CITATION: Grahoui v. Yassine, 2017 ONSC 5108
COURT FILE NO.: 11-50594
DATE: 2017/08/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROLA GHRAOUI
Plaintiff
– and –
MARK YASSINE (a.k.a. MOHAMED YASSINE, MOHAMAD IHAB YASSINE, MARK MOHAMAD YASSINE, IHAB YASSINE), BRIGHTEL VOIP SERVICES COPR., 3217400 CANADA INC., EXPRESS CELLULAR INC., X MARK GROUP, BRIGHTEL, JANE DOE and ROYAL BANK OF CANADA
Defendants
C. M. Gibson and T. Wallis, Counsel for Ms. Ghraoui
A. Jackson, counsel for the Royal Bank of Canada
Mark Yassine, Self-Represented
HEARD: May 20, September 21, December 17, 2015 and March 7, 2016
SUMMARY JUDGMENT DECISION
KANE, J.
[1] This is a decision of the motion for partial summary judgment brought by the Royal Bank of Canada (“RBC”), Defendant, Plaintiff by counterclaim and the cross-motion for summary judgment brought by Ms. Ghraoui as Plaintiff.
[2] This proceeding involves the validity and possible forgery of a charge to RBC of a residential property owned by Ms. Ghraoui and RBC’s alternative claim for equitable charges of that property under the doctrine of equitable subrogation.
[3] RBC by partial summary judgment seeks equitable charges by subrogation in the alternative to its counterclaim to enforce the registered charge from Ms. Graoui.
PLEADINGS
MS. GHRAOUI’S CLAIM
[4] Ms. Ghraoui in her February 8, 2011 statement of claim seeks a declaration that the $995,000 charge payable on demand to and registered by the RBC as instrument number OCl090693, on March 22, 2010 (“RBC Charge”) against her property legally described as PCL 21-1, SEC 50M-62; LT 21, PL 50M-62; Cumberland Property Identification Number 14543 - 0321(LT) as registered under the Land Titles Act RSO … (the “LTA”) and known municipally as 650 Canary Street, Navan, (Ottawa) Ontario, (the “Property”), is a nullity be declared void and be removed from title.
[5] In this claim, Ms. Ghraoui alleges that:
a. RBC advanced $995K to one or more of the defendants on March 3, 2010 and thereupon registered the RBC Charge against the Property;
b. she never agreed to or signed the RBC Charge and never agreed to its registration against the Property;
c. The execution by someone else of her signature, the registration of the RBC Charge, the appropriation of the monies advanced thereunder by RBC are the result of a conspiracy for that purpose by some or all of the defendants and constitute a fraud against her;
d. The monies advanced by RBC pursuant to that charge resulted in the recipients of those funds becoming constructive trustees thereof for her benefit and are obligated to remit such funds to Ms. Ghraoui;
e. Mr. Yassine as to the RBC Charge, breached his fiduciary duty to Ms. Ghraoui;
f. She accordingly is entitled to aggravated and exemplary damages;
g. RBC is liable in damages as it breached its duty of care in failing to act reasonably in the registration of the RBC Charge, allowing the fraud by the defendants, failing to follow its own internal procedures as to creation and registration of the RBC Charge and for failing to take any measures to identify and ensure the charge was signed by her.
MR. YASSINE DEFENCE
[6] Mr. Yassine in his Statement of Defence alleges that:
a. Ms. Ghraoui executed the RBC Charge on March 3, 2010;
b. no defendant attended at RBC with a person who falsely purported to be Ms. Ghraoui;
c. Ms. Ghraoui was aware that Mr. Yassine was attempting to obtain the RBC Charge from RBC, participated in preparation of the Property to be appraised for that purpose and accordingly no fraud has been committed against Ms. Ghraoui;
d. the $721,234 advanced by RBC under the RBC Charge was received by TD in payment of the $350,799 of indebtedness owed TD pursuant to a home equity line of credit collateral mortgage on the Property (hereinafter described and defined “TD # 4”) and $370, 434 of indebtedness owed TD pursuant to its mortgage registered against the Property (hereinafter described and defined “TD #5”); and
e. the amount then paid by RBC under the RBC Charge to TD is approximately $796,000. That amount, pursuant to an agreement between Mr. Yassine and RBC, is the maximum which may be advanced under the RBC Charge despite the $995,000 face amount of the RBC Charge.
[7] Mr. Yassine’s in his defence does not allege he saw Ms. Ghraoui sign the RBC Charge or how and where her execution occurred.
RBC DEFENCE AND COUNTERCLAIM
[8] In its Statement of Defence, RBC alleges that:
a. RBC on March 3, 2010 agreed to extend credit to Ms. Ghraoui and Mr. Yassine in the form of a line of credit in the maximum amount of $456,000 and a $340,000 fixed rate mortgage loan ($796,000 total) at rates of interest of prime + 0.5% and 2.75% respectively, together with any other indebtedness owed to RBC by those borrowers from time to time;
b. all of the above indebtedness to RBC was to be secured by the RBC Charge of the Property;
c. upon registration of the RBC Charge, RBC advanced TD $370, 804 and $ 350,149 ($720,953) to TD in payment of TD # 5 and TD #4;
d. the balance of money advanced under the RBC Charge ($75,047) was applied to pay down indebtedness owed to TD by or for the benefit of Ms. Ghraoui and Mr. Yassine; and
e. Ms. Ghraoui and Mr. Yassine executed the RBC Charge.
[9] RBC in its counterclaim seeks:
a. possession of the Property;
b. payment by Ms. Ghraoui and Mr. Yassine of $812,281, being the then $338,266 owing on the fixed rate mortgage portion plus 6.3 % annual interest as secured by the RBC Charge;
c. payment by Ms. Ghraoui and Mr. Yassine of $474,015 owing on the secured line of credit portion, plus 3.5% annual interest as secured by the RBC Charge; or
d. alternatively, if the RBC Charge is not valid, a declaration and the grant of a $796,000 equitable mortgage of the Property, plus interest pursuant to the RBC Charge and including the terms contained in the March 3, 2010, RBC Homeline Plan Agreement and Standard Charge Terms 200617, pursuant to the doctrine of equitable subrogation and unjust enrichment;
e. in the further alternative, the grant of an equitable mortgage to RBC for such other amount as the court determines, the above Homeline Plan and Standard Charge terms, or such other terms as determined by the court, together with interest at the rates in the RBC lending agreements or under the Courts of Justice Act; and
f. judgement against Mr. Yassine for the additional indebtedness he owed pursuant to other RBC credit lines and credit card.
RBC SUMMARY JUDGMENT MOTION
[10] RBC’s July 2013 motion for summary judgment against Ms. Ghraoui and Mr. Yassine. RBC sought:
a. dismissal of the Plaintiff’s claim to have the RBC Charge declared invalid and removed from title of Ms. Ghraoui’s Property; and
b. judgment against Ms. Ghraoui and Mr. Yassine for the indebtedness owed under the RBC Loan Agreement secured by the RBC Charge which included an overdraft and Visa account liabilities;
c. possession of the Property; and
d. if the RBC Charge is unenforceable, then in the alternatively, a declaration granting RBC an equitable mortgage in the amount of $796,000 or such amount as determined by the court, plus interest.
[11] The relief sought in RBC’s motion against Mr. Yassine was determined by his consent to judgment dated April 30, 2014, thereby limiting this summary motion to the relief requested against Ms. Ghraoui.
[12] RBC in its initial October 22, 2013 factum as against Ms. Ghraoui sought:
a. an order that RBC is entitled to a mortgage by way of subrogation on the Property securing the principal sum of $370,804.06, together with interest thereon at 3.9% per annum from March 22, 2010, for a total of $423,934.69 as at November 13, 2013, thereby securing RBC’s March 22, 2010 payment to TD of TD #5;
b. an order that Ms. Ghraoui is indebted to RBC for the sum of $370,804.06 together with interest thereon at 3.9% per annum from March 22, 2010, for a total of $423,934.69 as at November 13, 2013;
c. an order that Ms. Ghraoui shall commence making monthly payments of interest only on the said mortgage to RBC in the sum of $1,377.79 commencing in 30 days and every 30 days thereafter until further Order of this Court; and
d. an order that the balance of the claims made in its summary judgment motion and its counterclaim against Ms. Ghraoui requires a trial.
[13] RBC in its third factum dated September 30, 2014, relied upon new evidence being an affidavit from Mr. Campbell of TD that TD had mistakenly discharged its TD #4 charge of the Property from Ms. Ghraoui. RBC accordingly sought the following additional relief on this summary motion:
a. a mortgage by subrogation of the Property securing a further $350,429, thereby securing RBC’s payment of $350,429 to TD pursuant to the TD #4 liability which Ms. Ghraoui then owed TD pursuant to its Home Equity Line of Credit, plus interest thereon since March 22, 2010; and
b. an order that Ms. Ghraoui commence monthly payments of interest on that indebtedness to RBC in the monthly amount of $1,138.
[14] RBC submits that the issues:
a. whether Ms. Ghraoui knew about and consented to the arrangements to replace the TD lending and its security against the Property; and
b. whether Ms. Ghraoui executed the RBC Charge and loan documentation, or whether someone forged her signature thereon;
given the conflicting evidence filed, are issues which require a trial.
[15] RBC submits that a trial is not necessary for the partial summary judgment it seeks for a first and second subrogated equitable mortgage of the Property totalling $721,234 combined, being the amounts it paid to TD on behalf of Ms. Ghraoui and Mr. Yassine in March 2010 in payment of TD #4 and TD #5.
[16] If the court grants an equitable charge by subrogation, RBC would then not oppose the removal of the RBC Charge from title of the Property, thereby avoiding a trial as to who executed the RBC Charge and as to the enforceability thereof.
[17] If the court does not grant the equitable relief requested on its summary judgment motion, RBC submits a trial is then necessary as to whether Ms. Ghraoui executed the RBC Charge and its enforceability against the Property.
GHRAOUI SUMMARY JUDGMENT MOTION
[18] In March 2014, Ms. Ghraoui brought her cross-motion for summary judgment against RBC seeking:
A declaration that the $995,000 RBC Charge registered against the Property is a nullity; and
An Order that the Registrar of the Land Registry Office #4 delete the RBC Charge from the parcel register of the Property.
[19] Ms. Ghraoui in her motion submits that:
a. she never agreed to and never signed the RBC Charge of the Property which she is the sole owner of;
b. her signature on the RBC Charge is a forgery, likely by Mr. Yassine, as stated in the report of her hand writing examiner and no other party has presented a contradictory opinion of a hand writing examiner to the conclusions of her examiner;
c. RBC failed to follow appropriate procedures to ensure that the chargor in the RBC Charge was the plaintiff, including obtaining independent legal advice for the plaintiff as sole owner of the Property which was a matrimonial home and who was then married to Mr. Yassine;
d. the RBC Charge is therefore invalid and must be declared a nullity. Alternatively, this issue requires a trial;
e. RBC’s alleged advance of funds under the RBC Charge to pay TD two existing mortgage debts registered against the Property is untrue as one of those charges was discharged by TD one year prior to the registration of the RBC Charge and did not exist; and
f. RBC has failed to lead the best evidence available in support of its allegation that TD mistakenly discharged one of its prior mortgages in 2009, rather than postponing the same. Alternatively, this issue must be determined at trial.
[20] In argument, Ms. Ghraoui’s position is that:
a. the RBC Charge on numerous grounds must be declared void as a fraud against her and deleted from title to the Property;
b. that RBC not be granted judgment against her as to the indebtedness secured under the RBC Charge; and
c. RBC’s negligence and acts of misconduct prevent RBC’s entitlement to equitable relief including its request for equitable charges against the Property under the doctrine of subordination, particularly as to the prior discharge by TD of TD #4.
