Court File and Parties

COURT FILE NO.: CV-22-873 DATE: 2023/03/06 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: T.I.T.E. LTD., Plaintiff AND: TROY DOS SANTOS, Defendant

BEFORE: Justice I.F. Leach

COUNSEL: No one appearing for the Plaintiff [1] S. David Hwang, for the Defendant

HEARD: March 6, 2023

Endorsement

[1] This matter came before me yesterday as an urgent special appointment hearing, in respect of which two hours of hearing time had been reserved.

[2] By way of general background, gleaned from the moving defendant’s motion record, the court filings available on the court’s electronic filing system, and email correspondence provided to me by defence counsel at the request of counsel for the plaintiff, who nevertheless did not appear yesterday:

a. On May 30, 2022, counsel apparently then acting for the defendant, Valerie Dye, wrote to plaintiff counsel, attaching a request for a mortgage discharge statement; i.e., apparently signalling the defendant’s desire to pay the entire debt secured by the mortgage and have it discharged.

b. On June 2, 2022, a law clerk working with plaintiff counsel provided the requested payout statement, as well as information that would enable a direct deposit to the bank account of plaintiff counsel.

c. On June 7, 2022, plaintiff counsel wrote to defence counsel Ms Dye, requesting an update as to when she expected the proposed transaction, (i.e., the defendant’s anticipated payout of the relevant mortgage), to close.

d. On June 8, 2022, plaintiff wrote to defence counsel Ms Dye again, once again requesting an update, and noting that the plaintiff had held off on enforcement proceedings after being advised that the relevant mortgage would be paid out on June 3, 2022. Later that day, Ms Dye sent plaintiff counsel responses indicating that she was getting instructions to close the contemplated transaction on June 13, 2022, and that she would be receiving those instructions.

e. On June 13, 2022, Ms Dye’s office wrote to plaintiff counsel, indicating receipt of mortgage instructions from the defendant’s lender, and that the defendant would be coming into the office that day to sign necessary documents. However, Ms Dyet also indicated an inability to close the payout transaction that day. An extension until June 15, 2022, was requested. Later that day, plaintiff counsel sent Ms Dye’s law firm a further email indicating that the plaintiff was agreeable to that proposed extension.

f. On June 15, 2022, the law clerk working for plaintiff counsel sent Ms Dye’s office repeated requests for an update, and an indication of whether the defendant was expected to payout the mortgage that day.

g. The mortgage thereafter nevertheless obviously was not paid out and discharged, as the plaintiff issued its statement of claim herein on June 17, 2022, seeking various forms of relief, including a judgment for:

i. $749,748.02 said to be owing in relation to a mortgage registered against a residential property known by its municipal address as 948 Cecylia Court, in Pickering, Ontario, (“the property”), which was the defendant’s home at the time; and

ii. possession of that property.

h. An affidavit of attempted service filed with the court, in support of a motion for an order permitting substitute service, indicates that a process server repeatedly attempted to serve the defendant with the plaintiff’s statement of claim by attending at the property several times, (e.g., on June 21, June 25, July 4 and July 17, 2022), at various times of the day, without success. The plaintiff then moved for and obtained an Order permitting substitute service of the statement of claim on the defendant by regular letter mail or registered mail addressed to the defendant at the property.

i. When the plaintiff thereafter failed to deliver a statement of defence, the plaintiff filed a requisition for default judgment; a judgment that was issued on August 24, 2022.

j. Email correspondence exchanged in October of 2022 seems to indicate that the plaintiff and defendant were engaged in renewed negotiations through their representatives, (with the defendant now being represented by new counsel, Chayanika Dutta), to arrange a “payout” of the relevant mortgage in full. In particular, on October 24, 2022, plaintiff counsel:

i. advised that the property currently was under a power of sale;

ii. provided a breakdown and “payout statement” indicating the funds required payout the mortgage in full as of that date; and

iii. asked if the defendant would be able to complete the payout that day, failing which plaintiff counsel was requesting an indication of when the defendant expected to be in that position so that plaintiff counsel could “review the next step in the enforcement proceedings” with their client.

k. The plaintiff subsequently then moved for leave to issue a writ of possession; leave which was granted by an order made on November 15, 2022.

l. On December 14, 2022, new counsel representing the defendant, Jayanta Singh, wrote to plaintiff counsel, requesting immediate provision of a mortgage statement for discharge purposes; i.e., once again suggesting that the defendant would pay the outstanding mortgage debt in full, so that the plaintiff’s mortgage would be discharged.

m. On December 19, 2022, plaintiff counsel responded to that request, indicating that a payout statement would be sent the next day. In the meantime, plaintiff counsel asked for confirmation that defence counsel was in receipt of a mortgage commitment (with conditions fulfilled), and for confirmation of the proposed payout date. Later the same day, defence counsel Mr Singh responded with an email asking that the payout statement not be sent, as defence counsel did not yet have a mortgage commitment.

