BARRIE COURT FILE NO.: CV-23-00001485-0000 DATE: 20240423 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
2757043 ONTARIO INC. Plaintiff – and – ANTONIO SANSONE and SHANNON-LEE SANSONE Defendants
Counsel: Peter Verbeek, for the Plaintiffs David Pomer, for the Defendants
HEARD: January 23, 2024
REASONS FOR JUDGMENT
FRASER J.:
I. Nature of the Motion
[1] The Plaintiff, a mortgagee, brings this motion for summary judgment against the Defendants who are mortgagors under a second mortgage held by the Plaintiff.
[2] The Plaintiff claims that the mortgage was due on May 31, 2023 and renewed by way of a July 30, 2023 agreement.
[3] The Plaintiff claims that the Defendants defaulted on the mortgage and that the default continues.
[4] The Defendants claim that the mortgage was not renewed, and that mortgagees have always been prepared to pay out the proper amount under the mortgage and not the legal amount. They assert that they could not renew the mortgage because of what they claim was an exorbitant renewal fee charged by the Plaintiff.
II. Issues
[5] The issues on this motion are:
a. Are the issues of the mortgage renewal and the charges genuine issues for trial?
b. If so, can they be resolved on motion?
III. Analysis
A. Key Principles in Summary Judgment
[6] Rule 20.04(1) provides that the court shall grant summary judgment if,
a. the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
b. the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.
[7] Subrule 20.04(2.1) provides that:
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[8] It is now well understood that in Hryniak v. Mauldin, 2024 SCC 7, the Supreme Court of Canada called for a culture shift such that disputes can be resolved in a proportionate, timely and affordable manner.
[9] In approaching this motion, I can assume that the parties have placed before me all the evidence that will be available at trial. I must assess whether on the basis of the record that I can make the necessary findings of fact and apply the law to achieve a fair and just adjudication on the merits. See Sweda Farms Ltd v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 33, affirmed, 2014 ONCA 878, leave to appeal to S.C.C. refused, [2015] S.C.C.A. No. 97.
B. Is there a genuine issue for trial?
[10] There are two issues in dispute. The first is whether the mortgage was renewed. The second issue is whether the charges claimed are proper. I find that these do not present as genuine issues for trial because I can resolve them on the record placed before me and that I can apply the law to the facts to arrive at a just result. I will address each issue in turn.
(i) Was the mortgage renewed?
[11] The Plaintiff entered into a mortgage agreement with the Defendants on June 1, 2022. The principal was $300,000 which the Defendants borrowed at a rate of 6.14% interest. Payments were to be made on the last day of the month.
[12] In her affidavit, Ms. Araujo deposed that the mortgage was renewed on June 1, 2023 at 11%, relying on an automatic renewal. The payment the Plaintiff claims was due on June 30, 2023 was not made.
[13] In support of its claim that the mortgage was renewed at 11%, the Plaintiff relies on a July 30, 2023 email sent by Luisa Araujo, a representative of the Plaintiff, to the Defendants. The email simply states:
Hi Anthony,
We have agreed to the extension of
11% rate lender fee 5%
adm fee 1000.
Are you going to send me the arreas of the payments along with the renewal fee and adm f you have agreed to drop off? Pls advise so i know how to proceed. Thanks
[14] The words “Extension Renewal agreed both Sansone. Jul.30/23” are written on the face of a printed version of the email.
[15] According to the Affidavit of Adeline Blanchette, a senior law clerk with the law firm representing the Plaintiff, on Friday July 28, 2023, her office received instructions from Luisa Araujo, the manager of the Plaintiff corporation to send an email to the Defendants at sansone@hotmail.com informing the Defendants that since they have not accepted the Plaintiff’s offer to renew their mortgage with the Plaintiff, they must pay out the mortgage in seven days.
[16] On August 1, 2023, Mr. Verbeek, lawyer for the Plaintiff, wrote to the Defendants stating “since you have not accepted my client’s offer to renew the mortgage, please pay the balance due within 7 days.
[17] The Plaintiff has produced no written agreement of a renewal. Its own correspondence is contradictory and viewed as a whole, supports the Defendants position that the mortgage was not renewed.
[18] I also reject that the mortgage renewed automatically on June 1, 2023. I accept the Defendants’ argument that interest continued to accrue at the original contract rate until paid in full and I rely on Elle Mortgage Corporation v. Manjit Sihota et al., 2021 ONSC 1593, at para. 32 in support.