POSITION OF MR. YASSINE ON THESE MOTIONS
[21] Mr. Yassine supports the relief claimed by RBC on its motion including the subrogated equitable charges against the Property. He opposes the motion by Ms. Ghraoui.
GENERAL BACKGROUND
[22] Mr. Yassine and Ms. Ghraoui married one another in Lebanon on December 8, 1988. They immigrated to Canada in the early 1990s. They have three children of their marriage.
[23] The Property is this couple’s 7,000 sq. ft. matrimonial home. It was purchased on May 3, 2000 for $400,000. Mr. Yassine paid the down payment of some $45,000. TD loaned and received charges of the Property as to the balance of the purchase price and its renovation costs.
[24] It is not disputed that:
a. the Property since its purchase in May 2000 was and remained registered in the name of Ms. Ghraoui as a safeguard against potential claims of creditors of the businesses being operated by Mr. Yassine;
b. the Property underwent some $242,000 of renovations between its purchase in May 2000 and this couple moving into the Property in October, 2000;
c. the Property underwent further renovations costing approximately $79,000 between 2003 and 2010, prior to this couple’s separation;
d. the Property was subject to several charges to TD between 200 and 2009 as security and collateral security for loans from TD for its purchase and renovation costs, for operating lines of credit to Mr. Yassine and Ms. Ghraoui and for one or more of the businesses operated by Mr. Yassine through corporations named as defendants herein;
e. the multiple above charges of the Property to TD were lending and security transactions made with the knowledge and consent of Ms. Ghraoui who executed the necessary accompanying loan and charge documentation to TD; and
f. Mr. Yassine held a general power of attorney from Ms. Ghraoui between June 23, 2005 until she revoked the same on September 1, 2010, some 5 months after the registration of the RBC Charge; and
g. the RBC Charge documentation was not executed by use of this power of attorney from Ms. Ghraoui.
[25] In August 2010, some 6 months after registration of the RBC Charge, Ms. Ghraoui decided she wished to separate from Mr. Yassine. She retained a family law lawyer in September 2010 and thereupon revoked her 2005 Power of Attorney to Mr. Yassine. She then opened a new individual bank account at TD and obtained two statements from TD in September, 2010 which evidence that bank account and list her assets and liabilities.
[26] Mr. Yassine objected to the separation. Ms. Ghraoui halted her efforts to separate from her husband during the next four months.
[27] This couple separated when Mr. Yassine agreed and moved out of the Property on January 15, 2011.
Ms. Ghraoui:
a. Commenced family law proceedings against Mr. Yassine on February 3, 2011; and
b. Commenced this proceeding on February 8, 2011 against RBC, Mr. Yassine and the other defendants; and
c. Agreed to list the Property for sale in May 2011.
[28] Ms. Ghraoui challenged her execution and the validity of the RBC Charge of the Property in both of her above proceedings.
[29] She listed the Property for sale on May 30, 2011 for $1,300,000. She reduced that asking price by September, 2011 to $999,000.
[30] Ms. Ghraoui has continued to own the Property, has had exclusive possession of it since separation but has resided considerable periods of that time elsewhere.
[31] Mr. Yassine prior to separation carried on several business activities through the defendant corporations. Ms. Ghraoui during their marriage generally remained at home. She was not a Director, shareholder or actively involved in the businesses operated by Mr. Yassine, but had signing authority for Express Cellular Ltd. (“Express”) according to Mr. Yassine.
[32] The evidence is that Ms. Ghraoui signed loan documentation including guarantees and security charges in a number of loan transactions to Express, Wireless Point Inc. (“Wireless”) and 3217400 Canada Inc. (“3217400”).
[33] Mr. Yassine was President, a Director and owned the shares of Express and Wireless.
[34] Ms. Ghraoui alleges Mr. Yassine was in charge of finances for their family including the financing arrangements he made with lending institutions regarding his businesses. She alleges she was not involved in and knew little about the borrowings made by Mr. Yassine for their family and his businesses, some of which were secured by collateral charges of the Property to TD.
RBC CHARGE
[35] The RBC Charge of the Property from Ms. Ghraoui registered on March 22, 2010 is in the face amount of $995,000 and is payable on demand. The underlying documentation limited the advances thereunder to a $796,000. This higher $995,000 amount is simply the monetary limit of that secured lending facility.
[36] The RBC Loan Agreement giving rise to the RBC charge states it relates to several Credit Lines and a Mortgage Loan which include:
a. A Homeline Plan credit line with an initial credit limit of $456,000 with a variable interest rate; and
b. a $340,000 mortgage for a term of 1 year and with a fixed 2.75%/annum interest rate.
[37] The above RBC credit line portion of the RBC Loan Agreement became due upon default which occurred and resulted in RBC’s November 29, 2012 demand for payment thereof in the amount of $494,845, plus 3.5%/annum after demand.
[38] The mortgage loan portion of the RBC Loan Agreement was due on April 1, 2011 and was not paid.
[39] It is not disputed that RBC on March 22, 2010, pursuant to the RBC Charge advanced and paid The Toronto-Dominion Bank and/or TD Canada Trust (jointly referred to as “TD”) $721,234, which was existing indebtedness Ms. Ghraoui and Mr. Yassine each contractually owed to TD.
RBC LENDING TO 3217400
[40] 3217400 owned two rental properties. 3217400 borrowed from and granted a charge of these properties to TD.
[41] Mr. Yassine stated he decided and alleges he told Ms. Ghraoui that they should establish a new banking relationship with RBC and transfer the existing TD charges including those of these rental properties owned by 3217400 to RBC and that he had arranged to do so.
[42] Mr. Nassar, a branch Manager of RBC, at the end of June or the beginning of July 2009 brought RBC documentation to loan and replace the existing TD charges against the revenue properties of 3217400 to this couple’s home. He stated RBC was to lend to and take charges from 3217400 as security against those two rental properties. He stated that he met with Ms. Ghraoui and Mr. Yassine at their home and obtained their signatures of the RBC lending documents regarding these two properties.
TD FINANCING AND SECURITY PRIOR TO RBC CHARGE
[43] The history of lending by TD and security to it over the Property is relevant as to:
a. Ms. Ghraoui’s alleged lack of involvement and knowledge regarding the lending by and security to TD for the borrowings of this family and the businesses operated by Mr. Yassine;
b. her knowledge and consent in granting several mortgage security charges of the Property to TD, including the dates such indebtedness matured and became payable;
c. her allegation that she had no knowledge about and derived no benefit from the RBC financing secured by the RBC Charge in March 2010; and
d. RBC’s current claim for two subrogated equitable charges of the Property, including the registration status of the TD #4 Charge at the time of the loan and the registration of the RBC Charge in March of 2010.
[44] TD was the principle financial lender to Ms. Ghraoui, Mr. Yassine, Express and Wireless prior to being replaced by RBC.
[45] Ms. Ghraoui in her pleadings, her summary judgment motion and in her cross-examination does not dispute her agreement to and her execution of such TD loans and related TD security transactions, including charges against the Property. Some of those charges to TD of the Property included collateral security charges for loans by TD to Express and Wireless.
[46] Ms. Ghraoui in argument for the first time in 2015 however submitted that TD should have required and failed to ensure that she obtained independent legal advice regarding TD #4 which is issue and was discharged in 2009.
[47] The loan transaction history involving direct and collateral charges to TD against the Property from Ms. Ghraoui as owner and Mr. Yassine as guarantor, between 2000 and 2009 is summarized chronologically as follows:
a. Ms. Ghraoui became the registered owner of the Property on May 3, 2000;
b. Ms. Ghraoui simultaneously on May 3, 2000 granted two charges against the Property to TD which were guaranteed by Mr. Yassine. The first charge was in the amount of $250,000 (“TD #1”);
c. the second May 3, 2000 charge of the Property from Ms. Ghraoui to TD was a collateral charge in the amount of $100,000 (“TD #2”). As stated, the down payment on the purchase of this $400,000 home was $45,000. This couple then carried out some $242,000 of renovations before moving into the Property in October, 2000;
d. TD #2 was discharged February 28, 2003; and
e. on September 3, 2003, Ms. Gharoui granted TD a collateral charge of the Property in the amount of $300,000 (“TD #3”) as security for TD’s loan of $200,000 to Express and $100,000 to Wireless. Ms. Ghraoui also signed a personal guarantee to TD for the $200,000 loan advance to Express. Mr. Yassine signed an unlimited guarantee for these loans.
[48] Ms. Ghraoui and a lawyer signed a certificate as to her receiving independent legal advice as to the TD #3 loan, that registered charge and her guarantee in relation thereto.
[49] The purpose of the TD #3 Charge, namely to secure the loans to Express and Wireless which were operated and controlled by Mr. Yassine and the independent legal advice Ms. Ghraoui received in relation to TD #3 are collaterally relevant to her arguments that the RBC is not entitled to equitable relief in the form of a subrogated mortgage because a material portion of advances RBC paid pursuant to the RBC Charge to TD were payment of existing liabilities of Express and Wireless to TD for which she received no personal benefit and RBC failed to ensure she obtain independent legal advice regarding the RBC Charge.
[50] The TD #3 Charge was payable by Ms. Ghraoui on demand.
[51] TD #1 Charge remained registered on title as the first charge upon the registration of the TD #3 Charge.
[52] On October 12, 2005, Ms. Ghraoui granted a collateral charge of the Property to TD in the amount of $350,000 to secure a renewal of their home equity line of credit, or HELOC, to herself and Mr. Yassine (the “TD #4” Charge).
[53] Ms. Ghraoui as part of this transaction signed an acknowledgement of her receipt of the TD standard charge terms as to TD #4, a statutory declaration as being married and the owner of the Property as well as a direction to TD to pay the loan proceeds to her solicitor, in trust.
[54] The TD #4 Charge was payable on demand.
[55] Upon the registration of the TD #4 Charge on October 12, 2005, the TD #3 Charge was postponed behind the TD #4 Charge.
[56] The TD #4 Charge is a central issue on RBC’s summary judgment motion seeking an equitable charge by subrogation for its payment thereof.
[57] On October 1, 2006, one year later, Ms. Ghraoui and Mr. Yassine signed a one year renewal of the TD #4 loan, to November 2007, and increased the interest payable thereon to 5.35%.
[58] The $350K principle balance secured by the TD #4 Charge despite it being discharged March 2, 2009, remained outstanding and owing to TD until paid on March 19, 2010 by RBC’s advance under the RBC Charge;
[59] The TD #1 Charge was discharged on October 31, 2005;
[60] On February 24, 2009, Ms. Ghraoui granted TD a $375,000, fixed rate, conventional mortgage or charge (the “TD #5 Charge”) of the Property. This loan is referred to in the commitment letter as a “conventional mortgage”. Ms. Ghraoui in relation to this transaction signed TD documentation accepting the terms and conditions of the charge commitment, a disclosure information preference indicating her wish that borrowing information be delivered only to Mr. Yassine, an increased payment request and a waiver of loan insurance;
[61] The term of the TD #5 Charge was 1 year. Upon its maturity on March 1, 2010, the principle balance and interest under the TD #5 Charge became due and payable by Ms. Ghraoui as charger.
[62] The TD #5 Charge secured the existing line of credit indebtedness of $200,000 for Express and $100,000 for Wireless which had been secured by the TD #3 Charge. The additional $75,000 was applied by Mr. Yassine towards various family and corporate expenses.
[63] The TD #4 Charge was discharged by TD on March 2, 2009. TD’s position according to its representative Mr. Campbell, is that the TD #4 Charge should then have been postponed behind the TD #5 Charge, but was discharged in error. Ms. K. Agnew, a TD Private Banker, wrote Mr. Yassine on March 18, 2011 and stated that the TD #4 Charge was to have been postponed upon registration of and behind the TD #5 Charge.
