ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-48328 (Ottawa)
DATE: 2014 Jul 09
BETWEEN:
CANADA MORTGAGE AND HOUSING CORPORATION
Plaintiff
– and –
CATHLEEN BERYL HOLLANCID also known as KATHLEEN HOLL
Defendant
G. Douglas, for the Plaintiff
Defendant, appearing in person
TAUSENDFREUND, j.
COSTS ENDORSEMENT
[1] Reasons for Judgment were released March 5, 2014. I awarded the Plaintiff, Canada Mortgage and Housing Corporation (CMHC), the full amount of its claim in the sum $128,927.03 with pre-judgment and post-judgment interest at the rate of 5.55% per annum. These reasons included this paragraph relating to the question of costs:
CMHC shall be entitled to its costs of the action. If the parties cannot resolve the issue of costs, particularly the scale of costs to which CMHC claims it should be entitled, the parties may provide brief written submissions within 30 days.
[2] CMHC provided its costs submissions on April 4, 2014. A copy of these submissions was provided to the Defendant by email and courier. I have had no contact from the Defendant on this issue of costs.
[3] CMHC, in this action, alleged the damages it sought were the product of the Defendant’s fraud. The Defendant, for her part, claimed that the entire matter was orchestrated by two bank employees of the Bank of Nova Scotia (BNS). She asserted in her evidence that these two bank employees committed a fraud on her and that she was but an innocent dupe.
[4] To address this costs issue, certain parts of my decision bear repeating:
[1] ... Canada Mortgage and Housing Corporation (“CMHC”), states that in 2006, the Defendant submitted an application for a mortgage loan to the Bank of Nova Scotia (“BNS”) which contained fraudulent misrepresentations and/or false pretenses regarding the Defendant’s employer, employment history, annual income and the source of her down payment for the property the Defendant purportedly had purchased. … CMHC also alleges that the Defendant misrepresented the nature and condition of the Napanee property, its value and the Defendant’s intention to reside there after her purchase of it.
[2] CMHC relied on these same misrepresentations when CMHC agreed to insure the Defendant’s repayment obligation of the mortgage loan to BNS.
[4] The Plaintiff states that the Defendant knew that the information she had submitted to BNS contained misrepresentations intending to and did mislead BNS and CMHC about the true nature and value of the Napanee property, the Defendant’s portrayal of herself as the purchaser, mortgagor and intended occupant of that property, her financial status and her ability to repay the mortgage loan.
[5] The Defendant denied the Plaintiff’s allegations in their entirety. Her position was that she assisted a friend who needed another person to co-sign a mortgage application for a property not in Napanee, but in Pickering. She denied that she provided any personal information to BNS or that she represented herself to be the actual purchaser of the property. She stated that she was an innocent and naïve participant and likely a victim herself in a scheme orchestrated by third parties.
[65] I am faced with the evidence of two bank employees and a third party bill collector on the one hand and the uncorroborated evidence of the Defendant on the other. Both versions cannot be true.
[66] The Defendant asserts that each of the two bank employees, Muhammad Hanif and Mazen Al Taher, committed a fraud. It is a bald allegation based only on her evidence. …
[70] I have no difficulty in rejecting the Defendant’s evidence, where it is inconsistent with the evidence of the Plaintiff’s witnesses.
[74] I find that the documents the Defendant provided to Mr. Hanif regarding her employment, her income and the purported gift of $10,000 for the down payment and her representation in the documents that she intended to occupy the Napanee property as her residence were all fraudulent misrepresentations, unsupported by the facts. They were false. The Defendant intended BNS and CMHC to act on these false representations. This they did in approving the mortgage loan to the Defendant and did so to their detriment.
[75] … I find that the Defendant provided the false information and made fraudulent misrepresentations to BNS and the Plaintiff in return for the sum of $5,000 which she expected to be paid. …
[5] CMHC incurred legal fees in the amount of $91,595.13, inclusive of HST and disbursements of $10,430.38. The action took over four years to proceed to trial, heard over four days plus subsequent written submissions.
[6] There were no Rule 49 offers.
[7] The Plaintiff was awarded the full amount it claimed. I found that the award of damages was the result of fraud committed by the Defendant. I reject the Defendant’s evidence that she was but an innocent dupe of a fraudulent scheme orchestrated on her by BNS employees.
[8] CMHC seeks full reimbursement of its fees based on its success in this action and the acknowledgement that it was caused by the fraudulent actions of the Defendant. In support of its position, CMHC relies on Procor Ltd. v. U.S.W.A. 1990 6637 (ON SC), [1989] O.J. No. 2156, a High Court of Justice decision and Kepic v. Tecumseh Road Builders, [1987] O.J. No. 890 (ONCA).
[9] I accept the submissions of CMHC that substantial indemnity costs may be justified. I find these cases not to be helpful on the question of whether to award a higher scale of costs of substantial indemnity rather than the partial indemnity costs. These decisions are based on allegations of fraud made by the Defendant against the Plaintiff. Here, the Defendant made allegations of fraud not against CMHC, but against employees of BNS whose loan to the Defendant was insured by CMHC. Admittedly, had I held for the Defendant, the Plaintiff’s claim may likely not have been successful, yet the allegations of fraud made by the Defendant which I dismissed were not made against the Plaintiff.
[10] I accept the Plaintiff’s submission that the damages were caused by a fraudulent scheme involving this Defendant and that such a finding may attract substantial indemnity costs. I also accept that fraudulent activity, once so found, should be met with strong judicial condemnation.
[11] I am, however, also mindful that the Defendant was likely not the only party involved in this scheme, but only a minor player who was to be paid $5,000 for her part in it. I am also mindful that the Defendant had made an Assignment in Bankruptcy, that I held this judgment and costs be a debt or liability of the Defendant for which she is not released by any Order of Discharge of Bankruptcy which she may have received and that the Defendant is not a person of means.
[12] Taking all of these factors into account, I award costs to CMHC against the Defendant in the amount of $50,000.00, inclusive of disbursements and HST.
The Honourable Mr. Justice W. U. Tausendfreund
Released: July 9, 2014
COURT FILE NO.: 10-48328 (Ottawa)
DATE: 2014 Jul 09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
CANADA MORTGAGE AND HOUSING CORPORATION
Plaintiff
– and –
CATHLEEN BERYL HOLLANCID also known as KATHLEEN HOLL
Defendant
COSTS ENDORSEMENT
Tausendfreund, J.
Released: July 9, 2014