COURT FILE NO.: CV-18-1085 DATE: 2024 04 23

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N:

JASWANT KOONER Plaintiff G. S. Chandok and K. Dewani, for the Plaintiff

• and -

OMINIRA ADEGBORUWA Defendant B. Nagra, for the Defendant

HEARD: February 1, 2024

REASONS FOR DECISION DALEY J.

Introduction

[1] In this action the plaintiff mortgagee claims the payment of the balance of a second mortgage granted by the defendant mortgagor in the principal sum of $220,000, as advanced on August 12, 2016, along with interest at the rate of 12% per annum (the “Mortgage”).

[2] The property which is the subject of the second mortgage is located at 430 Brock Street North, Whitby, Ontario (the “Property”).

[3] The defendant was the owner of the Property, however she did not pay the monthly payments of $2200 during the term of the mortgage which expired on February 12, 2017.

[4] It is common ground that the defendant made three payments to the plaintiff on October 18, November 22, and in December 2016, in the amounts of $8150, $49,000 and $100,000 respectively. None of these payments were called for under the terms of the mortgage. However, there is a dispute as to whether those payments were in respect of the defendant’s liability under the terms of the second mortgage or related to other debts owing to the plaintiff.

[5] The parties disagree as to how the three payments made by the defendant are to be properly applied and specifically whether they were accepted by the plaintiff as credits against the Mortgage.

[6] Counsel for the plaintiff brought a motion for summary judgment which was scheduled to be heard in March 2024, however the case management judge ordered by his endorsement of October 13, 2023 that the date for the summary judgment motion be vacated and that the dispute as to the amount owing under the Mortgage would be determined by a reference. He also ordered that the Mortgage amount including accrued interest in the sum of $493,999.72 be paid into court to the credit of this action and that thereafter the Mortgage would be discharged.

[7] As to the conduct of the reference, by his endorsement of that date, he directed that the mortgage reference “determine the amount outstanding under the second mortgage.” No other terms of reference were provided.

[8] The case management judge further directed that the evidentiary record on the reference would be made up of the motion materials that had been filed for the summary judgment motion, along with any updated affidavit materials required, and that cross-examination and re-examination of the deponents would be conducted during the in-person reference hearing.

[9] The mortgage reference came before me on November 30, 2023, and it quickly became apparent that the parties were not prepared to proceed with an accounting reference as to the monies owing by the defendant under the terms of the subject Mortgage.

[10] The dispute between the parties extended far beyond the terms of a mortgage reference hearing and included issues of law related to the Statute of Frauds, R.S.O. 1990, c. S.19, parole evidence, waiver and estoppel. With the written evidentiary record, that was intended for use on the summary judgment motion, the parties were effectively looking to conduct a mini-trial that would otherwise proceed in the discretion of the motion judge on a summary judgment motion pursuant to rule 20.04 (2.2) of the Rules of Civil Procedure.

[11] Furthermore, as the evidence adduced by the parties conflicted in almost every respect, extensive findings of fact and determinations of credibility would be required in order to properly determine the matters in dispute, which again, would require an adjudicative process far beyond the scope of a reference and in particular the reference directed in this case.

[12] The issues that became evident upon the return of this reference would not have been readily apparent to the case management judge at the time the reference was ordered.

[13] In an effort to salvage the reference that had been directed and to determine if the scope of the issues in dispute could be narrowed, I ordered that the parties prepare and submit to the court an agreed statement of facts.

[14] Following the filing of the agreed statement of fact, the hearing of the reference continued before me on February 1, 2024, at which time cross- examinations were completed and counsel’s closing submissions were received.

[15] Unfortunately, the agreed statement of fact did not assist in narrowing the issues at stake to bring this matter into an adjudicative process required for a proper reference.

[16] For the reasons outlined below, I have concluded that given the nature of the mortgage dispute, the legal positions asserted by both counsel and the highly conflicting evidentiary record, this matter is well beyond the terms of the reference as directed and the scope of a proper hearing of a mortgage reference and as a result, I have concluded that I must dismiss the reference.

[17] I will make no findings of fact or legal determinations on this matter all of which will be left to the next court on a full record and within the context of the trial.

Applicable Legal Framework and Analysis

[18] In the reasons to follow I will consider the proper scope of a reference proceeding and whether the inherent jurisdiction of the court would afford the expansion of the reference as directed by the case management judge, to allow a full and proper determination of the issues in dispute.

[19] References relating to mortgages are governed by rules 54, 55 and 64.06 of the Rules of Civil Procedure.

[20] Rule 54.02 of the Rules of Civil Procedure provides that a judge may at any time in a proceeding direct a reference of the whole proceeding or a reference to determine an issue. Rule 54.02 (2) lists the issues that may be determined on a reference including (a) “the taking of accounts”.

[21] As to the procedural steps involved in the conduct of a reference, rule 55.01 of the Rules of Civil Procedure provides in summary that, subject to the directions contained in the order directing a reference, the court conducting the reference should adopt “the simplest, least expensive and most expeditious manner of conducting the reference…”

[22] Rule 64.06 of the Rules of Civil Procedure specifically deals with the conduct of a mortgage reference in an action related to foreclosure, sale or redemption of a mortgage. Given the scope of the order directing the reference in this case, this rule is not directly engaged: Fisgard Capital II Corp. v. Montgomery, 2022 ONSC 978, at para. 10.