[64] Mr. Yassine and RBC agree the TD #4 Charge should have been postponed behind the TD #5 Charge and not discharged, rather than the TD #3 Charge being so postponed behind the TD #5 Charge.
[65] The TD #3 Charge was postponed behind the TD #5 Charge on May 19, 2009.
[66] The TD #3 Charge was discharged by TD on July 24, 2009.
[67] As previously stated, Mr. Nassar in late June or the beginning of July, 2009, met in the home of and had Ms. Graoui and Mr. Yassine sign RBC loan and charge documentation as to the two rental properties owned by the defendant 3217400. That RBC financing replaced and paid off similar TD charges of those properties.
[68] The RBC Charge in issue was registered on March 22, 2010, namely upon the maturity of the TD #5 Charge.
[69] The $796K advance under RBC Charge paid TD the $350,429 liability then owed to it and previously secured by the TD #4 Charge and the $370,804 liability then owed TD pursuant to the TD #5 Charge.
[70] The TD #5 Charge was discharged on March 26, 2010 upon TD’s receipt of RBC’s payment on March 22, 2010 of the above $370,804;
[71] RBC disbursement notice dated March 22, 2010 indicates RBC’s payment of $370,804 to TD of the then amount owed by Ms. Ghraoui under the TD #5 Charge includes a $260 “discharge fee” and $70 for “other fees”. Those are the same additional fees listed in TD’s “mortgage discharge statement”.
[72] RBC’s March 22, 2010 disbursement notice indicates its payment of $350,429 to TD being the then amount owed by Ms. Ghraoui under TD’s Home Line Agreement previously secured by the TD #4 Charge as well as a $70 “other fee” charge. But does not include a “discharge fee”. TD’s Home Equity Line of Credit Discharge Statement reflects the same (emphasis added).
[73] RBC did not engage a solicitor to sub search title and register the RBC Charge. It instead instructed and used First Canadian Title to electronically register notice of the RBC Charge.
[74] Ms. Ghraoui on February 3, 2011, granted a charge of the Property to her legal counsel for their services in this and her family law proceeding.
[75] In summary, Ms. Ghraoui:
a. prior to the RBC Charge agreed to and granted five charges of the Property to TD for money borrowed by and for the benefit of herself, Mr. Yassine and as security for lending to business operated by Mr. Yassine;
b. acknowledges she received independent legal advice as to TD’s loans of $220K and $100K to Express and Wireless secured by the TD #3 Charge;
c. as of the time of the RBC Charge in March 2010, was bound by the TD #5 Charge registered against the Property pursuant to which she was liable for that $370K debt which was then due and secured against the Property; and
d. although the TD #4 Charge was not then registered against the Property as it had been discharged one year before on March 2, 2009, she remained liable for that $350K debt previously secured by the TD #4 Charge.
SUMMARY JUDGMENT- GENERAL PRINCIPLES
[76] RBC does not oppose the removal of the RBC Charge if the court grants it equitable charges under the doctrine of subrogation for its payment of Ms. Ghraoui’s formerly secured indebtedness to TD.
[77] Ms. Ghraoui opposes the granting of such equitable security and seeks the RBC Charge be declared invalid due to forgery, negligence, misconduct and therefore removed from title.
[78] The above issues require determination whether the evidence permits the court to grant summary judgment as to:
a. whether the alleged execution by Ms. Ghraoui of the RBC Charge is a forgery;
b. even if the signature of Ms. Ghraoui of that charge is forged; is RBC under entitled to the equitable remedy of by subrogation charges for the payment it made to TD in March 2010, or whether RBC’s conduct disentitles it to such remedy; and
c. if RBC is entitled to equitable relief, whether that relief is limited to its payment of the TD #5 Charge, indebtedness or should it also include its payment of the debt previously secured by the TD #4 Charge, which involves whether the TD #4 Charge was discharged in error.
[79] The evidence involving the above issues is intertwined.
[80] The relevant portion of Rule 20.04(2) of the Rules of Civil Procedure, RRO. 1990, Reg. 194 states that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. (emphasis added)
[81] Some of the relevant principles regarding a R. 20.04 summary judgment motion as determined by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at paras. 32 to 34, 36, 43 to 45, 49, 50, 57, 58, 60, 62, 66 and 68, are:
a. Judges must actively manage the legal process in line with the principle of proportionality;
b. Proportionality is a comparative principle, it compels a motion judge to question whether the added expense and delay of fact finding at trial is necessary to a fair process and just adjudication between the parties;
c. The summary judgment motion can enhance access to justice because it can provide a cheaper, faster alternative to a full trial;
d. Summary judgment pursuant top R. 20 is a legitimate alternative means for adjudicating and resolving legal disputes;
e. Pursuant to R. 20.04(2)(a), the court shall grant summary judgment if there is no genuine issue requiring a trial. The test is no longer whether there is “a genuine issue for trial”;
f. If the parties on the summary judgment motion provide the court with the evidence required to fairly and justly adjudicate the dispute; there will be no genuine issue requiring a trial;
g. There will be no genuine issue requiring a trial when if a judge is able to reach a fair and just determination on the merits on a summary judgment motion; which will be the case when the process by motion:
(i) allows the judge to make the necessary findings of fact;
(ii) allows the judge to apply the law to the facts; and
(iii) is a proportionate, more expeditious and less expensive means to achieve a just result;
h. A summary judgment motion judge can consider a comparison of evidence that will be available at trial and on the motion as well as the opportunity to fairly evaluate it. Even If the evidence available on a motion is limited, there may be no reason to think that better evidence would be available at trial;
i. The test whether proceeding by motion will provide a fair and just adjudication is not whether the procedure is as exhaustive as a trial. The evidence considered by the court on a summary judgment need not be equivalent to that which would be available at a trial, but must be such that the presiding judge is confident that she can fairly resolve the dispute;
j. The test is the court’s confidence level as to its abilities to make findings of fact to apply the relevant legal principles to resolve a dispute on the motion;
k. The interests of justice cannot be limited to the advantageous features of a conventional trial, and must account for proportionality, timeliness and affordability: Hyrniak, para. 56;
l. Proportionality may require the motion judge to assess the relative cost, speed and efficiencies of proceeding by summary judgment rather than a trial. It may include what evidence would be available at trial;
m. The court must ask why it should not grant summary judgment;
n. If there appears to be a genuine issue requiring a trial, the court should then determine if the need for that trial can be aborted by using the new discretionary power under R.20.04 (2.1) and (2.2), by the weighing of the evidence, evaluating credibility and the drawing of reasonable inferences;
o. The court shall decide whether it can make the necessary findings of fact, apply the law to the facts and thereby achieve a fair and just adjudication of the action based on the evidence presented;
p. The court on a motion for summary judgment is required to assume the parties have presented all evidence that will be available at trial; and
q. If summary judgment cannot be granted, the Court is to decide any issues that can be determined pursuant to the same principles and identify the steps to be undertaken to enable the court to decide the remaining issues.
[82] The Supreme Court in Hryniak, para 60, 66 and 68, articulated the two stage examination to be conducted under R. 20.04 on a summary judgment motion including the use of the added powers under R. 20.04 (2.1) as follows:
a. At stage 1, the judge shall first determine if there is a genuine issue requiring a trial based only on the evidence before the court without using the fact-finding powers in R. 20.04(2.1);
b. If there appears to be a genuine issue requiring a trial, the judge is to then proceed to a stage 2 analysis where the court, at its discretion, may:
(i) weigh the evidence,
(ii) evaluate the credibility of a deponent, or
(iii) draw any reasonable inference from the evidence;
unless it is in the "interest of justice" for these powers to be exercised only at trial.
c. If there appears to be a genuine issue requiring a trial, the court should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). The court has discretion to use such powers provided their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole; and
d. If a trial is necessary for some of the claims against some parties in any event, it may not be in the interest of justice to use these fact-finding powers to grant summary judgment against a single defendant due to the risk of duplicative proceedings or inconsistent findings of fact..
[83] The Rule that each party on a summary judgment motion must put its “best foot forward” continues to apply: Cuthbert v. T.D. Canada Trust 2010 ONSC 830, para. 12; Sweda Farms Ltd. v. Egg Farmers 2014 ONSC 1200, at para. 32 and Grann v. Thunder Bay Police Services Board, 2015 ONSC 438 (CanUI), para 20.
[84] The review of the evidence requires this court’s use of the fact-finding powers in Rules 20.04(2.1) and (2.2) on each of these motions.
RBC CHARGE AND FORGERY
[85] The first issue is whether Ms. Ghraoui agreed to and signed the RBC Charge loan documentation, which she denies.
[86] RBC submits this issue requires a trial given the conflicting evidence. Ms. Ghraoui disagrees and seeks a declaration that this court conclude her alleged signature of the RBC Charge documentation is a forgery.
[87] Ms. Ghraoui in her affidavit states that she never met with Ms. Craig of RBC and did not sign the RBC Homeline Plan Agreement or its Mortgagor’s Acknowledgment and Direction, as attested to by and in the presence of Ms. Craig.
[88] Mr. Nassar, the then RBC Branch Manager, stated he was not present and did not witness Ms. Ghraoui sign the RBC Charge documentation.
[89] Ms. Craig’s affidavit states she witnessed Ms. Ghraoui’s signature of the RBC Home Line of Credit agreement.
[90] Ms. Craig on cross examination stated:
a. she first met Ms. Ghraoui at the RBC Billings Bridge branch office for her signing of the RBC loan documents;
b. She doubts she would have asked for or verified the identity of the woman she understood was Ms. Ghraoui who signed some of the loan documents before her as:
(i) that woman would have been presented to her as Ms. Ghraoui by Mr. Nassar or some other bank representative;
(ii) because someone else had already started the loan application when identification of the borrower is to be determined;
(iii) Mr. Nassar told her earlier that day or the day before that Ms. Ghraoui was coming to see her to sign the loan documentation;
c. She believes that Ms. Ghraoui signed RBC’s Mortgage Acknowledgement and Direction in her presence at the RBC branch in that she met with a woman she believed to be Ms. Ghraoui who signed that document. She admitted however that document could have already been signed when it was presented to her and when Ms. Craig signed it.
d. She signed but did not witness the signatures of Ms. Ghraoui and Mr. Yassine on RBC’s Payout Request for Discharge Purposes.
e. She stated that the RBC’s payment Request for Discharge Purposes dated January 20, 2010, allegedly signed by Ms. Ghraoui, would already have been signed before her meeting with the woman she believed was Ms. Ghraoui;
f. She cannot recall writing or signing the letter on RBC letterhead faxed February 17, 2011 to Mr. Yassine stating that the two cited RBC mortgages were signed by Mr. Yassine and Ms. Ghraoui in the presence of an RBC bank officer. Mr. Yassine however states that he received that letter from Ms. Craig.
g. She was unable to identify which RBC officer was present during Mr. Yassine and Ms. Ghraoui’s signing of the RBC mortgage documents, as stated in the RBC February 17, 2011 letter allegedly written by her.
[91] RBC acknowledges that it does not currently have sufficient evidence to prove that Ms. Ghraoui signed the RBC Charge which it would have the opportunity to present at trial. RBC submits however that such evidence and the court’s determination of whether Ms. Ghraoui signed the RBC Charge is not necessary, as it should receive partial summary judgment on the evidence for the equitable subrogation relief it claims thereby dispensing with the need, time and expense of a trial as to who signed the RBC Charge.
[92] Given the limited evidence presented by RBC and the contradictory evidence summarized below, the issue as to who or whether Ms. Ghraoui signed the RBC Charge cannot be determined without a trial, as acknowledged by RBC.
