



COURT OF APPEAL FOR ONTARIO

CITATION: B2B Bank v. Hails, 2018 ONCA 366

DATE: 20180412

DOCKET: M48951 (C64489)

Watt J.A. (In Chambers)

BETWEEN

B2B Bank

Respondent

and

Darrell George Hails

Appellant (Moving Party)

Darrell Hails, in person

James M. Butson, for the respondent

Heard: March 29, 2018

ENDORSEMENT


[1]

Darrell George Hails entered into a mortgage agreement with B2B Bank (the
    Bank). The mortgage was registered on October 29, 2012 in connection with
    residential property located in Grimsby, Ontario. The mortgage secured the sum
    of $280,526 at an interest rate of 3.14 percent for a term of five years
    commencing on December 1, 2012 and maturing on November 1, 2017.

[2]

The Standard Charge Terms provided the Bank with remedies on default of
    payment, including entry upon and sale of the land.

The Default

[3]

Mr. Hails defaulted on payment of installments of principal and interest
    on January 1, 2017. He continued in default until the mortgage matured on
    November 1, 2017. The mortgage was not renewed or extended.

The Proceedings to Enforce the Mortgage Security

[4]

On May 17, 2017 the Bank issued a statement of claim in the Superior
    Court of Justice. About a week later, the Bank issued a Notice of Sale under
    Mortgage and a Notice of Intention to Enforce Security. Mr. Hails delivered his
    statement of defence on June 20, 2017.

The Summary Judgment Motion

[5]

After a review of the statement of defence, the Bank considered that the
    pleadings revealed no genuine issue requiring a trial. As a result, the Bank
    brought a motion for summary judgment.

[6]

The summary judgment motion came on for hearing on September 22, 2017.
    As a result of Mr. Hails agreement not to oppose the motion and the imminence
    of the maturity of the mortgage, the motion judge granted summary judgment to
    the Bank, but ordered that it could not take possession of the mortgaged
    property until November 1, 2017, the maturity date of the mortgage. This
    allowed Mr. Hails a further opportunity to redeem the mortgage or make other
    necessary financial arrangements.

The Appellate Proceedings

[7]

Mr. Hails appealed the order granting summary judgment. He also filed a
    motion for leave to introduce fresh evidence on the hearing of the appeal.

[8]

On two separate occasions, Mr. Hails sought an order staying execution
    of that portion of the order made on the motion for summary judgment requiring
    him to deliver vacant possession of the mortgaged property on or before the maturity
    date. Both motions were dismissed by judges of this court.

The Sale of the Property

[9]

On January 29, 2018 the sale of the mortgage property closed. The sale
    price of $489,900 yielded a net surplus available for distribution of
    $125,700.45.

[10]

On
    March 21, 2018, the Banks solicitor contacted the second mortgagee seeking a
    discharge statement identifying the amount outstanding under the second
    mortgage.

These Motions

[11]

Mr.
    Hails, who is self-represented, has filed three further motions in connection
    with his appeal to this court. He seeks an order:

i.

appointing Michael Joseph Albert, Gaboury as a McKenzie friend;

ii.

adjourning the hearing of the appeal to permit the McKenzie friend time
    to prepare; and

iii.

directing the payment of the surplus available from the sale of the
    property and an accounting in connection with the sale.

[12]

In
    oral submissions, Mr. Hails abandoned his request for an adjournment.

The McKenzie Friend Motion

[13]

In
    support of his motion to have Michael Joseph Albert, Gaboury appointed as a McKenzie
    friend, Mr. Hails relies upon his own affidavit and an affidavit from the
    proposed McKenzie friend.

[14]

For
    all practical purposes, the supportive affidavits are in identical terms. Each
    asserts the complexity of the proceedings and the difficulty Mr. Hails has in
    keeping up and organizing his documents as the basis for his request for the
    appointment of a McKenzie friend. The balance of both affidavits is occupied by
    descriptions of the qualifications of Michael Joseph Albert, Gaboury for his
    proposed role as McKenzie friend and his prior experience of serving in that
    capacity.

[15]

The
    proposed McKenzie friend, Michael Joseph Albert, Gaboury is a party to what
    is described as a pure trust agreement with Mr. Hails, as grantor, with
    respect to the mortgaged property. According to the pure trust, the mortgage
    property was conveyed unto the trust pursuant to a vote of the board of directors
    of the Hails Life Maintenance Foundation. The transfer and trust is dated
    August 24, 2017 well after default first occurred under the mortgage and the
    Bank had begun to take steps to enforce its rights.

[16]

A
    further connection between the proposed McKenzie friend and Mr. Hails appears
    on examination of the address for service Mr. Hails has provided in his
    materials. The address is the registered address for G.E. Holdings Canada
    Limited, a company of which Lord Michael Joseph Albert Gaboury is the director.

