Court File and Parties

Date: 2022-07-19 Superior Court of Justice - Ontario

Re: 2495940 Ontario Inc., Applicant And: 2633346 Ontario Inc., Respondent

Before: Vella J.

Counsel: Behrouz Amouzgar and Stefanija Savic, for the Applicant Scott Turton, for the Respondent John Mather, for Alijan Alijanpour, proposed intervenor

Heard in writing: July 14, 2022

Endorsement

[1] On February 24, 2022 I conducted a further case conference in this matter.

[2] I was advised that the timetable I had imposed leading to a hearing of the trial of an issue I ordered had not been complied with.

[3] The Applicant now takes the position that I ought to re-open my decision with respect to my determination that, subject to the fraud allegations (raised by the Applicant by way of its Reply Factum which has led to this inefficient process), the Respondent’s renewed first mortgage, with its amended terms, maintains priority over the Applicant’s second mortgage.

[4] The Applicant neglected to raise s. 93(4) of the Land Titles Act, R.S.O. 1990, c. L.5 at the original hearing of this matter which it says will dispose of the proceeding in its favour.

[5] The Respondent objects and submits that it is too late to raise a new argument that could have been raised at the initial hearing.

[6] I requested written submissions on this discreet issue relating to my jurisdiction, focused on the doctrine of functus officio. I have received and reviewed these submissions.

[7] I have considered the Applicant’s submissions that I am not functus since my Order does not entirely dispose of the application (Chandler v. Alberta Association of Architects, 1989 CanLII 41 (SCC), [1989] 2 S.C.R. 848 at p. 862). The Court of Appeal, in quashing the Applicant’s notice of appeal relating to my Order, stated that my Order was not final, as I have expressly reserved jurisdiction relating to the allegation of fraud.

[8] The Applicant submits that if I permit this new argument under the Land Titles Act (which has nothing to do with the fraud allegations it has made), it will not offend the public policy principles underlying the doctrine of functus officio (see, Doucet-Boudreau v. Nova Scotia (Department of Education), 2003 SCC 62, [2003] 3 S.C.R. 3 at para. 79; Doctrine of Functus Officio: The Changing Face of Finality’s Old Guard, Canadian Bar Review, vol. 98, no. 3, at pp. 459, 457-8).

[9] The Applicant also relied on a decision of the Prince Edward Island Court of Appeal, in Ayangma v. French School Board, 2011 PECA 3, 306 Nfld. & P.E.I.R. 103 at para 16, which dealt with a motion to re-open a decision under its rules of practice and drew an analogy to r. 59.06 which is our version of that rule. The Applicant relies on the portion of the cited paragraph that suggests that a judge, when faced with a motion to re-open a decision, ought to consider matters that ought to have been brought to the judge’s attention at the time of the hearing but neglected to.

[10] However, in Ayangma, the party had neglected to draw the Court of Appeal’s attention to his argument that the findings of the trial judge were based on inadmissible evidence. He sought to have the Court reconsider its decision based on this alleged legal error. The Court dismissed the appeal on the basis that the Notice of Motion did not provide a basis of jurisdiction for the Court to reopen the appeal.

[11] Of more import, is the part of the Court’s reasons in that same paragraph (16) that “[t]he general rule that a final decision of a court cannot be reopened, subject to the exceptions to correct a slip in drawing it up, or where there was an error in expressing the manifest intention of the court, is not meant to provide an avenue to deal with arguments that could have been advanced, but were not”.

[12] In my view, the true focus of this analysis is on the limited jurisdiction that I reserved to myself with respect to the trial of an issue, and whether my determination of the balance of the Application was final in the sense that I have determined the legal issues raised subject only to the fraud issue. At paras. 25-28 and 74 of my Reasons released December 18, 2020, I expressly limited that jurisdiction to the issue of whether or not the assignment of the First Mortgage to the Respondent, resulting in amended financial terms more favourable to the Respondent, was fraudulent and deprived the Applicant from realizing its shortfall under the second mortgage after the mortgaged property was sold.