[93] Even if the execution of the RBC Charge is a forgery, the court must still review the evidence and determine if possible, Ms. Ghraoui’s her level of knowledge, when she became aware of the RBC Charge and whether she in fact accepted the registration of the RBC Charge in any event; in order to consider whether RBC is entitled to the equitable remedies required which includes whether RBC is at fault as to the creation of the RBC Charge such that it is not entitled to that equitable relief and whether Ms. Ghraoui would be prejudiced as to such relief.
EVIDENCE RELATED TO ALLEGED FORGERY
[94] Ms. Ghraoui in argument of her summary judgment motion submits:
a. her uncontradicted evidence warrants judgment that the RBC Charge was not signed by her and her signature thereof is a forgery, likely by Mr. Ghraoui;
b. that her evidence that she did not execute the RBC Charge is supported and confirmed by her hand writing examiner; and
c. that RBC and Mr. Yassine have failed to present evidence to contradict her allegation that she did not sign the RBC Charge documents and to contradict her hand writing examiner’s opinion that she did not execute the RBC Charge and there is strong reason to believe that Mr. Yassine forged her signature to that RBC Charge loan documentation;
[95] The evidence is clear that Mr. Yassine elected and applied to transfer TD loans secured by charges of the Property to RBC and in doing so, he dealt with Mr. Nassar who was then a Branch Manager of RBC and Ms. Craig who worked at the same RBC branch.
[96] Mr. Nassar as to the RBC Charge had Ms. Craig in his branch handle the execution of the loan documentation resulting in the RBC Charge. He stated he did not witness Ms. Ghraoui attend and sign the RBC Charge loan documentation. He presumably would have stated the opposite if he was aligned with Mr. Yassine and not reliable as argued by Ms. Ghraoui.
[97] The above evidence of Ms. Craig is that a woman she understood to be Ms. Ghraoui attended her office and signed some of the RBC Charge loan documents. Ms. Craig did not require this woman produce identification as she understood that would have already occurred upon the initiation of the loan application. Ms. Craig stated that some of the other loan documents as to this charge may have been already signed and presented to her.
[98] RBC did not require that ILA be obtained by Ms. Ghraoui as to her agreement, execution and registration of the RBC Charge.
[99] Mr. Nassar, Ms. Craig and RBC however acted on the understanding that Ms. Ghraoui agreed to and executed the loan documentation authorizing the registration of the RBC Charge of the Property.
[100] There are gaps in the evidence of RBC representatives and Mr. Yassine as to Ms. Ghraoui being the person who signed the RBC Charge documentation. Neither of those defendants presented evidence of a handwriting examiner countering the opinion of Mr. Lindblom.
[101] While recognizing the above gaps in evidence, I find important parts of the evidence of Ms. Ghraoui lacks credibility to what she knew about and whether she agreed to the RBC Charge.
[102] I also have questions as to the methodology and weight to be placed on the report of the plaintiff’s handwriting examiner.
ALLEGED LACK OF KNOWLEDGE AND INVOLVMENT IN LOANS SECURED AGAINST THE PROPERTY AND MR. YASSINE’S BUSINESSES
[103] The granting of the five TD charges of the Property and related loan documentation signed by Ms. Ghraoui are not disputed.
[104] Based upon the multiple TD loan and charge transactions prior to the RBC Charge, although initiated and arranged by her husband, Ms. Ghraoui contrary to her allegations:
a. had significant experience involving secured lending transactions which involved her consent and execution of loan documentation to TD on multiple occasions of charges of the Property she owned, as security for the debt repayment obligations therein in favor of TD;
b. knew that some of the TD charges related to the purchase price and renovation costs of her Property and that others TD charges, such as the TD #3 Charge and the TD #5 Charge were collateral security for loans to corporations her husband was operating;
c. knew in signing any financial documentation her husband asked her to, that some of the TD loan transactions secured by charges of the Property were financial loans to Express and Wireless;
d. knew, if she read the loan documents she signed and thereby agreed to, that she had contractually agreed to TD’s right to realize against the Property thereby secured if the contractual debt obligations she had promised to pay were not met; and
e. knew or should have known that a number of these TD loans, including TD #4 and TD #5, matured and became payable within one year, which maturity dates were prior to the registration of and funding provided by RBC pursuant to the RBC Charge.
[105] Ms. Ghraoui’s allegations that she “knew nothing and that he husband decided all financial matters” ignores:
a. her repeated agreement and execution of the multiple TD lending transactions and charges of the Property as security for those debts;
b. her contractual obligations thereunder to pay those amounts;
c. the maturity dates therein which she agreed to by which she was obligated to pay such loan balances, or obtain credit extensions or replacement financing;
d. effectively, her assignment of her above responsibilities to her husband; and
e. the right of TD to realize against the Property in the event of her default of those loan obligations.
[106] This number of loan transactions binding Ms. Ghraoui and her pledging of the Property as security between 2000 and 2009 contradicts her allegation that she virtually knew nothing about her financial affairs and charges of the Property.
[107] One cannot repeatedly as the contractual principle borrower and grantor of security on your property credibly thereafter successfully claim that you knew nothing and were not a principle participant in the borrowing and security transactions for benefit and the benefit of corporations your husband was sole shareholder, director and controller of.
[108] I have no doubt that Mr. Yassine, not Ms. Ghraoui, conducted and decided the business affairs of Wireless, Express and 3217400. That said, she had on the evidence signing authority for Wireless and participated on several occasions in signing guarantees, loan documentation and charges of the Property to secure indebtedness of Express Wireless based on some level of discussion with her husband.
[109] Signed contractual commitments cannot simply be ignored or set aside because the party obligated thereby elected to not read or not inform themself as to the obligations they thereby contractually committed to and/or because they are married to the directing mind of a corporation for which some of the loans were made.
[110] Ms. Ghraoui’s level of knowledge as to the loans made by and security granted in consideration thereof must be determined by the factual evidence. The facts in this case include the March 2010 maturity date of the TD #5 Charge then secured against the Property, Ms. Ghraoui’s obligation to then repay that $370K debt or arrange other financing and at a minimum the $350K outstanding liability to TD previously secured by the TD #4 Charge.
KNOWLEDGE OF RBC AND RBC CHARGE
[111] The position of Ms. Ghraoui in her affidavit and cross-examination as to the RBC Charge does not address her above TD experience, knowledge, liabilities and context as she seeks to limit the issue to the absence of her relationship with RBC and the alleged forgery of her signature of the RBC Charge.
[112] Ms. Ghraoui on cross-examination stated:
a. she never had an RBC bank account;
b. She had no knowledge or memory of ever signing an RBC bank account signature card;
c. she had “no recollection of any dealings whatsoever with RBC or attending at premises of that bank” when advised after this couple’s separation on January 15, 2011, that there was an RBC mortgage registered against the Property;
d. she at no time was aware of Mr. Yassine’s efforts to obtain this loan from RBC, or have the $350K home equity line of credit under the TD #4 Charge and the $370K TD #5 Charge “secured against my property by TD and paid out by RBC”;
e. she was unaware of the existence of the RBC Charge until after she and Mr. Yassine separated on January 15, 2011; and
f. She never had access to the money advanced under the RBC Charge.
[113] On her examination in the family law proceeding however, Ms. Ghraoui stated:
a. she went to the RBC branch following her January 15, 2011 separation and told the RBC representative that she had three mortgages with RBC which she wanted to examine. She stated she went to RBC, not TD, and she knew RBC had those mortgages because Mr. Yassine had told her that the TD mortgages had been moved to RBC; and
b. She asked for, received and reviewed copies of that RBC loan documentation and thereupon realized her alleged signature of the RBC Loan Agreement was a forgery and not her signature.
[114] Ms. Ghraoui is giving contradictory versions as to when she learned that RBC held a charge of the Property and that RBC held several charges and loans she was obligated by, not just the RBC Charge. It appears from her family law examination that she went to RBC to obtain disclosure because she already knew prior to her January 15, 2011 separation that RBC held three charges which she wished to examine.
MEETING WITH MR. NASSAR RBC BRANCH MANAGER
[115] Mr. Nassar is the former RBC Branch Manager Mr. Yassine dealt with in transitioning several of the TD loans and charges to RBC in 2009 and the RBC Charge in 2010.
[116] Ms. Ghraoui stated she only saw Mr. Nassar once when he attended their home and met with Mr. Yassine, but she did not talk to him on that occasion.
[117] Mr. Nassar states he met and spoke to Ms. Ghraoui on three occasions, which Mr. Yassine confirmed.
[118] Mr. Nassar stated that he met Ms. Ghraoui:
a. Upon her opening an RBC bank account at his branch which included her signing the June 22, 2009 RBC signature card in evidence on that occasion which Mr. Nassar also signed as witness;
b. In the home of this couple in late June or early July, 2009, when Mr. Yassine and Ms. Ghraoui each signed RBC mortgage documents in his presence for the transfer of TD loans and security from 3217400 to RBC which resulted in a charge of the two rental properties owned by that corporation to RBC. Mr. Nassar confirmed her signing of this RBC charge of the rental properties on this occasion in a letter to Mr. Yassine on March 3, 2011. He described in detail the belongings and their stated origin he was shown by Ms. Ghraoui at this meeting in their home during his cross-examination; and
c. Once un-expectantly and briefly at a comedy event in Ottawa which Mr. Yassine, Ms. Ghraoui and their 3 children attended. Mr. Nassar happened to attend that event. He stated he was seen by and called over by Mr. Yassine and that he said hello to and shook the hands of Ms. Ghraoui and their children then introduced to him.
[119] Mr. Yassine confirms Ms. Ghraoui’s above the meetings with Mr. Nassar on these occasions, including her opening a RBC bank account as part of and the transfer of 3217400’s loans from TD to RBC which included the new charge of the rental properties from 3217400 to RBC and his wife’s signature thereof at this meeting with Mr. Nassar in their home.
[120] Ms. Ghraoui on cross-examination acknowledged her signature of the June 22, 2009, RBC bank signature card to open her RBC account and recanted her original position that she never had an RBC bank account. She then added however that she never used that account prior to their separation.
[121] Ms. Ghraoui’s evidence as to only seeing Mr. Nasar once in her home, that she only saw him as she stood on the balcony and never spoke to him on that occasion, did not sign RBC borrowing documents on this occasion and that this was the only occasion she ever saw Mr. Nassar, is extremely doubtful.
[122] Ms. Ghraoui has not alleged that the transfer by 3217400 of its loans and charges of the two rental properties from TD to RBC did not occur. She is not alleging that her execution of that loan and mortgage by 3217400 from TD to RBC, some 8 months prior to the RBC Charge, is a forgery of her signature. Her hand writing examiner was not asked to and did not provide an opinion as to her signature of this 2009 RBC lending and charge transaction with 3217400.
[123] The evidence clearly indicates that Ms. Ghraoui in June 2009 opened an RBC bank account and in doing so signed the RBC signature card at that branch and in the presence of Mr. Nassar.
[124] Ms. Ghraoui met Mr. Nassar more than once and did not only see him at a distance on one occasion in her home. Ms. Ghraoui is either not telling the truth or is forgetful of these events. The focus of her affidavit and answers on cross-examination however was that she had no knowledge or involvement with RBC prior to her allegedly first learning about the RBC Charge some 10 months after it was signed and registered.
[125] Ms. Ghraoui’s alleged lack of knowledge and non-execution of the RBC Charge must also be considered within the context of the following facts.
[126] Ms. Ghraoui’s statement that she only learned about the RBC Charge after her husband separated and left their home on January 15, 2011, at a minimum, ignores:
a. The fact that TD #5 became due and payable by her before or at least by March 22, 2010 when the RBC Charge was registered;
b. her admission that she understood from Mr. Yassine that their TD loans and charges were being repaid to TD and replaced by lending and security against the Property to RBC; and
c. as was their arrangement as a couple, she would leave the replacement of TD loan indebtedness and security by funding from and security to RBC to the discretion and determination of Mr. Yassine and would without questioning, sign any required loan documentation in relation thereto.
