7084421 Canada Ltd. v. Savary, 2025 ONSC 102
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: 7084421 Canada Ltd., Plaintiff
AND:
Cory Shane Savary, Defendant
BEFORE: The Honourable Madam Justice M.E. Vallee
HEARD: July 29-31, August 1-2, 2024
Corrected Decision: The text of the original Decision was corrected on January 9, 2025 and the description of the correction is appended.
reasons for decision
1This matter concerns a loan secured by a mortgage. Gerald Anthony is the principal of the plaintiff, who I will refer to as Mr. Anthony. Mr. Anthony agreed to lend to the defendant, Mr. Savary, $570,000 to be paid out in advances for houses that he would build on three vacant lots. A mortgage was registered against Mr. Savary’s residence as well as against the three building lots to secure the loan. Mr. Savary challenges the validity of the mortgage. He states that only one charge should have been registered indicating that the three vacant lots were collateral to the mortgage. He states that another charge was fraudulently registered against them. He states that he never received a discharge statement in the proper form and never had an opportunity to pay out the mortgage. In the alternative, he challenges Mr. Anthony’s calculation of the outstanding amount.
Issues to be determined as pleaded by Mr. Savary
2Did Mr. Savary sign the acknowledgement and direction forms regarding registration of the mortgage?
3Did Mr. Anthony fail to properly fund the mortgage?
4Was the registration of the mortgage against Mr. Savary’s residence in the Land Registry Office 57 and against the three vacant lots in the Land Registry Office 45 fraudulently entered?
5Did Mr. Anthony breach the contract and act in bad faith when he refused to grant discharges for partial payment?
6Were the sales of the three vacant lots unlawful?1
7Did Mr. Anthony fail to comply with s.22(2) of the Mortgages Act2 in neglecting to provide a discharge statement in the correct form?
8Did Mr. Anthony sell Mr. Savary’s chattels?3
9If Mr. Savary owes money on the loan, what is the amount?
The Loan Agreement
10The loan was arranged through a broker, I Finance Construction. Mr. Savary approached the broker about a loan. She prepared an Investment Loan Summary and approached Mr. Anthony. Among other things, the Summary set out the four properties that Mr. Savary owned including his residence and three vacant lots. They were to be security for the loan. The loan amount was $570,000. The Summary suggested a 10% interest rate. It also set out a draw schedule.
11Mr. Anthony decided to lend the money to Mr. Savary. He provided to Mr. Savary a Commitment Letter dated June 2, 2015. It was signed by both parties on that date and contained the following terms:
a. Loan amount: $570,000
b. Interest: 10% per annum calculated monthly
c. Term: 12 months
d. First advance: $150,000 less fees
e. Purpose of loan: to provide funds for working capital expended in connection with the Project
f. Second mortgage to be registered against four properties – Mr. Savary’s residence and the three building lots in the amount of $570,000
g. Mr. Savary to pay a lender fee: 3% of the loan ($17,100) in installments;
i. $1,000 paid on acceptance of the Commitment;
ii. $1,000 paid 2 days after the lender waives the conditions;
iii. balance payable on closing and will be deducted from first advance;
iv. Brokerage fee 2% to be paid from advance on closing;
h. Mr. Savary to pay legal fees for services to complete the loan4
12The repayment terms were: Interest only monthly and compounded monthly. Interest charged on advanced amounts only and interest accrued deducted from future advances.
13Schedule A to the loan agreement, each page of which was initialled by Mr. Savary, stated in paragraph 13 that if the lender commenced Power of Sale proceedings, it was entitled to charge 5% of the mortgage principal plus HST.
14Mr. Savary signed a disclosure statement dated June 3, 2015 for a private collateral mortgage of $570,000 on the four properties.
Acknowledgement and Direction
15In order for Mr. Anthony to have authority to register the mortgage against the properties, he required Mr. Savary to sign two Acknowledgement and Direction documents. One was required for registration of the mortgage against Mr. Savary’s residence located in Omemee in Land Registry Office 57. The other was required for registration of the mortgage against the vacant lots in Land Registry Office 45.