[13] Accordingly, the fact that my resulting Order was not final in the sense that it could not be appealed or enforced is not the right focus in this analysis.

[14] It is important to emphasize that it was the Applicant’s neglect to identify and raise fraud in the first place, that then made the Application the wrong originating process and led to the current situation. It was at the Applicant’s request and urging, contrary to the Respondent’s position, that the court granted this indulgence and ordered a trial of this issue so that the merits of this serious allegation could be made.

[15] The Applicant is yet again seeking this court’s indulgence to advance new arguments that were well known to it (or could have been) premised on the Land Titles Act and requiring no new facts, very late in the day, to revisit my Reasons on the issues that I have fully determined, on the joint consent of the parties, at the hearing of the Application on August 21, 2020.

[16] In Canadian Broadcasting Corp. v. Manitoba, 2021 SCC 33, 461 D.L.R. (4th) 635, the Supreme Court drew a distinction between the court’s (broad) ability to change its final order where it is related to its supervisory authority over its own record (in that case, a request to change a publication ban after a final disposition of the underlying proceeding, characterized as a procedural order) and the doctrine of functus officio which permits only a narrowly prescribed jurisdiction in the court to amend or vary its own final judgment relating to the merits of the underlying dispute.

[17] Of particular relevance to my analysis is the Supreme Court’s observation at para. 35 that “functus officio is only one of several legal principles designed to promote the [public policy] goal of finality” which is important so that a party has a firm decision to appeal, as opposed to “shifting sand” (para. 34), that would result from reopening a judgment to permit further new arguments raised after the hearing.

[18] The key distinguishing feature from the cases relied upon by each party is that I am being asked to re-open my decision to hear a new legal argument with respect to a discreet legal issue that I have determined but which is not fully determinative of the Application because of the discreet pending issue of fraud. As put by the Applicant, there is no “final” order from which they can appeal or enforce.

[19] However, I disagree with the Applicant’s position that should I permit a re-opening of the argument on an issue which I have determined (namely the priority of the respective mortgages under the Mortgages Act, Land Titles Act and the land titles system in Ontario), I will be still respecting the public policy objectives underlying the doctrine of functus officio.

[20] As stated by the Supreme Court in Canadian Broadcasting Corp., at para. 35, the doctrine of functus officio does not have a “monopoly on finality”.

[21] The proposed new legal argument, premised on a provision of the Land Titles Act, could have been made by the Applicant at the hearing. To permit a new legal argument to be made at this juncture would, in my view, offend the public policy goal of finality in legal proceedings.

[22] Allowing the Applicant to raise new arguments on the issue I have determined would give rise to the “shifting of sands” warned against by the Supreme Court. It would have the effect of allowing a party to constantly raise new arguments which were available to it at the original hearing. This is not permitted. The Applicant’s recourse will be an appeal if it deems warranted.

[23] The efficiency and integrity of the application process, including the important principle of finality, requires that, in these circumstances, I decline the Applicant’s request. It would be counter to the principle of finality to allow my decision to be effectively re-opened with respect to the discreet and extricable legal issue I have determined; namely, the order of priority of the assigned Renewed First Mortgage and the Second Mortgage based on legal and statutory principles under the land titles regime and governing statutory framework, without any consideration of alleged impropriety on the part of the Respondent in having acquired the First Mortgage.

[24] The issue of fraud will be determined on a different set of facts, comprised of evidence that was not before me at the hearing, and within the legal context of fraud.

[25] The Applicant’s motion is denied. Costs are reserved to be spoken to at the next case conference.

[26] The next step is to schedule the proposed intervenor’s (Alijan Alijanpour) motion to intervene at the trial of the fraud issue, and to schedule a further timetable and hearing date, and to address the costs of this motion.

[27] A case conference will be convened before me.

Justice S. Vella

Date: July 19, 2022