COURT FILE NO.: CV-20-00000650-0000 DATE: 2024 07 12
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Kelly Martin, Applicant – and – 2670082 Ontario Corp, Respondent
COUNSEL: Dennis Van Sickle, for the Applicant Samir Chhina, for the Respondent
HEARD: April 17, 18, 19, 20, May 15, 25, 30, June 1, July 4, August 4, 10, October 13 and November 28, 2023
REASONS FOR JUDGMENT
Chozik J.
INTRODUCTION:
[1] This is an an application by Kelly Martin (“Martin”) seeking certain relief related to what had been her home at 1560 Reeves Gate, Unit 22, Oakville, Ontario (“the property”).
[2] On November 20, 2019, 11037315 Canada Inc. (“110”) obtained default judgment for foreclosure against Martin in respect of the property. She had missed a single $650 mortgage payment. As a result of the foreclosure, and 110’s subsequent actions, Martin lost $350,000 of equity in her home – her life’s savings. In essence, Martin says that the process by which she lost her home was the product of a series of opportunistic and illegal manoeuvres by the Respondents.
[3] On December 5, 2019 – nine days after obtaining the default judgment – 110 sold the property to 2670082 Ontario Corp. (“267”) for $150,000 less than its market value. The transaction closed on January 8, 2020. Martin still occupied the property. She had no notice of the default judgment, foreclosure or the sale of her home.
[4] Martin learned of the default judgment, foreclosure and the sale of her home on January 31, 2020 when Paul Smith (“Smith”), a representative of the property management company used by both 110 and 267, Apex Property Management (“Apex”), came to her door. Apex tried to evict her. She refused to leave, consulted a lawyer and commenced an application to set aside the default judgment and the sale to 267. For more than three years, she refused to leave her home.
[5] In the meantime, 267 encumbered the property and then defaulted on its mortgage obligations. Martin was evicted from her home as a result of legal action taken by 267’s creditors in March, 2023 - a few weeks before the trial of the issue commenced before me. Her home was sold under power of sale to satisfy 267’s debts.
[6] The default judgment 110 obtained against Martin and the sale of the property to 267 was set aside by Gibson J. in December 2020: see Martin v. 11037315 Canada Inc., 2020 ONSC 8087 [“11037315 Canada Inc.”], at para. 37. Gibson J. found at para. 34, that 110 improperly obtained the default judgment – it had failed to give Martin notice of the assignment of her mortgage, which it had obtained from another corporation, as required under s.31 of the Mortgages Act, R.S.O. 1990, c. M.40.
[7] Gibson J. also set aside the sale of the property to 267, having concluded that 267 was not an innocent third party and that this was not an arm’s length transaction: 11037315 Canada Inc., at para. 27.
[8] The Court of Appeal upheld Gibson J.’s decision in respect of the default judgment improperly obtained by 110 (see Martin v. 11037315 Canada Inc., 2022 ONCA 322 [Martin], at paras. 45-48 and 53.).
[9] However, the Court of Appeal was not satisfied that the sale of the property to 267 should have been set aside. On appeal, 267 sought to rely on s.78(4) of the Land Titles Act, R.S.O. 1990, c. L.5, which provides that an instrument, when registered, is deemed to be effective according to its nature and intent. Whether 267 was entitled to the protections afforded under the Land Titles Act was not raised before Gibson J.
[10] The Court of Appeal was of the view that it could not determine whether 267 was a bona fide purchaser for value without notice that Martin was occupying the property and may have had a claim to set aside the default judgment for foreclosure, and thus entitled to the protection of s.78(4) of the Land Titles Act: Martin, at paras. 74 and 88 (3). Rather, the Court of Appeal ordered a trial of this issue.
[11] The Court of Appeal also ordered a reference of the accounting between Martin and 110 pursuant to r.55.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
[12] I conducted that reference on August 24, 2023. 110 chose not to adduce any accounts or evidence on the reference. Rather, Roy D’Mello, the principal of 110 (who is also an experienced lawyer), sought for me to recuse myself for bias. I dismissed his motion. At the conclusion of the reference, I ordered 110 to pay Martin $354,197.58 plus pre- and post-judgment interest. This sum represented the proceeds of the sale of the property by 110 to 267 ($425,000), less the debt owed by Martin to 110 ($71,055.78) as acknowledged by her at the reference.
[13] At this trial of an issue, I heard the evidence of four witnesses: (i) Martin, (ii) Shan Mangal (“Mangal”), who is the principal of 267, (iii) Anoop Dhillon (“Dhillon”), who is the solicitor who acted on behalf of 267 in respect of the purchase of the property from 110, and (iv) Roy D’Mello (“D’Mello”), who is the operating mind of 110.
[14] Having considered all the evidence, I find that 267 was not a bona fide purchaser of the property. I conclude that 267 had actual notice that Martin occupied the property and had a potential claim to set aside the default judgment for foreclosure. As a result, 267 cannot rely on s.78(4) of the Land Titles Act. Its purchase of Martin’s property from 110 must be set aside.
BACKGROUND:
Foreclosure on Martin’s Property:
[15] The factual background to this matter is set out in greater detail in the decision of the Court of Appeal in Martin, at paragraphs 7 to 35, as well the decisions of Gibson J. (11037315 Canada Inc.), Kurz J. (1614358 Ontario Ltd. v. 2670082 Ontario Corp., 2023 ONSC 1774 [“1614358 Ontario Ltd.”]) and in the Ruling on Motion and Report on Reference cited as Martin v. 11037315 Canada Inc., 2024 ONSC 1877 [“Report on Reference”], at paras. 8 to 21.
[16] On November 20, 2019, 110 obtained a default judgment for foreclosure against Martin. Although foreclosure transfers title to a property and extinguishes any debts owing (Atlas (Brampton) Limited Partnership v. Canada Grace Park Ltd., 2021 ONCA 221, at para. 50), the claim and the default judgment, at para. 1(c), also sought $70,407.08 due under the second mortgage in addition to foreclosure and possession of the property.
[17] On November 26, 2019, 110 registered the judgment on title to transfer the property into its name. On December 5, 2019, 110 entered an Agreement of Purchase and Sale (“APS”) with 267 for the sale of the property for $425,000. This was $150,000 less than its market value, which was, according to an appraisal later obtained by Martin, $575,000. The transaction closed on January 8, 2020, less than 90 days after Martin was served with the Statement of Claim.