n. On January 23, 2023, new counsel retained by the defendant, Nooruddin Waliani, wrote to plaintiff counsel asking for provision of a discharge statement; i.e., once again suggesting that the plaintiff would pay the plaintiff’s mortgage debt in full, thereby allowing the mortgage to be discharged and the plaintiff to regain the property. However, plaintiff counsel responded the next day, after speaking with the plaintiff, indicating that the plaintiff had accepted a firm offer for the property, such it was not in a position to accept a payout of the mortgage. Plaintiff counsel would not hear from Ms Waliani again until February 27, 2023.

o. On February 7, 2023, new counsel retained by the defendant, Michelle Baksh, sent plaintiff counsel an email indicating that she had been retained, and requested provision of a mortgage statement for discharge purposes as of February 14, 2023.

p. On February 27, 2023, Ms Waliani, apparently still under the impression she continued to act for the defendant, (notwithstanding the correspondence sent to plaintiff counsel by Ms Baksh 20 days earlier), requesting provision of plaintiff counsel’s “discharge statements and ledger”, based on her understanding “that there would be funds left over to pay [her] client”; i.e., the defendant. That correspondence seems to indicate the plaintiff’s acceptance that the property would be sold, but a hope that there would be residual sale proceeds directed to the defendant after the mortgage debt owed to the plaintiff had been satisfied.

q. On February 28, 2023, (i.e., the day before the scheduled completion of the sale of the property contemplated by the aforesaid agreement of purchase and sale), the defendant, now represented by Mr Hwang, filed his motion material herein, seeking relief that would include:

i. an interim order requiring the plaintiff to cease any further enforcement of its default judgment, including any sale or transfer of the property;

ii. an order permitting the defendant to register a certificate of pending litigation against title to the property;

iii. if necessary, an order:

1. declaring that the contemplated sale of the property be set aside;
2. setting aside the Notice to Vacate received by the defendant in relation to the property;
3. allowing the defendant to repossess the property; and
4. declaring the contemplated sale of the property to be null and void.

r. On Tuesday, February 28, 2023, counsel for the defendant served the defendant’s notice of motion herein on the plaintiff, via the plaintiff’s counsel of record.

s. On the same day, (i.e., Tuesday, February 28, 2023), counsel for the defendant, by way of correspondence directed to the office of the London trial co-ordinator, requested an urgent hearing of the motion, despite his not yet having commenced any proceeding, relying on Rule 37.17 of the Rules of Civil Procedure; i.e., a rule which permits a motion to be made before the commencement of a proceeding on the moving party’s undertaking to commence a proceeding forthwith. In that letter to the London trial co-ordinator, counsel for the defendant’s justifications for an urgent hearing included the following:

i. the defendant was never served with the plaintiff’s statement of claim;

ii. the defendant was never served with a notice of sale;

iii. the defendant was “unlawfully evicted” from his home, (i.e., the property), on December 15, 2022;

iv. the defendant embarked on discussions with a mortgage broker in January of 2023, and has had funds available to redeem the outstanding mortgage since January 9, 2023;

v. the defendant had contacted the plaintiff mortgagee to indicate that the defendant now had funds available to pay the full outstanding amount owed to the plaintiff, and was ready and willing to pay the amount required to discharge the outstanding mortgage;

vi. on January 22, 2023, the plaintiff nevertheless entered into the aforesaid purchase and sale agreement, a copy of which was received by the defendant on or about February 20, 2023;

vii. the defendant believed the actual value of the property was much higher than the sale price of $916,000.00 contemplated by the aforesaid agreement of purchase and sale, such that a sale of the property at that price would cause the plaintiff to lose not only his home but all of his equity in the property;

viii. sale of the property was imminent, insofar as the aforesaid agreement of purchase and sale was scheduled for completion on March 1, 2023; and

ix. the defendant believed that any resulting prejudice experienced by the mortgagee plaintiff and the purchasers, through granting of the relief being requested by the defendant, could be “remedied through financial compensation”.

t. On March 3, 2023, Mr Hwang served the defendant’s motion record on the plaintiff, via the plaintiff’s counsel. The affidavit sworn by the defendant, contained therein, includes indications:

i. that the plaintiff was served with a notice to vacate the property, (dated November 19, 2022), during the first week of December, 2022;

ii. that the plaintiff “immediately” left the property as instructed, leaving all his personal belongings behind;

iii. that the sheriff entered the property “in or around the first week of January”, advising the defendant that “the home was being sold”, and moving the plaintiff’s belongings into the property’s garage;

iv. that the defendant had received a copy of the aforesaid agreement of purchase and sale, without specifying the date on which that had happened;

v. that the defendant had been in discussions with a private lender, and now had the funds available to redeem the outstanding mortgage owed to the plaintiff;

vi. that the defendant “firmly believed”, “at all material times”, that he was in negotiations with the plaintiff for the “renewal” of his mortgage; and

vii. that neither the defendant nor the holder of a subsequent or second mortgage on the property had never received a “notice of sale under mortgage”.

