Court of Appeal for Ontario

Citation: Toronto-Dominion Bank v. Mawji, 2012 ONCA 152 Date: 2012-03-09 Docket: C54257

Before: Winkler C.J.O., Simmons and Cronk JJ.A.

Between

The Toronto-Dominion Bank Plaintiff (Respondent)

and

Karima Mawji also known as Karima Padamsey and Karim Mawji also known as Karim Sadrudin Gulam Hussein Mawji and Hoyes, Michalos & Associates Inc., Trustees in Bankruptcy of the Estates of Karima Padamsey and Karim Mawji also known as Karim Sadrudin Gulam Hussein Mawji, Bankrupts Defendants (Appellants)

Counsel: Richard D. Howell, for the appellants Susanne M. Balpataky, for the respondent

Heard and released orally: March 1, 2012

On appeal from the order of Justice Herman Wilton-Siegel of the Superior Court of Justice, dated August 19, 2011.

Endorsement

[1] The Deputy Registrar in Bankruptcy dismissed the respondent's motion for an order under s. 69.4 of the Bankruptcy and Insolvency Act, R.S.C. 1985 c. B‑3, lifting the automatic stay to permit the respondent Bank to proceed with an action against the bankrupts for fraudulent misrepresentation and obtaining funds from a line of credit by false pretences. The Deputy Registrar concluded there was no evidence of oral contact between the bankrupts and the Bank and no evidence of written misrepresentation by the bankrupts.

[2] On appeal to the Superior Court, Wilton-Siegel J. allowed the appeal and lifted the automatic stay. The bankrupts appeal from that decision.

[3] This is a case in which the bankrupts obtained continuing advances under a line of credit after the collateral mortgage securing the line of credit had been paid out and discharged with part of the proceeds of a conventional mortgage. Nonetheless, the bankrupts continued to draw advances and make payments under the line of credit.

[4] Although there was no direct evidence on the motion of a misrepresentation or false pretences, the appeal judge held that the background circumstances leading up to the unsecured draws could lead a trier of fact to infer that, to the knowledge of the bankrupts, the Bank would not have been prepared to provide them with an unsecured line of credit. This, in turn, could support an inference that the manner of using the line of credit amounted to a false representation or false pretence.

[5] We agree with the appeal judge’s conclusions concerning the available inferences. The appeal is therefore dismissed.

[6] Costs of the appeal are to the respondent on a partial indemnity basis, fixed in the amount of $5,765, inclusive of disbursements and applicable taxes.

"Winkler C.J.O."

"Janet Simmons J.A."

"E. A. Cronk J.A."