[18] At the time, Martin did not know that 110 had acquired her mortgage. She had a first mortgage with TD bank and obtained the second mortgage from a different numbered corporation, who then assigned it to 110 without notice to Martin. When her $650 cheque was returned, no one made any demand for payment. She had provided post-dated cheques for a year’s worth of payments, which went un-cashed.
[19] Though she was served with 110’s Statement of Claim, Martin did not know that 110 had obtained default judgment against her or that the judgment entitled 110 to foreclosure. Foreclosure, of course, is not the same as a power of sale. Foreclosure transfers title to the property. Martin thought the action was for a power of sale, to which she was agreeable. When she received the Statement of Claim, she tried to contact D’Mello, who was identified as 110’s lawyer in that document, to discuss the power of sale but he never returned her calls. She gave evidence that when Paul Smith came to evict her on January 31, 2020, she was still waiting to hear from D’Mello.
[20] In the meantime, 267 encumbered the property. When its purchase of the property closed on January 8, 2020, 267 registered a first charge in favour of Autodome Ltd. (“Autodome”) in the amount of $460,000. This was $45,000 more than the purchase price. That mortgage was subsequently replaced by two other mortgages: (i) a one-year charge registered on October 14, 2020 in the amount of $480,000 in favour of 1614358 Ontario Ltd. that replaced the Autodome first charge of $460,000, and (ii) a one-year second mortgage registered on December 14, 2020 in the amount of $100,000 in favour of Ranjit Singh Pandher: see Martin, at paras. 29-30.
[21] After Martin started these proceedings to set aside the default judgment and the sale to 267, 267 defaulted on those mortgages. The property was then sold by one of the mortgagees because of 267’s default. Martin was evicted from her home in March 2023, just before the start of the trial of the issue before me: 1614358 Ontario, at paras. 1 and 12.
Evidence At The Trial of an Issue:
[22] The trial of an issue before me proceeded as a blended application/trial. I received Martin’s affidavits dated March 4, 2020, October 9, 2020 and November 2, 2020, which had been filed on the application to set aside the default judgment, as well as her viva voce evidence. None of her evidence is in dispute.
[23] I also received Mangal’s affidavit dated January 18, 2023, which was the only affidavit he purported to rely on, as well as his viva voce evidence. His affidavit dated August 21, 2020 was adduced in cross-examination. Dhillon and D’Mello produced their paper files for examination by Martin’s lawyer part way though the trial and testified under summons: Report on Reference, at paras. 26 and 29-30.
Martin’s Evidence:
[24] Martin gave evidence that she purchased the home in 2010 for $289,000. She had a first mortgage with the Toronto Dominion Bank (“TD Bank”). In 2018, she fell upon hard times. In January, 2019 Martin obtained a one-year interest-only second mortgage with a private lender, 2148468 Ontario Ltd. (“214”). This second mortgage was for $65,000 plus interest at the rate of 12%. Payments of the interest were to be made monthly. Martin provided 214 with post-dated cheques for the year in the amount of $650 each, as required under this second mortgage.
[25] In June 2019, Martin’s bank account was defrauded and subsequently frozen by TD Bank pending an investigation. As a result, the bank did not honour Martin’s June 15, 2019 cheque to 214 for $650. Her cheque was returned for insufficient funds.
[26] On July 22, 2019, 214 sold her mortgage to 110. Martin was not given notice of the assignment of the mortgage. None of Martin’s other post-dated cheques were cashed. No notice of default was given. No demand for payment was made.
[27] On October 24, 2019, 110 commenced an action for foreclosure. Martin was served with 110’s Statement of Claim on October 29, 2019. Martin, who is not legally trained, did not understand that a foreclosure is different from a power of sale. Martin thought the claim was from 214, the original mortgagee on the second mortgage and did not realize that 110 was a different numbered company.
[28] Martin testified that she had come to terms with the fact that she would not be able to repay the second mortgage. When she first borrowed that money, she anticipated that an inheritance after her mother’s death would be enough to pay back that mortgage. But her mother had died and there was not enough money to pay back the private lender.
[29] Martin chose not to defend the action but called D’Mello, whose name and phone number appeared on the back of the Statement of Claim as the lawyer for 110. She called him to discuss selling the property. Her undisputed evidence is that she called him repeatedly. Her evidence is supported by phone records, showing that she called the phone number identified as D’Mello’s on the back of the Statement of Claim on November 21, November 25 and December 17, 2019. Each time, the call lasted a couple of minutes, which I find is consistent with her evidence that left detailed voice messages. She did not hear back from D’Mello or anyone else.
[30] In the meantime, as I have set out above, 110 moved for default judgment. On November 20, 2019, the Registrar granted default judgment for foreclosure and possession of the property. Pursuant to r. 19.01 of the Rules of Civil Procedure, when a defendant fails to deliver a statement of defence within the prescribed time, the defendant may be noted in default. Default judgments are granted by a registrar (who need not be a lawyer and may not be legally trained) without a hearing or a judge looking at it.
[31] The evidence at this trial established that 110 registered the default judgment on title to transfer the property into its name on November 26, 2019. On December 5, 2019, less than a month and a half after the Statement of Claim was issued, and without first enforcing its judgment for possession, 110 entered into an agreement to sell the property to 267 for $425,000, $150,000 less than its market value.
[32] Under the APS, 267 agreed that 110 would not be providing vacant possession of the property on closing and agreed to assume any existing tenancies in accordance with the terms of those tenancies. No inquiries as to those tenancies were ever made and no details of the tenancies were included within the APS or requested by 267 at any time.
Mangal’s Evidence:
[33] Mangal testified that he had been involved in residential real estate for over a decade. He opened a construction and property management company in 2010 and started buying and renovating properties. He purchased “distressed” properties to renovate them and had done so on at least ten occasions prior to this transaction. He found a “niche” buying such properties. Distressed properties were ones where the homeowner needed to sell or a mortgage holder needed to retrieve their money from it. The transfers of such properties would usually go through by way of a power of sale or foreclosure. He testified that he understood the difference between the two. He also understood that default judgments can be set aside.
[34] Mangal claimed that although he had worked with D’Mello in the past, they had no personal relationship. He claimed that this was an arm’s length purchase. Mangal further claimed that he would be prejudiced if Martin were not ordered to pay occupancy costs retroactively to January 2020.
[35] Mangal claimed that he was not put on notice that Martin had any issues with this transaction. He testified that there been any notice of a caution on the property, the deal would have never closed.
[36] In his evidence, Mangal claimed that he relied on Dhillon, his real estate solicitor, to complete the due diligence. Mangal testified that he relied on the foreclosure order being registered on title and the document from the Superior Court (the default judgment) to ensure that the sale was proper.