[127] On her cross-examination in this proceeding, Ms. Ghraoui stated:
a. This visit of Mr. Nassar to her home occurred between April and June 2010, before her departure and stay in Lebanon. The evidence however indicates this visit at their home by Mr. Nassar to sign the 3217400 loan transfers and security from TD to RBC was one year earlier in 2009. Ms. Ghraoui’s time frame of between April and June, 2010 in any event would be 1 or 2 months after the registration of the RBC Charge, some 3-4 months before her September, 2010 attempt to separate and some 8 months before she and her husband separated in January 2011;
b. On this single occasion of Mr. Nassar being at their home, which on the evidence was in June or July 2009, Mr. Yassine told Ms. Ghraoui that he had moved the TD mortgage financing to RBC which was charging a lower interest rate;
c. She acknowledged that when he husband told her on this occasion about moving the financing from TD to RBC, Mr. Yassine could have been referring to the TD charge on the Property, a TD charge on another property or all of their TD charges. She stated she perhaps then thought that Mr. Yassine had moved all TD charges to RBC;
d. Mr. Yassine asked her to do some cleaning of the Property, their home, as an appraiser was coming to determine its market value, which occurred around April 2010 when she was about to leave for Lebanon. Mr. Nassar and Mr. Yassine both state RBC obtained two appraisals of the Property as a term of the RBC Charge financing;
e. In their relationship, Mr. Yassine was responsible to look after their family and as such, he decided all financial matters including mortgages, he knew what he was doing and she relied upon his decisions as to financial matters;
f. She signed all documents her husband asked her to sign. She did not ask questions about the documents her husband presented to her to sign nor as to any explanation he provided as to such transactional documentation; and
g. during her examination in the family law proceedings, she stated that she previously had signed her husband’s signature to documents when he had asked her to do that.
[128] There is further evidence that Ms. Ghraoui had knowledge her debts with TD involving the Property and particularly the TD #4 debt had been paid off 5 months before her alleged post-January 2011 first knowledge of the RBC Charge.
[129] The affidavits and exhibits filed by Ms. Ghraoui in her family law proceeding include:
a. her affidavit statement that only one TD charge remained registered against the Property at the time of the March 22, 2010 registration of the RBC Charge; and
b. her above statement is confirmed by an attached exhibit which is a copy of her “deposit account history at TD Bank confirming a settlement of $350,000”.
[130] That attached account deposit history shows the credit or deposit to her TD account on March 19, 2010 of $350,429.57. That was full payment of her then liability owing pursuant to the TD #4 loan and Charge. RBC had advanced $350,429.57 under the RBC Charge in payment of that liability of Ms. Ghraoui, namely their home equity line of credit debt, previously secured by the TD #4 Charge.
[131] Ms. Ghraoui had knowledge from that TD account statement in March 2010 that her TD #4 liability had been paid in full. She accepted that benefit and apparently asked nothing about that.
[132] Ms. Ghraoui received further notification and confirmation of Mr. Yassine’s earlier statement to her that their TD loans and charges were being transferred to RBC.
[133] Ms. Ghraoui’s two personal assessment statements from TD dated September 7 and 15, 2010, which she obtained when she opened a new individual TD bank account upon her initial decision to separate from Mr. Yassine, state that:
a. The value of her assets includes $1,010,000, being the estimated value of the Property she owned; and
b. she had no liability regarding the TD #5 Charge, or any other TD liability. The reason for that is because RBC had paid TD all of her prior TD #4 and TD #5 liability, 5 months prior to this statement.
[134] Ms. Ghraoui knew from this September 2010 TD statement that she owed no liability regarding any of the prior TD mortgages of the Property that she had signed since 2000. That result was to her benefit which she accepted and now wishes to protect by the removal from the Property of the RBC Charge.
[135] Ms. Ghraoui in 2010 and now, ignores where the money had come from to pay her $726K, March 2010 TD liability. From May and then from September 2010, she ignored these notices which confirmed Mr. Yassine’s statement to her in late June or early July 2009, that their TD debts and security were being transferred to RBC.
[136] Ms. Ghraoui reversed her September 2010 decision to separate in response to pressure from Mr. Yassine. They continued to live together from September 2010, which was 6 months after the registration of and the advances under the RBC Charge in payment of all liability owed to TD by Ms. Ghraouis, for a further 6 months until January 15, 2011, when they permanently separated.
[137] Ms. Ghraoui’s $726K TD liability had been extinguished, with three subsequent notices to her by TD of that fact, for one year prior to her objection to her alleged signature of and the March 2010 registration of the RBC Charge which paid her TD liabilities.
[138] Ms. Ghraoui knew from Mr. Yassine in mid-2009 and then received three subsequent notices in April or May and then in September 2010, that her liabilities and mortgages of the Property to TD had been paid out and replaced by lending which Mr. Yassine had told her was being provided by RBC.
[139] Ms. Ghraoui had no difficulty with her above knowledge or those facts until her final separation, months later in January 2011 and her alleged then review of the RBC Charge documentation which led her to conclude that her alleged signature thereof was a forgery.
[140] Ms. Ghraoui’s objection after January 15, 2011 therefore related to who signed her signature, not that:
a. Mr. Yassine had told her in June or July, 2009 that their TD charges and loans were being moved to RBC;
b. she had several notices from TD in March 2010 and in September 2010 that the TD #4 and #5 debts had been fully paid to TD; or
c. the substitution of TD Charges to another lender.
[141] Ms. Ghraoui’s statements in her affidavit, in cross-examination and in answer to an undertaking on examination that:
a. She “never participated in her husband’s businesses in any capacity”;
b. She never had any dealings with RBC and never attended at RBC premises;
c. She had no RBC bank account and then, the RBC bank account she had was only in existence between March 9 and April 9, 2012; and
d. She only learned of her RBC bank account upon consulting with a family law legal counsel in September 2010;
e. She at no time was aware of Mr. Yassine’s efforts to obtain the loan in issue from RBC, or to have the TD #4 and/or the TD #5 liabilities or Charges paid out by RBC; and
f. She only learned of an RBC charge of the Property after their January 15, 2011 separation;
are inaccurate and incomplete statements of fact, which relate to her credibility and reliability.
LINDBLOM OPINION
[142] Ms. Ghraoui in seeking an order declaring the RBC Charge invalid and removed from title the Property relies upon the opinion report she obtained from Mr. Lindblom, a handwriting examiner whom she retained upon commencing this proceeding.
[143] The RBC Charge documents examined by Mr. Lindblom are:
a. RBC Client Acknowledgement, with her alleged signature;
b. Page 16 of a RBC Homeline Plan Agreement dated March 3, 2010, with her alleged signature and that of Mr. Yassine;
c. Mortgagor’s Acknowledgement and Direction to RBC and the First Canadian Title Company, with her alleged signature and that of Mr. Yassine; and
d. An Authorization/Letter of Direction to The Toronto-Dominion Bank, dated March 11, 2010, with her alleged signature.
[144] A description of the methodology used by this examiner, his observations and the two resulting opinions expressed, consume 2 of the 4 pages of the body of this report excluding attachements.
[145] Mr. Lindblom’s report conclusions are that:
a. There is conclusive evidence for the view that Ms. Ghraoui did not write the questioned signatures on the four above documents; and
b. There is very strong support based on his two signatures produced, that Mark Yassine wrote the questioned signatures of Ms. Ghraoui on the four above documents.
[146] As part of his engagement as handwriting examiner, Mr. Lindblom requested Ms. Ghraoui provide a minimum of 10 to15, and preferably 15 to30 specimens of her signature.
[147] Ms. Ghraoui in response provided Mr. Lindblom with:
a. Her direction to her present lawyer dated February 2, 2011 to authorize creation of a charge of the Property in favor of her lawyers for their representation of her in this and her family law proceeding;
b. An authorization signed by her dated March, 2011;
c. Her signed statement of support arrears, dated July 29, 2011;
d. A power of attorney she signed, dated June 23, 2005;
e. A copy of the revocation of the above power of attorney, dated September 1, 2010; and
f. Eight signatures she executed on July 22, 2011for this document examiner.
[148] What is troubling is that 12 of the above 13 signatures Ms. Ghraoui provided to Mr. Lindblom were made:
a. After the above March, 2010, RBC Charge four signatures in issue;
b. After this couple’s separation in January 2011;
c. After or some at the same time as commencement of this and her family law proceedings in February 2011, and
d. After her communication to her counsel that her alleged signature of the RBC Charge documentation was a forgery.
[149] Ms. Ghraoui, for example, did not provided the examiner with her signature on her driver’s licence, her health card, her passport, prior cancelled cheques she had signed, the 2009 RBC charge documents she signed for 3217400’s rental properties nor any of the five TD Bank mortgage loan transactions which she does not dispute she consented to and signed.
[150] There were ample historical signatures of Ms. Ghraoui available without creating and producing signatures after their January 15, 2011 separation and her then challenge as to her execution of the RBC Charge.
[151] The examiner’s stated preference for 15 to 30 signatures of Ms. Ghraoui, versus the 13 she produced, the fact that 12 of those 13 are written at or after Ms. Ghraoui placed her signature of the RBC Charge in issue, are not commented upon in the examiner’s report.
[152] Mr. Lindlblom’s expression of opinion, albeit qualified, that there was strong support that Mr. Yassine signed Ms. Ghraoui’s signature on the RBC Charge documentation, was based on 2 signatures of Mr. Yassine, as compared to the 15 to 30 preferred number of signature specimens requested of Ms. Ghraoui. The justification for that possible double standard is not addressed in Mr. Lindblom’s report.
[153] No contradictory opinion however of a document examiner was filed by RBC or Mr. Yassine.
[154] Notwithstanding the absence of handwriting evidence from RBC and Mr. Yassine, the issue as to whether Ms. Ghraoui executed the RBC Charge cannot be determined without a trial given the number of contradictions in her testimony and the questions as to Mr. Landblom’s report.
MS. GHRAOUI’S JURISPRUDENCE IN SEEKING SUMMARY JUDGMENT
[155] A number of the authorities relied upon by Ms. Ghraoui involve different factual circumstances which include admissions of fraud at trial, level of knowledge, whether unjust enrichment will result or harm will be caused to the spouse seeking to set aside the charge, as well as the issues and remedies sought.
[156] Forgery of the wife’s signature to the mortgage was admitted in the trial decision in Iori (Litigation Administrator of) v. Village Building Supplies [2005] O.J. No. 2742. The undisputed evidence was that the wife did not know about the mortgage, did not consent to it and unlike this case, had never spoken to or dealt with the mortgagee. The only issue before that court was whether to declare the mortgage invalid as the mortgagee had withdrawn its claim for an equitable mortgage. There was no alternate claim as in this case for a subrogated mortgage.
[157] The court as to that limited issue declared the mortgage a nullity despite the mortgagee being innocent of the fraud because of the admitted forgery and the lack of ILA as the property was a matrimonial home and the requirements of ILA pursuant to s. 21(1) of the Family Law Act R.S.O. 1990, c. F.3. In arriving at that conclusion the court acknowledged that the case law was divided as to the consequences of a forged mortgage of a matrimonial home based upon the variety of particular circumstances: Para 20.
[158] The plaintiff wife in the trial decision of McCaskie v. McCaskie and Larry McQuoid Holdings Limited, [2002] O.J. No. 1273, sought an order setting aside a mortgage of the matrimonial home which she had not consented to nor signed. Her husband in executing the mortgage misrepresented that he was not a spouse pursuant to s. 21(1) of the FLA and thus no spousal signature was required. The mortgage was obtained to pay and discharge a prior mortgage which the wife had signed for other liabilities.
