COURT FILE NO.: CV-19-0037 (Brockville)

DATE: 20210601

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JUDITH ANNE HODGKINSON, Plaintiff (Defendant by Counterclaim)

AND

ROBERT MAGUIRE, Defendant (Plaintiff by Counterclaim)

BEFORE: Mr. Justice Robert N. Beaudoin

COUNSEL: Michael M. Johnston, for the Plaintiff, (Defendant by Counterclaim)

Alexander Heath, for the Defendant, (Plaintiff by Counterclaim)

HEARD: May 13, 2021 by Zoom

ENDORSEMENT

1This motion for summary judgment seeking judgment on a mortgage and possession of lands was heard on May 13, 2021. At the conclusion of argument, in oral reasons, I granted summary judgment in favour of the Plaintiff (Defendant by Counterclaim). I indicated that these written reasons were to follow.

Background

Background

2On July 2, 2018, Judith Anne Hodgkinson, (“Hodgkinson”) the Plaintiff (Defendant by Counterclaim), sold a rural property to Robert Maguire, the Defendant (Plaintiff by Counterclaim). The Agreement of Purchase and Sale prepared by Maguire’s lawyer clearly set out that the property was being sold on an “as is” basis.

3The purchase price was $189,000. As part of the consideration, Hodgkinson agreed to take back a first mortgage in the amount of $159,000. She was to receive a further non-refundable amount of $20,000 on closing. She further agreed to accept ten post-dated checks, each for $1000, representing a further deposit. The Agreement included a clause whereby McGuire had had an opportunity to inspect the property.

4On closing, Hodgkinson received ten uncertified post-dated cheques representing the further deposit of $10,000 and a mortgage which was registered in her name. Payments on account of the further deposit, ($1000 each) and on account of the mortgage ($929.99 each) were to commence on August 1, 2018. Standard Charge Terms No.200033 were included as one of the provisions.

5Maguire defaulted making payments on account of the further $10,000 deposit on August 1, 2018. He defaulted in making payments under the mortgage on October 1, 2018

6A Notice of Sale under the Mortgages Act, R.S.O. 1990, c. M.40 was served by registered mail on Maguire on January 15, 2019. No attempts were made by Maguire to redeem the payments.

7Hodgkinson then commenced a Small Claims Court action in connection with a further $10,000 deposit which Maguire defaulted on Maguire did not defend the claim resulting in a default judgment. No motion has been brought to set that default judgment aside.

8This action was commenced on March 15, 2019 seeking possession of the mortgaged property, and payment of the 159,060.98 together with interest and costs. Maguire served a Statement of Defence and Counterclaim wherein he alleged fraud and that Hodgkinson’s husband, John, misrepresented the condition of the property in question. Maguire alleged multiple and serious defects in the property soon after the deal closed. He claimed $55,050 in damages plus damages for the expenses incurred for his inability to stay at the property.

9In the face of this impending motion for summary judgment, Maguire then sought to amend that Counterclaim to add John Hodgkinson as a necessary party. On November 30, 2020, Justice Johnston dismissed that motion with written reasons.

10There is no dispute that Maguire is in default of the mortgage. His Counterclaim is a form of equitable set-off” for alleged fraudulent misrepresentations and resulting breach of the agreement and sale. The law in this aera was succinctly canvassed by Justice Edwards in Jasco Holdings Limited v. Bloomington Land Company 2004 Ltd., 2014 ONSC 7228at paras. 27- 28:

27 In 7895 Tranmere Drive Management Inc., Sproat J. went on to deal with the issue of whether or not a claim for damages for fraudulent misrepresentation based on a claim of equitable set off could proceed, notwithstanding the “without any deduction or abatement” language of the mortgage. In that regard, Sproat J. relied on a decision of Somers J. in Chiarotto v. S. Parks Investments Ltd., [1995] O.J. No. 3003, to come to the conclusion that the defendant did not have any tenable claim to equitable set off. It is noted that in order for a claim for equitable set off to succeed the moving party must establish the following:

1. A cross claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross claim.

2. The plaintiff’s claim and the cross claim need not arise out of the same contract.

3. Unliquidated claims are on the same footing as liquidated claims.

28 Dealing with the first aspect of the basis upon which the defendants must succeed in order to pursue a claim for equitable set off, it is difficult to conceive that the defendants can meet the first aspect of the test; i.e., that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross claim. In this case the defendants did not raise any of the issues upon which it rests its claim for equitable set off at the time that the replacement vendor take back was entered into in November 2010. None of the allegations upon which the claim for equitable set off are based arise until after the default in payment and the plaintiffs’ action to pursue payment on the vendor take back by way of litigation which was commenced in July 2012. The defendants have not particularized their claim for equitable set off, nor have they put any evidence before the court that would suggest at this stage that there is any real merit in the claim for equitable set off. …. (emphasis added)

Conclusion

11I conclude that Maguire is estopped from raising any form of “set-off” in defence of this motion for summary judgment. The validity of the Agreement and Purchase and Sale was never challenged in the Small Claims Court proceedings. Default judgment was granted and has not been set aside. The doctrine of res judicata applies.

12As there is an admitted default on the mortgage, summary judgment is granted. Unless the parties come to an agreement on costs, they are to provide me with their written submissions within 30 days of the release on this Endorsement.