COURT FILE NO.: CV-19-615918
DATE: 2020/02/05
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SHELDON RAKOWSKY PROFESSIONAL CORPORATION
Plaintiff
- and -
2023115 ONTARIO INC.
Defendant
Michael A. Katzman for the Plaintiff
Anthony Guido for the Defendant
Daniel Richer for 2712428 Ontario Inc.
HEARD: January 29, 2020
PERELL, J.
REASONS FOR DECISION
A. Facts
[1] This is a summary judgment motion in a mortgage enforcement action.
[2] On June 27, 2011, the Plaintiff, Sheldon Rakowsky Professional Corporation, lent $100,000 to the Defendant, 2023115 Ontario Inc., on the security of a 1-year second mortgage on a property municipally known as 890 Ties Mountain Road, Bobcaygeon, Ontario. The mortgage provided for interest only monthly payments. The interest rate was 12% per annum. The mortgage was registered as instrument number PE 149113.
[3] The mortgage was subject, among other things, to the registered standard mortgage terms (Instrument No. 2000033). The mortgage provided for solicitor and client costs for the mortgagee’s costs of litigation.
[4] The mortgage matured on July 1, 2012. However, the mortgage was not redeemed, and, rather, the Defendant continued making monthly mortgage payments until March 1, 2018, when the payments stopped.
[5] On December 19, 2018, the Plaintiff issued a Notice of Exercise of Power of Sale. The redemption period passed without the mortgage being redeemed.
[6] On March 11, 2019, the Plaintiff commenced this action seeking payment on the covenant and a writ of possession.
[7] On April 10, 2019, the Defendant delivered its Statement of Defence. The Statement of Defence stated:
STATEMENT OF DEFENCE
The Defendant admits paragraphs 2 and 3.
The Defendant denies all other allegations of the plaintiff’s claim and puts the Plaintiff to strict proof of allegations.
At all material times, Sheldon Rakowsky represented SHELDON RAKOWSKY PROFESSIONAL CORPORATION, and the Defendant relied upon her [sic] representations and extension agreements.
The Plaintiff charged extra costs to extend the mortgage and agreed to have these paid on refinancing.
Estoppel
- The Defendant states that the Mortgagor have not defaulted under the Mortgage. In the alternative, if it is found that the Mortgagor did default on the Mortgage, which is not admitted but specifically denied, the Mortgagor state that the Plaintiff is barred from proceeding with enforcing the Mortgage by virtue of the doctrine of estoppel. The Mortgagor came to an agreement that they would accrue interest while the Mortgagor sought new financing. The Plaintiff represented to the Mortgagor and Defendant that they would not enforce the Mortgage during this period. In reliance of the Plaintiff’s representations, the Mortgagor sought new financing. The Mortgagor pleads that the Plaintiff is precluded from now resiling on these representations and proceeding with enforcing the Mortgage.
Non est Factum
- Further and in the alternative, the Defendant pleads that the terms of the extended mortgage were fundamentally different from the extension agreement that was confirm in writing. The Defendant states as a result, the mortgage is unenforceable by reasons of non est factum.
Relief from Possession/Forfeiture
- In the further alternative, the Plaintiff is seeking possession in order to realize on the alleged debt of $119,789.09. The value of this property is grossly in excess of this alleged debt, the subject property exceeds $1,000,000. The Mortgage pleads that the sale of this property to realize $119,789.09 is wholly unfair and ought not to be ordered. The Mortgagor state that they are entitled to relief from forfeiture by operation of the Courts of Justice Act, R.S.O. 1990, c. 4l3, s. 98.
Notice of Sale is Null and Void
The Plaintiff failed to properly serve the Mortgagor, and any other interested parties with the Notice of Sale on the Properties. As a result, the Notice of Sale is null and void, and consequently, the Plaintiff is barred from realizing any remedies pursuant to the Mortgage until a Notice of Sale is issued and served in compliance with the Mortgages Act, R.S.O. 1990, c. M. 40, as amended.
The Mortgagor states that the Plaintiffs accounting is inaccurate and cannot be relief upon. Specifically, failed to acknowledge and/or record payments, fees, and agreement to defer interest upon new financing was sought.
The Defendant respectfully request that the Plaintiff’s Statement of Claim be dismissed against it, with costs payable on a substantial indemnity basis.
[8] In May 2019, the Plaintiff brought a motion for summary judgment seeking payment on the covenant and a writ of possession. On May 14, 2019, Justice Wilson scheduled the motion for September 25, 2019.
[9] The parties could not agree on a timetable, and on June 14, 2019, Justice Firestone ordered the Defendant’s responding materials to be served by June 24, 2019. However, no materials were filed by that date.
[10] On July 19, 2019, Justice Kimmel made the return of the motion peremptory and she granted the Defendant an extension of time to file materials to July 31, 2019. However, no materials were filed by that date.
[11] On September 23, 2019, the original return date of the motion, Justice Pollak adjourned the motion to an attendance to Civil Practice Court on October 7, 2019.
[12] On October 7, 2019, Justice Archibald granted a further extension for filing material to December 1, 2019. However, no materials were filed by that date.
