Toronto-Dominion Bank v. Hagey

Toronto-Dominion Bank v. Hagey Collection Decisions of the Court of Appeal Date 2016-04-14 Neutral citation 2016 ONCA 270 Docket numbers C61842, M46265 Judges van Rensburg, Katherine Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Toronto-Dominion Bank v. Hagey, 2016 ONCA 270 DATE: 20160414 DOCKET: M46265 (C61842) van Rensburg J.A. (In Chambers) BETWEEN The Toronto-Dominion Bank Plaintiff (Respondent) and Betty Hagey also known as Betty Mae Hagey, Kevin Hagey also known as Kevin Scott Hagey Defendants (Appellants) Allan Rouben, for the appellants Eric Golden, for the respondent Heard: April 5, 2016 ENDORSEMENT [1] This is a motion for a stay pending appeal under rule 63.02(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The judgment under appeal was made in a summary judgment motion by Gordon R.S.J. He granted the Bank’s motion to rectify two mortgages that are registered against adjacent properties owned by the appellants. The first property, which consists of 97 acres, contains their home. This property is registered in the Registry system (the “Registry Part”). The second, a parcel of 100 acres, is vacant, and is registered in Land Titles (the “Land Titles Part”). [2] In January 2011, the appellants borrowed $269,250 from the Bank. The Bank took as security for the loan a mortgage over each of the two parcels of land, and mortgage documents were executed and registered. The terms of the mortgages are identical. The mortgages, however, breach s. 50(3)(b) of the Planning Act, R.S.O. 1990, c. P.13. The breach is a result of the mortgages not being registered simultaneously, and not having the Land Titles mortgage reference the Registry Part and the Registry mortgage reference the Land Titles Part. The Bank moved for summary judgment to rectify the mortgages to accord with the parties’ intention. [3] The motion judge concluded that the common intention of the parties was that both parcels were mortgaged as security for the Bank’s loan to the appellants. He set out Mr. Hagey’s explanation for why the mortgage was to attach only to the Registry Part (at para. 17), and his reasons for rejecting this explanation and for concluding that there was in fact a common intention to mortgage both properties (at paras. 21 to 26). This was a finding of fact that was open to the judge on the evidence. Indeed, the available evidence overwhelmingly supported that conclusion. [4] The test for a stay has three parts. The appellants must establish that (a) there is a serious question to be determined in the appeal; (b) they would suffer irreparable harm if the stay is refused; and (c) the balance of convenience favours the granting of the stay: Circuit World Corp. v. Lesperance (1997), 33 O.R. (3d) 674 (C.A.), at 676 -677. [5] The appellants do not meet the test for a stay. [6] First, I see little merit in their appeal. The appellants assert that rectification was not available in this case because this was a situation where the Planning Act was violated when the mortgages were registered on different days. The application judge stated at para. 5: “the mortgages were not registered simultaneously, nor did they contain terms cross-referencing one another to indicate that they were, in effect, a single mortgage being registered separately under the Land Registry and Land Titles systems”. The judgment he granted amends each mortgage to refer to the other, and to state that it is the intention of the chargor to charge the lands simultaneously. The judgment declares that the two mortgages collectively comprise, and have always comprised, a single charge of the whole of both parts together. The motion judge did not, as argued by the appellants, alter the dates of registration of the mortgages. He ordered rectification of the mortgage documents, so that it was clear that both parts were mortgaged to the Bank as part of a single transaction. The motion judge applied settled principles in granting the rectification requested. He ordered rectification of the documents that was consistent with the mutual intention of the parties. [7] The motion judge made a finding of fact with respect to the parties’ shared intention. He rejected the contrary evidence of Mr. Hagey, which was not corroborated by any evidence of his wife in response to the Bank’s motion. Importantly, the motion judge relied on documents the appellants themselves had executed, which indicated their intention to mortgage the entire 197 acres as security. The decision of a judge ordering rectification, made on proper principles, is entitled to deference: McLean v. McLean, 2013 ONCA 788, 118 O.R. (3d) 217, at para. 44. [8] There is no merit to the appellants’ argument that relief ought to have been denied because the Bank neglected to notice the violation of the Planning Act when it originally sought enforcement of the mortgages. The record indicates that the mistake occurred through an oversight – the loan was provided by the Bank to refinance a loan with another financial institution. This is not a case where one party knew or ought to have known of the other’s mistake and sought to take advantage of it. It would be inequitable to refuse rectification where the appellants had the benefit of the Bank loan and the parties’ shared intention was that both parcels would stand as security for the loan. [9] The appellants’ counsel also asserts that the summary judgment motion was premature in the absence of documentary discovery. I disagree. The record was such that the motion judge could make the necessary findings of fact to determine the rectification remedy. [10] Second, the appellants have not established irreparable harm. The appellants’ counsel argues that without a stay their ability to pursue the appeal will be thwarted (relying on Re Regal Constellation Hotel Ltd., (2004), 71 O.R. (3d) 355 (C.A.)). That case involved the appeal of a vesting order that, in the absence of a stay, effected a conveyance of property. The appeal was quashed. Here, it is the power of sale proceedings, that have been commenced, and will continue as a result of the rectification of the mortgages, that may well result in the transfer of the subject properties before the appeal is heard. The right to appeal however will not be lost; rather the question is whether the appellants would suffer irreparable harm (harm that cannot be compensated for in money). [11] While the loss of their home might well occasion irreparable harm, the unfortunate reality is that the appellants are bankrupt. Even if they were successful in their appeal, the properties would vest in their trustee, and only their unsecured creditors (of which the Bank would represent 68%) would stand to gain. The trustee has not taken any position in the litigation. The appellants assert that, if they were successful in the appeal, they would be able to negotiate with the trustee to buy back their properties. On the basis of the evidence before the court concerning the appellants’ debts and incomes and the value of the properties and their other assets, the prospect of the appellants ending up with the properties is entirely speculative and doubtful. [12] The motion for a stay pending appeal is accordingly dismissed. Costs to the respondents. If the parties are unable to agree on the amount, they may provide written submissions to the court, limited to five pages each side, within 15 days. “K. van Rensburg J.A.”