Dhillon’s Evidence:
[37] Mangal waived solicitor-client privilege and Dhillon produced a paper file in respect of the transaction on the first day of trial for examination by Martin’s lawyer. Dhillon testified later in the trial and gave evidence that it was his practice to print emails and put them in his file. There were no emails between himself and Mangal in the file he produced for Martin. No notes of any discussions he may have had with Mangal or any written instructions were adduced in evidence.
[38] Dhillon testified that the email he used at the time of the transaction had been hacked. There was no evidence that he reported this to Mangal or LawPro, as required under r.7.8-1 and r.7.8-2 of the Rules of Professional Conduct, and Endorsement No. 14 of the LawPro policy handbook. Indeed, Mangal testified that Dhillon did not advise him that his email was hacked.
[39] Mangal produced some emails between himself Dhillon and other people for the period of December 19, 209 to March 3, 2020. Many of these emails appear to be redacted or incomplete. None were properly authenticated. They appear to be carefully selected.
[40] The following documents were in Dhillon’s file:
a. The APS entered into by 110 and 267 is dated December 5, 2019. On its face, it shows a purchase price of $450,000 being crossed out and replaced with a handwritten price of $425,000. It is “irrevocable” by the buyer until 6 pm on December 6, 2019. It is signed by D’Mello as the seller and Mangal as the buyer. On its face, it shows that Mangal signed it on December 5, 2019 and D’Mello accepted it on December 6, 2019. It appears to have been signed in person (not electronically). b. Dhillon’s file also contained an unsigned APS for the same property, showing a purchase price of $450,000. c. One of the emails produced by Mangal to Dhillon is dated December 19, 2019. In it, Mangal said: “I will sign back at $425K, please let me know when we can close”. The email shows icons for six PDF documents attached, entitled “budget”, “COMPS”, “SQ FT”, “MPAC”, “Agreement of Purchase and Sale”, and “Inc-Charter Docs”. Mangal testified that he meant to say “I signed it back”, not I will sign. d. The MLS listings for comparable properties contained in Dhillon’s file were provided to Dhillon by Mangal. Mangal testified that he used his ex-wife’s credentials to access the MLS. Those printouts post-date the APS (they are dated December 10, 2019). e. There is a Statement of Adjustments dated November 29, 2019. It pre-dates the APS of December 5, 2019. A statement of adjustments is usually prepared prior to closing and reflects necessary adjustments to tell the buyer how much money is due on closing. Here, the Statement of Adjustments is dated November 29, 2019 – before the property was sold to 267, but it reflects a purchase price of $425,000. f. There is an email dated December 30, 2019 from D’Mello to Dhillon stating, amongst other things, that the statement of adjustments is attached and dated November 29, 2019 “as the transaction was to close Nov.29/19 adjustments remain as of that date”. g. The above email also states that the first mortgage has been paid out, and that the payout statement is attached and that the undertaking to discharge the mortgage is attached and he may rely on it. h. The deposit of $5,000 required under the signed APS was never paid. i. There is an identical Statement of Adjustments, dated November 29, 2019, showing a different purchaser, 2728253 Ontario Inc. (“272”). j. Other evidence at trial established that 272 was incorporated a week before the sale of the property to 267, on November 22, 2019 by Paul Smith. k. There is an undertaking to discharge a mortgage signed by D’Mello given to 272 and its solicitor, Karanpaul Randhawa, to discharge the TD mortgage in respect of the property (Martin’s first mortgage). The undertaking is dated November 29, 2019. l. Dhillon testified that Karanpaul Randhawa was his articling principle and that they work in the same office space, sometimes on the same files.
[41] Part way through his testimony, Dhillon obtained representation through Law Pro.
D’Mello’s Evidence:
[42] D’Mello testified pursuant to a summons served by Martin. For a history of D’Mello’s attendances before me at this trial, see the Report on Reference, at paras. 22-51.
[43] When he testified, D’Mello denied that he is the sole director, shareholder or officer of 110. He claimed that he is not a shareholder and that he did not know “off hand” who the shareholders are. He denied that he was the sole officer and could not name any others, claiming that he had to look at a list of officers. He admitted that he is the “sole operational mind” of the corporation. He denied being a private lender. He denied that 110 owned the mortgage against Martin’s property. He testified that 110 “holds” the mortgage, but that it can itself be held by different investors. He could not name any investors and did not know “off hand” if there was any documentation to support this.
[44] D’Mello is a lawyer with 25 years of experience dealing in real estate. He could not explain any of the critical documents found in Dhillon’s file, such as the duplicate Statement of Adjustments, the APS, or the aborted sale of the property to 272. He claimed that he could not recall why the sale to 272 did not go through. He produced a paper file well into the trial, which did not contain any electronic documents, emails or other communications in respect of this transaction.
[45] At the time of the sale of the property, D’Mello and 110 were bound by a Mareva injunction ordered by Dennison J. on July 24, 2019 (Sapusak v. 9706151 Canada Ltd. et al (24 July 2019), Brampton, CV-18-13100-00 (Ont. S.C.), at para. 41 [Sapusak]), subsequently amended by Doi J. on August 14, 2019 (Sapusak (14 August 2019), at para. 1) and extended by Petersen J. on May 25, 2022 (Sapusak (25 May 2022), at para. 2). At this trial when he testified, D’Mello claimed that the Mareva injunction was not in effect in December 2019. He claimed that selling the property to 267 was not “dealing with property” in a way that breached the injunction.
THE ISSUE:
[46] The Court of Appeal, at para. 6 of Martin, directed a trial in respect of the following issue:
[W]hether 267 was a bona fide purchaser for value without actual notice that Ms. Martin was occupying the property and may have had a claim to set aside the default judgment for foreclosure. [Emphasis added.]
According to the Court of Appeal, resolving this question determines whether 267 is entitled to the protection of s.78(4) of the Land Titles Act.
LEGAL PRINCIPLES:
[47] 267 contends that it is a bona fide purchaser for value without notice, and that it is therefore entitled to rely on the protection of s.78(4) of the Land Titles Act. The determination of whether 267 was a bona fide purchaser turns on whether it had actual notice of Martin’s competing claim to or interest in the property. This is a question of fact. The burden of proving the absence of notice is on the person alleging that they are a purchaser for valuable consideration without notice: Durrani v. Augier (2000), 50 O.R. (3d) 353, at para. 60.