16Mr. Anthony produced two Acknowledgement and Direction documents. Attached to each one is the draft charge to be registered. Both documents appear to be signed by Mr. Savary on June 9, 2015 and were witnessed.
17Mr. Savary states that he did not sign these documents. His signatures are forgeries.
Did Mr. Savary sign the Acknowledgement and Direction documents regarding registration of the mortgage?
18Because Mr. Savary alleged that the signatures were forgeries, the onus was on him to prove this. He did not provide any handwriting expert evidence. The signatures on these two documents look remarkably similar to Mr. Savary’s signature on the Commitment Letter, which he acknowledges that he did sign. In the absence of expert evidence to the contrary, I find that Mr. Savary did sign the Acknowledgement and Direction documents that permitted registration of the mortgage on the properties.5
Did Mr. Anthony fail to properly fund the mortgage?
19Mr. Savary states that Mr. Anthony was required to prove that he had the loan amount at his disposal. The entire loan amount should have been paid into his lawyer’s trust account. The issue was not raised between June 9, 2015 and June 30, 2016 when the six loan advances were made. The Commitment Letter is silent on this. There was no requirement for Mr. Anthony to provide the loan funds to a lawyer acting for Mr. Savary. There is no evidence that Mr. Anthony did not have the full loan amount at his disposal nor that Mr. Savary requested proof of this before the advances were made.
20Mr. Anthony provided a statement of adjustment for each advance showing the principal amount owing as of the advance date, the amount advanced less fees, the applicable interest, and the balance of account, being the amount of the loan advanced. The first advance was made on June 9, 2015. Mr. Savary signed the statement of adjustments for advances three to six. The statement of adjustments for the sixth advance on June 30, 2016 shows the balance of account to be $356,825.28. This advance was provided a few weeks after the term of the loan had expired.
21Mr. Savary stated that his signatures on the last three advances were forgeries. This was not pleaded. I do not accept his forgery allegation for reasons set out above.
22Mr. Savary stated that Mr. Anthony could not prove that he provided the funds. There are no cancelled cheques nor bank statements. While this is unusual, Mr. Savary’s signing the statements of advance is evidence that he received the funds.
Was the registration of the mortgage against Mr. Savary’s residence in the Land Registry Office 57 and against the three vacant lots in the Land Registry Office 45 fraudulently entered?
23Mr. Savary states that these documents show that two mortgages each in the amount of $570,000 were registered. Only one mortgage should have been registered showing the four properties. In paragraph 9 of his statement of defence Mr. Savary states that
The plaintiff mortgagee was informed by Director of Titles, Ontario that the instruments registered against the defendant’s properties were fraudulently entered into the Land Titles Office. There should have only been one charge mortgage on the land, showing four (4) properties.
24Mr. Savary states that this assertion is based on an inquiry that he made at a Land Registry Office. He stated that he had a recording of a telephone call with the Director of Land Titles but could not find it.
25Mr. Savary received a letter dated May 1, 2017 from Jeffrey Lam, Director of Land Titles. This was after Mr. Anthony had served the Notice of Sale. Mr. Lam was not called as a witness at trial; therefore, the letter is hearsay. Nevertheless, its contents do not support Mr. Savary’s allegation. Mr. Lam stated that the question of whether a document had been forged was within his jurisdiction; however, other issues raised by Mr. Savary were not. Mr. Lam suggested that Mr. Savary consult with a lawyer. This letter was not sent to Mr. Anthony and does not state that the mortgages were fraudulently registered.
26In Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, the plaintiff alleged that the defendant had acted fraudulently. At para. 21, the court set out the elements of fraud:
(1) a false representation made by the defendant;
(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);
(3) the false representation caused the plaintiff to act; and
(4) the plaintiff’s actions resulted in a loss.
All four elements must be proved.
