Court File and Parties

COURT FILE NO.: CV-19-629114

DATE: 20210205

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Home Trust Company, Plaintiff

AND:

Maureen Patricia Nelson-Maalouf and Louis Maalouf, Defendants

BEFORE: Paul B. Schabas J.

COUNSEL: Jeffrey Kukla, for the plaintiff

Louis Maalouf, in person

HEARD: February 1, 2021

reasons for judgment

[1] This is a motion for summary judgment brought by the plaintiff for payment of arrears owing under a mortgage, and for possession of the property related to the mortgage.

Background

[2] The defendant, Maureen Patricia Nelson-Maalouf, granted a mortgage to the plaintiff dated July 18, 2012, which charged the property known as 2 The Outlook, in Etobicoke (Toronto), for a 1-year term securing the principal sum of $513,750.00 (the “Charge”). Ms. Maalouf’s husband, Louis Maalouf, guaranteed the Charge.

[3] The Charge was renewed annually between the parties from 2013 to 2018. Each year the plaintiff would send a Renewal Acceptance letter for the defendants to execute confirming the terms of the Charge which the plaintiff was prepared to offer for the coming year. The Renewal Acceptance letter would also provide that if the offer was not accepted and the Charge was not repaid, the Charge would be renewed for an open 12-month term at a specified rate of interest, which was higher than that contained in the offer. At each renewal date the principal amount was adjusted to reflect payments made and fees which the plaintiff was entitled to charge under the terms of the Charge. Each year the defendants would receive an annual mortgage statement and a schedule of fees charged by the plaintiff.

[4] In 2016 the defendants did not execute the Renewal Acceptance letter promptly, or discharge the Charge, which led to the plaintiff renewing the Charge for an open term at a higher rate of interest as set out in the Renewal Acceptance letter. However, shortly thereafter the defendants said they wished to accept the offer and the plaintiff accommodated that request.

[5] In 2017, there was a similar problem. The plaintiff did not receive acceptance of its offer, or repayment of the principal, and so it renewed the Charge for an open term at a rate of 8.99%. This apparently only came to Mr. Maalouf’s attention in June 2018, when he claimed that he had executed the Renewal Acceptance in 2017 and requested a refund of the additional interest paid based on the open rate. The plaintiff did not provide a refund but reduced the interest rate for the balance of the term (July and August 2018) to 4.99%.

[6] In August 2018, the parties agreed to renew the mortgage for a further year at an interest rate of 4.5%.

[7] In 2019, by letter dated June 20, 2019, the plaintiff’s Renewal Acceptance letter offered to renew the mortgage at an interest rate of 5.35%, and informed the defendants that if the offer was not accepted or the mortgage was in arrears then the Charge would be renewed for “the 12 Months OPEN**** option at 8.5%.”

[8] Mr. Maalouf sought better terms. His correspondence indicates that he returned the offer but with a proposed interest rate of 3.6%. Home Trust then offered to renew at 4.5%. Mr. Maalouf was reminded by Home Trust that if no agreement was reached then the open terms would apply.

[9] Home Trust’s proposal of 4.5% was not acceptable to Mr. Maalouf and no agreement was reached. Consequently, in accordance with the letter of June 20, 2019, the plaintiff renewed the mortgage on an open basis at 8.5%.

[10] The defendants then stopped making monthly payments, and on August 27, 2019 the plaintiff issued a Notice of Sale Under Charge.

[11] On January 10, 2020, the plaintiff issued a Mortgage Discharge Statement identifying amounts owing at that time. This included a principal balance as of July 1, 2019 of $465,423.74, plus interest and other fees arising since the default in August, 2019, for a total outstanding of $491,636.40.

Issues

[12] The issue is whether the plaintiffs are entitled to summary judgment on the amount outstanding and to possession of the property.

Analysis

[13] In my view, the plaintiff is entitled to judgment as requested. The evidence clearly establishes liability against both defendants and is uncontradicted. Maureen Patricia Nelson-Maalouf is the Chargor. Mr. Maalouf guaranteed the debt.

[14] When the defendants did not agree to the offered rate in August 2019, the plaintiff was entitled to automatically renew the loan on the terms set out in the renewal notice. Section 2.3(b) of the Standard Charge Terms provides:

The initial loan may also be automatically renewed where before the balance due date we send to you a notice offering to renew the outstanding loan amount at certain rates and terms and you do not respond in writing accepting one of the renewal terms offered, or you do not pay the loan amount in full or you have not made other arrangements for payment or extension with us on or before the balance due date. In that circumstance, you agree the initial loan will be renewed for the term and at the rate for automatic renewal we set out in the renewal notice we send you. We may in the same way automatically renew any other fixed term loan you may have with us. [emphasis added]

[15] This is what happened. The defendants then chose to allow the mortgage to go into default, which gives rise to the remedies now sought.

