



COURT OF APPEAL FOR ONTARIO

CITATION: Murphy v. Wheeler, 2016 ONCA 166

DATE: 20160226

DOCKET: C60467

MacPherson, van Rensburg and Miller JJ.A.

BETWEEN

Michelle Murphy

Applicant (Respondent)

and

John Wheeler

Respondent (Respondent)

Kevin Sherkin and Ryan Wozniak, for the appellant
    1269825 Ontario Inc.

Michelle Murphy, acting in person

James McReynolds, for the respondent Victoria Wood (Main
    Square) Inc.

Heard: February 23, 2016

On appeal from the judgment of Justice
Sherrill
    M.
Rogers of the Superior Court of Justice, dated April 21, 2015.

ENDORSEMENT

[1]

The appellant 1269825 Ontario Inc. (126) appeals the judgment of
    Rogers J. of the Superior Court of Justice dated 21 April 2015 ordering,
inter
    alia
, the payment of $297,015.12 plus interest to the respondent Victoria
    Wood (Main Square) Inc. (VW). The appellant also appeals the costs order made
    by the motion judge in favour of VW in the amount of $22,996 and in favour of
    Michelle Murphy in the amount of $9,040.

[2]

The judgment at issue was made in matrimonial proceedings between
    Michelle Murphy and John Wheeler. In particular, the court was addressing
    claims to the proceeds of sale of their matrimonial home in Maple, Ontario.
    John Wheeler was the registered owner of the home.

[3]

The matrimonial home had two mortgages on it. The first mortgage was
    granted by the Bank Nova Scotia for $1,200,000. It has been paid out in its
    entirety. The second mortgage was granted by 126 for $397,000 with interest of
    0%. It was registered on title on July 30, 2010.

[4]

There was a series of amending agreements to 126s second mortgage. The
    main one, the Second Amending Agreement on April 27, 2012, increased the
    principal by $97,785.74 to $494,785.74 and set the interest rate at 11.75%.
    None of these amendments was registered on title. Michelle Murphy had consented
    to all of the mortgages and the amending agreements.

[5]

After the parties separated, the matrimonial home was placed on the market.
    A closing was scheduled for June 3, 2013 with a sale price of $1,999,900.
    Pursuant to its mortgage, 126 prepared a discharge statement seeking payment of
    $599,136.74.

[6]

Murphy brought an emergency motion which was heard on May 31, 2013. The
    order arising from the motion provided for payment from the proceeds of sale of
    the matrimonial home to discharge the first mortgage and to pay other expenses,
    and for payment of $259,500 to VWs counsel in trust and of the balance of the
    proceeds into court, pending further order. The order discharged from title 126s
    mortgage and VWs writ of execution,  thereby enabling the sale to be completed
    on June 3, 2013.. The order provided that it was without prejudice to the
    rights of the parties and that the priorities of the parties to the funds paid
    in trust and into court were preserved.

[7]

On November 14, 2014, the order of May 31, 2013 was amended so that 126
    received $397,000 from the proceeds of the sale ($259,500 of which was to come
    from the trust account of VWs counsel). The order stated that a motion could
    be brought to determine, among other things 126s claims for interest under
    its mortgage registered against the matrimonial home and any and all claims
    to the proceeds of the sale held in court.

[8]

126 brought its motion which was heard by Rogers J. on April 2, 2015.
    The motion judge released her ruling on April 21, 2015. She ruled against 126s
    claim for the additional funds (about $200,000) added to the mortgage by the
    unregistered amending agreements and for interest. She said:

The only amount that is secured under the registered mortgage
    is the principal amount of $397,000. No interest is owing on this registered
    document and no other advances fall into this secured category. This sum of
    $397,000, as paid out to 126 on November 14, 2014, is the total of monies
    secured under the registered mortgage.

[9]

The appellant appeals on two grounds.

[10]

First,
    the appellant contends that its claim for principal and interest based on the   amended
    mortgage agreements trumps VWs claim as an execution creditor of John Wheeler
    (whose interest arose after the second mortgage was registered), and entitles
    it to receive the full amount of its claim, $599,136.74.

[11]

We
    do not accept this submission. The submission is inconsistent with the position
    taken before the court in a hearing leading up to the hearing before the motion
    judge. In the previous hearing, the appellants counsel (not current counsel),
    expressly submitted that only the $397,000 plus interest and costs was secured
    by the mortgage, and that the rest was unsecured. He stated, all my client
    would be entitled to Your Honour, is whatever it can secure under that last
    mortgage registered on title. The motion judge relied on this admission in her
    reasons; in our view, she was entitled to do so.

[12]

Furthermore,
    in a separate action resulting in a default judgment against Wheeler, 126 as
    plaintiff claimed, under the heading
Additional Funds
    Owing to the Plaintiff
:

13.
Separate and apart from the funds
    due under its

second
    mortgage
, the Plaintiff is also due       additional funds from the
    Defendant for the loan  set out in paragraph 9 herein. [Emphasis added.]

The additional funds set out in paragraph 9 explicitly
    include the money advanced under the Second Amending Agreement. Accordingly,
    126s position in that action is antithetical to its position before the motion
    judge.

[13]

Finally,
    we do not accept the appellants attempt to overcome the motion judges
    reasoning by relying on the doctrine of equitable mortgage discussed in
Trang
    v. Nguyen
(2011), 11 R.F.L. (7
th
) 105 (Ont. S.J.), affd 2012
    ONCA 885.

[14]

In
    the present case, the factual context (an unregistered mortgage from a party
    that already held a registered mortgage, 126s admission earlier in these
    proceedings that its mortgage security applied to only the $397,000 plus
    interest and costs, 126s opposite position in different proceedings, and the
    steep increase in interest rate from zero to 11.75 per cent), belies any
    serious foundation for an argument grounded in equitable mortgage.

[15]

Second,
    the appellant contends that the motion judge erred by awarding costs to the
    respondent and to Murphy.

[16]

We
    disagree. By August 14, 2014, 126 had received, on consent of the other
    parties, $397,000, precisely the full amount of its registered mortgage.
    Everything it has done since then in an attempt to obtain more money from these
    matrimonial proceedings has been unsuccessful. The costs awarded by the motion
    judge are deserved.

[17]

The
    appeal is dismissed. The respondent VW is entitled to its costs of the appeal
    fixed at $12,800, inclusive of disbursements and HST.

J.C. MacPherson J.A.

K. van Rensburg J.A.

B.W. Miller J.A.