27I do not have copies of the registered charges. Only drafts have been produced; however, I will assume that the drafts are the same as the charges that were registered.
28Because four properties were security for the loan, charge documents had to be registered on title to all of them. The charge documents registered against the vacant lots should have stated that they were collateral to the charge registered against Mr. Savary’s residence.
29The fact that this language was not used in the charges against the vacant properties is of no consequence. Mr. Savary did not pay out the mortgage at the end of the term. Mr. Anthony sold the properties and credited the proceeds against the loan amount. Mr. Anthony is not seeking double recovery based on “two mortgages”. He seeks recovery of the balance owing on one loan based on the terms in the Commitment Letter.
30Mr. Savary has not proven the four elements of fraud. The registration against the three vacant lots was not fraudulently entered in Land Titles.
Did Mr. Anthony breach the contract and act in bad faith when he refused to grant discharges for partial payment?
31Mr. Anthony stated that he expected the loan to be paid out when Mr. Savary had built a house on one of the lots and had sold the property.
32In paragraph 1.09 of the Commitment Letter, terms for pre-payment privileges are set out as follows:
Closed for 6 months and then open on any payment date with 15 days prior written notice, plus 60 days interest as a bonus on the amount prepaid notwithstanding partial discharges for the agreements of Purchase and Sale Part Lot 17, Part 2 & 463C County Road 40.
33Mr. Savary sent an email dated December 9, 2015, in which he offered to pay $85,000 “on closing the transaction of 463C [a vacant lot] for which you would have to discharge on that particular property. [He stated] I think this amount is fair as it is more than 25% of the total funds advanced”. Mr. Anthony’s response was that $85,000 was not enough.
34I interpret the pre-payment clause to mean that six months after the commencement of the loan, Mr. Savary could make a payment on the loan under certain conditions, despite any partial discharges that may have been granted to purchasers of the lots. The clause does not state that he was entitled to partial discharges.
Were the sales of the three vacant lots unlawful?
35Mr. Savary did not plead this. By Mr. Anthony’s calculations, on March 1, 2017, approximately nine months after the term of the loan, the balance owing was $384,014. Mr. Anthony sent to Mr. Savary a Notice of Sale dated March 8, 2017. He subsequently sold the three vacant lots.
36Mr. Savary alleged at trial that these sales were unlawful because the registration of the mortgage against the lots was unlawful. I have addressed the issue of the mortgage registrations above. The mortgages were not unlawful.
Did Mr. Anthony fail to comply with s.22(2) of the Mortgages Act by neglecting to provide a discharge statement in the correct form?
37Section 22 of the Mortgages Act states:
The mortgagor may, by a notice in writing, require the mortgagee to furnish the mortgagor with a statement in writing,
of the amount of the principal or interest with respect to which the mortgagor is in default; or,
of the nature of the default or the non-observance of the covenant,
and of the amount of any expenses necessarily incurred by the mortgagee.
38Mr. Savary stated that he repeatedly requested a discharge statement. He stated that he never received one. Then he stated that he never received one in the proper form. Despite repeated requests from the court, Mr. Savary did not provide the form that he considered to be proper.
39In an affidavit dated August 9, 2021 sworn by Mr. Savary, he states in paragraph 5, “I have also been able to locate a “payout statement” prepared by Mr. Anthony on or about December 14, 2015.”
40The payout statement sets out the borrower’s name and address and then states:
This statement was prepared on December 14, 2015 and is effective December 16, 2015.
Principal as of December 16, 2015 = 322,145.21
2 months interest penalty = waived
Interest from October 25, 2015 to December 16, 2015 = 4,589.46
Early payout discount effective December 16, 2016 only = -11,734.67
Balance as agreed = 315,000
Statement fee 250
Discharge fee excluding registering discharges = 250
Net as of December 16, 2015 = $315,500
Registration of discharges by lender (if required) = 600
E&OE
41This document shows that Mr. Savary did receive a statement setting out in detail the payment required on December 16, 2015 to discharge the mortgage. By this date, Mr. Savary had received five advances.
