COURT FILE AND PARTIES

COURT FILE NO.: CV-09-3351-00

DATE: 2013-11-01

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: CIBC Mortgages Inc. (Plaintiff)

• and -

Sookia Vieira (Defendant)

BEFORE: Justice S. A. Coroza

COUNSEL:
R. Aisenberg, for the Plaintiff
K. Apel, for the Defendant

HEARD: August 7, 2013

ENDORSEMENT

Introduction

[1] The plaintiff (“CIBC”) moves for summary judgment against the defendant Sookia Vieira (“Vieira”) on the basis that there is no genuine issue requiring a trial. CIBC and Vieira entered into a mortgage for a property that subsequently went into default. CIBC’s claim is for a mortgage deficiency arising out of CIBC’s completion of its sale of the property under a power of sale. Vieira claims she was used as a “dupe” by Cherry-Ann Jama (“Jama”), lawyers, and employees of CIBC in a scheme to defraud CIBC. According to Vieira, CIBC was complicit in this fraud or ought to have protected itself from becoming a victim.

[2] Vieira advances a counter claim against CIBC arguing that CIBC owed a fiduciary duty to Vieira and breached that duty by allowing a fraud to be perpetrated by their employees. Vieira claims that the resulting mortgage default has caused her to suffer financial losses and interfered with her ability to obtain future credit.

[3] CIBC submits that the only evidence on this record is that the mortgage is enforceable and that there is no evidence that Vieira was a dupe or that a fraud took place. CIBC denies the existence of any fiduciary duty and argues that lack of due diligence or careless lending is not a defence open to Vieira.

[4] I agree with the position advanced by CIBC. There is no genuine issue for trial. Summary judgment is granted and Vieira’s counterclaim is dismissed.

Background

[5] CIBC and Vieira entered into a mortgage that was registered on title for a property municipally known as 3 Barbour Crescent, Ajax, Ontario, L1S 7E1 (“property”) on May 1, 2007. The mortgage was in the amount of $412,366.50 with interest and payments due the first of each month commencing June 1, 2007.

[6] The mortgage went into default of regular monthly payments in March of 2009 (“The last regular monthly mortgage payment was made on February 1, 2009”).

[7] CIBC took possession of the property in November of 2009 and sold it for $349,000.00 by power of sale. CIBC sues for a deficiency of $119, 562.37 as of May 14, 2010. This amount, and interest, remains outstanding.

[8] Vieira does not dispute that she signed the mortgage. In her pleadings she claims that Jama approached her with a scheme. Jama offered Vieira $7,000.00 if she would sign the mortgage and, in effect, lend her good credit to a mortgage transaction. Vieira claims that Jama worked closely with employees of CIBC to process a fraudulent mortgage transaction. Vieira claims that she understood that Jama was going to “flip a house” and realize a profit. When the “flipping” of the house did not materialize, it is her position that she became concerned about the mortgage and asked to be removed from the covenant contained in the mortgage.

[9] Vieira claims that she was an unsuspecting dupe and relied on Jama’s representation that the mortgage was a quick flip transaction; the investment was lawful; and that all proper procedures were followed by Jama, employees of CIBC and the lawyers who assisted with the mortgage transaction.

[10] In support of her claim, Vieira contends that Jama drove her to a lawyer’s office on May 4, 2007, and was told by a lawyer to sign documents though she was never shown the amount of mortgage, and not given any copies of the documents that she signed at the end of the meeting.

[11] To sum up, Vieira defends this action in her pleadings by:

a. first, asserting the defence of non es factum because she was never told about the amount of the mortgage, the liability that she would assume the risks involving signing her name, and on the basis that she was not shown nor read the documents signed;

b. second, claiming that CIBC failed to take any reasonable steps or exercise due diligence to avoid fraud; and

c. third, asserting that CIBC breached a duty of care and fiduciary duty to Vieira by approving her for a mortgage based on Vieira’s financial information and the value of the property.

[12] Vieira also advances a counter claim seeking a declaration that because CIBC owed at all material times a fiduciary duty to Vieira, CIBC’s breach of that duty has led to damages.