[23] Notably, whether a referee is a judge or associate judge, their power is limited by the terms of the reference. Specifically, where the order directing the reference relates to a specific issue in dispute, as opposed to the whole proceeding, the referee’s jurisdiction will be restricted to the narrow issues as defined by the reference order.

[24] The terms of reference provided for in the case management judge’s order were limited to determining “the amount outstanding under the second mortgage.” Thus, the issues at stake in the whole proceeding are not included in the terms and scope of the reference. Alternatively, this case involves a reference to determine the outstanding amount under the second mortgage, which determination depends on findings of fact and legal determinations that must be made relative to the two other properties mentioned as well as the debts and investments relating to those properties.

[25] The evidentiary record with respect to the mortgage on the Property and the other properties referenced was entirely in conflict and rolled up with evidence relating to another mortgage and an alleged joint venture real estate investment and thus the reference did not involve simply an accounting as to what remained owing on the second mortgage on the Property, but also included issues as to what monies were paid and received in respect of these other properties and by which parties.

[26] Not only is the evidentiary record beyond the scope of the reference as defined by the order directing it but also it is well beyond the scope of the taking of accounts pursuant to rule 54.01 (2) of the Rules of Civil Procedure.

[27] In considering whether the issues at stake on this reference could properly and fairly be adjudicated, when examining all the evidence within the context of the terms of the reference, I also considered whether the reference could be conducted based on the court’s inherent jurisdiction and whether justice as between the parties could be achieved.

[28] The court’s inherent jurisdiction must be examined within the context of the applicable statutory framework and the Rules of Civil Procedure and specifically how these sources of judicial authority interplay.

[29] The Superior Court of Justice has historically exercised powers found in common law and equity, and it has been held that these include “all powers that are necessary to do justice between the parties” unless these powers are specifically limited by statute: 80 Wellesley Street East Limited v. Fundy Bar Builders Ltd., 1972 535 (ON CA) at para. 9.

[30] The Supreme Court of Canada in its decision in Endean v. British Columbia, 2016 SCC 42, stated that in considering the exercise of inherent jurisdiction, the courts should look first to their statutory powers before considering inherent jurisdiction (at paras. 22 – 23). Furthermore, the court stated that in view of the broad and loosely defined nature of the court’s powers based on its inherent jurisdiction, that jurisdiction should be “exercised sparingly and with caution.” (Para. 24).

[31] Thus, the Rules of Civil Procedure and the directions ordering the reference frame the jurisdiction as well as the process to be undertaking by the “referee”, whether by an associate judge or a judge of the Superior Court of Justice.

[32] The directions contained in the reference order simply call for the referee to “determine the amount outstanding under the second mortgage” in respect of the Property.

[33] The plaintiff denies that the payments made by the defendant as referenced above, were made in respect of the second mortgage and submits that the payments were in fact as follows:

(a) $8150 – this representative part-payment of a personal loan granted by the plaintiff to the defendant and her mother in the sum of $10,000; (b) $49,000 – this represented a payment on another mortgage as between the plaintiff and the defendant on a property at 222 Markham Street, Toronto; (c) $100,000 – this related to the purchase of a property known as 363 Grace Street, Toronto, under a joint venture between the plaintiff, the defendant and her mother.

[34] In the result, the necessary inquiries to be carried out on this reference would involve the alleged personal loan, as well as a mortgage on another property, and an alleged investment by way of a joint venture on a further property. All these inquiries involve an evidentiary record well outside the scope of the reference as defined by the court’s order and far beyond the scope of a reference as provided for by the Rules of Civil Procedure.

[35] Both counsel simply proceeded with this so-called reference, when in reality they attempted to shoehorn a summary judgment mini-trial into a reference hearing. Clearly, counsel were not proceeding on the basis that this was a reference but rather a summary judgment motion.

[36] Although not determinative of my conclusions, both counsel conceded that the evidentiary record was highly confused and conflicting with many evidentiary gaps, which were not remedied by the filing of the agreed statement of fact, as was ordered.

[37] Given that the positions asserted by the parties called for an adjudication far beyond the scope of the order directing the reference and as well the applicable rules, I have concluded that this is not a proper case for the exercise of the court’s inherent jurisdiction.

[38] This is not an exceptional case where the court’s inherent jurisdiction should be exercised to resolve the dispute between the parties as this would be contrary to the rules as to the proper conduct a reference. The statutory provisions and rules specifically set out the jurisdiction and process for the conduct of a reference. The mere fact that the evidentiary record and issues in dispute are outside the terms of the reference as framed does not warrant the court exercising its inherent jurisdiction.

[39] Due process must be carried out and justice for both parties must be achieved.

Conclusion

[40] For the reasons set out, the reference is dismissed.

[41] As to the costs of this purported reference, they shall be in the cause.

Justice P. Daley

Released: April 23, 2024