42On March 8, 2017, Mr. Anthony sent Mr. Savary an email stating, “Since I did not hear from you on or before March 1st, we have instituted default proceedings.”
43On March 9, 2017, Mr. Savary sent an email to Mr. Anthony stating, among other things, that he had not provided a discharge statement. The same day, Mr. Anthony replied stating,
The mortgage matured some time ago and has not been paid so you are in default. If you intend to pay out the mortgage, have your lawyer contact me and I will forward a payout statement to him/her. You asked me to send you a payout statement on various occasions but have never followed through with it. I am tired of your games…
44On November 4, 2019, Mr. Savary’s counsel sent a letter to Mr. Anthony’s counsel stating that Mr. Savary would be refinancing the property on December 2, 2019. She requested “a mortgage statement for discharge purposes as of the aforesaid closing date”. It appears that Mr. Anthony initially sent a draft discharge statement. Mr. Anthony’s counsel sent to Mr. Savary’s counsel a finalized “Mortgage Statement for Discharge Purposes” dated November 27, 2019. It lists the four properties, provides detailed calculations, and shows that $533,160.29 was the total amount payable as of December 1, 2019. The per diem was $113.68. In comparison to the draft, it included two paragraphs setting out the cheques required on closing: one for the payout and another for the legal fees. The statement was dated and signed by Mr. Anthony.
45Neither Mr. Savary nor his lawyer took issue with form of the discharge statement nor its contents. I conclude that this discharge statement complied with the requirements of s. 22(2) of the Mortgages Act.
46I do not accept Mr. Savary’s position that he never received a discharge statement. The evidence shows that he received at least two. He did not payout the mortgage.
Did Mr. Anthony sell Mr. Savary’s chattels?
47Although this was not pleaded, Mr. Savary stated that lumber and other materials were on the vacant lots owned by Mr. Savary’s company when Mr. Anthony sold the properties. Mr. Savary alleged that Mr. Anthony sold these materials as chattels when he sold the lots. Mr. Anthony recalled that a sea container was located on one of the lots but it was moved prior to the sale. Mr. Anthony stated that he had no knowledge of any chattels on the properties. Furthermore, the properties were listed for a year before they sold. Mr. Savary had opportunity to remove any chattels in the interim.
48The agreement of purchase and sale for vacant lot 463C states, “Chattels Included: All building materials as found in storage containers.” This suggests that the building materials were sold; however, Mr. Savary did not make a counterclaim for them and did not provide evidence of their value.
If Mr. Savary owes money on the loan, what is the amount?
49Mr. Anthony provided a spreadsheet setting out his calculations. It shows that the balance owing is 455,426 as of September 6, 2023.
50Mr. Savary provided a calculation showing that he owed 297,686.88 at maturity (June 8, 2016). He states that the total balance on May 20, 2020 was $333,701.45. Then he makes some interesting deductions. He deducted $282,500, which he says was the amount of the funds received from the sale of part lot 17. He stated that the actual value of the property was $450,000 and that he was owed the difference. No expert appraisal was called at trial. He did not plead an improvident sale. He went on to deduct $84,740 for the fraudulent conveyance of lot 463C. He deducted $100,000 as an approximate value for stolen chattels at “CTY 38 properties” and $350,000 as an approximate value of materials at “Cty Road 40 fraudulently conveyed with title”. No evidence was provided regarding the calculation of these deductions. In the end, he calculates that Mr. Anthony owes him $691,548.55.
51According to Mr. Anthony’s calculations, by March 1, 2017, approximately nine months after the last advance and 10 months after the term expired, the balance owing on the loan was $384,014.
52Mr. Anthony sent to Mr. Savary a Notice of Sale dated March 8, 2017. He subsequently sold the three vacant lots. He credited the sale proceeds against the amount owing on the loan.
