COURT FILE NO.: 709/01

DATE: 20021106

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

then, coo and e. macdonald j.

B E T W E E N:

XLO INVESTMENTS LIMITED

Plaintiff

• and -

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTRY OF CONSUMER AND COMMERICAL RELATIONS

Defendant

R. Donald Rollo, for the Plaintiff

Linda McCaffrey, Q.C., for the Defendant

HEARD: November 6, 2002

Oral Reasons for Judgment

COO J.: (Orally)

1This is an appeal from the judgment of Madam Justice Mesbur after an appeal by way of trial under s. 26 of the Land Titles Act from the decision of the Deputy Director of Titles.

2The case arises out of a claim that the appellant XLO, a mortgage portfolio manager suffered loss in regard to two loans made by it, each supported by a registered mortgage by reason of a mistake made by administrative officials in the land registry system in failing to register a CIBC second mortgage against the correct piece of land.

3There came to be the exercise of a power of sale by the first mortagee, Canada Trustco. There was a ruling that the appellant's two mortgages, the first for $165,000 and the second for $19,000, understood by XLO at the time to be second and third mortgages, should stand ahead of the CIBC mortgage. But it is the position of the appellant that had it known of the existence of what was intended by the bank to be a second mortgage it would never have advanced loan money supported by the mortgages received as security in the first place. It claims its investment loss, less the amount received by it on distribution of power of sale proceeds.

4Alternatively, the appellant takes the position that at the material time it could not exercise its second mortgagee's rights such as by paying off the first mortgage and selling the property later since the priorities as between it and the CIBC were not then determined, but were in dispute.

5The learned trial judge concluded on evidence that we find supportive that the appellant suffered no loss by reason of the registration error, that XLO got what it bargained for, that there is no evidence that as a prudent investor it would have exercised any rights as a second mortgagee at the time, or that, had it done so, the economic outcome would have been different.

6With respect to the later $19,000 mortgage, the trial judge determined that the loan was unrelated to the state of the land register and was driven by other practical financial factors.

7We are not prepared to conclude that the trial judge applied any wrong test on the issue of cause. One of the major points raised for the appellant is that there was no explicit adverse finding on the general issue of credibility of Ms. De Sante in the reasons for judgment. But it is manifest that the trial judge did not accept the testimony of the principle of XLO on key points on which the appellant's case had to rest. Her decision on this point was logical, sensible and is in no conflict with the balance of the evidence led at trial and did not reflect any failure to consider relevant evidence before her. We see no palpable in overriding error in what she did or in the result she reached.

8For these reasons the appeal will be dismissed.

THEN J.

9The appeal book is endorsed as follows: "This appeal is dismissed for reasons by way of endorsement read by Mr. Justice Coo. We agree with the respondent that costs should follow the event. The respondent submits that costs should be fixed on a substantial indemnity basis in the amount of $23,138.43. The Bill of Costs presented demonstrates that the amount encompasses the counsel fee, student-at-law, clerks, disbursements and GST. Costs on a partial indemnity basis are sought in the amount of $17,398.41. The appellant submits that it is appropriate to fix costs at $7,500 on a partial indemnity basis if the court is of the view that costs should follow the event. We agree with the appellant that costs should be assessed on a partial indemnity basis. Given the nature of the issues raised in the context of an admitted error on the part of the Registrar which has given rise to the proceedings upon which the appeal is based and given also our view of the nature of the effort which should reasonably be expended in preparing for this appeal, we fix costs on a partial indemnity basis in the amount of $7,500, all inclusive.

THEN J.

COO J.

E. MACDONALD J.

Date of Reasons for Judgment: November 6, 2002

Date of Release: November 12, 2002

COURT FILE NO.: 709/01

DATE: 20021106

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

then, coo and e. macdonald j.