[48] The law insists on actual notice of a defect in title to warrant an exception to the “mirror principle”. The “mirror principle” stands for the proposition that the land titles registration system is a mirror to the actual state of title of a property: Stanbarr Services Limited et al. v. Metropolis Properties Inc., 2018 ONCA 244, at para. 13. This statutory protection is only available to bona fide purchasers for value without notice of a defect in title: Martin, at para. 66; Stanbarr, at paras. 38-39.
[49] The concepts of actual and constructive notice or knowledge cannot be blurred. In Stanbarr, the Court of Appeal held that it is unnecessary and unhelpful to consider whether a party received sufficient information to warrant an inquiry. Receipt of such information may make out constructive notice, but it does not amount to actual knowledge: Rose v. Peterkin (1885), 13 S.C.R. 677, at pp. 694-695, as cited in Stanbarr, at para. 28.
[50] “Actual notice” was explained by Epstein J. (as she then was) in Durrani, at paras. 61-62:
Actual notice is knowledge, not presumed knowledge as in the case of constructive notice. The concept of actual notice has most often been discussed in the context of the Registry Act, the second form of land registration in Ontario. Recently Salhany J. in Canadian Imperial Bank of Commerce v. Rockway Holdings Ltd. (1996), 29 O.R. (3d) 350, 3 R.P.R. (3d) 174 (Gen. Div.) reviewed the authorities on the definition of actual notice and concluded that the term "actual notice" [at p. 356]:
. . . means actual notice (as opposed to constructive notice) of the nature of the prior agreement and its legal effect. There is no requirement that there be actual notice of the precise terms of the agreement, such as the amount of the consideration passing between the parties or the term of the agreement. The test, in my view, is whether the registered instrument holder is in receipt of such information as would cause a reasonable person to make inquiries as to the terms and legal implications of the prior instrument.
Thus, a person has actual notice if he or she is aware of the existence of a legal right. It is not necessary that the person have knowledge of the precise details of that legal right. In circumstances that involve the transfer of title, a purchaser does not need to have actual knowledge of the particular person who is in fact the true owner or holder of title of the property. It is sufficient for actual notice that the purchaser is aware that the person with whom they are dealing as the vendor does not have a legitimate claim to the title. This follows, since the logical inference to draw from the knowledge that the vendor with whom the purchaser is dealing does not have a legitimate right to the title is that someone else is, in fact, the true owner. [Emphasis added.]
[51] In Stanbarr, the Court of Appeal appears to have rejected the notion that whether the registered instrument holder is in receipt of such information so as to cause a reasonable person to make inquiries into the terms and legal implications of the prior instrument is part of the test for actual notice. That aspect of the test articulated in Durrani was applied by the trial judge in Stanbarr. The Court of Appeal in Stanbarr found that the trial judge had erred and stated at para. 28 that receipt of information and the 'inquiry' parts of the trial judge's analysis in that case were "wholly irrelevant to the actual knowledge analysis.”
[52] In Martin, at para. 69, the Court of Appeal said:
Concerning the application judge's finding that Mr. Mangal/267 ought to have known that foreclosure judgments can be set aside, we observe, as a starting point, that this is a finding of constructive, not actual, knowledge. At para. 26 of Stanbarr, this court emphasized that because notice is one of the limited exceptions to the mirror principle underlying the Land Titles Act, it has been strictly construed to mean actual notice. The court said:
Our courts insist on actual notice of a defect. Actual knowledge means just that; the party must actually know about the defect. It is not sufficient that it has become aware of facts that may suggest it should make inquiries.
[53] This passage in Martin is accompanied by a footnote, in which the Court of Appeal observes that at footnote 2 of Stanbarr, “this court left open whether willful blindness can suffice” to meet the threshold for notice because the issue was not argued.
[54] Willful blindness, in criminal law, is the same as actual knowledge. It is distinct from imputed, implied or constructive knowledge. Willful blindness, in the civil law context is the same as in the criminal law context: Wescom Solutions Inc. v. Minetto, 2019 ONCA 251, at para. 9. It is actual knowledge.
[55] Wilful blindness occurs when it is proven on the balance of probabilities that a person would have had actual knowledge about the true facts but for his or her choice to remain deliberately ignorant. To deliberately choose not to make further inquiries in certain circumstances to determine the truth or what truth would be revealed by those inquiries is essentially the same as knowing the truth about those facts: R. v. Briscoe, 2010 SCC 13, at paras. 21-24; R. v. Jorgensen, [1995] 4 S.C.R. 55, at para. 103. Willful blindness is knowledge that arises from "an actual process of suppressing a suspicion": Briscoe, at para. 24.
[56] A duty to inquire arises where one has knowledge of circumstances that would alert an honest and reasonable person of the need for further inquiries. The law does not require one to exercise a standard of perfection; rather, one must do what is expected of an honest and reasonable person: Gold v. Rosenberg, [1997] 3 S.C.R. 767, at paras. 76, 83; Citadel General Assurance Co. v. Lloyds Bank Canada, [1997] 3 S.C.R. 805, at paras. 22-23.
[57] Given the remarks of the Court of Appeal in the footnote in Martin, it is not clear to me whether wilful blindness can be equated with actual notice or knowledge in this case. It seems to be open, but I am not sure. I am also not certain what the distinction is between the doctrine of willful blindness and constructive notice. The two concepts seem to have considerable overlap. As a result, I decline to apply the willful blindness test in this case, though for the reasons that follow I have no difficulty in concluding that it has been met.
[58] Knowledge in the hands of the purchaser’s agent, such as a real estate agent or lawyer, will be deemed to be knowledge of the purchaser: Sandu v. Paterson, 2016 ONSC 1748, at para. 43. A principal has constructive knowledge of things the agent is under a duty to make known to him and the principle is estopped form denying knowledge of the matters in question: Durrani, para. 69. A lawyer is deemed to know the law and in particular the Rules of Civil Procedure: Access Legal Services et al. v. Mirjana Padjen, 2010 ONSC 1412, at para. 18.
[59] I conclude that the test I must apply is whether 267 has proven on a balance of probabilities that it had no actual notice that Martin occupied the property and that she had a potential claim to set aside the default judgment.
[60] For the reasons that follow, I find that 267 has not met its burden. To the contrary, even if I reverse the burden of proof and raise the standard of proof, I am satisfied beyond any doubt that 267 knew Martin occupied the property and that both Mangal and Dhillon had actual notice that she had a potential claim to set aside the default judgment.
APPLICATION:
Assessment of Credibility and Factual Findings
[61] My findings of fact turn on an assessment of the credibility and reliability of the witnesses. Martin’s evidence was not seriously challenged and is not really disputed. I accept her evidence.
