COURT FILE NO.: CV-22-00678867-0000 DATE: 20231109 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Newland Financial Inc., Plaintiff AND: Majid Peighambari, and Fariba Yousef-Hashtiyani, Defendants

BEFORE: Justice A.P. Ramsay

COUNSEL: Robert B. Macdonald, for the Plaintiff HEARD: In Writing

Endorsement

I. Nature of the Motion

[1] The plaintiff, Newland Financial Inc., moves for judgment as against the defendants, Majid Peighambari and Fariba Yousefi-Hashtiyani for default judgment on a proposed amended statement of claim, an order abridging the time for service of the motion record, and an order amending the statement of claim. The Notice of Motion seeks damages in the amount of $332,213.01, plus prejudgment interest at the rate of 11.5% per annum or, alternatively, in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, as well as post judgment interest on the same basis.

[2] The motion was heard in writing under subrule 37.12.1(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, because the motion was unopposed.

II. Background

[3] The underlying claim is for damages arising because of alleged deficiency suffered by the plaintiff in enforcing two mortgages given by the defendants.

[4] The plaintiff, Newland Financial Inc. ("the plaintiff”) is a corporation incorporated under the laws of the Province of Ontario and carries on business in the Province of Ontario.

[5] The defendant, Majid Peighambari, was the registered owner of the property known as 46 Woodbury Crescent, Newmarket, Ontario, and provided first and second mortgages to the plaintiff on the property.

[6] The defendant, Fariba Yousefi-Hashtiyani, was the registered owner of the property municipally known as 118 Springhead Gardens, Richmond Hill, Ontario, and provided first and second mortgages to the plaintiff on the property.

[7] The defendants defaulted on the mortgages. The plaintiff obtained default judgment in a prior proceeding with respect to a first and second mortgage given by the defendants to the plaintiff and secured by property owned by the defendants.

[8] In this proceeding, the statement of claim apparently seeks damages in the amount of $279,815.91, allegedly suffered by the plaintiff as deficiency in the completion of the sales of the properties. The original statement of claim is not before the court. The Registrar declined to sign judgment, which precipitated this motion before the court.

[9] The plaintiff indicates that it was only in preparing this motion that it discovered that its damages are higher than previously calculated, which requires an amendment to the statement of claim increasing the damages claimed in the prayer for relief to $332,213.00 plus interest.

[10] After reviewing the materials, I am satisfied that the motion must be dismissed for the following reasons.

III. Disposition

[11] After reviewing the materials, I am satisfied that the motion must be dismissed for the following reasons.

IV. Analysis

(i) Motion to amend the statement of claim

[12] There are three reasons why the motion to amend the pleadings is not being determined. First, the only motion scheduled by the plaintiff was a motion for default judgment, with a schedule imposed, and a direction by the triage judge directing that the endorsement be served on the defendants. Second, an amended statement of claim must be served on the defendant. Third, in the Toronto Region, a motion to amend pleadings is within the jurisdiction of an Associate Judge.

[13] Firstly, in the Toronto Region, all unopposed or consent motions are triaged by a judge before a date is assigned and, at the same time, the triage judge evaluates whether the mode of hearing requested is appropriate, a schedule is required for the hearing and the requirement, if any, of notice to the adverse party.

[14] In this case, in August 2023, counsel for the plaintiff filed the requisite “Requisition To Schedule Short Motion Or Application” form to the Civil Scheduling Unit. The form indicated that the plaintiff was requesting a date for a motion for default judgment under r. 19.05 of the Rules of Civil Procedure and asked that the motion be heard orally. The affidavit of Sally Poursiamak in support of the motion, was sworn on February 24, 2023, almost 6 months before the requisition was submitted to the court for a motion date. The plaintiff should be bound by the motions that it indicated that it would proceed with as set out in the endorsement of the triage judge, and as served on the defendants.

[15] On August 18, 2023, the triage judge, Justice Callaghan, issued an endorsement assigning a date of September 21, 2023, for the hearing of the motion for default judgment to be heard in writing. In his endorsement, Justice Callaghan directed that the endorsement be served on the defendants, and he established a schedule to govern the process for the motion for default judgment. The endorsement did not address the plaintiff’s motion to amend the pleadings.

[16] The plaintiff now seeks judgment in an amount in excess of the damages claimed in the statement of claim. In order to obtain judgment for the new increased amount, the plaintiff now seeks an order to amend the statement of claim to increase the claim for damages. The statement of claim was issued on March 24, 2022, seeking damages in the amount of $279,815.90.

[17] Secondly, Rule 26.01 of the Rules of Civil Procedure provides that an amendment to pleadings is mandatory unless non-compensable prejudice to the opposing party would result. The plaintiff submits that there is no prejudice to the defendants as proposed amendments relate only to the quantum of damages claimed. The plaintiff further submits that the applicable limitation period is 10 years under section 43 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, which the plaintiff submits has not yet expired. As a result of the procedural issues below, I will not address the merit of the amendment to pleadings motion.

[18] An amended statement of claim however must be served on the parties affected. Under subrule 26.04 of the Rules of Civil Procedure, an amended pleading “shall be served forthwith on every person who is, at the time of service, a party to the main action or to a counterclaim, crossclaim or third-party claim in the main action, unless the court orders otherwise.” [Emphasis added] The rule is mandatory.

