Court File and Parties

COURT FILE NO.: CV-21-00672768

DATE: 20211130

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: R & PD INC., FAKHROLZAMAN DAVOODIAN and FARSHAD DAVOODIAN, Applicants

-and-

TANG CHOW, SUK CHING CHOW and BRIAN CHOW, Respondents

BEFORE: FL Myers J

COUNSEL: Eli Karp, for the Applicants

Joost K. Heersche, for the Respondents

HEARD: November 30, 2021

TRIAGE ENDORSEMENT

[1] At 4:46 p.m. on November 29, 2021, Mr. Karp sent a request to the court for an urgent hearing to be held on November 30, 2021 to seek an injunction preventing the closing of a real estate transaction scheduled for December 1, 2021.

[2] The request was properly made under s. C.1.8 of the Notice to Profession – Toronto; Toronto Expansion Protocol for Court Hearings During COVID-19 Pandemic. It was supported by the notice of application and brief written submissions concerning urgency.

[3] In essence, the owners of a commercial building in Alliston Ontario seek to enjoin their second mortgagee from closing a sale pursuant to the mortgagee’s power of sale.

[4] The owners/mortgagors claim that: the mortgage was not in default when the notice of sale was delivered on April 9, 2021; the notice of sale is invalid due to non-trivial errors in its contents; and the mortgagee failed to provide a discharge statement. They say they have at least $1.5 million in equity in the property, so there is no risk of loss to the mortgagee.

[5] The notice of application also says that an injunction is justified because:

The Applicants would suffer irreparable harm if their building was sold by the Second Mortgagee without a determination of a proper amount for discharge being determined by this court.

[6] Mr. Karp has also fairly provided the court with a copy of a letter from Mr. Heersche for the respondents dated yesterday. Mr. Heersche asserts that the late timing of this request is an abuse of process and he contests the manner of service of the notice of application.

[7] There are no judges sitting today who have time available to hear this matter. For the reasons that follow I am not prepared to bump another scheduled motion to make room for this one.

[8] First, the notice of sale was served in April. The mortgagors’ entitlement to redeem ends when the mortgagee enters into a new agreement of purchase and sale (assuming it is valid). Waiting to the day before closing is far too late to investigate the applicants’ alleged concerns. Self-induced urgency is not urgency under the Notice to the Profession.

[9] Second, the irreparable harm alleged is a lack of an accounting prior to the sale. The mortgagors will be entitled to a full accounting once the sale closes. This is a money issue. While it may be that the applicants are being stripped of their property interest, if they are correct that the sale is invalid under s. 22 of the Mortgages Act, the sale can be reversed and a full accounting obtained then too. The notice of application confirms that this is a commercial investment. It is about money.

[10] Third, the property is in Alliston, Ontario. Alliston is located in the Central East Region of the Superior Court. If the mortgagee sued to enforce the mortgage, it would be required to bring the application in the county designated by the RSJ of the Central East Region under R. 13.1.01 (3) of the Rules of Civil Procedure, RRO 1990, Reg 194. Under rule 13.1.01 (1), this rule trumps the usual rule that the plaintiff or applicant gets to choose where to commence a proceeding under Rule 13.1.01 (2).

[11] Absent briefing and argument, I would not make a finding on the scope of Rule 13.1.01 (3) and whether it requires that pre-emptive strikes against mortgage enforcement, like this case, be brought where the property is located. As the obvious counterclaim by the mortgagee, to enforce its mortgage, would be required to be brought in Central East, there is much logic to an argument that a claim to prevent enforcement of a mortgage should also be brought there to avoid multiplicity.

[12] Toronto often receives allegedly urgent motions dealing with mortgages on land located in other regions of the court. Rule 13.01.01 (3) was designed at least partly to alleviate the regional mis-allocation of resources. It forced into Toronto claims for mortgage enforcement that counsel were taking elsewhere to try to benefit from speedier processing. The corollary however, is that claims about land outside Toronto should be brought in the appropriate region as well. Requiring such proceedings to be brought where the land is situate would appear to reflect the intended and a better allocation of scarce judicial resources.

[13] This matter will not be heard in Toronto before the scheduled closing date of December 1, 2021 i.e. tomorrow. Once the sale closes, any semblance of urgency is spent.

[14] I leave to the applicants the question of whether they may be able to have the proposed urgent motion heard in the Central East Region.

FL Myers J

Date: November 30, 2021