[62] I do not accept Mangal’s evidence about this transaction or his denial of any actual notice or knowledge of Martin’s potential claim. I find that his evidence is not credible because it is internally inconsistent about critical points at issue. For example, his evidence about who he thought was occupying the property at the time he bought it is internally inconsistent. His evidence about how he learned of the property being for sale is inconsistent. His evidence about the purpose for which he bought the property is inconsistent.
[63] I also find that his evidence about how he came up with the purchase price for the property is, when considering the documents found in Dhillon’s file, entirely concocted. Those documents tell a completely different story of this transaction than the one Mangal presented in his affidavits and when he testified. As a result, I reject Mangal’s evidence entirely.
[64] The Court of Appeal accepted Gibson J.’s findings that Mangal knew he was purchasing the property by way of default judgment for foreclosure, that default judgments for foreclosure can be set aside, and that Mangal ought to have known this, with his experience in ‘flipping’ properties for profit. Mangal did not challenge these conclusions at the trial before me.
[65] I find that Mangal knew that Martin occupied the property. He says so in his affidavit dated January 18, 2023. I find that he also knew that she may have had a claim to set aside the default judgment. This was not an arm’s length transaction. Rather, it was a cooked-up transaction, designed to maximize profit for both 110 and 267 by taking advantage of Martin’s vulnerability and the court’s process.
[66] In respect of Dhillon, I find that he was not incredible. He appeared to do his best to tell the truth when testifying but he was caught in having facilitated a transaction he knew was cooked up. I find that he too had actual notice that Martin occupied the property and may have had a claim to set aside the default judgment.
[67] In respect of D’Mello’s evidence, I reject it entirely. His evidence was neither credible nor reliable. He was evasive. He repeatedly demonstrated that to him, truth is relative. He, like Mangal and Dhillon, tried to omit his attempt to sell the property to 272 from his evidence. He often talked in circles. He made claims without any foundation.
[68] For example, he said that a default judgment is final if it is registered on title. This is not true, and D’Mello knows it, as is demonstrated in this case. The default judgment was set aside even though it was registered on title. He claimed that the Statement of Claim he drafted was in simple language a lay person like Martin could understand. The Statement of Claim speaks for itself. He said he could not remember if Martin had called him, and quibbled with whether the length of her calls (2, 3 and 4 minutes) as demonstrated by her phone records was consistent with her leaving a voice message.
[69] D’Mello’s evidence about 110 – that he is neither its sole director or officer or shareholder but he can’t say who is – is without any objective proof and is entirely incredible. I do not believe that an operating mind of a corporation would not know these things. He claimed that 110 held title to Martin’s property for someone else, but testified that he could not say who that is. He testified that he could not say where the money for the mortgage came from. He claimed that he could not recall how much 110 paid for the mortgage it got from 214. He parsed words. He argued with the plain wording of this court’s endorsements to claim that the Mareva injunction ordered by this court had expired and that selling Martin’s property to 267 was not “dealing with property”. I find that he deliberately evaded answering straight forward questions, the answers to which lay squarely within his knowledge. He did this to hide the truth.
[70] In a land transfer application filed when the default judgment for foreclosure was registered on title, 110 claimed to have assumed a mortgage of $422,402 in respect of Martin’s property. This also is not true. The mortgage 110 assumed was approximately $240,000. D’Mello could not explain why he filed a document with the registry containing this blatant lie.
[71] In the end, there is simply nothing in D’Mello’s evidence that I can rely on. He impressed me as someone who will say anything to serve his own interests without any regard for the truth, the court or its process. His evidence was self-serving nonsense.
[72] While I do not accept D’Mello’s evidence, whether he or 110 were precluded from dealing with the property by the Mareva injunction is irrelevant to the issues before me. There is no evidence from which I can infer that Mangal or 267 were aware of the injunction. I also assess the credibility and reliability of Mangal and Dhillon entirely independent of my findings about D’Mello’s credibility.
Did Mangal Know that Martin Occupied the Property?
[73] Mangal testified that he knew 110 was not offering vacant possession of the property. The APS makes this crystal clear. Mangal’s evidence about whether he knew that the property was occupied by the owner has evolved over time. In his affidavit dated August 21, 2021, at para. 18, which was before Gibson J. and the Court of Appeal, he stated that:
Once the ownership of the property was transferred to 267, I visited the property to discover that the owners prior to the Foreclosure were still occupying the property and I communicated to them that I am the new rightful owner and require vacant possession of the property. I advised that I would be willing to give the owners time to remove their belongings and vacate the premise. [emphasis added]
Based on this evidence, that he did not know that Martin occupied the property until after the closing, at paras. 75 and 76, the Court of Appeal ordered this trial of an issue.
[74] But in his affidavit dated January 18, 2023 – prepared for this trial of an issue – at paras. 7-10 Mangal clearly states that he learned of the property being for sale from D’Mello and that D’Mello told him it was occupied by the owner. He therefore knew that the property was occupied by the person against whom 110 had obtained default judgment for foreclosure.
[75] Despite his clear statement in his January 18, 2023 affidavit that D’Mello told him the property was occupied by Martin, Mangal testified before me that he thought the property could be occupied by a tenant, a trespasser or an “occupant” who could be the former owner.
[76] I do not accept Mangal’s evidence. I find that he attempted to distance himself from knowing that the property was occupied by Martin.
[77] I find his evidence that he thought a tenant occupied the property unbelievable. The APS set out that vacant possession was not being offered, and 267 was to assume any tenancy. Inexplicably, although he claimed that his intention was to take possession, renovate and ‘flip’ the property as quickly as possible, Mangal made no inquiry as to that tenancy. No details about the tenancy were included in the APS. I infer, from his lack of inquiry about any tenancy, that he knew it was the former owner (Martin) who occupied the property.
[78] I also reject his claim that he thought a tenant occupied the property because a foreclosure does not terminate a tenancy. Section 47 of the Mortgages Act states that when there has been a foreclosure, the new mortgagee becomes the landlord under the tenancy agreement. Thus, foreclosure does not automatically entitle the new landlord to evict the tenant and take vacant possession of the property.
[79] Under the Residential Tenancies Act, S.O. 2006, c. 17, if a valid termination of tenancy has been issued but the tenant refuses to vacate the property, an order must be obtained from the Board: s.43. Buying a property subject to foreclosure occupied by a tenant would run contrary to Mangal’s stated interest to buy it, renovate it and quickly ‘flip’ it for a profit. Had Mangal believed the property he was purchasing was occupied by a tenant, it would have been very important for him to know the details of the tenancy because it could mean that he may not be able to take possession of the property for a long time and not without going through the process under the Residential Tenancies Act.
