DATE: 20041028

DOCKET: C39304

COURT OF APPEAL FOR ONTARIO

RE:

DOEF’S IRON WORKS LTD. (Plaintiff/Respondent) – and MORTGAGE CORPORATION CANADA INC., JAMES C. SINCLAIR also known as JIM SINCLAIR and PATRICIA ANN SINCLAIR (Defendants/Appellant)

BEFORE:

SIMMONS, GILLESE JJ.A. and HENNESSY J. (ad hoc)

COUNSEL:

Mark A. Klaiman

for the appellant

William W. Walker

for the respondent

HEARD:

October 13, 2004

On appeal from the judgment of Justice Thomas J. Lally of the Superior Court of Justice dated November 22, 2002.

E N D O R S E M E N T

[1] The trial judge applied the doctrine of promissory estoppel and declared that the mortgage was null and void based on the representation which he found to have been made by James Sinclair and upon which he found the respondent relied to its detriment.

[2] It is well established that promissory estoppel can be used only as a shield and not as a sword. See: Canwest Exploration Co. v. Letair, [1964] S.C.R. 20, 41 D.L.R (2d) 198; Reclamation Systems Inc. v. The Honourable Bob Rae, [1996] 27 O.R. (3d) 419. When the respondent commenced proceedings claiming a declaration that the mortgage was null and void based on the representation that the mortgage was “not a real mortgage”, it was using the doctrine as a sword.

[3] Although MCCI was advancing its claim by way of an extra-judicial remedy (power of sale proceedings), it was open to the respondent to assert its rights other than by way of promissory estoppel, for example, by seeking the requested declaration based on lack of consideration. Accordingly, in the circumstances, we are not prepared to conclude that a remedy was available through application of the doctrine of promissory estoppel. Moreover, even if the respondent could not succeed in obtaining a declaration that the mortgage was null and void based on lack of consideration, the remedy granted by the trial judge based on promissory estoppel exceeded the scope of any remedy that was properly available through the application of that doctrine.

[4] Although the trial judge found that MCCI had not lent any money to the owner of the property forming the subject matter of the mortgage, in order to determine whether the mortgage was null and void, it was necessary for the trial judge to also consider whether there was consideration for the mortgage. As the trial judge did not make a finding concerning this issue, we are unable to determine whether the remedy granted was properly available based on the findings of fact made at trial.

[5] On the issue of bias, we did not admit the affidavits filed as fresh evidence because we determined that they would not be conclusive of an issue on appeal. In particular, in our view, the evidence adduced fell short of demonstrating that a reasonably informed person viewing the matter realistically and practically would likely conclude that the incident in question constituted evidence of bias.

[6] Accordingly, the judgment below is set aside and the matter is remitted back for a new trial in accordance with these reasons. Based on the agreement of counsel, costs of the appeal are awarded to the appellant on a partial indemnity scale fixed in the amount of $6500 inclusive of disbursements and applicable G.S.T. Costs of the first trial are reserved to the judge hearing the new trial.

“Janet Simmons J.A..”

“E.E. Gillese J.A.”

__ “P.C. Hennessy J. (ad hoc)”