Court File and Parties
COURT FILE NO.: CV-20-637423
DATE: 20210604
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: THE TORONTO-DOMINION BANK, Applicant
AND:
THE ESTATE OF CHERYL ANNE WALKER, Respondent
BEFORE: A.A. Sanfilippo J.
COUNSEL: James M. Butson, lawyer for the Applicant
No one appearing, for the Respondent
HEARD
In Writing: June 4, 2021
ENDORSEMENT
[1] The Applicant, the Toronto-Dominion Bank (“TD Bank”), brought this Application for an Order to pay into Court the surplus funds that it claims to have realized on the exercise of its sale, as mortgagee, of property formerly belonging to the deceased, Cheryl Anne Walker. It also seeks an order that its liability, if any, is extinguished in respect of the funds paid into Court. Specifically, the TD Bank sought the following:
(a) An Order pursuant to the Trustee Act, R.S.O. 1990, c. T.23, ss. 1, 36 and 64, and Rule 43.02 of the Rules of Civil Procedure permitting the TD Bank to pay into Court the sum of $670,624.72, less the Applicant’s costs, being the surplus of sale proceeds in the possession of the Applicant as first mortgage, from sale under mortgage of the property municipally known as 138B Finch Avenue West, North York, Ontario.
(b) An Order that upon payment into Court of the aforesaid surplus proceeds, the liability of the Applicant be forever extinguished vis-à-vis the Respondent and any or all other parties who may have a claim in the surplus proceeds.
(c) Costs of this Application on a substantial indemnity basis, which are to be fixed and paid out forthwith from the surplus proceeds presently in the possession of the Applicant.
[2] The TD Bank alleged that it acted on its rights in a mortgage granted to it on January 12, 2006 by the late Ms. Walker. The TD Bank is in possession of surplus funds, after satisfaction of the mortgage loan owed to the TD Bank, and after payment of a second charge to the Canadian Imperial Bank of Commerce (“CIBC”).
[3] The Respondent in this Application is the Estate of Cheryl Anne Walker. Based on the materials filed in this Application, the Walker Estate has not yet been constituted. The Applicant tendered evidence that lawyers for parties interested in the Walker Estate, being Hugh Walker and Bonnie Nash, siblings of the late Ms. Walker, have filed with the Court an Application for Estate Trustee. The other person interested in the Walker Estate is Eugene Hewchuk, who is said to be the spouse of the deceased.
[4] The evidence showed that these interested parties have legal counsel: Hugh Walker and Bonnie Nash are represented by lawyer David A.S. Mills, and Eugene Hewchuk is represented by lawyer Jerome H. Stanleigh. The Applicant has provided notice of this Application to the interested parties, Hugh Walker, Bonnie Nash and Eugene Hewchuk, through service on their lawyers of the Notice of Application, Application Record, supplementary affidavit, Statement of Fact and Law and my earlier Endorsement of December 18, 2020. The Applicant established that none of these interested parties has responded to this Application, which thereby proceeded unopposed.
[5] I am satisfied that the Applicant has established a basis for the granting of the relief claimed, for reasons that I will now explain.
A. FACTUAL BACKGROUND
[6] The evidence on this Application derived from the affidavits of Lee Guarino, a solicitor with the lawyers for the TD Bank, sworn November 16, 2020 and December 31, 2020.
[7] On January 12, 2006, the late Ms. Walker acquired exclusive title to the property municipally known as 138B Finch Avenue West, North York, Ontario M2N 2H9 (the "Property"). Ms. Walker provided to the TD Bank, as mortgagee, a Charge/ Mortgage of Land (the “TD Bank Mortgage”), registered against title to the Property, on January 12, 2006, as Instrument No. AT1034075 in the Land Registry Office for the Land Titles Division of Toronto (No. 80), which secured the principal sum of $362,089.80.
[8] The Standard Charge Terms forming part of the TD Bank Mortgage provided rights to the TD Bank in the event of default, including to enter on the land and sell the Property on Notice, and in accordance with the Mortgages Act, R.S.O. 1990, c. M.40.
[9] The late Ms. Walker defaulted in payment of monies due under the TD Bank Mortgage, with the result that on April 12, 2018, the TD Bank issued and served a Notice of Sale Under Mortgage and Notice of Intention to Enforce Security. The TD Bank became aware that the mortgagor had passed away and obtained possession of the Property and proceeded to market it for sale.
[10] On July 6, 2018, the TD Bank received and accepted an offer to purchase the Property for the sum of $985,000. On August 22, 2018, the sale of the Property closed resulting in initial surplus of proceeds in the possession of the TD Bank in the amount of $715,535.10.
[11] The TD Bank conducted execution searches on April 12, 2018 and February 27, 2020 with the Sheriff of the City of Toronto (Toronto) which disclosed no executions against the late Ms. Walker or the Property. A sub-search of the charged property disclosed the registration of the TD Bank Mortgage and a second mortgage in favour of the CIBC.
