Court File and Parties
COURT FILE NO.: CV-20-00652565
DATE: 20210722
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MCC MORTGAGE HOLDINGS INC.
Plaintiff
– and –
RADHIKA KANNAN AND KANNAN RAMNATH
Defendants
COUNSEL:
Jeffrey Kukla, for the Plaintiff
No one appearing for the defendants
HEARD: July 21, 2021
BEFORE: J. Steele J.
The Motion
[1] This a motion by the plaintiff, MCC Mortgage Holdings Inc. (“MCC”) for summary judgment for, among other things, payment of principal, certain fees and interest in the amount of $749,004.35, pre-judgment and post-judgment interest and possession of the lands and premises municipally known as 46 Canmore Boulevard, Scarborough, ON M1C 3W2 (the “Property”).
[2] For the reasons set out below summary judgment is granted, however, the amount payable by the defendants has been determined at $728,523.94.
Overview
[3] This matter involves a claim by the plaintiff on a mortgage that was defaulted under by the defendants. The plaintiff proceeded by way of summary judgment.
[4] The defendants, having had ample notice of the proceedings, did not file any evidence nor did they attend the summary judgment motion.
Background
[5] This matter involves a claim by the plaintiff on a charge that was made between the defendants and MCC under which MCC charged the Property for an original term of one year securing the principal sum of $675,000.00, with interest thereon at a rate of 6.99 percent per annum (the “Charge”). The original Charge was dated August 14, 2019 and was registered on the Property.
[6] The Charge was scheduled to mature on September 1, 2020. By letter dated June 19, 2020, (the “June 19, 2020 Letter”) the plaintiff, through its agent, offered to renew the Charge. The defendants did not reply.
[7] Under the terms of the Charge, and pursuant to the terms set out in the June 19, 2020 Letter, the mortgage is automatically renewed on the terms set out in the notice for a further one-year term. The Charge provides in section 12:
“This mortgage will be automatically renewed where before the balance due date the Mortgagee sends to the Mortgagor a notice offering to renew the Mortgage upon the terms set out in the notice, including without restricting the generality of the foregoing an interest rate and lender’s fee which shall be equivalent to the original lender fee and interest rate or greater, and Mortgagor has not responded in writing accepting the renewal terms offered or Mortgagor does not pay the amount outstanding on the Mortgage in full or has not made any other arrangements for payment or extension with the Mortgagee on or before the balance due date. In the event of the foregoing the Mortgagor agrees that the Mortgage will be renewed in accordance with the renewal notice sent to the Mortgagor by the Mortgagee.
Any unpaid lender fee will be added to principal amount of the mortgage and will bear interest at the mortgage interest rate and will with such interest be a charge against the property prior to all claims after this mortgage and will be payable on demand.”
[8] The June 19, 2020 Letter stated that if the defendants did not “return the renewal documents along with renewal conditions by the Maturity Date, the mortgage will be renewed for 1 year, CLOSED at the rate of 9.49% with a lender fee of $23,557.50”. In accordance with the Charge terms and the June 19, 2020 Letter, the mortgage was automatically renewed. MCC, through its agent, wrote to the defendants on or about September 15, 2020 to confirm the terms of the renewed Charge.
[9] The standard Charge terms provide that on default in payment of any portion of the money secured by the Charge, the principal shall, at the mortgagee’s option, become payable and the mortgagee is entitled to possession of the Property. The following provisions are included in the standard Charge terms:
Upon default in payment of principal and interest under the Charge or in performance of any of the terms or conditions hereof, the Chargee may enter into and take possession of the land hereby charged and where the Chargee so enters on and takes possession or enters on and takes possession of the land on default as described in paragraph 9 herein the Chargee shall enter into, have, hold, use, occupy, possess and enjoy the land without the let, suit, hindrance, interruption or denial of the Chargor or any other person whomsoever.
In default of the payment of the interest secured by the Charge the principal amount secured by the Charge shall, at the option of the Chargee, immediately become payable, and upon default of payment of instalments of principal promptly as the same mature, the balance of the principal and interest secured by the Charge shall, at the option of the Chargee, immediately become due and payable….
[10] The defendants defaulted under the Charge on or about November 1, 2020 and the default continues. MCC demanded payment of the arrears owing due to the default by letter dated November 6, 2020.
[11] The plaintiff issued a Notice of Sale under the Charge on or about December 29, 2020.
Analysis
[12] The plaintiff seeks summary judgment against the defendants under Rule 20 of the Rules of Civil Procedure. Under Rule 20.04 the 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.
[13] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, the Supreme Court of Canada set out the principles for the summary judgment motion judge to consider in order to determine whether there is a genuine issue requiring a trial based on the evidence before the court. Specifically, the Supreme Court of Canada indicated that there will be no genuine issue requiring a trial when the summary judgment 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 a just result.”
[14] There is no genuine issue requiring a trial in this case. The facts are not in dispute, as the defendants have not filed any evidence, and the law can be applied to the facts through the summary judgment process. There is no question that in this case summary judgment is a proportionate, more expeditious and less expensive means to a just result.