[159] The court held that:
a. the new mortgagee acquired an interest for value and in good faith however its mortgage application documentation disclosed that the husband was married but separated thus constituting constructive notice that the house was or had been a matrimonial home;
b. the mortgage should therefore be set aside, however it would be unfair to do that under the doctrine of subrogation and deprive the mortgagee of its subrogated rights, as the new mortgage paid out the prior mortgage which the wife had agreed to and signed; and
c. the new mortgage was to be set aside upon payment by the wife within 60 days of the discharged amount of the prior mortgage, plus interest.
[160] Ms. Ghraoui attempts to distinguish the result in McCaskie by arguing that RBC is not entitled to subrogation as it could have and failed to determine that the RBC Charged was not signed by her. The court in McCaskie however found knowledge and therefore fault by the new mortgagee but applied the subrogation doctrine and effectively granted an equivalent result now sought by RBC.
[161] In Shute v. Premier Trust Company [1993] O.J. No. 2758 (Ont. Ct. of Just. (Gen. Div.)), it was admitted at trial that the subject mortgage of the matrimonial home owned by the husband and wife in joint tenancy was forged by the wife as to her husband’s signature. The court ordered that the mortgage should be set aside upon the husband paying a specified amount with interest to the mortgagee. To that extent, the setting aside of the admitted forged charge was conditional to payment.
[162] The court on the facts in Shute rejected the agency argument, namely that the wife as agent of the husband, had signed the mortgage on his behalf. The court found that although Premier Trust Company had acted in good faith, there cannot be a mortgage against only half of the property and, with little explanation, dismissed the mortgagee’s claim for an equitable subrogated mortgage.
[163] The annotation of that decision by James G,. McLeod contains the following critical points of analysis:
a. this might have been an appropriate case for the imposition of a remedial constructive trust or other restorative relief;
b. the defrauded mortgagee in equity should have been able to rely upon the rights of the prior mortgagee which it advanced and paid out;
c. the husband learned about the new mortgage and could not with justification object if the rights of that prior mortgage which he had consented to were asserted by the new mortgagee given his resulting unjust enrichment, namely owning a mortgage-free home;
d. the husband’s failure to react in response to an apparent fraudulent mortgage might have constituted his ratification of the fraudulent mortgage; and
e. the court’s preoccupation with traditional proprietary froms of relief may have unnecessarily restricted its ability to look to the equities of the case.
[164] Mr. McLeod in this annotation is urging the courts to apply remedies which address the unjust enrichment of parties like Ms. Ghraoui who allege or prove forgery and then seek to benefit by striking the forged security while retaining the financial benefit gained by the fraud.
[165] The court in Armitage Motors Ltd. v. Royal Trust Corp of Canada, (1997) O.A.C. 308, denied the remedy of subrogation because such relief if granted would cause serious harm to a prior valid mortgagee. Ms. Ghraoui is not harmed if the court’s exercise of equitable relief is limited to the extent of her TD liabilities and security immediately prior to the registration of the RBC Charge, as now sought.
[166] Ms. Ghraoui argues the RBC Charge be determined and removed from title based on the doctrine of deferred undefeasibility and provisions of the Land Titles Act, RSO 1990, c. L.5.
[167] The Divisional Court’s decision in CIBC Mortgages Inc. v. Computershare Trust Company of Canada, 2016 ONSC 7094, involved the registration of an owner instigated fraudulent and therefore invalid discharge of a first charge to Computershare and the priority as between it and the validity of a subsequent charge to CIBC.
[168] The owner defaulted then went bankrupt.
[169] The Divisional Court dealt with the s. 78(4) of the Land Transfer Act as amended by ss. 78 (4.1) and (4.2) subsequent to the decision relied upon by Ms. Ghraoui in Lawrence v. Maple Trust Co., 2007 ONCA 74.
[170] The Divisional Court held that under that legislation as amended:
a. the scheme of deferred indefeasibility applies only to fraudulent instruments, not to non-fraudulent instruments, even if registered subsequent to a fraudulent instrument;
b. the owner’s fraud related and resulted in the invalidity of the discharge of the Computershare mortgage, not how the owner had the capacity to and granted the mortgage to CIBC which was not therefore a fraudulent transaction as CIBC at the time of its mortgage was unaware the prior discharge of the Computershare mortgage was fraudulent; and
c. the subsequent CICB mortgage was valid and took priority as between it and the fraudulently discharged Computershare mortgage: paras 44, 46, 47 53, 54 and 63.
[171] Ms. Ghraoui’s reliance again on CIBC and Lawrence presupposes a finding that she did not consent to or sign the RBC Charge. The issue in CIBC was between two mortgagees who had provided value, not the property owner who had received those benefits and was now attempting to obtain a declaration of invalidity of the security and avoid the debt.
[172] Equitable relief in the face of acknowledged or determined fraud was not before the court in CIBC. However the Divisional Court comments that a discharge of the CIBC mortgage “would be an inequitable outcome” given the money it had advanced on the understanding that debt was secured as “CIBC innocently advanced funds to fraudsters and ought not be disentitled to recover their interests.”: para 62.
[173] It would be similarly inequitable to RBC for the RBC Charge to now be declared invalid, removed from title and for Ms. Ghraoui to retain the resulting windfall.
[174] The Divisional Court in CIBC stated that had the fraudulent and invalid discharge of the Computershare charge been discovered before the registration of the CIBC charge, the discharged Computershare charge could have been restored to title.
[175] Ms. Ghraoui upon identification of her alleged forged signature of the RBC Charge agreement had options including:
a. As now occurring, rely upon the alleged forgery of her signature and seek a court declaration of the invalidity of the RBC Charge; or
b. while recognizing the alleged forgery, she in recognition of Mr. Yassine’s 2009 notice that their TD debts and charges were being transferred to RBC and the TD’s notices of her account’s receipt of payment of the TD #4 loan amount and TD asset/liability statements that her former TD indebtedness had been paid off; could have acknowledged her financial benefit from RBC by agreeing pursuant to the principles of equity to rectify by confirming the validity of the RBC Charge.
[176] The fraudster in Home Trust Co. v. Zivic, (2006) 51 RPR (4th) 71 (S.C.O.), conveyed title of the property to himself and simultaneously then granted two mortgages to two lenders who sought a declaration as to the validity of those charges against the defrauded real owner. The same solicitor acted for the mortgagees and the fraudulent “purchaser”.
[177] The court in Home Trust held that:
a. the doctrine of deferred indefeasibility did not apply as there was no reliance upon the Land Titles register;
b. although innocent as to the fraud, the mortgagees should bear the burden of the fraud over the legitimate innocent registered owner, as the mortgagees had failed in their opportunity to be vigilant upon entering into the lending transactions and instead retained the same solicitor as the fraudster; and
c. the mortgages’ applications to have their mortgages declared valid was accordingly dismissed.
[178] The facts in Home, particularly the absence of an unjustified benefit received by the true owner and the encumbrance of her property if the mortgagees were successful in validating their charges are clearly different than the present case. As is often the case, the circumstances often determine the outcome.
[179] The legal issues in Home in addition did not include a claim for equitable charges by subrogation and therefore do not address RBC’s motion for that relief even if the RBC Charge is set aside.
[180] The court in Central Guaranty Trust Co. v. Dixdale Mortgage Investment Corp., (1994) 1994 CanLII 1429 (ON CA), 24 O.R. (3d) 506 (C.O.A.), dealt with the issues of unjust enrichment or restitution as between a negligent 1st mortgagee who mistakenly discharged its mortgage and the 2nd mortgagee which received a windfall enrichment upon the sale of the property, as it then was the only registered mortgage. The 2nd mortgagee relied upon the validity of its mortgage and priority recognition of that interest as recognized and created by the registration provisions of the Registry Act, RSO 1990, c. R.20.
[181] That court held that:
a. Canadian courts recognize the general principle that a claimant has a right to recover benefits acquired by another in circumstances making the other’s retention of those benefits unjust, absent valid judicial policy militating against it;
b. The three requirements of a claim of unjust enrichment are i) an enrichment, ii) a corresponding deprivation; and iii) the absence of any juristic reason for the enrichment.
c. The first two of those elements are met where there is an enrichment or windfall benefit equal to the amount of money required to satisfy outstanding mortgage of the second mortgagee conferred by the mistaken discharge of the first mortgage resulting in a corresponding deprivation.
d. The third element may be met if the 1st mortgagee can show the absence of any juristic reason for the enrichment or, simply, that it would be unjust to allow the remaining 2nd mortgagee to retain the money in dispute;
e. The absence of notice due to the discharged 1st mortgage and the resulting priority of the 2nd mortgage pursuant to sections 70(1), 71 and 74(1) of the Registry Act resulting in that legislation’s recognition of the priority of the 2nd mortgagee were not considered dispositive as a court may give effect to the principle of unjust enrichment or restitution despite statutory terms which would otherwise preclude recovery; and
f. The court in each case must weigh the objective of fulfilment of the purpose of the legislation versus the common law policy of preventing unjust enrichment: paras 18 to 20 and 28 to 30.
[182] RBC does not base its claim in restitution, however the above principles are informative as to some of the general principles regarding unjust enrichment which is relevant to an equitable remedy like subrogation.
[183] Ms. Ghraoui’s case law does not justify that her motion be granted. A number of the principles in those decisions as cited are contrary to her opposition to the equitable relief sought by RBC for the equitable remedy of subrogation.
FLA CONSENT AND INDEPENDENT LEGAL ADVICE
[184] Ms. Ghraoui relies upon the forgery and therefore her lack of consent as to the RBC Charge, the requirements of s. 21 of the Family Law act R.S.O. 1193 c. F-3 (the “FLA”) and RBC’s failure to ensure that she received independent legal advice as to that RBC transaction:
a. as grounds to declare the RBC Charge invalid and removed from the Property; and
b. why RBC lacks the clean hands requirement to obtain the equitable remedy of subrogation.
[185] I will address these grounds now as to her motion and then return to them on RBC’s motion.
FAMILY LAW ACT REQUIREMENTS FOR CONSENT TO ENCUMBER MATRIMONIAL HOME
[186] The relevancy of s. 21 (1) of the FLA to the present case presupposes and is conditional upon this court conclusion that she did not execute the RBC Charge and it was Mr. Yassine who forged her signature.
[187] As to the applicability of and Ms. Ghraoui’s reliance upon s. 21 of the FLA, upon which Iori was decided, the court notes that:
a. Mr. Yassine was not a Property owner and therefore lacked the legal capacity to encumber the Property, which is the prohibited factual encumbrance addressed in s. 21(1);
b. S. 21(1) creates prohibited conduct by a spouse and does not address the rights of creditors of the spouses;
c. The court in any event has authority to authorize such a charge or released the Property from the application of the requirement of spousal consent to encumber the matrimonial home pursuant to s. 21(1)(c and s. 23;
d. Upon proof of a spouse breaching s. 21(1) in encumbering matrimonial property without spousal consent, s. 21(2), like s. 23, enables but does not require the court to set aside the mortgage transaction; and
e. S. 21 of the FLA does not address, limit or determine what equitable remedies are appropriate where an owner has encumbered a matrimonial home in contravention of that section.
[188] Ms. Ghraoui’s reliance upon s. 21 of the FLA is premature until the issue whether she signed this charge is determined and even if she did not, that is not determinative of her motion or the RBC motion.
INDEPENDENT LEGAL ADVICE AND RBC’S INTERNAL POLICIES
[189] Ms. Ghraoui submits that independent legal advice (“ILA”)was legally required pursuant to Iori, was “axiomatic” as that court referred to and was also required pursuant to RBC’s own internal policies and the absence thereof in this case requires that the RBC Charge be declared a nullity and set aside.
[190] I have already described the limitations of Iori to the present case.