[80] Mangal also testified that when 267 took possession of the property, rather than taking steps under the Residential Tenancies Act to terminate the tenancy, he served a trespass notice.
[81] Under the mortgage agreement between Mangal, 267 and Autodome, no part of the property was permitted to be occupied by a tenant before or after the closing/advance of mortgage funds, unless authorized by Autodome in writing. No evidence of any such authorization was adduced at this trial of an issue. Had Mangal thought he was purchasing the property with a tenant, he was obliged to obtain such authorization.
[82] I therefore find that Mangal knew that the property was occupied by Martin, against whom 110 had obtained the default judgment. His evidence to the contrary is false.
Other Inconsistencies in Mangal’s Evidence:
[83] Mangal’s evidence was also inconsistent about his intended use of the property. He claimed that he bought the distressed property to renovate it and ‘flip’ it. Yet on the Prescribed Information for Purposes of Section 5.0.1 Land Transfer Tax Act, he indicated that he intended to use it as a principal residence himself or for a family member. When confronted with this in cross-examination, Mangal claimed that he intended to move his grandmother into the property. When pressed, Mangal testified that his grandmother had lived in Toronto all her life, where he and his mother also live. Mangal could not explain why his grandmother would suddenly want to move to Oakville. I find that Mangal was not truthful on the land transfer act declaration and then tried to justify it with another made up story.
[84] Mangal was also inconsistent about how he learned Martin’s property was for sale. In his affidavit dated January 18, 2023 and in his evidence in chief, Mangal said that he learned of the property in late November 2019 from D’Mello. Yet, he also testified that he “got wind of it” from the property manager they shared, Apex, just before he entered the APS in December. He never mentioned the failed sale of the property to 272 in any of his affidavits or evidence in chief, though he must have been aware of it. Instead, he skirted around it and tried to cover up his knowledge of this failed transaction. I find this omission fatal to his credibility also.
Mangal’s Evidence About How He Came Up with the Purchase Price:
[85] Mangal gave extensive evidence about how he came up with the purchase price. He testified that in his business of buying distressed properties, to come up with a purchase price he would ordinarily go through an evaluation process of the property based on a method he had developed over the years in business. He would find comparable properties and previous sales, investigate current market conditions, and consider the time of year and how much activity was going on. Based on those factors, he would usually come up with a price he was comfortable paying for a property. He claimed to have followed this process to come up with the purchase price of $425,000 for Martin’s property.
[86] Mangal testified that to arrive at $425,000, he pulled up listings of comparable properties on MLS (using is ex-wife’s real estate credentials as he often did) and then pulled the square footage of the property through MPAC. The most comparable property was closer to $520,000 and the next one was $550,000. Given the “distressed” nature of the sale, he initially thought that $500,000 would be a good price. But because it was being sold “as is”, and assuming that the property was not upkept, he came to an equation that 10% would be needed to bring the property up to good standards. He did this without ever inspecting the property. Since this was a private sale, he also reduced the price by 5% to account for real estate commission that would otherwise be payable by the seller.
[87] Mangal testified that he told Dhillon that he would be using him for the closing of the real estate transaction and then provided Dhillon with the APS he had drawn up. Mangal testified that on this particular transaction, he would speak directly to D’Mello. He claimed that he never exchanged emails or texts with D’Mello. He understood D’Mello to be a lawyer and the principal owner of the property. Dhillon then worked with the seller’s lawyer (presumably D’Mello) and the lender’s lawyer to complete the transaction.
[88] Mangal testified that he gave Dhillon the APS as well as the lender’s information, and the listings for comparable properties he used to come up with the price. He did the later to help the title insurance application go faster. Mangal stated that he was well versed in real estate transactions.
[89] Considering Mangal’s evidence in cross-examination, as well as the documents in Dhillon’s files, I find that Mangal’s evidence about how he came up with the purchase price was concocted. The APS and other documents in Dhillon’s file fundamentally undermine Mangal’s version of events.
[90] Mangal testified that he prepared the APS. The APS dated December 5, 2019 shows that the price for the property was initially $450,000, and that it was irrevocable by the buyer until 4 pm, December 6, 2019. This would be consistent with Mangal having prepared it. Yet in this case, the purchase price of $450,000 is typed, but then crossed out and $425,000 is written in hand. It is signed by D’Mello as the seller on December 6, 2019 and Mangal as the buyer on December 5, 2019. It is executed in person, not electronically.
[91] It makes no sense for Mangal to have prepared the offer to purchase the property for $450,000, made it irrevocable until the next day, but then revised his purchase price to $425,000. It is also inconsistent with the email in Dhillon’s file, in which Mangal tells Dhillon, “I will sign it back at $425K” or “I signed it back”. Why prepare an offer to purchase at a higher price than the one you are prepared to purchase it at?
[92] Dhillon’s file also contained an unsigned APS for the same property, showing a purchase price of $450,000. There is no adequate explanation for why Mangal’s solicitor would have an APS prepared by Mangal for a purchase price that is higher than the one Mangal was supposedly prepared to pay either.
[93] It also makes no sense that D’Mello drew up the APS at $450,000 because, as I explain below, it appears that he was prepared to sell the property to 267 and 272 for $425,000 well before this APS came into being.
[94] When confronted with these irregularities, Mangal testified that the offer was sent to him at $450,000. Mangal then said that D’Mello had him draw up the APS at $450,000 and he would have to sign and send it back, but that he had no intention of buying the property for $450,000. This makes no sense. I do not accept this explanation.
[95] I draw an adverse inference from the fact that no emails whatsoever have been produced as part of Dhillon’s file or D’Mello’s file between Mangal and D’Mello, 267 or 110, or Dhillon about how the APS came to be. I do not accept that the emails Mangal produced are a complete set of communication about this transaction.
[96] Other documents further undermine Mangal’s evidence about how he came up with the purchase price. The Statement of Adjustments in respect of the sale of the property to 267 is dated November 29, 2019. It pre-dates the APS of December 5, 2019, but it reflects a purchase price of $425,000. Here, before the property was even sold to 267, it reflects a purchase price of $425,000.
[97] There is an identical Statement of Adjustments, dated November 29, 2019, showing a different purchaser, 2728253 Ontario Inc. Evidence at trial established that this corporation was incorporated a week before the sale of the property to 267, on November 22, 2019, and that the person who incorporated it was Paul Smith. Paul Smith also worked for APEX. That Statement of Adjustments also shows a purchase price of $425,000.
