



COURT OF APPEAL FOR ONTARIO

CITATION:
MCC
    Mortgage Holdings Inc. v. Mundulai, 2020 ONCA 312

DATE: 20200521

DOCKET: M51539 (
C68332
)

Pardu J.A.
    (Motion Judge)

BETWEEN

MCC Mortgage Holdings Inc.

Plaintiff
(Respondent/Responding Party)

and

Aliamisse Omar Mundulai
and Ying Huang

Defendants
(
Appellant
/
Moving Party
)

Jeffrey Kukla, for the responding party

Aliamisse Omar Mundulai, acting in
    person

Heard: May 12,
    2020, by teleconference

REASONS
    FOR DECISION

[1]

Mr. Mundulai brings this motion on short notice
    on the ground of urgency. Because of this urgency I indicated at the
    teleconference hearing that the motion was dismissed, with reasons to follow. These
    are those reasons.

Background

[2]

Mr. Mundulai, a defendant mortgagor, brings this
    motion to prevent the proposed sale of real property that was scheduled to
    close on the date this motion was heard. The responding party, the plaintiff
    mortgagee, wishes to sell the property to realize the amounts owing on the
    mortgage, long in default. Mr. Mundulai seeks a stay pending appeal of
    enforcement of a writ of possession, a stay which was refused by the Superior
    Court. He proposes to appeal to this court from that decision and also asks to
    extend the time to appeal from a July 23, 2019 decision of the Superior Court
    refusing to set aside default judgment against him.

[3]

The plaintiff mortgagee recovered possession of
    the property the day before this motion was heard, when the writ of possession
    was executed for a second time.

[4]

The mortgage is dated May 31, 2016, given by Mr.
    Mundulai and his then spouse, Ying Huang. The original term was for two years.
    It is a second mortgage.

[5]

Default in payment on the mortgage occurred on
    July 1, 2018 and continues. Property taxes are in arrears in the sum of $29,562.15,
    a further event of default under the mortgage.

[6]

The mortgage matured on June 1, 2019 and has not
    been discharged.

[7]

The mortgagee issued a statement of claim on
    August 22, 2018, seeking judgment for payment of the amounts owing and
    possession. It was served on Mr. Mundulai on October 25, 2018, by an
    alternative to personal service. The mortgagors did not defend the action and
    default judgment issued on February 12, 2019, for the sum of $218,025.47 plus
    interest and for possession of the mortgaged property and costs. A copy of the
    default judgment was delivered to the mortgagors lawyer on February 20, 2019.

[8]

The Superior Court granted leave to the
    mortgagee to issue a writ of possession on April 12, 2019, and the writ of
    possession was issued on April 26, 2019.

[9]

Mr. Mundulai brought a motion to set aside the
    default judgment, which was dismissed on July 23, 2019. McCarthy J. found that
    there was no explanation for the delay in bringing the motion to set aside the
    default judgment, and that the mortgagors had been well aware of the substance
    of the claim and would have had time to formulate a defence. He found that the
    mortgagors had no arguable case on the merits. He found that service of the
    statement of claim was made properly under the rules and came to the attention
    of the defendants. He noted that the defendants had no evidence that the
    amounts set out in the discharge statement were inaccurate or not amenable to
    calculation as a liquidated sum by the registrar. There was no subsequently
    concluded agreement arriving at a compromise amount. He found that the mortgagee
    would be prejudiced by an order setting aside a properly obtained default
    judgment and doubted that the mortgagors had the ability to pay the amounts
    owing.

[10]

The writ of possession was enforced and the
    mortgagee took possession on January 8, 2020. Mr. Mundulai was asked to remove
    his personal belongings. He did not do so and the belongings were placed in
    storage by the mortgagee. Mr. Mundulai was not then living in the property,
    having separated from the co-defendant, his spouse. She agreed to leave the
    property and has not participated in this motion nor in the earlier motion
    brought by Mr. Mundulai to set aside the writ of possession.