[13] I have relied on the following material on this motion:

1. CIBC’s motion record, which includes the affidavit of Foungmai Liu, an employee of CIBC;

2. cross-examination of the affidavit of Ms. Liu by counsel for Vieira dated January 10, 2013;

3. CIBC’s factum;

4. Vieira’s motion record which includes an affidavit of Vieira; and

5. a transcript of the examination for discovery of Vieira dated September 8, 2011.

Skarica J.’s Endorsement

[14] At the outset of oral argument, counsel for Vieira requested an adjournment of the motion until CIBC complied with the endorsement of Skarica J. dated May 8, 2013. Counsel for Vieira had brought a motion before the Court on May 6, 2013 seeking answers from Ms. Liu that were previously refused on January 10, 2013. Skarica J. ordered that Ms. Liu was required to answer eight questions. Skarica J. then went on to endorse:

In my opinion, it would be helpful for the presiding justice, on a summary judgment motion, to be informed whether or not there is any type of history of a combination of any two of Cherry Ann Jama plus Antonio Villarin or CIBC bank employees being involved in mortgage fraud/mortgage foreclosures or power of sale before the Vieira mortgage. The information should be readily available and not unduly onerous for CIBC to obtain and produce in their response to the 8 questions needing to be answered. For clarification, the relevant dates regarding any mortgage fraud/mortgage foreclosures/power of sales would be the date the mortgages were entered into.

[15] Counsel for Vieira received a response from CIBC on May 31, 2013 answering the eight questions. The answers did not contain the information that Skarica J. wrote would be “helpful”. CIBC submits that Skarica J.’s comments were not orders and that if there was a dispute about the nature of this endorsement, Vieira could have taken out an order pursuant to the Rules of Civil Procedure.

[16] I denied the adjournment because I was satisfied that Skarica J.’s comments were not orders directing CIBC to provide information about Jama, lawyers or their employees relating to mortgage fraud. In my view, his comments are capable of being interpreted as a strong suggestion that it would be helpful for CIBC to provide information that would be relevant on a summary judgment motion but not a direct order.

[17] In this case, counsel for Vieira argued that I should draw a negative inference against CIBC for failing to provide this information. I will deal with that submission below.

The Parties’ Positions

CIBC

[18] CIBC argues that it has set out its prima facie case based on the evidence of Ms. Liu. CIBC submits that Vieira’s pleadings are not evidence. Counsel for CIBC stresses that there is no evidence of fraud on this record and objects to Vieira using her own discovery transcript, relying on Rule 39.04(2) which prevents a party, on the hearing of a summary judgment motion from using in evidence her own examination for discovery. (see also Lana International Ltd. v. Menasco Aerospace Ltd. (2000) 2000 16845 (ON CA), 190 D.L.R. (4th) 340 (Ont.C.A) “Lana International”). Counsel for CIBC points out that Vieira’s affidavit is a very short affidavit and refers simply to the pleadings and baldly asserts that the calculation of the mortgage deficiency is too high.

Vieira

[19] Counsel for Vieira submits that summary judgment is not appropriate because Vieira has a defence to the plaintiff’s claim and her counter-claim has merit. According to counsel for Vieira, CIBC has “stonewalled” any efforts made by Vieira to ascertain a connection between CIBC and Jama by “hand-picking” Liu to provide evidence on this motion. He argues that a review of Ms. Liu’s cross-examination demonstrates that this witness was deliberately selected because she has no knowledge of the relevant transaction and that the gaps in her evidence as to what CIBC knew about Jama and other individuals in relation to this specific mortgage and other past frauds is the genuine issue at trial. Counsel for Vieira argues that CIBC continues to hinder Vieira from discovering a fraud by not complying with Skarica J.’s order.

[20] Vieira’s counsel forcefully submits that her position on this motion comes down to this: there is a smoking gun demonstrating a fraud and CIBC is hiding it. According to counsel, Vieira cannot put forward any information of a fraud because it is CIBC who has access to its own employees and records of frauds on mortgage transactions. If CIBC did have specific knowledge of Jama and other individuals being involved in mortgage fraud, this information would be relevant as to whether there is a genuine issue for trial. It is CIBC’s obligation to put forward that evidence on the motion.