[98] From this evidence, I conclude that Mangal’s evidence before me about how he came up with the purchase price is a lie.
Did Mangal and / or Dhillon Have Actual Notice of Martin’s Claim to Set Aside the Default Judgement?
[99] I find that Mangal and Dhillon had actual notice that Martin may have had a claim to set aside the default judgment because:
a. Mangal and Dhillon knew of the speed with which D’Mello was selling the property and that it was being sold without 110 enforcing its right to possession. b. Mangal and Dhillon knew that D’Mello first tried to sell the property to 272, and that sale was to have closed on November 29, 2019, only nine days after 110 had obtained the default judgment. This quick sale could only have been intended to defeat or hinder any potential claim to set aside the default judgment by Martin; c. Mangal knew that the D’Mello was offering to sell the property well below its market value; d. Mangal is not an innocent third party – all of these persons are involved in similar transactions in similar circumstances; e. When it became apparent that Martin may have a claim to set aside the default judgment, Mangal did not act as a bona fide purchaser would; f. Dhillon examined the Statement of Claim and the default judgment. There are defects readily apparent in these documents. These gave Dhillon, and as a result Mangal, actual notice that Martin may have had a claim to set aside the default judgment.
The Quick Sale:
[100] Based on documents in evidence, it appears that D’Mello obtained the default judgment on November 20, 2019 and immediately offered to sell the property to Paul Smith, who incorporated 272 for this purpose on November 22, 2019. D’Mello registered the default judgment on title on November 26, 2019. The transaction with 272 was meant to close on November 29, 2019, but it did not for some reason. Mangal and Dhillon were brought in.
[101] Mangal and Dhillon knew of the speed with which D’Mello was proceeding with the sale of the property. They knew that 110 was entitled to possession of the property but chose not to enforce it. They knew he had tried to sell it to 272; they saw the statement of adjustments and relied on the undertaking given by D’Mello to 272 to discharge the first mortgage to TD Bank. They both knew that D’Mello was trying to sell this property within nine days of obtaining the default judgment.
[102] I find that Mangal and Dhillon knew that within nine days of the default judgment, Martin could not and would not have vacated the property. They knew that she had not had any notice of the default judgment, the order for foreclosure, that no demand for possession had been made and that she had not been given any notice of the sale of the property.
[103] I find that the speed with which the sale of the property proceeded was deliberate, to ensure that Martin had no notice of it and so that her ability to set aside the default judgment or otherwise engage the court process to protect her interests was hindered. Both Mangal and Dhillon, given their line of work, would have appreciated this.
[104] Counsel for 267 argued that Martin is the author of her own misfortune. She took no steps to defend the Statement of Claim, did not consult with or hire a lawyer when she was served with it, did not register a caution on title or otherwise move to set aside the default judgment prior to closing.
[105] With respect, I find that D’Mello, Mangal and those who work for them made sure that Martin could not possibly have any time to take any such steps before the closing. She had no notice of the default judgment or demand for possession or the sale of her property. As Gibson J. already found, she acted diligently once she learned of the default judgment for foreclosure: 11037315 Canada Inc., at para. 20. She was in a vulnerable position.
[106] An ordinary person could not reasonably anticipate that in less than two and a half months after receiving a Statement of Claim for having failed to make a $650 payment for which no demand is ever made, and calling the lawyer for the mortgagee repeatedly, one’s home would be foreclosed on and sold without any notice whatsoever, and one’s life savings gone.
The Sale Price Was Significantly Less Than Market Value:
[107] Mangal testified that he is an experienced real estate investor, who made it his business to purchase and flip “distressed” properties. He testified that knew the risks of buying a property for an improvident price. He testified that a power of sale has a lot more rules to follow and that he understood that the property had to be sold at market value. He was aware of the need for caution when buying a “distressed” property, though he insisted in his evidence that a foreclosure made such caution unnecessary. At the same time, Mangal testified that he realized that this was not a power of sale, but a foreclosure, when the APS was already done.
[108] Based on the documents in evidence, I infer that D’Mello offered to sell the property, first to 272 and then to Mangal for $425,000, which was $150,000 below its market value. I find that Mangal knew this, and also knew that this was an improvident price. He immediately mortgaged the property for $460,000, $40,000 more than the purchase price. The mortgage documents show that this loan was contingent on the property being valued at least $560,000. Mangal knew this.
[109] Mangal claimed that he cross-collateralized that mortgage against another property because it was not worth $560,000. While I accept that he did so, I find that it was likely because no appraisal of the property had been done. Mangal knew - held out to the lender – that the property was worth at least $560,000. He told Dhillon in an email dated January 2, 2020 to tell the lender that the estimated value of the property was based on a “CMA” (a comparative market analysis) done by his realtor.
Mangal Is Not An Innocent Third Party:
[110] The undertaking to discharge a mortgage given by D’Mello to 272 shows that the lawyer acting for 272 was Karanpaul Randhawa – Dhillon’s articling principle. Randhawa is also the same lawyer who represented 267’s lender Pandher at the Court of Appeal in Martin.
[111] Evidence at this trial of an issue also shows that Randhawa represented 110 in Sapusak, and that he represented Paul Smith in Liscio et al v Solutions Real Estate and Financial Corporation, Roy D'Mello, Anthony Forgione, Apex Financial Corp., a matter proceeding in Brampton (CV-21-00671965-0000), In Chan v. Mangal, 2022 ONSC 2068, Randhawa is identified in the body of the judgment as one of Mangal’s lawyers: Report on Reference, at para. 102.
[112] At this trial I received extensive evidence of the various court actions these persons are involved in, arising from similar alleged schemes: Report on Reference, at para. 101-107. In and of itself, I draw no conclusion from this except that Mangal also did not act as an innocent third party after he learned that 110 may not have had authority to sell the property.
[113] Martin gave affidavit evidence, which Mangal did not deny or challenge, that after the transaction closed, Mangal and his “agents” (property managers) harassed and intimidated her. On June 3, 2020, when she was trying to sell her vehicle to raise money, Mangal had it towed from the driveway. A person from the City of Oakville attended to tell her that “the owner of the property” had arranged for a tow truck to remove her vehicle. The vehicle was inoperable and not causing any inconvenience.
[114] While her vehicle was being towed, Mangal’s agent shouted disparaging comments at her in front of other condo residents, calling her a “freeloader”, accusing her of refusing to pay her bills and of having lost her driver’s license for impaired driving. After the vehicle was towed, the agent pounded on her door. She told them to leave any papers in her mailbox, but they refused, went into her backyard and looked in her windows. They did not leave any papers behind when they finally left.