[11]

The mortgagee entered into an agreement of
    purchase and sale of the property with a closing date set for May 12, 2020. The
    proposed purchasers sold their property in anticipation of acquiring this new
    home.

[12]

The mortgagee discovered that the locks had been
    changed by Mr. Mundulai on or about April 4, 2020. From correspondence sent by
    Mr. Mundulai to the mortgagees lawyer, it appears that he asserts a right to
    possession of the property despite the judgment and the writ of possession. He acknowledged
    to the motion judge that he re-occupied the property at some point after March
    29, 2020. He broke the existing locks on the property to effect entry. The
    mortgagee changed the locks again but discovered that Mr. Mundulai changed them
    a second time.

[13]

Competing motions were brought in the Superior
    Court. The plaintiff mortgagee sought a further writ of possession and removal
    of Mr. Mundulai from the property. Mr. Mundulai sought an order staying
    mortgage enforcement proceedings, setting aside the default judgment, and
    discharging the mortgage upon payment into court. By order of April 30, 2020,
    Boswell J. dismissed Mr. Mundulais motion and granted the mortgagees motion.
    Mr. Mundulai proposes to appeal from that order, and also seeks to extend the
    time to appeal from the order of McCarthy J. refusing to set aside the default
    judgment of July 23, 2019. Boswell J. concluded that there was no merit to Mr.
    Mundulais position, that he was stalling to take advantage of the temporary
    suspension of evictions resulting from the COVID crisis, that he unlawfully
    broke into the premises, and that his claim to pay $190,388.90 into court was
    disingenuous. The motion judge doubted that he had the funds available or that
    they would be sufficient to discharge the amount now owing, estimated at
    $240,000 plus the unpaid costs from the refusal of the motion to set aside the
    default judgment.

[14]

For some time, Mr. Mundulai and the mortgagees
    counsel engaged in discussions over the amount owing. Mr. Mundulais issues
    with the amounts claimed related mostly to certain ancillary charges such as
    renewal and administration fees, costs and interest after maturity. There is no
    dispute that the mortgage is in default. At one point in May or June 2019 they
    were close to agreement that $185,777.75 would discharge the mortgage, but the
    discussions fell apart when Mr. Mundulai asserted entitlement to a credit for a
    further $3,988.86 beyond what the mortgagee was prepared to accept by way of
    compromise. The mortgagee has lost faith that Mr. Mundulai can truly raise the
    money to discharge the mortgage or that any further discussions would be
    fruitful.

Arguments on the motion

[15]

Mr. Mundulai argues that the amounts claimed by
    the mortgagee for ancillary matters such as renewal fees, administrative costs
    and interest after maturity are excessive. He says these amount to roughly 10%
    of the principal amount of the mortgage and are significant. He argues that
    Boswell J. erred by failing to consider ss. 12, 22 and 23 of the
Mortgages
    Act
, R.S.O. 1990, c. M.40,
and erred by failing to allow him to pay money into court on account of the
    mortgage. He argues that the mortgagee acted in bad faith and has asserted
    claims for which there is no contractual or legal foundation. He submits that
    the Notice of Power of Sale was invalid. He says there is no evidence the
    mortgagee has obtained market value for the property by the proposed sale. He
    submits that, by virtue of an exit clause in the agreement of purchase and sale
    with the proposed purchaser, the mortgagee would not be prejudiced if the sale
    could not proceed. He submits that to deny a stay would allow an overreaching
    mortgagee to benefit from its conduct and deny him any remedy, rendering his
    appeal moot. He says that the mortgagee would not be prejudiced if this court
    grants a stay of enforcement of the writ of possession because it could simply
    give a new notice that it was exercising its power of sale rights.

