Supreme Court of Canada
Mayzel v. Runnymede Investment Corp. Ltd. et al., [1968]
S.C.R. 543
Date: 1968-04-29
Louis Mayzel (Plaintiff
by Counterclaim) Appellant;
and
Runnymede
Investment Corporation Limited and Rexdale Investments Limited (Defendants
by Counterclaim) Respondents.
1968: February 1; 1968: April 29.
Present: Cartwright C.J. and Martland,
Judson, Hall and Pigeon JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR
ONTARIO.
Mortgages—Power of sale—Legislation with
effective date September 1, 1964, respecting notice of exercising power—Sale on
October 6, 1964—Whether proceedings under power of sale were commenced by
notice given May 20, 1964, and were consequently outside legislation—The
Mortgages Act, R.S.O. 1960, c. 245, s. 29 (rep. & sub. 1964, c. 64, ss. 4
and 5).
[Page 544]
An action brought by Runnymede Investment
Corporation Ltd. for foreclosure of a mortgage against Louis Mayzel and City
Parking Ltd. was discontinued by Runnymede, but prior to the discontinuance a
counterclaim was commenced by Mayzel against Runnymede and Rexdale Investments Ltd. The aim of the counterclaim was to set
aside the sale of an interest in certain lands, which interest had been sold to
Rexdale by Runnymede on October 6, 1964, relying on a power of sale in a mortgage of that interest from
Mayzel to Runnymede. The latter mortgage had been given to Runnymede to secure an extension of time on
two other mortgages held by Runnymede on adjoining lands owned by Mayzel. All
three mortgages were in default on May 20, 1964, when a notice of sale was
given by Runnymede.
The Mortgages Act, R.S.O. 1960, c. 245, s. 29 (rep. & sub. 1964, c. 64, ss. 4 and
5) provides that a mortgagee shall not exercise a power of sale unless a notice
of such exercise in the form prescribed has been given to certain persons
enumerated by the Act. Mayzel would have been one of such persons.
Section 8 of the same Act provides that the foregoing provision “applies
where proceedings under a power of sale are commenced on or after the 1st day
of September, 1964.”
The exercise of the power was upheld by the
trial judge and an appeal from his decision was dismissed by the Court of
Appeal. Mayzel then appealed to this Court. Runnymede and Rexdale submitted that the proceedings under the power of sale
were commenced by the notice given on May 20, 1964, and that they were
consequently outside the legislation in question.
Held: The
appeal should be dismissed.
The Court agreed with the conclusion of the
Court of Appeal that the proceedings under the power of sale were commenced by
the notice of May 20, 1964; that these proceedings were never abandoned and
that the right subsisted and continued up to October 6, 1964; and that
negotiations between Mayzel and Runnymede which were running concurrently with
the sale proceedings did not constitute a withdrawal or an abandonment of the
proceedings.
APPEAL from a judgment of the Court of Appeal
for Ontario dismissing an
appeal from a judgment of Haines J. Appeal dismissed.
Claude R. Thomson, for the appellant.
John J. Robinette, Q.C., for the
respondents.
The judgment of the Court was delivered by
JUDSON J.:—We are concerned in this appeal with
the counterclaim of Louis Mayzel against Runnymede Investment Corporation
Limited and Rexdale Investments Limited. In this counterclaim Mayzel asked for
a declaration
[Page 545]
that the exercise of the power of sale in a
certain mortgage given by him to Runnymede Investment Corporation Limited was a
nullity. Both the trial judge and the Court of Appeal have upheld the exercise
of the power.
Mayzel says that the exercise of the power is a
nullity because it offends s. 29 of The Mortgages Act, which was enacted
by 1964 Statutes of Ontario, c. 64, s. 5. This legislation came into force on September 1, 1964. The new s. 29(1) provides:
29. (1) A mortagee shall not exercise a
power of sale unless a notice of exercising the power of sale (Form 1) has been
given by him to the following persons, other than the persons having an
interest in the mortgaged property prior to that of the mortgagee and the persons
subject to whose rights the mortgaged property is being sold:
There is a transitional provision in the 1964
legislation contained in s. 8, which reads as follows:
8. The Mortgages Act, as amended by
this Act, applies where proceedings under a power of sale are commenced on or
after the 1st day of September, 1964.
Mayzel’s argument is that the proceedings under
the power of sale were commenced on or after September 1, 1964. Runnymede and Rexdale submit that the
proceedings were commenced by a notice given on May 20, 1964, and that they are
consequently outside the new legislation. This is the only issue involved in
this appeal.
Mayzel was the owner in fee of two parcels of
land on University Avenue.
These were subject to mortgages which were vested in Runnymede as mortgagee. There were encumbrances prior to these mortgages.
Mayzel was also interested in land known as 137
Richmond Street West, which adjoined the two freehold
parcels. His interest in 137 Richmond Street West was a right to acquire a leasehold interest from Principal
Investments Limited. This leasehold enjoyed a right of perpetual renewal every
twenty-one years at an agreed or arbitrated amount as ground rental. To secure
an extension of time on the mortgages on the freehold lands on University Avenue, Mayzel gave a mortgage
to Runnymede on his right to acquire the leasehold interest in 137 Richmond Street West. All three
mortgages were in default on May 20, 1964, when Run-
[Page 546]
nymede Investment Corporation Limited gave the
following notice of sale. It applied both to the freehold lands and the
leasehold interest. It is in the following form:
May
20, 1964.
