



COURT OF APPEAL FOR ONTARIO

CITATION: Maloney v. Goodman, 2021 ONCA 792

DATE: 20211108

DOCKET: C68760

MacPherson, Simmons and Nordheimer JJ.A.

BETWEEN

Joseph
    Maloney and Heather Maloney

Applicants
    (Respondents)

and

Rick Goodman personally,
    and in his capacity as executor
    of the Estate of Leo Goodman, deceased

Respondents
    (Appellants)

Darryl Singer and Nadia Condotta, for the appellants

Todd Storms and Kerri Malcolm, for the respondents

Heard: November 2, 2021 by video conference

On appeal from the
    order of Justice Graeme Mew of the Superior Court of Justice, dated October 1,
    2020 with reasons reported at 2020 ONSC 5948.

REASONS FOR DECISION

[1]

The issues on appeal arise out of
    the respondents application to discharge several mortgages registered against
    two farm properties they own. The mortgages were originally held by Leo Goodman
    as mortgagee. Leo Goodman (Mr. Goodman Sr.) assigned the mortgages to his
    son, Rick Goodman (the appellant)
[1]
,
    in 2010. Mr. Goodman Sr. died in 2017 at the age of 102.

[2]

Because of poor record keeping and
    the confusing state of the record, the application judge was unable to resolve
    the question of whether the mortgages had been fully paid. However, he made
    four findings in an effort to assist the parties in resolving that question.
    The appellant appeals the application judges second and fourth findings. We
    dismissed the appeal at the conclusion of the appeal hearing for reasons to
    follow. These are our reasons.

Background

[3]

The respondents originally owned
    three properties that were subject to mortgages in favour of Mr. Goodman Sr.:
    the two farm properties referred to above and a property referred to as the
    Donald Street property. The mortgages fell into arrears. In 2008, Mr. Goodman
    Sr. sold the Donald Street property under power of sale.

[4]

In an effort to resolve matters,
    the respondents applied for a mediation under the
Farm Debt
    Mediation Act
, S.C. 1997, c. 21. The
    September 15, 2008 mediation resulted in an arrangement under s. 19 of that Act
    (the "FDMA Agreement"). Under the FDMA Agreement the parties agreed
    on the amounts owing under each of the mortgages, including the Donald Street
    property mortgage, as of various dates in 2006. However, the agreed upon amounts
    were subject to verification of certain figures. Further, the parties agreed
    that additional adjustments could be made.

[5]

Commencing in January 2009 and
    continuing until about April 2019, the respondents made monthly payments of
    $2,703.05 to the appellant or his father on account of their indebtedness.

The Application Judges Second Finding  the $60,000
    Promissory Note

[6]

The application judges second
    finding relates to a $60,000 promissory note (the Promissory Note) signed by
    the respondents on March 28, 2008 in favour of Mr. Goodman Sr. The Promissory Note
    stipulated that it was due and payable on March 1, 2010.

[7]

The appellant's position on the
    application was that the Promissory Note was paid with the proceeds of sale of the
    Donald Street property and that $60,000 should therefore be added to the total
    owing on all the mortgages as set out in the FDMA Agreement.

[8]

The application judge rejected the
    appellants position. Among other things, he noted that, assuming the Promissory
    Note was a genuine obligation, applying proceeds from the sale of the Donald
    Street property to pay it in priority to obligations secured against the
    property would have violated s. 27 of the
Mortgages Act
, R.S.O. 1990, c. M.40. In any event, if the Promissory
    Note reflected a genuine obligation, an action on a promissory note that was payable
    on March 1, 2010 would be statute barred.

[9]

The formal order arising from the
    application stipulates that the Promissory Note is not enforceable, due to its
    being statute barred.

[10]

On appeal, the appellant states
    that he and his father reasonably believed the Promissory Note was paid off
    with the proceeds of the Donald Street property. He submits that the application
    judge erred in holding that an action on the Promissory Note is statute barred
    because the fact that the Promissory Note could not properly be repaid from the
    Donald Street power of sale proceeds was only discovered when the application
    judge made his finding. Accordingly, the limitation period should run from the
    date of the application judges reasons, being the date on which the appellant
    discovered the Promissory Note was in fact unpaid.

[11]

We reject the appellant's
    submissions. As a starting point, the application judge made it clear in his
    reasons that he was not convinced that the Promissory Note was a genuine
    obligation. Further, it is unclear how any amount that may ever have been owing
    on the Promissory Note could be added to the balance owing on the mortgages on
    the farm properties for which the respondents seek a discharge. Most
    importantly however, the Promissory Note stipulated it was due and payable on
    March 1, 2010. The two-year limitation period for suing on the Promissory Note
    runs from its maturity date, March 1, 2010. The appellant is not entitled to
    rely on his own, or his fathers, purported mistake in applying the proceeds of
    sale of the Donald Street property to resurrect a claim that became statute
    barred in 2012.

The Application Judges Fourth Finding  the December 31, 2008
    Account for Legal Fees

[12]

The application judges fourth
    finding was that an account from Leo Goodman's lawyer dated December 31, 2008
    for legal fees relating to mortgage enforcement proceedings should not be added
    to the amount owing on the mortgages for which the respondents seek a discharge.

[13]

The appellant submits that the application
    judge erred in holding that the respondents were entitled to infer that any
    claim for reimbursement of legal expenses was extinguished by the [September
    2008] FDMA Agreement. The account was dated December 31, 2008, which was after
    the FDMA Agreement was made and states, in part, [t]his is the amount that
    should be added to Maloneys mortgage. Further, the appellant notes that the
    parties agreed that additional adjustments were to be made to the FDMA
    Agreement figures, that the FDMA Agreement was silent on the subject of legal
    fees and that the mortgages all provided for enforcement fees to be added to
    the balance owing.

[14]

We do not accept the appellants
    submissions. Mr. Goodman's lawyer confirmed that the December 31, 2008 account
    related to work done prior to the mediation. The application judge found that
    the first communication to the respondents about this claim was a letter dated May
    28, 2015, which the appellant sent on behalf of his father. In our view, the
    application judges finding was open to him on the record and was reasonable.
    The fact that the formal account pre-dated the mediation does not mean the fees
    were not taken into consideration at the mediation in calculating the balance
    owing on the various mortgages. Had legal fees not been taken into account on
    the mediation, the respondents were entitled to receive notice of the claim
    much sooner than six-and-a-half years after the fact.

Costs of the Appeal and Further Relief

[15]

Costs of the appeal are to the
    respondents on a partial indemnity scale fixed in the amount of $10,000
    inclusive of disbursements and applicable taxes.

[16]

As noted by the application judge,
    if necessary, the parties are at liberty to request a case conference in the
    court below if further directions or orders are required to finally resolve the
    application.

J.C. MacPherson J.A.

Janet Simmons J.A.

I.V.B. Nordheimer
    J.A.





[1]
As the assignments of mortgage were never registered, the parties agreed in the
    court below that the estate is not a necessary party to this proceeding. Mr.
    Goodman Jr. is not, in any event, the estate trustee of Mr. Goodman Sr.s
    estate.