[16]

The mortgagee asserts that the amount owing on
    the mortgage has been conclusively settled by the default judgment, and that no
    appeal has been taken for over nine months from the decision refusing to set
    aside the default judgment. Extension of time to appeal from that decision
    should not be granted. The mortgagee argues that the sections of the
Mortgages
    Act
cited by the moving party are of no assistance to him, and that
    Boswell J. exercised his discretion properly in refusing to stay enforcement of
    the writ of possession.

Analysis

[17]

I begin with the request for an extension of
    time to appeal from the decision of McCarthy J. of July 23, 2019 refusing to
    set aside the default judgment.

[18]

The relevant factors are:

1.

Whether the appellant had an intention to appeal
    within the relevant period

2.

The length of the delay and the explanation for
    the delay

3.

Any prejudice to the respondent

4.

The merits of the appeal

5.

Whether the justice of the case requires
    granting an extension

The governing principle is whether the
    justice of the case requires that an extension be granted: see
Chandra v. Canadian
    Broadcasting Corporation
, 2016 ONCA 448, 349 O.A.C. 93, at paras. 13-14.

[19]

Here there is no evidence the appellant intended
    to appeal within the relevant period. The delay, close to ten months, is
    substantial and there is no explanation for it. Mr. Mundulai is a former
    practicing lawyer and would have been aware of the importance of acting
    promptly. The prejudice to the mortgagee is substantial. It has taken steps to
    sell the property to realize the money owed to it. No payments have been made since
    September 2018. The municipal taxes are in substantial arrears and there is no
    indication as to how these would be paid. It is not possible to conclude that
    there is merit to the appeal. It is possible that if he had acted with dispatch
    and with a proper evidentiary foundation the appellant might have reduced the
    mortgagees claims by some amount, but there is no dispute that the principal
    is outstanding. The appellant has not resided in the home since January 2019,
    until he broke into the premises around March and April of 2020, in the face of
    a judgment for possession in favour of the mortgagee. His former spouse takes
    no part in these proceedings.

[20]

It follows that the motion to extend time to
    appeal from the decision of July 23, 2019, is dismissed. That judgment
    therefore conclusively settles the amount owing on the mortgage and the
    mortgagees right to possession of the property.

[21]

I now turn to the request for a stay of the writ
    of possession pending the appeal to this court from the decision of April 30,
    2020.

[22]

The factors to be considered are:

1.

Is there a serious issue to be tried?

2.

Will the appellant suffer irreparable harm if
    the stay is not granted?

3.

Does the balance of convenience favour granting
    a stay?

See
RJR-MacDonald Inc. v. Canada
    (Attorney General)
, [1994] 1 S.C.R. 311.

[23]

Given that the amount owing on the mortgage has
    been conclusively determined by a final decision from which there is no appeal,
    I am not satisfied that there is a serious issue to be tried as to the amount
    owed on the mortgage. Given that the accuracy of the money judgment was
    previously litigated, Boswell J. was correct to decline to embark on a
    re-consideration of the same issue.

[24]

Further, I see no error in Boswell J.s exercise
    of discretion to refuse to stay enforcement of the writ of possession. He did
    not err in considering that the appellants actions in twice breaking into the
    premises in the face of a judgment for possession in favour of the mortgagee
    was a factor weighing against the granting of the stay.

[25]

Given the appellants limited occupation of the
    property since January 2019, I am not satisfied that he will suffer irreparable
    harm if the stay is not granted. His spouse and co-owner agreed to vacate the
    property and appears to have no interest in holding onto it.

[26]

The balance of convenience does not favour
    granting a stay, given the appellants long, unexplained delay. It is unlikely
    he can raise the funds to discharge the mortgage. The mortgage commitment he
    has filed has not been executed by his former spouse and it appears unlikely
    that she will do so. Default has continued for a long time and the mortgagee
    should be permitted to realize the money owed to it.

[27]

For these reasons the motion was dismissed.

[28]

There will be an order for costs of this motion
    in favour of the mortgagee in the sum of $3,300.00 inclusive of taxes and
    disbursements.

Released: May 21, 2020

G.
    Pardu J.A.


