|
Real Property - Mortgages (3). Margel v. Dawson
In Margel v. Dawson (Ont CA, 2024) the Ontario Court of Appeal considers a court's discretion to vary (reduce) mortgage interest in response to a mortgagee's failure to deliver a mortgage statement:[3] The motion judge was entitled to consider the decision in Cheung v. Moskowitz Capital Mortgage, 2018 ONSC 1322, 87 R.P.R. (5th) 89 to be distinguishable. As explained by this court in 2257573 Ontario Inc. v. Furney, 2022 ONCA 505, at paras. 17-18, the discretion exercised in Cheung to reduce interest as a consequence of a mortgagee’s failure to deliver a mortgage statement is a fact driven exercise. In Cheung, it was predicated on the mortgagee having sought to obtain an advantage by not delivering a statement to the prejudice of the mortgagor.
[4] Here, as in Furney, no advantage was sought or prejudice suffered to justify the exercise of any discretion to vary the interest payable under the mortgage. The motion judge noted that, although there was no mortgage statement delivered before the mortgage matured in April 2020, a Notice of Sale was delivered in May 2020 which set out the amounts owing. Subsequently, in August 2020 a discharge statement was provided. The motion judge also found that the absence of a mortgage statement did not hamper refinancing. Yet no payments at all were, or have been, made under the mortgage since it matured four years ago. . New Haven Mortgage Corporation v. Codina
In New Haven Mortgage Corporation v. Codina (Ont CA, 2023) the Court of Appeal considers an appeal relating to a claim against a mortgage company for taking of possession of a house, here allegedly contrary to s. 42(1) of the Mortgages Act:[3] First, he did not err in concluding that the respondents’ peaceable taking of possession of the property was not contrary to s. 42(1) of the Mortgages Act. Contrary to the appellant’s submission, this conclusion is consistent with Lee v. Guettler (1976), 1975 CanLII 639 (ON CA), 10 O.R. (2d) 257. The respondents did not commence an action or take proceedings in order to take possession of the property.
[4] Second, the motion judge did not err in his factual findings that the property was vacant when the respondent took possession, and that the respondent took peaceable possession. His decision was in accordance with the definition of “peaceable possession” articulated in the recent decision of this court, Hume v. 11534599 Canada Corp., 2022 ONCA 575. . Rose-Isli Corp. v. Smith
In Rose-Isli Corp. v. Smith (Ont CA, 2023) the Court of Appeal upheld a motion judge's order that denied the appellant's statutory right to redeem property [Mortgages Act, s.2] once it had gone into receivership and an APS had been entered into:[5] The appellants submit the motions judge erred in dismissing their cross‑motion because the second mortgagee, 273 Ontario, pursuant to s. 2 of the Mortgages Act, R.S.O. 1990, c. M.40, had an absolute right to redeem the first mortgage at any time, even where a court-approved sales process had been undertaken and the receiver was seeking court approval of a bid.
....
[7] 273 Ontario, as one of the applicants for the appointment of a receiver, consented to the Appointment Order. Section 9 of the Appointment Order qualified any encumbrancer’s right to redeem a mortgage on the properties under receivership. The section states that “all rights and remedies against the Company, the Receiver, or affecting the Property, are hereby stayed and suspended except with the written consent of the Receiver or leave of this Court.” See also: BCIMC Construction Fund Corporation et al. v. The Clover on Yonge Inc., 2020 ONSC 3659, at paras. 33 and 41.
[8] The motions judge recognized that the issue for determination was not whether 273 Ontario had a right to redeem but the more pragmatic issue of whether it should be permitted to exercise that right once the court-approved sales process had run its course and the Receiver had entered into an agreement with the successful bidder: Reasons, at paras. 73‑74. This properly framed the issue: the appellants had sought the appointment of the Receiver; the Receiver had undertaken the sales process approved by the court; and the Receiver had not been discharged. Accordingly, the ability of 273 Ontario to exercise a right of redemption had to take into account the reality that the property remained subject to an active receivership, which engaged interests beyond those of the second mortgagee.
[9] We see no error in the motions judge applying the following principles to guide her consideration of whether, in the specific circumstances, 273 Ontario should be granted leave to redeem:. In considering a request by an encumbrancer to redeem a mortgage on property in receivership, a court should consider the impact that allowing the encumbrancer to exercise its right of redemption would have on the integrity of a court-approved sales process;
. Usually, if a court-approved sales process has been carried out in a manner consistent with the principles set out in Royal Bank of Canada v. Soundair Corp., (1991), 1991 CanLII 2727 (ON CA), 4 O.R. (3d) 1 (C.A.), a court should not permit a latter attempt to redeem to interfere with the completion of the sales process. In our view, the reason the Soundair principles apply to circumstances where an encumbrancer seeks to redeem a mortgage is that once the court’s process has been invoked to supervise the sale of assets under receivership, the process must take into consideration all affected economic interests in the properties in question, not just those of one creditor; and
. In dealing with the matter, a court should engage in a balancing analysis of the right to redeem against the impact on the integrity of the court-approved receivership process. [10] We adopt the rationale for those guiding principles articulated in B&M Handelman Investments Limited v. Mass Properties Inc. (2009), 2009 CanLII 37930 (ON SC), 55 C.B.R. (5th) 271 (Ont. S.C.), where the court stated, at para. 22:A mockery would be made of the practice and procedures relating to receivership sales if redemption were permitted at this stage of the proceedings. A receiver would spend time and money securing an agreement of purchase and sale that was, as is common place, subject to Court approval, and for the benefit of all stakeholders, only for there to be a redemption by a mortgagee at the last minute. This could act as a potential chill on securing the best offer and be to the overall detriment of stakeholders.
|
