Court of Appeal for Ontario

CITATION: 1396929 Ontario Inc. v. Valladares, 2026 ONCA 282

DATE: 20260420

DOCKET: COA-25-CV-0714

Gillese, Madsen and Pomerance JJ.A.

BETWEEN

1396929 Ontario Inc. Plaintiff (Respondent)

and

Lucia Valladares also known as Lucia Margartia Valladares, Walter Valladares also known as Walter E. Valladares, and Leonides Valladares Defendants (Appellants)

David Sterns and Sara Ray Ramesh, for the appellants

Amandeep Sidhu and Balpreet S. Lailna, for the respondent

Heard: March 30, 2026

On appeal from the judgment of Justice Colleen Yamashita of the Superior Court of Justice, dated May 29, 2025.

Reasons for Decision

Overview

[1] The appellants received money by way of a second mortgage from the respondent. After the appellants committed acts of default under the second mortgage, the respondent successfully moved, by way of summary judgment, to recover the outstanding indebtedness and possession of the property. The appellants now seek to have that judgment, dated May 29, 2025 (the "Judgment"), set aside and the matter remitted to the Superior Court of Justice for trial.

[2] On appeal, the appellants submit that the motion judge failed to properly consider the circumstances in which they entered into the second mortgage and that those circumstances raise genuine issues requiring a trial.

[3] We reject this submission. In our view, there is no basis for appellate interference with the decision below. Accordingly, the appeal is dismissed.

Background

[4] On August 25, 2023, the respondent, 1396929 Ontario Inc., advanced the appellants Lucia Valladares and Walter Valladares $96,000 by way of a second mortgage (the "Second Mortgage") registered against 3 Cohoe Street in Brampton, Ontario (the "Property"). The appellant Leonides Valladares is the guarantor of the Second Mortgage. The Second Mortgage was for a term of one year.

[5] The appellants had separate legal representation on the transaction. They signed a certificate and acknowledgement of independent legal representation (the "ILA Certificate") in which they confirmed that their lawyer had independently advised them of the "rights, obligations, consequences, and liabilities" relating to the Second Mortgage and that the respondent had not exercised any undue influence over them.

[6] The appellants defaulted on the first mortgage in favour of Home Trust Company (the "First Mortgage") on approximately May 1, 2024. Home Trust Company issued a Notice of Sale on June 20, 2024. To avoid further costs arising under the First Mortgage, the respondent made payments on it to bring it into good standing.

[7] The Second Mortgage matured on September 1, 2024, and has not been paid out.

The Summary Judgment Motion

[8] The respondent issued a statement of claim and then moved for summary judgment for the outstanding indebtedness and possession of the Property. It also sought leave to issue a writ of possession against the property (the "Motion").

[9] The appellants, who were self-represented below, raised numerous issues in their statement of defence, including allegations that their rights under the Canadian Charter of Rights and Freedoms and the principles of "fundamental justice" had been breached, and that the respondent had committed "illegal" acts. A primary focus of the appellants' defence was that Cristabel Valladares, the appellants' daughter/sister, was the beneficial owner of the property. Cristabel Valladares was a self-admitted former mortgage agent who had previously worked with the respondent's director in the mortgage industry. The appellants' evidence was that they intentionally agreed with what Cristabel Valladares did in respect of the Second Mortgage to assist her in hiding the downpayment she made for the purchase of the Property in a matrimonial proceeding.

[10] The appellants' statement of defence also states they sought to settle the matter by offering to execute a third mortgage with the respondent to deal with the arrears arising from the Second Mortgage. It is noteworthy that the appellants' attempts at settlement were taken before the respondent launched this proceeding.

[11] The motion judge granted the Motion after finding no issue that required a trial.

[12] The motion judge began by observing that the appellants, as the parties opposing the Motion, had to show "a real chance of success". Relying on Rozin v. Ilitchev et al. (2003), 2003 CanLII 21313 (ON CA), 175 O.A.C. 4, 66 O.R. (3d) 410, she stated that "[a] self-serving affidavit is not sufficient to create a triable issue in the absence of detailed facts and supporting evidence".

[13] The motion judge then found that the appellants had: (1) admitted they executed the Second Mortgage documentation; (2) admitted having received the benefit of the Second Mortgage; (3) made proposals to pay off the Second Mortgage; and (4) defaulted under the Second Mortgage both by defaulting on the First Mortgage, which constituted default on the Second Mortgage, and by failing to pay off the Second Mortgage when it came due on September 1, 2024.