Mr. Norton Penturn,
John Penturn & Son Limited,
25 Adelaide Street West,
Toronto 1,
Ontario.
Mortgagee’s
sale of freehold and
leasehold
land
We wish to inform you that written Offers
to Purchase will be considered by us at the offices of Messrs. McDonald, Davies
& Ward, 4 King Street West, Toronto 1, on Friday May 29, 1964 at 12:00 o’clock noon, in respect of the lands
described in the enclosed sketch. The lands are vacant except for a service
station building located at the northeast corner of the property.
The portion of the property outlined in red
is leasehold land subject to a perpetually renewable lease which provides for a
current rental of $7,200 per annum. Such rental to be re-negotiated and if
necessary settled by arbitration in 1970 for the ensuing twenty‑one year
term and so on from term to term. The balance of the property is freehold land
which will be sold subject only to an existing first mortgage for $800,000 due
as to the principal amount on October 1, 1971 with interest only payable during
the term at the rate of $4,600.03 per month.
The area of the property is approximately
60,000 square feet; the 1963 real estate taxes were approximately $74,000 and
we understand (without warranty thereof) that the net rental income derived
from the property is approximately $55,000 per annum.
A deposit equal to 10% of the purchase
price, in cash or by certified cheque, will be required upon the submission of
any Offer to Purchase. The balance of the purchase price shall be payable in
cash or by certified cheque on June 12, 1964. The freehold portion of this property is being sold by us as third
mortgage under and by virtue of the power of sale without notice contained in a
first mortgage upon the said leasehold interest.
In connection with this sale we refer you
to our letter of October 24, 1963, which was mailed to you. The sale
contemplated by that letter was abandoned because of the furnishing by the
mortgagor of the adjoining leasehold property as additional security for us. As
this additional mortgage is now in default and the original mortgage has
continued in default we are now entitled to sell the two properties together.
Yours
very truly,
RUNNYMEDE
INVESTMENT CORP. LTD.
Louis Charles
LC/ej
Enc.
[Page 547]
This notice was sent to forty of the leading
real estate agents in Toronto
and a copy was also sent to Mr. Mayzel and his solicitor.
Mayzel’s right to acquire an assignment of the
leasehold interest from Principal Investments was in serious jeopardy. The
purchase price was $250,000 with a $10,000 deposit. The purchase should have
been completed on December 17, 1962, but because of litigation concerning the validity of the right of
perpetual renewal, there were extensions from time to time. The closing date
was finally extended to October 6, 1964. On that date Mayzel required almost
$250,000 to save the property.
There were continuous negotiations between Runnymede and Mayzel from the date of the
notice, May 20, 1964, to the date of closing of the purchase of the leasehold
interest, October 6, 1964.
Mayzel’s object in these negotiations was to come to some kind of agreement
with Runnymede about the ultimate disposition of the property. It is admitted
that no such agreement was made but on October 6, 1964, Mayzel consented to the
sale from Runnymede to Rexdale of his right to acquire the leasehold interest
in the hope that he would be able to come to a subsequent arrangement with the
person who controlled both Runnymede and Rexdale. He signed a direction, dated October 5, 1964, to
Principal Investments to assign the lease to Rexdale Investments Limited in the
following terms:
TO: National Trust Company,
Receiver-Manager of
Principal Investments Limited.
RE: Principal Investments Limited sale to
Mayzel. Principal Investments
Leaseholds
Please make the Assignment of the Lease
between John Elias Gibson and Principal Investments Limited, dated December 15th, 1949, and registered in the
Registry Office for the City of Toronto on December 4th, 1950, as Instrument Number 31971E.S. to REXDALE
INVESTMENTS LIMITED, a Company incorporated under the laws of the Province of Ontario.
This shall be your good and sufficient
authority for so doing.
DATED at Toronto this 5th day of October, 1964.
WITNESS:
(sgd)
Vera
Christoff
(sgd)
Louis Mayzel
LOUIS
MAYZEL
[Page 548]
On October 6, 1964, Runnymede, for a consideration of $65,000, assigned to Rexdale all the right,
title and interest of Mayzel to purchase the leasehold interest in 137 Richmond Street West under the
agreement of October 19, 1962, made between Mayzel and Principal Investments.
I have mentioned that both Runnymede and Rexdale were under the same
control but Mayzel, as appellant, declined to attack the transaction on this
ground. He could not very well do so. He had released his interest in the
property in favour of Runnymede and Rexdale in the hope that he would be able
to make a subsequent agreement with them. This is more than acquiescence. He
confines his attack on the transaction to the legislation amending The
Mortgages Act in 1964. This legislation came into force, as I have said, on
September 1, 1964, over a month
before the exercise of the power of sale on October 6, 1964.
The Court of Appeal has held that the
proceedings under the power of sale were commenced by the notice of May 20,
1964; that these proceedings were never abandoned and that the right subsisted
and continued up to October 6, 1964; and that the negotiations which were
running concurrently with the sale proceedings did not constitute a withdrawal
or an abandonment of the proceedings. With this conclusion I agree.
I would dismiss the appeal with costs.
Appeal dismissed with costs.
Solicitor for the appellant: Claude R.
Thomson, Toronto.
Solicitors for the respondents: Arnup,
Foulds, Weir, Boeckh, Morris & Robinson, Toronto.
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