[12] In November 2018, the TD Bank was advised by the CIBC that the sum of $44,910.38 was owing under the CIBC mortgage in second priority position. Accordingly, on November 16, 2018, the TD Bank paid the amount of $44,910.38 to the CIBC in satisfaction of its charge. This resulted in surplus funds available for distribution in the amount of $670,624.72 (the “Surplus Funds”).
[13] Since August 2018, the TD Bank’s counsel has been in contact with lawyers representing the parties interested in the Walker Estate in regard to the Surplus Funds. The TD Bank awaited the appointment of an Estate Trustee, or a submission by the interested parties regarding the application of the Surplus Funds. When none was forthcoming, the TD Bank brought this Application to pay the Surplus Funds into Court.
B. ANALYSIS
[14] Rule 43.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides that a party may seek an interpleader order – an order that money be paid into Court – where: (i) “two or more persons have made adverse claims in respect of the property”; and, (ii) the person seeking the order “claims no beneficial interest in the property, other than a lien for costs, fees or expenses”, and “is willing to deposit the property with the court or dispose of it as the court directs.”
[15] Here, the TD Bank has sold the Property, has realized the Surplus Funds, and claims no interest in the Surplus Funds other than the costs of this Application. The mortgagor is deceased, and, according to the Application materials, an Estate Trustee has not yet been appointed. The interested parties Hugh Walker and Bonnie Nash have stated through their counsel that they do not oppose the payment of the Surplus Funds into Court and have pending an Application for Certificate of Appointment of Estate Trustee. The other interested party, Eugene Hewchuk asserts an interest in the Surplus Funds but has not responded to this Application.
[16] Section 1 of the Trustee Act defines a trust to include an implied trust where the trustee has some interest in the subject of the trust. Through the power of sale proceeding against the Property, the TD Bank is holding the Surplus Funds in trust. Section 36 of the Trustee Act provides that the Court may order the payment of trust funds into Court where the sole trustee seeks to do so and cannot obtain the concurrence of parties of interest in the trust funds:
Where any money belonging to a trust is in the hands or under the control of or is vested in a sole trustee or several trustees and it is the desire of the trustee, or of the majority of the trustees, to pay the money into court, the Superior Court of Justice may order the payment into court to be made by the sole trustee, or by the majority of the trustees, without the concurrence of the other or others if the concurrence cannot be obtained.
[17] I am satisfied that the TD Bank has established the basis, under Rules 43.02 and 43.04(1) and ss. 1 and 36 of the Trustee Act, for an Order for the payment of the Surplus Funds into Court, to be held pending further Order of this Court, which may result from a determination of entitlement to the Surplus Funds. The TD Bank has no interest in the Surplus Funds, apart from its claim for costs of this Application, the Walker Estate has not yet been constituted, notwithstanding the steps taken by interested parties Hugh Walker and Bonnie Nash, and I see no reason why the TD Bank should be required to continue to hold the funds in trust pending determination of the entitlement to the Surplus Funds.
[18] Rule 43.04(1)(b) provides that the Court may “declare that, on compliance with an order under clause (a) [that the applicant pay the proceeds into Court], the liability of the applicant or moving party in respect of the property or its proceeds is extinguished. I am satisfied that an Order shall issue that on compliance with the Order for payment of the Surplus Funds into Court, the liability of the TD Bank in respect of the Surplus Funds is extinguished.
[19] Last, s. 64 of the Trustee Act provides that: “The Superior Court of Justice may order the costs of and incidental to any application, order, direction, conveyance, assignment or transfer under this Act to be paid or raised out of the property in respect of which it is made…” The Applicant seeks costs of this Application, to be deducted from the Surplus Funds. I find that the Applicant is entitled to the costs of this Application, which was made necessary by the lack of response by the parties interested in the Surplus Funds.
[20] The Applicant filed a Costs Outline that showed costs of the Application in the amount of $3,095 for legal fees, HST of $402.35 and disbursements of $708.22 for a total of $4,205.57. I am satisfied that these costs are fair, reasonable and proportionate to this Application: Beaver v. Hill, 2018 ONCA 840, 143 O.R. (3d) 519, at para. 12; Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at para. 38; Zesta Engineering Ltd. v. Cloutier (2002), 2002 CanLII 25577 (ON CA), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4.
C. DISPOSITION
[21] For the above Reasons, I order as follows:
This Court orders that the Applicant may pay into Court, by payment to the Accountant of the Superior Court of Justice, the amount of $670,624.72, being the surplus of sale proceeds in the possession of the Toronto-Dominion Bank as mortgagee in first priority position, from the sale under mortgage of the property municipally known as 138B Finch Avenue West, North York, Ontario, less costs of this Application fixed in the amount of $4,205.57, which are awarded to the Applicant payable from the surplus sale proceeds.
This Court orders that the funds paid into court in accordance with paragraph 1 of this Judgment, may be paid out of Court upon further Order of this Court.
This Court declares that, on compliance with paragraph 1 of this Judgment, the liability of the Applicant, the Toronto-Dominion Bank, is extinguished in respect of the funds paid into Court.
A.A. Sanfilippo, J.
Date: June 4, 2021