[17]

As
    I will briefly explain, I am not persuaded that this is a case in which a
    McKenzie friend should be appointed.

[18]

Appointment
    of a McKenzie friend appears to have originated in a practice developed in
    England primarily for family law proceedings. In accordance with this practice,
    self-represented litigants are permitted to have with them in the court room a
    friend who can take notes, make suggestions and give advice. In this way, the
    self-represented litigant is better able to present their case to the court.

[19]

The
    role of the McKenzie friend does
not
extend to the functions usually
    discharged by counsel. Cross-examining witnesses. Advancing argument. The
    appointment of a McKenzie friend is left to the sound discretion of the court
    to which the application is made, with each case falling to be decided on its
    own facts. Even where such an appointment is made, the nature and extent of the
    assistance authorized must be closely circumscribed, lest the mandate provided
    to the friend amount to the functional equivalent of that performed by counsel.
    See,
Law Society (Manitoba) v. Pollock,
2007 MBQB 51, at paras.
    121-122.

[20]

In
    this case, the record is barren of any credible evidence that Mr. Hails is in
    need of a McKenzie friend.

[21]

These
    proceedings originate in Mr. Hails default under a mortgage. The terms of the
    mortgage required Mr. Hails to make monthly payments of principal and interest.
    Default began on January 1, 2017 and continued throughout the remaining term of
    the mortgage. The Bank exercised its rights under the mortgage. It sought and
    obtained summary judgment without opposition from Mr. Hails. It obtained an
    order for possession of the property effective on the maturity date of the
    mortgage. It sold the property, paid out the first mortgagee and is in the
    process of doing the same in connection with the second mortgagee.

[22]

It
    is difficult to tease out of this factual matrix any support for the claim of
    complexity Mr. Hails advances as the lynchpin of his claim for appointment of a
    McKenzie friend. Any complexity is of Mr. Hails own making.

[23]

The
    few authorities to which I have been referred do not assist Mr. Hails. For the
    most part, appointment of a McKenzie friend occurs in family law proceedings,
    not in enforcement proceedings for default under a mortgage. And the range of
    assistance provided, according to those authorities, such as helping the
    litigant find the courtroom; organize and locate court documents; take notes; talk
    to the litigant during submissions; offer suggestions during court recesses;
    and quietly indicate to the litigant whether all points have been covered
    during submissions seem not to be what Mr. Hails has in mind for Michael
    Joseph Albert, Gaboury who may be one and the same as Lord Michael Joseph
    Albert Gaboury, a director of G.E. Holdings Canada Limited and a party to a
    pure trust agreement in connection with the property.

[24]

The
    motion to appoint a McKenzie friend fails and is dismissed.

The Motion Relating to the Proceeds of Sale

[25]

Mr.
    Hails also seeks directions on disbursement of the excess funds available after
    sale of the mortgaged property and an accounting of the sale proceeds. Mr.
    Hails wants the surplus paid into court then disbursed to him for the purpose
    of paying the second mortgagee.

[26]

Section
    27 of the
Mortgages Act,
R.S.O. 1990, c. M. 40 directs the manner in
    which the person receiving the money from the sale of a mortgaged property is
    to apply that money.

[27]

In
    this case, the person receiving the money from the sale is the Bank. Thus far,
    the Bank, in complying with its obligations under the section, has:

i.

paid all the expenses incident to the sale;

ii.

applied the money in discharge of all interest and costs it has
    incurred;

iii.

paid the principal balance outstanding under its first mortgage;

iv.

contacted the second mortgagee in order to determine, then pay the
    amount due to it under its mortgage; and

v.

agreed to remit the remaining surplus to Mr. Hails.

[28]

The
    obligation to pay the second mortgagee from the sale proceeds settles upon the
    bank under s. 27 of the
Mortgages Act.
It follows that the direction
    sought by Mr. Hails  that
he
receive the current surplus to pay the
    second mortgagee  would have the effect of circumventing the obligations
    imposed on the bank by s. 27 of the
Mortgages Act
. It is not an order
    that I am prepared to make.

[29]

Mr.
    Hails also complains about the Banks costs associated with the sale and
    payments out under its mortgage. He alleges an improvident sale of the
    mortgaged property. Complaints about costs, governed by s. 43(2) of the
Mortgages
    Act
, are to be made to and settled by an assessment officer upon proper
    notice. And the materials filed by the Bank in response to the motion for
    directions disclose full particulars of the sale and subsequent disbursements.

Conclusion

[30]

In
    the result, the motion fails in its entirety and is dismissed. The Bank is
    entitled to its costs which shall be in the cause and determined by the panel
    hearing the appeal. If the appeal does not proceed, the Bank may make written
    costs submissions in connection with this motion in accordance with a schedule
    I will set upon notice that the appeal has been abandoned.

David Watt J.A.