The Evidence

[21] I do not agree with counsel for CIBC that I ought not to consider the examination for discovery transcript of Vieira on this motion. Counsel has referred to the decision of the Ontario Court of Appeal in Lana International. In that case the defendant brought a motion for summary judgment to have the claims against him dismissed. In support of his motion he did not provide an affidavit but relied upon his own examination for discovery transcript. The court held that the underlying policy behind Rule 39.04 is that a parties wishing to rely on their own evidence on a motion ought not to be able to shield themselves from cross-examination by using their own examination for discovery. The court held that this policy was applicable to a motion for summary judgment so that parties to such a motion who wish to use their own evidence must provide an affidavit and be subject to full cross-examination. O’Connor, J. A., stated at paragraph 39:

I recognize that interpreting rule 39.04(2) to foreclose any use of a party’s own discovery encourages parties to provide affidavits, and could result in two pre trial examinations of the same party; a cross-examination on an affidavit in addition to an examination for discovery. Repetition, however, can be avoided if counsel take a reasonable approach when a situation involving the prospect of two examinations arises. There are a number of alternatives. One would be, on consent, to approach an examination for discovery as a cross-examination on an affidavit attesting to the facts in the pleading. Another would be to append the discovery to an affidavit and submit the deponent to a cross-examination resisting repetitive questions. A further alternative would be to bring the motion for summary judgment before discovery and to seek on that motion an order, if unsuccessful, to treat the cross-examination on the affidavit as all, or a portion of, the examination for discovery. I do not think that an interpretation of rule 39.04(2) which precludes any use by parties of their own examinations for discovery on a motion need result in extra examinations, expense or delay.

[22] In my view, the rationale of Lana International, precluding a party from conducting a meaningful cross examination, has not been shown to be a live concern here. The court in that case does observe that it would be appropriate to use parts of a discovery transcript if they were appended to an affidavit, as this would permit the affiant to be cross-examined on the content (see also Ruggieiro v. Swartz, [2003] O.J. No. 6292 (S.C.J.) at para. 9). This is what occurred here. I have no explanation as to why CIBC did not cross-examine Vieira on the content of her affidavit although it was certainly open for them to do so.

[23] Whether or not the record produced by Vieira on this motion discloses a genuine issue for trial is an entirely different matter that I will deal with below.

[24] In her affidavit and her cross examination Ms. Liu provided the following evidence:

• CIBC as mortgagee, and Vieira as mortgagor, entered into a mortgage that was registered on title for 3 Barbour Crescent, Ajax, Ontario
• The mortgage is in the amount of $412, 366.50 with interest at 5.10 per cent per year and provides that payments are due on the first day of each month commencing June 1, 2007
• The mortgage was to mature on May 1, 2012
• Antonio Villarin, a lawyer, acted for both CIBC and Vieira;
• The mortgage went into default in March of 2009. Some payments were received thereafter, but the payments were not sufficient to return the mortgage to good standing;
• CIBC issued and served a notice of sale on September 21, 2009
• CIBC took possession of the property on November 12, 2009
• CIBC completed a sale of the property under power of sale for $349,000, on May 14, 2010
• The sale resulted in a deficiency of $119,562.37 calculated as of May 14, 2010 (with interest)

The Test for Summary Judgment

[25] I may grant summary judgment if I am satisfied that by exercising the powers available under Rule 20, there is no factual or legal issue raised by the parties that requires a trial for a fair or just resolution. (see: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, [2011] O.J. No. 5431 (C.A.) at para. 37 “Combined Air”).

[26] I must take a “hard look” at the evidence to determine whether it raises a genuine issue requiring a trial. In response to affidavit material or other evidence supporting a motion for summary judgment, a responding party may not rest solely on the allegations or denials in the party’s pleading, but must set out, in affidavit or other evidence, specifics facts showing that there is a genuine issue requiring a trial.

[27] Each side must put its best foot forward with respect to the existence or non-existence of material issues to be tried. A party is not entitled to sit back and rely on the possibility that more favourable facts may develop at trial. I may assume that the record before me contains all of the evidence that the parties will present if there is a trial (see Combined Air at para. 56).

