DATE: 20060523

DOCKET: C44317

COURT OF APPEAL FOR ONTARIO

RE:

SKYLINE EQUITIES V INC. (Plaintiff (Defendant by Counterclaim) Respondent)) – and – GUISEPPE STOCCO (Defendant (Plaintiff by Counterclaim) Appellant))

BEFORE:

LABROSSE, MOLDAVER and FELDMAN JJ.A.

COUNSEL:

Simon J. Adler

for the appellant

W.H. Peter Madorin

for the respondent

HEARD & ENDORSED:

May 19, 2006

On appeal from the judgment of Justice P.J. Flynn of the Superior Court of Justice dated September 15, 2005 at Kitchener.

A P P E A L B O O K E N D O R S E M E N T

[1] The issue on this appeal is whether an agreement to make a second mortgage loan contained an implied term that the first mortgage would be in good standing and that it contain no restrictions on subsequent encumbrances that had not been waived.

[2] With respect to the trial judge, in our view he erred by concluding that on the evidence, the written terms of the second mortgage agreement were the only terms of that agreement. In our view, the conduct of the parties and of their solicitor both in January 2002 and in February 2002 make it clear that it was an implied term that the second mortgage transaction would not be completed, if that action triggered a default under the first mortgage.

[3] Accordingly, the appeal is allowed and the action is dismissed without costs. The appeal with respect to the counterclaim is dismissed. Costs of the appeal on a partial indemnity basis to the appellant fixed at $7,713.49.