[115] On June 18, 2020, someone tried to break into Martin’s home by drilling the lock to the front door. The person was one of the two men that had been at the home earlier, on June 3.
[116] On another occasion, Martin and Mangal attended for cross-examination on their affidavits in this proceeding. Mangal was cross-examined first. While Martin was being cross-examined, Mangal left. Later, Martin’s son called and said he could not get into their home because the lock had been changed. Martin arrived home to find Mangal there and police. Martin observed that Mangal had broken into the back door, changed the lock on the front door, posted a notice of trespass on the front and back doors, plugged his phone to charge inside the home, used the bathroom and went into the upstairs rooms. The police officers continuously asked Mangal to leave the property until he eventually did at 4:30pm.
[117] Martin gave evidence that she had to change the locks back. She suffered from anxiety, panic and feared for her safety. She had her son move back in so she would not be alone.
[118] Had 267 been a bona fide purchaser, Mangal and/or Dhillon would have asked questions about why the earlier sale to 272 did not close, why the property was being offered for sale for significantly less than its market value, why this sale was proceeding so incredibly quickly, without 110 exercising its right to possession. There is no evidence that either Mangal or Dhillon asked any such questions.
[119] I also find support for my conclusion that Mangal is not an innocent third party because he omitted from his affidavit evidence and evidence any reference to 110’s failed sale of the property nine days after obtaining the default judgment to 272. I note that because of how this trial of an issue proceeded, counsel for 267 was given the opportunity to recall Mangal after all of the evidence was in, but he chose not to.
Dhillon Had Actual Notice That Martin Occupied the Property:
[120] I find that Dhillon also had actual notice that Martin occupied the property. Her address for service set out in the Statement of Claim and the default judgment which Dhillon reviewed. Dhillon knew that the foreclosure was granted on November 20, registered on title on November 26 and that the sale of the property to 272 was to have closed on November 29, 2019. I find that Dhillon knew – had actual notice – that in those nine days between the foreclosure and sale to 272, Martin still occupied the property: he had nothing that would suggest the contrary, such as a notice of a demand for possession. Afterward, when he got involved on behalf of 267, he knew that nothing had changed in terms of occupancy. The APS set out that vacant possession was not being offered.
The Statement of Claim and Default Judgment Gave Dhillon and Mangal Actual Notice That Martin May Have a Claim to Set Aside the Default Judgment:
[121] I find that the Statement of Claim and default judgment gave Dhillon, and as a result Mangal, actual notice of Martin’s potential claim to set aside the default judgment. Dhillon asked to review both documents as part of his due diligence on this transaction. He examined both documents. Dhillon is presumed to be a competent lawyer, who knows the law and the rules of civil procedure. Dhillon claimed that he only reviewed these documents to ensure that the file numbers matched. I do not accept his evidence in this regard. As a competent, diligent lawyer who was aware of all of the surrounding circumstances, he must have read the documents once he had them.
[122] Rule 19.06 provides that a plaintiff is not entitled to judgment on a motion or at trial merely because the facts alleged in the statement of claim are deemed to be admitted. The facts in the pleadings must also entitle the plaintiff to judgment. I can presume that, as a competent solicitor engaged in his line of work, he must know that to obtain judgment, the facts contained in the Statement of Claim must satisfy the registrar of the relief sought.
[123] The Statement of Claim makes clear that this was an assigned mortgage that 110 purchased. The law is, as confirmed by the Court of Appeal in Martin, that a mortgagee is precluded from obtaining foreclosure unless notice is given to a mortgagor of the assignment.
[124] In the Statement of Claim, there is no mention of notice being given to Martin that her mortgage was assigned to 110. This meant that D’Mello requisitioned the default judgment of the registrar, who improperly issued the judgment for foreclosure. 110 never had the authority to sell the property. Dhillon, by virtue of agency, Mangal, had actual notice of this potential claim to set aside the default judgment once he examined the Statement of Claim.
[125] The default judgment is for foreclosure, which is meant to extinguish a debt, but it also grants liquidated damages. This defect is apparent on the face of the document. As a lawyer with some experience in this area, who is presumed to know the law and rules of civil procedure Dhillon must have known this. Dhillon, by virtue of agency, Mangal, had actual notice of this potential claim to set aside the default judgment once he examined the default judgment.
[126] Based on all these factors, I conclude that at the relevant times Dhillon and Mangal had actual notice that Martin occupied the property and that she may have a claim to set aside the default judgment.
[127] I find, based on all these factors, that 267 has not established on a balance of probabilities that it was a bona fide purchaser for value without actual notice that Martin occupied the property and may have had a claim to set aside the default judgment. To the contrary, I am certain that both Mangal and Dhillon had actual notice of and knew these facts.
CONCLUSION:
[128] For these reasons, I find that 267 is not a bona fide purchaser without actual notice. 267 is not entitled to the protection of s.78(4) of the Land Titles Act. The sale of the property by 110 to 267 must be set aside.
[129] When the Court of Appeal ordered this trial of an issue, it contemplated that if the sale by 110 to 267 is set aside, the property would be sold under Martin’s request for sale, subject to any steps taken by 267’s creditors to enforce its loans. The property was sold by 267’s creditors before this trial of an issue started. I am not able to order the remedy contemplated by the Court of Appeal.
[130] I find that Martin lost her equity in the property due to the illegal conduct of 110 and 267. Her equity was approximately $350,000, plus pre and post judgment interest and legal costs.
[131] In the Report on the Reference, I ordered 110 to pay $354,197.58 - the proceeds of the sale of the property to 267 less money Martin owed to 110, plus pre and post judgment interest.
[132] I am advised that there is $140,000 being held in trust from the sale of the property by 267’s mortgagee. I am further advised that if the sale by 110 to 267 is set aside, I need not make any further order for relief.
[133] Therefore, I make no further order for relief at this time. If I am wrong or there is any uncertainty about the relief that Martin is entitled to, I invite the parties to make brief written submissions as to the appropriate order to be made or request a case conference before me through the trial coordinator’s office to address the issue.
COSTS:
[134] The parties are encouraged to agree on costs of this trial of an issue. If the parties are not able to agree on costs, they may make brief written submissions to me (maximum two pages double-spaced, plus a bill of costs). Martin may have 14 days from the release of these Reasons to provide its submissions, with a copy to 267; 267 shall have a further 14 days to respond.
[135] If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
Chozik J. Released: July 12, 2024