[19] To proceed with a motion to grant the judgment in accordance with the proposed amended statement of claim would deprive the defendant of their procedural rights afforded to them under subrule 26.05 (1), which permits them to respond to the amended pleading within the timeframe under the Rules of Civil Procedure. I am not inclined to speculate that as to whether the defendants will respond, if served, with the amended statement of claim.

[20] Thirdly, a motion to amend pleadings is within the jurisdiction of an Associate Judge.

(ii) Claim for liquidated damages – Jurisdiction to hear motion

[21] This is also a claim for liquidated damages. An Associate Judge has jurisdiction under rule 19.04(3) to sign default judgment in respect to claim for which registrar does not have power to sign default judgment under rule 19.04(1) of the Rules of Civil Procedure. Rule 19.04(1)(a) includes “a debt or liquidated demand in money”, which is the amount being claimed in the statement of claim.

[22] The definition of a liquidated claim was considered by the Nova Scotia Court of Appeal in the decision of Pick O'Sea Fisheries Ltd. v. National Utility Service (Canada) Ltd., 1995 NSCA 208, where the Court of Appeal noted at paras. 36 and 37:

36 "Liquidated demand" is not defined in the Rules.

37 The present English Rule, with respect to entering judgment in default of defence (Order 19, Rule 2), is similar to our Rule in that it refers to the case where the plaintiff's claim "is for a liquidated demand only". The words liquidated demand, as they are used in that English Rule, are defined in Precedents of Pleadings, Bullen & Leake, 12th edition, 1975 at p. 153 as follows:

"A liquidated demand is a debt or other liquidated sum. It must be a specific sum of money due and payable, and its amount must be already ascertained or capable of being ascertained as a mere matter of arithmetic. Otherwise even though it be specified, or quantified, or named as a definite figure that requires investigation beyond mere calculation, it is not a "liquidated demand" but constitutes "damages"."

[23] A liquidated claim includes a claim for a deficiency following mortgage default, and any shortfall or deficiency upon resale of the property at a loss: Christie Corp. v. Lawrence (1997), 35 O.R. (3d) 412 (Ont. C.A.), Corp. v. Donachey (1980), 30 O.R. (2d) 378 (Ont. H.C.).

[24] Rule 19.04(3.1) of the Rules of Civil Procedure outlines the available routes to a plaintiff where the registrar declines to sign judgment. It reads as follows:

(3.1) If the registrar declines to sign default judgment, the plaintiff may,

(a) move before a judge for judgment under rule 19.05; or

(b) in the case of a claim referred to in subrule (1), make a motion to the court for default judgment.

[25] In the Toronto Region a motion for liquidated damages claim is within the jurisdiction of an Associate Judge. Rule one final comment regarding jurisdiction. Rule 37.04 of the Rules of Civil Procedure governs to whom a motion must be made. It reads:

37.04 A motion shall be made to the court if it is within the jurisdiction of an associate judge or registrar and otherwise shall be made to a judge

[26] The rule is mandatory. In Bensusan v Ali, 2009 ONSC 63956 Matlow J. examined r. 37.04 in the context of the summary judgment rule, as it then existed, which permitted such a motion to be brought before a Master and a judge. Justice Matlow commented on the jurisdictional issue at paras 4 – 5 of his decision, stating:

Motions for summary judgment fall within the jurisdiction of a master pursuant to rule 37.02 (2) and rule 37.04 makes it mandatory that they be brought before a master. This rule reads as follows:

37.04 A motion shall (emphasis added in original text) be made to the court if it is within the jurisdiction of a master or registrar and otherwise shall be made to a judge.

Accordingly, this motion ought to have been brought before the master and, in my view, I am required to decline to hear it. I therefore adjourn the motion before the master to a date to be fixed.

[27] In Hitlab Inc. v. Anderson, 2015 ONSC 2535 and Shumak v. Oulahen, 2016 ONSC 5258, both decisions of Dunphy J., he exercised his jurisdiction to hear the motions. Justice Dunphy noted in Hitlab that he “elected exceptionally” to hear the matter but offered the following comments:

I advised counsel that I do not expect to see further instances of this occurring in the future. Access to justice is a major issue before our courts and failing to use the services of our Masters as they are meant to be used leads to inefficiencies and delays in our system to say nothing of the parties losing a substantive right of appeal. In having heard this matter, I do not wish it be considered by any that I am setting a precedent that violations of Rule 37.04 will be accepted or routinely overlooked.

[28] In Shumak, Dunphy J. again heard the motion while noting the mandatory language in r. 37.04 of the Rules but deprived the moving party of their costs. Recently, in Gu v. Huang, 2022 ONSC 7150 my colleague Sugunasiri J. chose to exercise her jurisdiction in hearing a motion as well. In the circumstances of this case, I need not consider whether the court ought to exercise its discretion and hear the motion for default judgment in the face of the anticipated amendment to the pleadings. Having now been alerted to the issue of jurisdiction, I would direct that if the plaintiff renews its motion for default judgment, that the proceed before an Associate Judge.

V. Conclusion

[29] The relief sought on this default motion for judgment is based on a relief in the proposed amended statement of claim. Even absent the jurisdictional issue raised, the motion for default judgment is premature until the pleadings are regularized. The motion for default judgment is dismissed, without prejudice to the plaintiff renewing its motion after any amendment to the statement of claim, and service of the amended claim on the defendant. The claim is for liquidated damages. The motion is within the jurisdiction of an Associate Judge. As for the motion to amend the statement of claim, if the plaintiff wishes to proceed with that motion, it can be transferred to an Associate Judge.

A.P. Ramsay J. Date: November 9, 2023