Elle Mortgage Corporation v. Roscoe, 2011 ONCA 254

CITATION: Elle Mortgage Corporation v. Roscoe, 2011 ONCA 254

DATE: 20110405

DOCKET: C52777 and C53112

COURT OF APPEAL FOR ONTARIO

Armstrong, Juriansz and Watt JJ.A.

BETWEEN

Elle Mortgage Corporation

Plaintiff (Respondent in Appeal)

and

Peter Karl Roscoe

Defendant (Appellant)

AND BETWEEN

Peter Karl Roscoe

Plaintiff by Counterclaim (Appellant)

and

Elle Mortgage Corporation, Terry M. Walman and Sub-Prime Mortgage Corporation

Defendants by Counterclaim (Respondents in Appeal)

Peter Roscoe, in person

Glenn E. Cohen, for the respondent Elle Mortgage Corporation and Sub-Prime Mortgage Corporation

Joseph Y. Obagi, for the respondent Terry Walman

Heard: March 23, 2011

On appeal from the judgment of Justice A.J. Roy of the Superior Court of Justice, dated September 30, 2010 (C52777), and the order of Justice V. J. MacKinnon of the Superior Court of Justice, dated October 28, 2010 (C53112).

ENDORSEMENT

[1] Roscoe is the appellant in two appeals. He contests the summary judgment of Roy J. granting possession of real property he owned to the respondent Elle Mortgage Corporation and dismissing his counterclaim against Elle and Sub-Prime Mortgage Corporation. He also appealed the order of MacKinnon J striking his statement of defence and counterclaim against the respondent Walman.

[2] Roscoe also brought a motion to admit fresh evidence, which was initially opposed. However, as both Roscoe and counsel for the respondents made generous reference to the fresh evidence, we admitted it.

[3] The thrust of Roscoe's position, the foundation of all of his arguments in relation to both appeals, is that his arrangement of a first mortgage with Elle and a second mortgage with Sub-Prime were a single package that was divided into the two mortgages by Walman. He argues that since the two mortgages were intrinsically linked, that it was the failure of Sub-Prime to advance funds that caused him to default on the Elle mortgage.

[4] The action for possession was brought by Elle. The appellant involved Sub-Prime in the litigation by his counterclaim.

[5] Having both mortgages disbursed at the same time was undoubtedly important to Roscoe's business plan. This may have caused him to lose sight of the fact that he arranged two separate mortgages. The documents he received from his broker when the financing was first arranged set out clearly and in detail that there would be two separate mortgages. Roscoe signed an acknowledgment of the arrangements in regard to each of the mortgages. He signed two separate mortgages and, contrary to his assertions, he received copies of two mortgages. In November, 2009, when Roscoe first protested there was a second mortgage, his broker reminded him in an e-mail that he had signed a letter arranging the second mortgage, that he had received a copy of the terms of the second mortgage when he met with his own lawyer, and that a copy of the executed second mortgage had been provided to him.

[6] The mortgage terms that Roscoe executed authorized Sub-Prime to register the mortgage before disbursing the funds. Sub-Prime's subsequent refusal to advance funds was due to Roscoe's own failure to remove an execution filed by the Family Responsibility Office (“FRO”) on the property and to provide a fresh appraisal. The evidence establishes that he was well aware of both these requirements. Contrary to his oral submission that Sub-Prime should have disbursed funds to remove the execution, his lawyer's letter dated July 24, 2009 shows that he gave instructions that funds were not to be remitted with respect to the FRO execution.

[7] In his oral submissions, the appellant submitted strenuously that the Sub-Prime mortgage should have been discharged. However, the evidence establishes that prior to the commencement of the litigation, Roscoe never asked for its discharge. To the contrary, the evidence indicates that he continued to press for funds to be advanced under the Sub-Prime mortgage.

[8] Roscoe did allude to the discharge of the Sub-Prime mortgage in his defence and counterclaim. In its defence, Sub-Prime pleaded that it was ready and willing to provide a discharge upon payment of its costs of defending Roscoe's counterclaim.

[9] Significantly, Roscoe filed no evidence that the registration of the Sub-Prime mortgage interfered with his ability to arrange a different second mortgage. He simply submitted that with the Sub-Prime mortgage registration, he was “maxed out”. He gave no indication of having considered that a new second mortgage might be arranged on the basis that the Sub-Prime mortgage would be removed from title on or before closing. The only documentary evidence on this point in the record indicates that the appellant was offered a complete refinancing of the property. While he explained why he refused the refinancing, the offer of the mortgage broker indicates the Sub-Prime mortgage on title was not an impediment. The offer notes only the total of the actual charges outstanding against the property.

[10] The material before Roy J. left no doubt that the Elle mortgage was in default and that Sub-Prime's withholding of the mortgage funds was due to Roscoe's own failures.

[11] In the second appeal, Roscoe's claim against Walman was properly struck as disclosing no cause of action. Roscoe made a litany of complaints against Walman, but could substantiate none of them. For example, Roscoe said he did not know who acted for Sub-Prime and that Walman refused to tell him. However, Roscoe could not point to any document which showed he asked Walman if he acted for Sub-Prime, and documents Roscoe tendered as fresh evidence show that his own broker advised him at the outset that Walman acted for both Elle and Sub-Prime.

[12] Roscoe's inability to substantiate his complaints is beside the point because, on a pleadings motion, the allegations in the claim must be taken to be established. The pleadings point is that Walman had no duty of care to Roscoe. Walman acted for Elle and Sub-Prime. Roscoe was represented by his own lawyer and had his own mortgage broker. Walman had no duty to Roscoe to disburse the Sub-Prime mortgage, but rather had a duty to his client Sub-Prime to refuse to disburse the mortgage funds until Roscoe fulfilled the requirements of removing the FRO execution and providing a fresh appraisal. Roscoe has no cause of action against Walman.

[13] The court expressed concern about certain aspects of the case. It is doubtful that, absent default on the second mortgage, Sub-Prime was entitled to treat its mortgage as security for the costs of defending the counterclaim. Elle and Walman provided no explanation why Roscoe was never provided with a statement accounting for the proceeds of the sale of his property. At the court’s direction, a statement was obtained and provided to him. These concerns, however, do not affect the resolution of the issues raised and the outcome of the appeals. Counsel for Walman and Elle each gave the court their personal undertaking that they would bring an interpleader motion within 30 days in regard to the proceeds of the sale of the property.

[14] Both appeals are dismissed. The respondent, Elle Mortgage Corporation, shall have its costs of the appeal and three interlocutory motions fixed in the amount of $15,000 inclusive of disbursements and applicable taxes. The respondent, Terry M. Walman, shall have his costs of the appeal fixed in the amount of $5,000 inclusive of disbursements and applicable taxes.

“Robert P. Armstrong J.A.”

“Russell Juriansz J.A.”

“David Watt J.A.”