[191] RBC policy documents provided that:
a. ILA is highly recommended for a co-signer or guarantor involved in a debt, especially if that person is not getting any value from the loan;
b. A co-signer is a family member on title to the property who can add strength to a credit proposal that the primary applicant lacks;
c. Examples of when ILA should be obtained are where a spouse is pledging a mortgage on the matrimonial home to support a loan which will be used for business purposes.
d. A co-signer or secondary borrower should obtain ILA unless they are deriving some benefit from the loan proceeds; and
e. ILA is required where a co-signer will not receive direct benefit from the mortgage proceeds.
[192] The TD #5 Charge at a minimum was due and payable by Ms. Ghraoui on March 1, 2010. She derived a direct benefit by RBC’s payment of that TD liability and its payment of her TD #4 liability, thereby rendering the above instances (a), (d) and (e) inapplicable.
[193] Ms. Ghraoui was not a co-signer as in (b). She was primarily liable for and had granted the TD #4 and TD #5 Charges.
[194] The RBC loan was for personal liability of Ms. Ghraoui and Mr. Yassine pursuant to (c) above and for business debt. I note however that the policy is “should” and not “must”.
[195] Breach of the policies of a lender in any event do not on their own render the mortgage or loan unenforceable, do not give borrowers a right of recourse and are not determinative as to whether there was lawful execution of a mortgage or its enforceability: Bank of Montreal v. Duguid, (2000) 2000 CanLII 5710 (ON CA), 132 OAC 106, para 38, Avco Financial Services Ltd. v. Bhabha, 1994 CarswellOnt 1087, O.C.J. (Gen. Div.) paras 45 and 46 and Alberta Treasury Branches v. Georgopoulos, (1998) ACWS (3d) 654 (Master) paras 11 to 13.
[196] RBC policy statements are relevant as to what practice was appropriate but are not determinative whether equitable relief should be granted.
CONCLUSION AS TO MS. GHRAOUI’S SUMMARY JUDGMENT MOTION
[197] The issue as to whether Ms. Ghraoui signed the RBC Charge and therefore the validity thereof should be determined at a trail in order to decide the following relevant matters which cannot be determined on this motion, namely:
a. the issue of Ms. Ghraoui’s credibility and reliability given her contradictions; including her admission that she perhaps understood from Mr. Yassine upon Mr. Nassar’s attendance in their home that all then existing TD indebtedness and security was to be transferred to and replaced by RBC, the notices she received from TD prior to her separation of the repayment of the TD #4 and TD #5 debts;
b. whether Ms. Ghraoui knew and consented to the replacement of TD debts and security with equivalent RBC debt and security;
c. the above questions as to Mr. Lindblom’s report; and
d. whether Ms. Ghraoui signed the RBC Charge.
[198] For the above reasons, Ms. Ghraoui’s summary judgment motion to declare the RBC Charge invalid and deleted from title of the Property is denied.
[199] Without altering the above decision, this court for the purpose of any appellate review in the alternative would order that:
a. the RBC Charge be declared unenforceable and removed from title of the Property upon Ms. Ghraoui’s payment to RBC of the $721,234 paid by RBC to TD of the TD #5 Charge and the TD #4 liability for the reasons and as ordered by the courts in McCaskie and Shute;
b. less any amount of those debts paid by Mr. Yassine under the above consent judgment to RBC;
c. plus pre-judgment simple interest at the TD rates applicable to those loans on March 15, 2010.
WHETHER RBC IS ENTITLED TO EQUITABLE CHARGE(S) BY SUBROGATION
[200] The court will now determine RBC’s summary judgment motion .
[201] RBC submits that even if the RBC Charge was forged and not signed by Ms. Ghraoui, RBC was unaware of that fact and given Ms. Ghraoui’s knowledge, acquiescence and the resulting unjustified benefit she received, it should be granted an equitable charge by subrogation because:
a. Mr. Yassine had told his wife in June or July 2009 that their TD debts and charges were being transferred to RBC;
b. she knowingly received the benefit of RBC’s payment of $721, 234 to TD of her indebtedness related to TD #4 and the payment of the TD # 5 Charge as she received notice of those payments on March 22, 2010 as to TD #4 and by September 2010 as to the TD #5 Charge;
c. she accepted those payments by RBC of those debts for which she was liable;
d. Ms. Ghraoui then tried to protect that benefit received and avoid the corresponding liability by commencing this proceeding after she and her husband separated in January 15, 2011; and
e. It which would be an inequitable windfall and unjust enrichment to her and a deprivation and inequitable result to RBC if it did not receive an equitable charge by subrogation.
[202] The facts as determined and the reasons expressed above lend weight to this argument. There are however a number of legal issues as to whether RBC is entitled to that equitable relief.
PLAINTIFF’S GROUNDS IN OPPOSING EQUITABLE REMEDY BY SUBROGATION
[203] Ms. Ghraoui submits that RBC is not entitled to an equitable charge by subrogation because:
a. She did not agree to borrow from RBC and secure that debt against the Property. There was therefore no common intent with RBC as required to secure the Property for the existing debts owed to TD, as per Elias Markets LTD. (2006) 2006 CanLII 31904 (ON CA), 216 OAC 49, para 65 and Shute v. Premier Trust Co. et al, (1993) 1993 CanLII 16131 (ON SC), 35 RPR (2d) 141 OCJ. (Genral Division);
b. RBC failed to ensure that she was the person who signed the RBC Charge;
c. The RBC Charge is in breach of s. 21(1) of the Family Law Act, RSO 1990, c. F-3 which prohibits Mr. Yassine from encumbering the matrimonial home Property without the consent of Ms. Ghraoui, which she did not consent to;
d. RBC failed to require that Ms. Ghraoui obtain the fundamentally required independent legal advice regarding the matrimonial home as to the RBC Charge;
e. RBC has failed to meet its burden to establish the four prerequisite to such equitable remedy as articulated in Armatage Motors Ltd. v. Royal Trust Corp. of Canada (1997) O.A.C. 308, para 23; and
f. In the alternative, any equitable charge by way of subrogation must be limited to the liability of TD #5 as of March 22, 2010 and not include the liability as to TD #4 as the TD #4 Charge was discharged on March 2, 2009, twelve months prior to the March 22, 2010 RBC Charge; and
g. RBC and Mr. Yassine have failed to prove that the discharge of the TD #4 Charge was an error.
ALLEGED PREREQUISITES TO EQUITABLE REMEDY OF SUBROGATION
[204] Ms. Ghraoui submits that RBC has not met it burden to establish the four prerequisites determined in Armitage because:
(i) The forgery of the RBC Charge based on her allegations, the opinion of her document examiner and Ms. Craig’s acknowledgment that she did not witness the signature of at least one RBC Charge document and did not obtain proof of identification of the female before her who signed some of the RBC loan documents, demonstrates collusion of RBC officers in the creation of the RBC Charge thereby defeating RBC’s requirement to show it has clean hands;
(ii) RBC further lacks clean hands in its failure to require Ms. Ghraoui obtain independent legal advice as required by RBC’s lending policies which states such ILA is required given that the RBC Charge of the matrimonial home was to support a loan for business purposes in which she was not actively involved;
(iii) RBC has alternate remedies to the relief sought given its consent judgment against Mr. Yassine; and
(iv) Ms. Ghraoui was not unjustly enriched by RBC’s payment of the $726K to TD as that included the past re-payment of the combined $300K debt owed TD by Express and Wireless, the $75K liability of Mr. Yassine and the further advance by RBC of some $70K to Mr. Yassine to pay family and business expenses.
[205] The Court of Appeal in Armitage did not establish a four prerequisite burden on the claimant to obtain subrogation as submitted by Ms. Ghraoui.
[206] The court in Armitage:
a. Adopted the decision in Brown v. McLean (1889), 18 O.R. 533 (Ont. H.C.), that each instance of negligence largely depends on its own circumstances and when no injury is thereby caused to a party like Ms. Ghraoui, the courts lean towards granting subrogation;
b. To grant subrogation in that case would injure Armitage which would then be unable to recover anything on its mortgage;
c. The known loss if subrogation was granted, the absence of evidence as to what acts to salvage its position Armitage might have taken had it known it was moved to second priority and because Royal Trust appeared to have a cause of action against its solicitor who failed to note the Armitage first mortgage registered on title, led that court to elect not to exercise and grant the discretionary remedy of subrogation: paras 23,24, 26, 27, 32 and 33.
[207] Armitage emphasizes the equitable nature of subrogation as a remedy, the pre-disposition to granting it if no injury is thereby caused and the need to consider the surrounding circumstances as to that determination.
EQUITABLE REMEDY PURSUANT TO DOCTRINE OF SUBROGATION
[208] The doctrine of subrogation and the availability of an equitable charge as a remedy thereunder is not as limited as Ms. Ghraoui submits.
[209] Dictionary definitions of subrogation include the following:
a. Subrogation. The substitution of one party for another whose debt the party pays, entitling the paying party to rights, remedies, or securities that would otherwise belong to the debtor. For example, a surety who has paid a debt is, by subrogation, entitled to any security for the debt held by the creditor and the benefit of any judgment the creditor has against the debtor, and may proceed against the debtor as the creditor would: Black’s Law Dictionary, Eighth Edition.
b. Legal Subrogation. Subrogation that arises by operation of law or by implication in equity to prevent fraud or injustice: Black’s Law Dictionary, Eighth Edition.
[210] Legal authors describe the equitable remedy of subrogation as follows:
“Subrogation is equitable assignment. The right comes into existence when the surety becomes obligated, and this is important as affecting priorities; but such right of subrogation does not become a cause of action until the debt is fully paid. Subrogation entitles the surety to use any remedy against the principal which the creditor could have used, and in general to enjoy the benefit of any advantage that the creditor had, such as a mortgage, lien, power to confess judgment, to follow trust funds, to proceed against a third person who has promised either the principal or the creditor to pay the debt.” Laurence P. Simpson, Handbook on the Law of Suretyship 205 (1950).
“Subrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person’s rights against the defendant. Factually, the case arises because, for some justifiable reason, the subrogation plaintiff has paid a debt owed by the defendant.” Dan B. Dobbs, Law of Remedies 4.3. at 404 (2d ed. 1993).
[211] While acknowledging the above definitions are broad statements, RBC payment of some of Ms. Ghraoui’s TD debts and release of its security fits within some of the above definitions.