[15] The plaintiff has a Charge on the Property, the defendants have defaulted under the Charge. The defendants did not file any evidence on the summary judgment motion. Under the terms of the Charge, and based on the evidence before me, the plaintiff is entitled to:
a. Principal $664,095.35
b. Interest to March 17, 2021 $28,450.27
c. Balance of Auto Renewal 2020 Lender Fee $21,594.32
d. NSF Fees $1950.00
e. Postage & Delivery $40.00
f. Auto Renewal Fee $1,599.00
g. Default Legal Proceedings Fee $7,500.00
h. Discharge Administration Fee $978.00
i. Statement Fee (re preparation of mortgage statement) $979.00
j. Discharge of Mortgage $1,338.00
TOTAL $728,523.94
[16] Based on the record before me, I have not allowed the plaintiff’s claim for the administration fee (auto renewal 2020) of $975.00, as there is an administrative renewal fee (auto renewal 2020) that is included. I note that the amount of the administrative renewal fee in the Charge terms is $1,599.00, not $1,999.00 as claimed by the plaintiff, and I have reflected this above. I have also not allowed the plaintiff’s claim for administrative fees in the amount of $1,950.00 as the plaintiff was unable to direct me to the provision in the Charge permitting this fee. I have allowed the default legal proceedings fee, which is described in the Charge terms as an administration and servicing fee of $3,750 payable for each step in any legal action or proceeding instituted. However, in order to avoid duplication, and as external counsel was retained to represent the plaintiff in the proceedings, I have taken this into account in the costs award below.
[17] The plaintiff also claimed $17,155.41 in prepayment costs, which I have not allowed. The terms of the Charge provide that “[t]he Mortgagor shall have the privilege of prepaying the whole or any part of the principal amount outstanding under the Mortgage at any time or times upon payment to the Mortgagee of six (6) months’ interest and any costs thereunder”. On a plain reading of the Charge terms, the prepayment costs would not be applicable in the circumstances. Where a mortgagee, following default by the mortgagor, is enforcing a charge and seeking possession of the mortgaged property, this is not a circumstance of the mortgagor exercising a privilege to repay part of the outstanding principal amount outstanding.
[18] Because the defendants did not appear and did not raise any issue with regard to the legality of the fees and charges levied by the plaintiff, I did not consider the validity of any of the above fees in light of s. 8 of the Interest Act, R.S.C. 1985, c. I-15, or P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 331, 126 O.R. (3d) 108.
[19] The plaintiff sought pre-judgment and post-judgment interest at 9.49 percent per annum, the rate set out in the renewed Charge. I have determined that interest shall be payable at the rate of 6.99 percent per annum. I have done so as it is my view that levying the new Charge rate seems punitive in the circumstances for the following reasons: (a) the interest rate under the Charge was increased by the plaintiff to a rate unilaterally imposed by the plaintiff from 6.99 percent per annum to 9.49 percent per annum, and the plaintiff imposed a lender fee of $23,557.50, when the defendants failed to return the renewal documents along with renewal conditions by the Maturity Date; and (b) there are numerous fees that have been levied on the defendants. In accordance with Tribute (Springwater) Limited v. Asif, 2021 ONCA 463, at para. 27, I am relying on my “inherent jurisdiction” in awarding interest at this rate, as opposed to the renewal rate specified in the June 19, 2020 Letter.
[20] The plaintiff seeks possession of the Property. As set out above, this is contemplated in the standard terms of the Charge where there has been a default.
[21] The plaintiff had also requested leave of the Court to obtain a writ of possession of the Property. Now that judgment has been obtained, the plaintiff is required to bring a separate motion to the Court, filing evidence to satisfy Rule 60.10, in order to obtain leave for this relief.
Disposition
[22] In the result, therefore, summary judgment is granted as follows:
a. The defendants, Radhika Kannan and Kannan Ramnath, shall pay the plaintiff the sum of $728,523.94;
b. Pre-judgment interest shall be payable from March 17, 2021 to the date hereof at the rate of 6.99 percent per annum;
c. Post-judgement interest shall be payable at the rate of 6.99 percent per annum; and
d. The plaintiff is entitled to possession of the Property.
Costs
[23] The fixing of costs is a discretionary decision pursuant to section 131 of the Courts of Justice Act. Rule 57.01 of the Rules of Civil Procedure sets out certain factors that the court may consider in the exercise of such discretion. The factors in Rule 57.01 include the principle of indemnity, the amount of costs that an unsuccessful party could reasonably expect to pay, the conduct of any party that tended to shorten or lengthen unnecessarily the duration of the proceeding, the amount claimed and the amount recovered in the proceeding, whether any step in the proceeding was improper, vexatious or unnecessary, and the complexity of the proceeding.
[24] In considering the issue of costs, I have taken into account that the defendants are required to pay $7500.00 in default legal proceedings fee under the terms of the Charge (which requires payment of an administrative fee of $3750 “for each step in any legal action or proceeding instituted”). I have also taken into account the provision in the standard Charge terms, which requires the mortgagor to pay costs on a substantial indemnity basis in the circumstances. I note that the bill of costs submitted by counsel in the amount of $9,672.11 on a substantial indemnity basis (inclusive of disbursements and taxes) was reasonable.
[25] Having regard to the submissions of the plaintiff and the factors in Rule 57.01, including the conside noted above, the defendants shall pay the plaintiff’s costs fixed at $3,000.00 (inclusive of taxes and disbursements) within 30 days.
J. Steele J.
Released: July 22, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MCC MORTGAGE HOLDINGS INC.
Plaintiff
– and –
RADHIKA KANNAN AND KANNAN RAMNATH
Defendants
REASONS FOR JUDGMENT
J. Steele J.
Released: July 22, 2021