she has spent to maintain the home. She has also explained her dissatisfaction with the lawyers previously retained to represent her in this matter and her grievance with the mortgage broker she dealt with when obtaining the RiverRock mortgage. Finally, Ms. Maheswaran has set out her unsuccessful efforts to request RiverRock to reduce the interest rate and discount the fees and charges owed under the mortgage.
[78] While one must have great sympathy for the position in which Ms. Maheswaran now finds herself, none of the affidavit material disputes the central fact that the mortgage is in default. None of these allegations raises a defence to the claim. None of the affidavit material filed by Ms. Maheswaran would alter the conclusion of McCarthy J. that: “There is no genuine issue requiring a trial. The mortgage is clearly in default. The Plaintiff is entitled to the remedies set out in the mortgage contract.”
Conclusion
[79] In my view, considering the underlying merits of Ms. Maheswaran’s case, combined with the other factors listed above, this is not an appropriate case in which to set aside the June 30, 2020 Order of McCarthy J. under Rule 37.14. Accordingly, the stay issued by Dawe J. on October 16, 2020 must be set aside.
[80] As indicated above, the relief actually requested in Ms. Maheswaran’s October 9, 2020 motion is a collateral attack on the June 30, 2020 decision of McCarthy J., and cannot proceed. Once McCarthy J. granted summary judgment in favour of RiverRock, it was not open to another Superior Court judge to grant summary judgment in favour of Ms. Maheswaran in the same proceeding or to “dismiss” McCarthy J.’s judgment. Nor does the court have any jurisdiction to give Ms. Maheswaran a “discount from the balance owing” or “extra time … to get mortgage and pay off the mortgage with discount”.
[81] Accordingly, this Court orders that:
i. Newmarket File No. CV-20-2517 is consolidated with Barrie File No. CV-19-2036.
ii. The order of the Honourable Mr. Justice Dawe dated October 16, 2020 made in File No. CV-20-2517 commenced at Newmarket be and hereby is set aside.
iii. The motion brought by Anushiyathevi Maheswaran in File No. CV-20-2517 commenced at Newmarket and scheduled for January 27, 2020 is dismissed and the January 27, 2020 date is vacated.
[82] If the parties are unable to agree on costs, the plaintiff may serve and file costs submissions of no more than 3 pages plus costs outline and any offers to settle within 15 days of the release of this decision, and the defendant may file responding submission on the same terms within a further 15 days.
Justice R.E. Charney
Released: December 2, 2020
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
RiverRock Mortgage Investment Corporation
Plaintiff
– and –
Anushiyathevi Maheswaran
Defendant
AND BETWEEN:
Anushiyathevi Maheswaran
Plaintiff
– and –
RiverRock Mortgage Investment Corporation
Defendant
REASONS FOR DECISION
Justice R.E. Charney
Released: December 2, 2020