The registered owners of a property fraudulently discharged a first mortgage held by Computershare and subsequently granted new mortgages to CIBC and Secure Capital.
The application judge found the CIBC mortgage was a 'fraudulent instrument' under the Land Titles Act and restored Computershare's priority.
The Divisional Court allowed CIBC's appeal, holding that because the owners were the registered owners of the fee simple when they granted the CIBC mortgage, they did not falsely hold themselves out as owners in the instrument.
Therefore, the CIBC mortgage was not a fraudulent instrument and was entitled to priority under the deferred indefeasibility scheme of the Land Titles Act.