[19] On the basis of the information before me, I am able to decide the facts and the law. I find there is no genuine issue for trial, and I conclude that the mortgage was not renewed.
(ii) Are the charges claimed proper?
[20] The amount claimed by the Plaintiff is as follows:
a. for principal as of June 1, 2023 $300,000.00;
b. interest from June 1, 2023 to December 19, 2023 $300,000 x 11.0% x 202 days $18,263.00
c. renewal fee - 5% of $300,000 $15,000.00
d. renewal administration fee $1,000.00
e. administration fee to deal with fire insurance cancellation $750.00
f. administration fees for missed payments June, July, August, September October, November $1,000.00
g. correspondence fee $350.00
h. inspection fee $350.00
i. mortgage statement fees - $395.00 x 2 $790.00
j. default proceedings administration fee $1,000.00
k. discharge fee to discharge the mortgage $1,100.00
l. three-month prepayment penalty $300,000 x 11% x 3 months $8,250.00
m. legal fees and disbursements as of November 8, 2023 $11,850.03
[21] In addition to disputing the renewal, the Defendants assert that the following claims are improper: the claim for three months interest, the NSF charges, and other administrative fees above. I will assess each charge in turn.
[22] I find that as there was no renewal, there can be no renewal fee and I disallow that charge.
[23] With respect to the other charges, I find that several charges are improper as they violate s. 8(1) of the Interest Act, R.S.C. 1985, c.I-15.
[24] Section 8 of the Interest Act provides that:
No fine, penalty or rate of interest shall be stipulated for, taken, reserved or exacted on any arrears of principal or interest secured by mortgage on real property or hypothec on immovables that has the effect of increasing the charge on the arrears beyond the rate of interest payable on principal money not in arrears.
[25] In P.A.R.C.E.L. Inc. v. Aquavina, 2015 ONCA 331, the Court of Appeal for Ontario considered charges in light of s. 8 and held, at para. 96 that:
In the absence of evidence that the charges in question reflect real costs legitimately incurred by the respondents for the recovery of the debt, in the form of actual administrative costs or otherwise, the only reason for the charges was to impose an additional penalty or fine, apart from the interest otherwise payable under the mortgage. thereby increasing the burden on the appellants beyond the rate of interest agreed upon in the mortgage. The courts have not hesitated to disallow similar charges on the basis that they offend s. 8 of the Interest Act. [Citations omitted.]
[26] Charges which represent a penalty are therefore disallowed. These include the renewal administration fee, the administration fee to deal with fire insurance cancellation, the administration fees for missed payments, the correspondence fees, the inspection fee, the mortgage statement fee, and the default proceedings administration fee.
[27] The Plaintiff claims a discharge fee in the amount of $1,100 which I accept as proper.
[28] In addition, I disallow the charges for three-months interest. Where the mortgagee pursues its remedies through enforcement, this Court has declined to award the three-months interest in the redemption clause. See Lee v. He et al., 2018 ONSC 5932, at paras. 27 and 30, Benson Custodian Corporation v. Situ, 2019 ONSC 3077, at paras. 11-17.
[29] Finally, I find the appropriate time to address costs is after the parties have had the opportunity to make submissions.
(iii) What is the correct amount to discharge the mortgage?
[30] Having made the findings above, the correct amount to discharge the mortgage is $300,000 plus interest at 6.14% from the date of maturity (May 31, 2023) to the date of final payment plus a discharge fee of $1,100.00.
IV. Conclusion
[31] The Plaintiff shall have judgment in accordance with this decision.
[32] While the Plaintiff has been successful, the Defendants’ position throughout was that there was no renewal and that there could be no renewal because of the renewal fee. With the issues in dispute, the Defendants have largely been successful.
[33] If the parties are not able to resolve costs of this motion, the Defendants may email their costs submissions of no more than two double-spaced pages exclusive of supporting documentation to my Judicial Assistant Robyn Pope at Robyn.Pope@ontario.ca on or before May 2, 2024. The Plaintiff may deliver its responding submissions of no more than two double-spaced pages exclusive of supporting documentation on or before May 13, 2024. No reply submissions are to be delivered without leave.
Justice S.E. Fraser
Date: April 23, 2024
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: 2757043 ONTARIO INC. Plaintiff – and – ANTONIO SANSONE and SHANNON-LEE SANSONE Defendants REASONS FOR JUDGMENT Justice S.E. Fraser
Released: April 23, 2024