[16] Mr. Maalouf initially pleaded that he had not guaranteed the loan, but this position was not pursued on the motion.

[17] Mr. Maalouf refers to s. 2.3(a) of the Standard Charge Terms in support of his argument that any change requires agreement. The section states:

We may, at our option and by agreement with you, change any part of the mortgage. This change could include renewing or amending the initial loan or increasing the principal amount or other terms of the mortgage.

[18] However, this section is immediately followed by the more specific provision in s. 2.3(b) which deals with the situation where the chargor has not agreed to a change and the term of the agreement has elapsed. In these circumstances, s. 2.3(a) has no application.

[19] Mr. Maalouf also objects to summary judgment by asserting that there are financial disputes over the outstanding closing balance, referring to the account history statement dated November 28, 2019 which he has now obtained listing interest, fees and other charges that were charged to the defendants since 2012.

[20] However, all charges prior to the renewal of the mortgage in 2019 were included in the annual statements and added to the principal each year, and Mr. Maalouf knew or ought to have known of those charges. The vast majority of these charges were made more than two years ago, and any claim by Mr. Maalouf for reimbursement of them is likely barred by ss. 4 and 5 of the Limitations Act, 2002.

[21] Further, and in any event, Mr. Maalouf has not pointed to any charge or interest amount included in the January 10, 2020 Mortgage Discharge Statement that is not permitted by the Charge and fee schedules disclosed to him every year, nor has he asserted any claim, or counterclaim, relating to them. Accordingly, he has led no evidence of any issue that would require a trial.

[22] I note that although Mr. Maalouf has represented himself on this motion, the matter was the subject of a number of appearances, including case conferences before me, in which the need for evidence was emphasized to him. He has been given ample opportunity to respond to the claim, even though he has missed peremptory deadlines. Nevertheless, he has only filed an unsworn statement, despite my direction in November 2020 to have it sworn forthwith.

[23] Mr. Maalouf has also raised concerns about the plaintiff’s marketing practices, asserting that it has falsely made representations that it will give customers lower rates than what was offered to the defendants. I see no support for this in the record and, in any event, it does not provide the defendants with a defence to the enforcement of the Charge by the plaintiff.

[24] In the circumstances, therefore, there is no genuine issue requiring a trial with respect to liability or damages. The facts are clear, well-supported and uncontradicted, making this an appropriate case for summary judgment: Hryniak v. Mauldin, 2014 SCC 7 at para. 49. Accordingly, I grant judgment for the plaintiff.

[25] Mr. Maalouf’s actions, he stated to me, were driven by a desire to negotiate with the plaintiff, and he suggested in argument that I should fix a rate between 3.6% and 4.5%. That is simply not open to me to do. Courts do not create agreements between parties; they adjudicate disputes that arise from agreements, as in this case.

[26] Mr. Maalouf also feels it is unfair to now have to pay the charges and interest imposed on him which have accumulated for the past 18 months, complaining that the case has been delayed by the COVID-19 outbreak. However, the motion for summary judgment was brought in January 2020, before the pandemic, and Mr. Maalouf has not paid anything to the plaintiff for a year and a half yet has continued to live in the property. His objection to summary judgment, asking that the matter go to a trial, would simply cause more delay and expose him to more liability for interest at 8.5%. As I direct below, interest at 8.5% will stop as of the date of this judgment, although the amount owing will still be subject to interest at the rate set under the Courts of Justice Act.

[27] Mr. Maalouf must realize that he has brought this situation on himself. He acknowledged to me that he is a real estate agent. He knew from the experience in 2017-2018 that the plaintiff could, and would, charge a higher rate if he did not agree to the proposed rate and did not repay the loan. In fact, he was successful in negotiating a lower rate in the summer of 2019, but it simply wasn’t as low as he hoped. It was, however, the same rate he had paid the previous year. He had the option of accepting or going elsewhere, and he knew that if he did neither the plaintiff would renew on open terms at 8.5%, which is what happened.

[28] As pointed out by counsel for the plaintiff, the legal fees of $3,208.82 included in the January 10, 2020 statement shall be removed as those should be considered when I deal with costs. Accordingly, the plaintiff shall have judgment against the defendants in the amount of $488,427.58.

[29] Pre-judgment interest from January 10, 2020 shall be calculated at a rate of 8.5% per annum. Post-judgment interest shall be based on the applicable rate set pursuant to the Courts of Justice Act.

[30] The plaintiff is also entitled to possession of the property and leave is granted, if necessary, to issue a Writ of Possession.

[31] Unless costs can be agreed upon, the plaintiff may provide brief submissions on costs to me within 2 weeks of the date these Reasons are released, and Mr. Maalouf may provide a brief response within 7 days after receipt of the plaintiff’s costs submissions.

Paul B. Schabas J.

Date: February 05, 2021