53Mr. Savary testified that the loan advances stopped in September 2015. This is contradicted by the statement of adjustment for the June 30, 2016 advance that Mr. Savary signed. He stated that he accepted the $9,500 in October. Mr. Savary also testified that he only received one statement of adjustment for a loan advance – the second advance of $50,000 made on July 9, 2015. Again, this is contradicted by the statements of adjustment for the fourth, fifth and sixth advances that he signed. He stated that these signatures were forgeries; however, again, he provided no handwriting expert evidence. They appear to be similar to his signature on the Commitment Letter which he admits he did sign. In his statement of defence, he did not plead that his signatures on these documents were forgeries.
54Furthermore, I do not accept Mr. Savary’s calculations for the following reasons:
a) He calculates interest on the net amounts that he received whereas interest must be calculated on the actual amount of the advance prior to deductions.
b) He states that the lender fee payable at June 10, 2015 was $3,630; however, the Commitment Letter states that it was 3% of the loan, $17,500 ($570,000 x 3% = $17,000) According to the payment schedule, the balance was due on closing.
c) He states that $500 for legal fees was unlawfully charged on June 10, 2015. He does not provide any explanation for this. In article 4.19 of the Commitment Letter states, “The Borrower hereby agrees to pay the legal fees reasonably required by the Lender’s Solicitors for the completion of the legal services related to the Loan plus disbursements.” Legal fees of $2,500 were deducted from the first advance.
d) Mr. Savary’s calculations show that he used 1.525% interest for 2018 and 2% for 2019 and 2020 calculations. He stated that this was based on the Courts of Justice Act6 rates; however, the Commitment Letter states that interest is 10% per annum calculated monthly.
55I accept Mr. Anthony’s calculations as set out in his spreadsheet.7 As noted above, it shows that as of September 6, 2023, Mr. Savary owed $455,426. Additional interest is owed.
Conclusion
56Mr. Savary signed the Acknowledgement and Direction forms. His signatures were not forgeries.
57Mr. Anthony did not fail to fund the mortgage properly.
58The registration of the mortgage against Mr. Savary’s residence in the Land Registry Office 57 and against the three vacant lots in the Land Registry Office 45 was not fraudulently entered.
59Mr. Anthony did not act in bad faith when he refused to grant partial discharges.
60The sales of the three vacant lots were not unlawful.
61Mr. Anthony provided discharge statements to Mr. Savary.
62Chattels may have been included in the sale of one of the vacant lots; however, Mr. Savary did not make a counterclaim for the value of them.
63Mr. Savary shall pay to Mr. Anthony $455,426 owing on the loan as of September 6, 2023, plus applicable interest from that date. Mr. Anthony shall provide a calculation from September 7, 2023 to the release date of this decision.
Costs
64Mr. Anthony is the successful party and is presumptively entitled to costs. If the parties are unable to agree on costs, they may file brief written submissions, no more than 3 pages of text (14 pt. font size, regular 1” margins, 1.5 spacing) and any offers to settle. If either party exceeds the 3 page limit, the additional pages will not be considered.
65Self-represented parties may not claim costs based on lawyer’s rates. Costs are awarded on the basis of time lost from work or loss of opportunity to work. Evidence must be provided. If disbursements are claimed, invoices are required. If the parties incurred legal fees for assistance with trial document preparation, they may attach copies of invoices and proof of payment.
66Mr. Anthony’s submissions and interest calculation are due within three weeks of the release date of this decision and Mr. Savary’s within a further two weeks.
VALLEE J.
Date: January 9, 2025
January 9, 2025 – Correction:
- Para. 63 now reads: Mr. Savary shall pay to Mr. Anthony $455,426 owing on the loan as of September 6, 2023, plus applicable interest from that date.
Footnotes
- This was not pleaded.
- R.S.O. 1990, c. M.40
- This was not pleaded.
- $2,500 was deducted.
- Mr. Savary also alleged that his signatures on the fourth to sixth statement of adjustments for each advance were forgeries. I do not accept this for the reasons stated in paragraph 18.
- R.S.O. 1990 c. C.43
- Compendium T11