[14] The motion judge rejected the claim that Cristabel Valladares was the beneficial owner of the property, noting that she was not a party to the action nor a signatory to the Second Mortgage, and only signatories to a contract may sue or be sued under the contract: McDowell v. Fortress Real Capital Inc., 2019 ONCA 71, 91 B.L.R. (5th) 181, at para. 68. In any event, however, as the motion judge further found, even if Cristabel Valladares was the beneficial owner of the property, that did not absolve the appellants of their liability under the Second Mortgage nor did it deprive the respondent of its remedies pursuant to it.

[15] The motion judge also rejected the appellants' submission that they did not understand the Second Mortgage documentation when they signed it because they do not speak English. She observed that they had the benefit of independent legal counsel who represented that he had explained the mortgage documents to them and that they understood their rights and obligations.

[16] Finally, the motion judge found the appellants had failed to adduce "any evidence" to suggest fraud, illegality, or undue influence on the part of the respondent.

[17] Because the motion judge was satisfied that all persons in actual possession of the property had received notice of the proceeding, she granted the respondent leave to issue a writ of possession (the "Eviction Order"). The Judgment ordered the appellants to pay the respondent $192,565.55 plus costs in the all-inclusive sum of $18,000.

The Stay of Execution Pending Appeal

[18] The appellants moved to stay the Eviction Order pending appeal. The motion was granted by a single judge of this court on July 11, 2025 (the "Stay"). He said the summary judgment motion judge had not directly addressed the appellants' evidence, raised in reply to the Motion, about the circumstances in which they signed the Second Mortgage. Those circumstances include an allegation of conflict of interest and lack of independence on the part of their lawyer, and that their lawyer did not speak their language but had no translator present when they signed the documents. In these circumstances, he concluded it was in the interests of justice to stay the Judgment, pending appeal, on condition that the appellants amended their grounds of appeal to include the grounds raised before him.

[19] The appellants filed an amended notice of appeal in which they claim they have limited or no proficiency in English and signed the Second Mortgage in circumstances that involve coercion, misunderstanding, and deficient legal advice.

Analysis

[20] We see no basis for appellate interference with the Judgment. The record does not support a finding that there is an issue warranting trial. On the contrary, it fully supports the motion judge's finding that there was "no evidence" of conflict of interest, improper tactics, or other such circumstance.

[21] The appellants admit that they signed the Second Mortgage and accepted the benefit of the Second Mortgage funds. They also admit they failed to pay out the Second Mortgage when it came due. In response to their claim that they did not sufficiently understand the English language or the circumstances surrounding the Second Mortgage when they entered into it (the "Claim"), we reject it for the following reasons.

[22] First, the ILA Certificate is a standard document that confirms the basis on which the appellants entered into the Second Mortgage. It includes their lawyer's acknowledgement that he explained the terms of the Second Mortgage and their obligations under it to the appellants. The appellants have made no claim against their lawyer nor have they sought to bring a fresh evidence motion to show any wrongdoing on his part or to support any other aspect of their Claim. As the motion judge correctly observed, a self-serving affidavit is not sufficient to create a triable issue in the absence of detailed facts and supporting evidence.

[23] Second, the appellants' evidence on the Motion establishes that Cristabel attended the meetings between the appellants and their lawyer and interpreted what was said for their benefit.

[24] Third, the Claim rings hollow in light of the fact that title documents for the Property show the appellants have executed at least six mortgages on this Property alone. This fact alone belies the appellants' assertion that they do not understand mortgage documentation.

[25] Fourth, the appellants had every opportunity, prior to entering into the Second Mortgage and receiving the funds, to review the documentation and satisfy themselves as to its nature.

[26] Fifth, in the appellants' statement of defence they state that they tried to settle this matter by entering into a third mortgage with the respondent. At the hearing of the Motion, they reiterated this point. In light of this, the Claim defies credulity.

Disposition

[27] The Second Mortgage has been in default for almost two years. The appellants have failed to adduce evidence that warrants remitting this matter for trial. Accordingly, an order shall go lifting the Stay and dismissing the appeal, with costs to the respondent fixed at $10,000, all inclusive.

"E.E. Gillese J.A."

"L. Madsen J.A."

"R. Pomerance J.A."