Analysis

[28] Vieira’s motion record consists of an affidavit containing eight paragraphs and attaching the transcript of her examination for discovery. The affidavit asserts that Vieira is relying upon her pleadings as raising a genuine issue for trial. At paragraph 7 of her affidavit, Vieira appears to assert that the sale of the property by CIBC was improvident and that CIBC failed to mitigate their damages. I have reviewed this material carefully. This exercise was difficult because Vieira did not file a factum, and in her affidavit she did not pinpoint to the particular parts of the transcript to support her assertions. I have examined Vieira’s motion record carefully. I have concluded that the sparse affidavit filed by Vieira with the transcript attached is not consistent with putting her “best foot forward”.

[29] Other than bald claims in the material that she was a dupe in a fraudulent scheme perpetrated by Jama, lawyers and employees of CIBC, there is no specific evidence to support this allegation of fraud. Accordingly, I have concluded that there is no genuine issue for trial for the following reasons.

[30] First, I am not bound to accept Vieira’s conclusory statements set out in her pleadings. As counsel for CIBC points out this is not evidence on a summary judgment motion.

[31] Second, I do not accept Vieira’s assertion that Ms. Liu’s inability to answer questions related to Jama, or relating to other frauds being perpetrated by Jama and CIBC employees raises issues that should be resolved at a trial. Vieira is not entitled to sit back and wait for better facts to develop at trial and a party must “lead with trump or risk losing”. Ms. Liu in her affidavit and during her cross-examination has given evidence regarding the sale process. I agree with counsel for CIBC that there were certain steps that Vieira could have taken to examine other CIBC employees who were directly involved in the underwriting of the mortgage. For example, CIBC disclosed that Jama was not an employee of CIBC, but that they had information that Vieira was referred by Jama to Michael Georgopoulos who was an employee of CIBC. Vieira could have examined Georgopolous to explain the underwriting process and to obtain admissions that would undermine CIBC’s claim or provide evidence supporting her defence and counter claim. She chose not to. It is not up to CIBC to provide evidence of a fraud and no authority was provided for the submission that CIBC should provide this evidence. I agree with counsel for CIBC who argued that in the context of litigation it is not their responsibility to produce potential witnesses for Vieira. CIBC’s response to the endorsement of Skarica J. must be seen in this light and I do not draw the negative inference that counsel for Vieira urges me to do.

[32] Third, a review of the record discloses at its highest, speculation that CIBC employees were involved in a fraud. There are references by Vieira in her examination of discovery to false documents attached to the mortgage application, and assertions that Vieira did not recognize any of the documents that purport to contain her signature. However, there is simply no evidence of any link between any of these claims and CIBC employees.

[33] Fourth, even if there was evidence of a fraud, I find it very difficult to accept on this record, that Vieira was entirely innocent of any wrongdoing. Vieira has admitted that she received $7,000 for agreeing to sign the mortgage documents because Jama wanted Vieira to lend her good credit to the mortgage transaction (see Motion Record of Vieira, Examination for Discovery p. 58 line 5). The assertion made by Vieira that she subsequently loaned Jama $5,800 misses the point that Vieira was specifically compensated for signing the mortgage. There is no evidence that this was disclosed to CIBC. The Court of Appeal has held that where the carelessness of one party involves active participation in a fraudulent scheme and the wrongdoing inflicts a loss, that party must bear the burden of the loss: Isaacs v. Royal Bank, 2011 ONCA.

[34] Finally, although, it appears that an improvident sale is raised in paragraph 7 of Vieira’s affidavit, CIBC’s argument that this specific defence is not raised in the pleadings has merit.

Conclusion

[35] I have come to the following conclusions:

a. first, there is no meaningful evidence of a fraud;

b. second, there is no evidence that CIBC was complicit in any fraudulent behaviour;

c. third, there is no evidence that CIBC failed to take any reasonable steps or exercise due diligence in their lending practices;

d. fourth, there is no evidence that CIBC owed any duty to Vieira as a borrower; and

e. finally, there is no evidence of an improvident sale.

[36] Accordingly, I conclude that the mortgage is enforceable.

[37] In the absence of any evidence, I find no breach of fiduciary duty as claimed by Vieira in her counter claim.

[38] CIBC’s motion for summary judgment is granted and Vieira’s counter-claim is dismissed.

[39] I will receive brief written submissions on costs (no more than three pages) plus a bill of costs, first from CIBC within ten days and then from Vieira ten days thereafter.

Coroza, J.

Date: November 1, 2013