[13] On December 3, 2019, Justice Archibald granted a further-further extension to December 10, 2019. However, no materials were filed by that date.
[14] The summary judgment came before me on January 29, 2020. Anthony Guido, the principal of the Defendant, asked for an adjournment. Mr. Guido, who is not a lawyer, had been granted leave to represent his corporation. I refused the adjournment request.
[15] On the return of the motion, 2712428 Ontario Inc., a non-party, which was represented by counsel, also requested an adjournment. I was told that 2712428 Ontario Inc., which had entered into an agreement to purchase a majority controlling interest in the Defendant, had just learned of the litigation. I was told that it planned to secure financing that would redeem the mortgage, and it asked that the matter be adjourned.
[16] Further, 2712428 Ontario Inc. expressed concern that ending the closing of its purchase and the redemption of the mortgage, the Plaintiff might enforce its writ of possession and that would interfere with employees who would lose their jobs working at the mortgaged premises.
[17] Counsel for the Plaintiff indicated that the Plaintiff was not aware of the site even being occupied and would likely not exercise the writ of possession until a sale of the property had been made.
[18] I refused the adjournment request. I pointed out that 2712428 Ontario Inc. had no standing and that, in any event, since the property had not been sold under power of sale, the mortgagor’s rights to redeem had not been extinguished. Absent exceptional circumstances, once a binding contract of sale has been entered into by vendor a under a power of sale, the mortgagor has lost his right to redeem or sell the property,[^1] but in the immediate case no sale has yet occurred. 2712428 Ontario Inc. has no rights to interfere with the Plaintiff’s exercise of its rights to enforce the mortgage.
[19] The Plaintiff has proven that it owed $130,976.23, broken down as follows:
a. $114,263.35 – Debt outstanding as of Notice of Sale dated December 19, 2018;
b. $3,118.31 – Interest from December 19, 2018 to March 11, 2019 @ 12.0% interest per annum;
c. $12,464.57 – Interest from March 12, 2019 to January 29, 2020 at 12% interest per annum;
d. Statement fee $1,130.00.
[20] The Plaintiff also claimed $3,000.00 interest pursuant to s. 17 of the Mortgages Act.[^2] However, s. 17 is not applicable when a mortgagee takes action to enforce the mortgage after default.[^3]
B. Discussion and Analysis
[21] Notwithstanding Mr. Guido’s argument to the contrary, the Plaintiff has proven its claim on the covenant of the mortgage and its ancillary claim for a writ of possession. It has proven that the loan was advanced, that it has not been repaid, and it has accounted for and proven how much is owing for principal and interest as of the date of the summary judgment motion. When there is default, the mortgagee has a right to possession of the mortgaged property.
[22] The Defendant, despite numerous indulgences, has not filed any evidence in support of its pleaded defences. There are no genuine issues to be tried, and the summary judgment motion is more akin to a motion for a default judgment, the Defendant having not delivered any defence.
[23] The Plaintiff is entitled to a summary judgment.
[24] Before concluding I note that during argument, Mr. Guido advanced one meritless argument based on an obvious drafting error in the Plaintiff’s Statement of Claim. The pleading had been taken from a precedent document, and in several places, it misnamed the municipal address of the mortgaged property. The Defendant, however, was under no misapprehension about the correct identity of the property, and it knew all the pertinent facts of its failure to repay the mortgage loan. The mistaken description is a careless drafting error that should be ignored.
C. Conclusion
[25] For the above reasons, I grant the Plaintiff a writ of possession and judgment in the amount of $130,976.23. The Plaintiff is also entitled to postjudgment interest at the rate of 12% per annum.
[26] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the submissions of the Plaintiff within twenty days of the release of these Reasons for Decision, followed by the Defendant’s submissions within a further twenty days.
Perell, J.
Released: February 5, 2020
COURT FILE NO.: CV-19-615918
DATE: 2020/02/05
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SHELDON RAKOWSKY PROFESSIONAL CORPORATION
Plaintiff
- and -
2023115 ONTARIO INC.
Defendant
REASONS FOR DECISION
PERELL J.
Released: February 5, 2020
[^1]: 1175945 Ontario Ltd. v. Michael Wade Construction Co., 2010 ONSC 3732; Stone v. Stewart, [2009] O.J. No. 1674 (S.C.J.); Hornstein v. Gardena Properties Inc., [2005] O.J. No. 3302 (S.C.J.) at para. 54, aff’d. 2006 CanLII 23142 (ON CA), [2006] O.J. No. 2757 (C.A.); Logozzo v. Toronto Dominion Bank (1999), 1999 CanLII 9313 (ON CA), 45 O.R. (3d) 737 (C.A.); Toronto Dominion Bank v. Pallett Developments Ltd. (1984), 1984 CanLII 2062 (ON SC), 47 O.R. (2d) 251 (Div. Ct.) at pp. 255-56; Re Mission Construction Ltd. and Seal Investment Ltd., 1973 CanLII 396 (ON SC), [1973] 2 O.R. 190 (H.C.J.).
[^2]: R.S.O. 1990, c. M. 40.
[^3]: Parkhill v. Moher (1997), 1977 CanLII 1177 (ON SC), 17 O.R. (2d) 543 (H.C.J.).