[3] When the matter came on for hearing before me earlier today, I noted at the outset:

a. that there was no evidence before me to indicate that the aforesaid agreement of purchase and sale had not closed last Wednesday, (i.e., March 1, 2023), as contemplated;

b. that there was nothing before me to indicate that those scheduled to purchase the property had done anything wrong, or had any notice of the defendant’s intention to advance any further claims in relation to the property;

c. that there accordingly was a strong possibility and indeed probability that those individuals had not only purchased and acquired title to the property, but that they also had done so as bona fide purchasers for value without notice of any equitable interest or other claims the defendant may have had in relation to the property, making it unlikely that their acquisition of title to the property could be “undone” at this point;

d. that there was nothing to indicate that those apparent purchasers of the property had received any notice whatsoever of the defendant’s motion, which Mr Hwang confirmed to be the case;

e. that I was not prepared to grant the relief requested by the defendant, (which obviously would have a significant impact on title to that property), without those apparent purchasers being given notice of the motion and a meaningful opportunity to be heard; and

f. that the circumstances justifying an urgent hearing of the defendant’s motion, (i.e., a desire to obtain relief preventing any sale of the property before that occurred as scheduled on March 1, 2023), had now changed following the scheduled closing date, when title to the property seemed likely to have passed, confining the defendant to requests for remedial relief rather than preventative relief.

[4] In the circumstances, I adjourned the defendant’s motion to Friday, March 24, 2023, to provide the defendant with an opportunity to serve the apparent purchasers of the property with his motion record and provide those apparent purchasers with an opportunity to retain legal counsel if necessary and desired.

[5] In that regard, I indicated to Mr Hwang that the defendant’s motion likely would not proceed to argument on its merits that day; e.g., given Mr Hwang’s indication that the motion today would require at least two hours to be heard, even without the participation of plaintiff counsel.

[6] The matter instead almost certainly will require a further special appointment hearing date if the defendant’s motion is moving forward; a date that can and will only be provided if Mr Hwang and the apparent purchasers (or their counsel) have completed the appropriate certificate of readiness required by the Consolidated Regional Practice Direction for the Southwest Region.

[7] In other words, the matter has been adjourned in the first instance to Friday, March 24, 2023, only to be “spoken to” that date; i.e., to provide the court with further information as to the anticipated progress of this matter.

[8] Notwithstanding that adjournment, I thought it advisable to provide the background outlined above because:

a. anticipating a hearing of the defendant’s urgent motion on the merits, I invested the time required to review the defendant’s motion material and the correspondence which plaintiff counsel had asked Mr Hwang to provide to the court; and

b. in my view, the history of this matter makes it clear:

i. that the defendant, working his way progressively through no less than six different lawyers over the past nine months, repeatedly has made overtures indicating his intention to pay his mortgage debt to the plaintiff and redeem the property, all of which successively have come to naught;

ii. that the defendant, through counsel, has known of the plaintiff’s power of sale efforts since October 24, 2022, if not before;

iii. that the defendant’s knowledge of the plaintiff’s mortgage enforcement efforts clearly would have been reinforced by his receipt of the Notice to Vacate and forced departure from the property in December of 2022, and the removal of his belongings from the property by the sheriff in early January of 2022;

iv. that the defendant, through counsel, was advised of the relevant agreement of purchase and sale as long ago as January 23, 2023; and

v. that the defendant nevertheless delayed initiation of any formal measures to prevent a sale of the property until February 28, 2023; i.e., the day before the scheduled completion/closing of the plaintiff’s agreement of purchase and sale.

[9] Whether the defendant should be entitled to any equitable or other relief in such circumstances is a matter I leave to the judge hearing and deciding the defendant’s motion on its merits.

Justice I.F. Leach Date: March 6, 2023

[1] The plaintiff has been represented through this proceeding by Jeffrey D. Elliott, of Elliott Law; i.e., a law firm based here in London. As noted below, while Mr Elliott did not appear at the hearing before me, (and Kim Elliott from the same law firm apparently advised Mr Hwang by telephone that no one would be appearing to address the defendant’s motion), Mr Hwang was asked by Elliott Law to provide the court with copies of extended email correspondence exchanged between Elliott Law and a succession of lawyers retained by the defendant over the past nine months. Mr Hwang did so.