NATURE OF THE REMEDY
[212] Counsel in argument submit the following decisions of the Ontario Court of Appeal describe the nature, extent and availability of the equitable remedy of subrogation and when courts pursuant thereto will grant an equitable charge of property:
a. Midland Mortgage Corp. v. 784401 Ontario Ltd., (1997), 1997 CanLII 1946 (ON CA), 102 O.A.C. 226
b. Mutual Trust Co. v. Creditview Estate Homes Ltd., 1997 CanLII 1107 (ON CA), 102 O.A.C. 246
c. Armitage Motors Ltd. v. Royal Trust Corp. of Canada (1997), 149 D.L.R. (4th) 198 (C.A.) Elias Markets Ltd., Re, (2006), 2006 CanLII 31904 (ON CA), 216 O.A.C. 49
d. Lawrence v. Maple Trust Company, (2007), 2007 ONCA 74, 220 O.A.C. 19
e. O'Brien v. Royal Bank of Canada, 2008 CanLII 6422 (ON S.C.)
f. J.A. MacFarlane Engineering Co. v. Chetti, [2009] O.J. No. 342, para 21, aff’d, [2009] O.J. No. 2694
[213] A summary of the relevant principles from those decisions regarding when a court will grant an equitable charge and as to the doctrine of subrogation include the following:
a. Subrogation is a remedy and not a right: Armitage 23;
b. The remedy of subrogation is discretionary: Armitage 33;
c. An equitable mortgage if granted under the doctrine of subrogation is the exercise of the court’s equitable jurisdiction: Elias para 63 and 66;
d. An equitable mortgage is distinct from a legal mortgage. An equitable mortgage creates a charge in equity which attaches to the land but does not transfer the legal estate in the property to the mortgagee: Mutual Trust paras 25 and 47 and Elias para 63;
e. Where a party at the request of the mortgagor pays off a first mortgage with a view to becoming the first mortgagee of the property, that payor becomes, in default of evidence of intention to the contrary, entitled in equity to stand in the shoes of the original first mortgagee as to the property: Midland Mortgage, para 14 and O’Brien paras 25 to 27.
f. “Where a third party pays off a first mortgage with a view to becoming a first mortgagee and takes a new mortgage, he is entitled to stand in the shoes of the first mortgagee.”: Anger and Honsberger, Law of Real Property, Second edition, p. 1651
g. The equitable nature of a mortgage may be due to either (1) the fact that the interest mortgaged is equitable or future, or (2) the fact that the mortgagor has not executed an instrument sufficient to transfer the legal estate. In the first case the mortgage, be it [ever] so formal, cannot be a legal mortgage; in the second case it is the informality of the mortgage which prevents it from being a legal mortgage: Elias para 66;
h. Equitable mortgages of property are created by some act or instrument involving the owner which is insufficient to confer a legal estate but which, being founded on valuable consideration, shows the intention of the parties to create a security or evidences a contract to do so: Elias para 66;
i. An equitable mortgage is equivalent to an actual assurance to grant such a mortgage and is enforceable under the equitable jurisdiction of the court: Elias para 66.
j. The equity of subrogation attaches to the land in relation to which the third party advanced the mortgage funds: Mutual Trust, para 25 and Elias para 51;
k. The foundation of the doctrine of subrogation is fairness which is to be determined in light of the circumstances in each case, including the receipt of a benefit by the party who’s consent was forged: Mutual 34, Armitage paras 23 and 24, Elias paras 50, 51 and 53 to 55, MacFarlane para 21 and O’Brien, para 27;
l. Absent injury to the party against whom subrogation is sought, courts lean towards granting that remedy: Armitage: para 24;
m. Courts which grant the remedy of subrogation often do so in order to prevent a case of unanticipated windfall or unjust enrichment Elias para 53 and 54;
n. An equitable mortgage granted pursuant to the doctrine of subrogation seeks to step in to and prevent an injustice that would otherwise arise from the strict application of the law: Elias para 64;
o. The concept of an equitable mortgage seeks to enforce a common intention of the mortgagor and the mortgagee to secure property for either a past debt or future advances, where that common intention is not enforceable under the strict requirements of common law; Elias para 65;
p. Subrogation however is available even if the mortgage is void, as in the case of its forgery, because subrogation does not depend on the validity of the underlying registration but instead arises by virtue of the advance of funds to pay out the prior encumbrances: Elias paras 53 and 54
q. Where a third party at the request of a mortgagor pays off a first mortgage with a view of itself becoming a first mortgagee, such third party in the absence of evidence to the contrary, becomes entitled as to the property to stand in the shoes of the first mortgage paid out by the third party: Midland paras 14 and 15;
r. One principle underlying the grant of equitable relief by subrogation of a party to the rights of the original mortgagee is that such relief not create an injustice, namely whether the relief if granted, will place the recipient in any worse position than existed prior to their receipt of the funds: Armitage, para 25, Elias, para 51, Midland and Mutual.
s. The operation of the doctrine of subrogation is limited to the amount of the original first mortgage and not to a higher principle or interest amount: Mutual Trust para 38. (emphasis added)
[214] The principles underlined above in paras e, f, h, k to m and o to q are particularly relevant in this case.
[215] The court will now address the arguments of Ms. Ghraoui why the court should not exercise its discretion and grant the remedy of subrogation in granting an charge in this case.
FORGERY NOT A BAR TO EQITABLE REMEDY
[216] The fact forgery is not a bar to subrogation dictates in favor of determining whether to grant such remedy independent of the possibility that a later trial may determine that the RBC Charge contains a forgery of Ms. Ghraoui’s signature.
COMMON INTENT
[217] As to (e) above , RBC’s payment of the $726K of TD debt then owed by Ms. Ghraoui and the secured thereof against the Property, at least as to the TD #5 Charge, independent of other factors, strongly supports granting this equitable remedy.
[218] The evidence is clear that RBC intended and understood that it was to pay out and replace TD as to TD #4 and TD #5, in consideration for which it understood and received a first charge of the Property.
[219] RBC officials also understood that Ms. Ghraoui by the executed RBC loan documents agreed to and became obligated to repay RBC the monies lent and that such payment obligation was secured by a first charge of the Property.
[220] Common logic supports this lender’s belief and understanding that its loan and advance of $795,000 was based upon its receipt of enforceable security granted by the owner against the Property.
[221] There were some actions of Ms. Ghraoui in support of the RBC Charge. She assigned her responsibility as to her TD debts to Mr. Yassine. Those TD debts had fixed maturity dates or were payable on demand which she had contracted to pay failing which TD could realize against the Property. She was advised in June/July, 2009 that Mr. Yassine, effectively acting as her agent as to her TD debts and charges, was arranging for their transfer to RBC. She knew in March and September 2010 that the TD #4 and #5 liabilities totalling some $795K had been paid. She then, without question or objection, accepted that financial benefit and her resulting release of such TD liability and security.
[222] Ms. Ghraoui led no evidence as to how that $796K could have been paid without borrowing the same from another lender such as RBC, which Mr. Yassine had told her was occurring at her meeting and signing of loan documents with Mr. Nassar of RBC in the summer of 2009.
[223] It will not be known until the trial of that issue whether Ms. Ghraoui signed the RBC Charge. It cannot be said however on this motion that she did not know and did not agree to the transfer of her then TD debts and security against the Property to RBC. She knew that plan of action and saw the results thereof in the release of her TD liabilities
[224] Ms. Ghraoui effectively knew about and consented to the transfer of her TD debts to RBC. She effectively did not care how that had occurred prior to her separation.
[225] An equitable charge by subrogation will be granted where the mortgage due to forgery is unenforceable if there was a common interest as to the prior mortgage paid off, as the mortgagors benefitted by payment of that prior consensual debt and release of security and would be unjustly enriched if not required to repay that benefit received Fairness requires the sale of property to pay off that equitable charge: O’Brien, para 26, 27 and 30.
[226] An equitable remedy of subrogation should not be denied on this ground.
S. 21 FAMILY LAW ACT CONSENT TO ENCUMBER AND INDEPENDENT LEGAL ADVICE
[227] The above analysis as to these two issues is repeated.
[228] That analysis combined with Ms. Ghraoui’s knowledge of their transfer of TD debts and security to RBC, her knowledge and acceptance that such transfers had occurred with the resulting extinguishment of her TD liabilities leads this court to conclude that an equitable remedy of subrogation should not be denied for either of these reasons.
FAIRNESS, UNJUST ENRICHMENT AND PREVENTING AN INJUSTICE
[229] Fairness to RBC, an unjust windfall or enrichment to Ms. Ghraoui and preventing that combined injustice exist on the facts in this case as to the elements in (k), (l) and (m).
[230] Ms. Ghraoui logically is suggesting that that she should benefit:
a. from the payment by RBC of her contractual debt liability owed to TD in the amount of $721,234 as of March 2010;
b. by the discharge of the remaining and related TD charges against the Property;
c. by this court declaring the RBC Charge invalid and be removed from the Property; and
d. that she not be held liable to RBC for its payment of her liability to TD or RBC.
[231] As the court in CIBC similarly held, a discharge of the RBC charge with no relief to RBC would be an inequitable outcome given the money it had advanced on the understanding that debt was secured; as RBC would then like “CIBC, have innocently advanced funds to fraudsters and ought not be disentitled to recover their interests.”: CIBC para 62.
[232] Subrogation should not be denied for this reason.
REMEDY UNAVAILABLE IF INJUSTICE THEREBY CREATED
[233] Whether injury or injustice would occur to Ms. Ghraoui if the court granted an equitable charge to RBC in this case is a relevant consideration: Armitage, paras 24 and 25.
[234] There is no injustice to Ms. Ghraoui if this court grants subrogated charges as to her $370,804 TD #5 Charge, or the $350,429 TD #4 Charge if that TD charge was discharged in error, as per (q) above, thereby restoring Ms. Ghraoui to her prior liability position with TD secured by a charge(s) of the Property. That includes the evidence that the transfer of those TD debts to RBC was to gain a lower interest rate charge by RBC.
[235] RBC in the present case did not advance money to fraudsters in the sense that its $756K advance to TD paid off Ms. Ghraoui’s debts to that lender which she benefitted by. It would be inequitable to RBC for its RBC Charge created for and paying out that TD debt to now be declared invalid, removed from title and for Ms. Ghraoui to then receive the resulting windfall, which no one intended.
[236] The court stated in CIBC that had the fraudulent and invalid discharge of the Computershare charge been discovered before the registration of the CIBC charge, the discharged Computershare charge could have been restored to title. Ms. Ghraoui upon her allegedly identifying her forged signature of the RBC Charge had at least two options.
a. She could, as occurred, rely upon the alleged forgery of her signature and seek a court declaration of the invalidity and deletion of the RBC Charge; or
b. in recognition of Mr. Yassine’s 2009 notice that the TD debt and charges were being transferred to RBC and TD’s notices to her of her account’s receipt of payment of the TD #4 loan amount and TD asset/liability statements that her former TD indebtedness had been paid off; she in accordance with the principles of equity could acknowledge the financial benefit she had received from RBC by agreeing if necessary to rectify and acknowledge the validity of the RBC Charge.
[237] The court in National Trust Co. v. Newmaster, 2003 CanLII 64233 (ON SC), [2003] O.J. 3830 (O.S.C.) held that prejudice to a party like Ms. Ghraoui does not mean the detriment of being required to repay a debt she owes but requires some additional hardship. That court accordingly based on equity granted judgment for the debt owing despite the claimant’s error in discharging its prior security of the subject debt and omission of the debt in its lender’s discharge statement.
[238] Ms. Ghraoui benefitted from and was not prejudiced by RBC’s payment of her TD liabilities and the discharge of the TD charges of the Property, or at least the TD #5 Charge. She benefitted from RBC agreeing to loan her the $721,234 she owed TD which had then matured or was about to at a lower interest rate.
[239] Subject to the amount thereof and whether TD held one or two charge as security of the Property; Ms. Ghraoui would not be prejudiced if the court granted an equitable charge of the Property for the amount of her secured TD liability that was paid by RBC.
[240] The court disagrees with Ms. Ghraoui’s submission that the evidence establishes that the $721K advanced by RBC is solely the debt of corporations operated by Mr. Yassine. The evidence is that some of that debt was personal debt of this couple. Ms. Ghraoui in any event assumed responsibility for and was contractually liable for the full amount of the TD #4 liability and the TD #5 Charge as of March 15, 2010 and cannot now deny her contractual liability in relation thereto.
[241] The court in addition may limit the amount and terms of any equitable or subrogated charge granted and therefore prevent any prejudice in excess of Ms. Ghraoui’s liability and security to TD for the same debt.
[242] Ms. Ghraoui granted a charge of the Property to her counsel in February, 2011 upon commencing this and her family law proceedings. By commencing this proceeding, Ms. Ghraoui did not thereby obtain a bar or right to limit the remedies available to RBC in this proceeding. That charge to her counsel was made with full knowledge as to the risks of this litigation.
[243] With the above qualifications, Ms. Ghraoui would not be seriously prejudiced by the grant of an equitable charge of the Property to RBC.
WHETHER MISCONDUCT IS AUTOMATIC BAR TO SUBROGATION
[244] Ms. Ghraoui submits RBC has failed to establish it has clean hands which disentitles it to the equitable remedy of a subrogated charge.
[245] There is no evidence to support the plaintiff’s submission that Mr. Nassar and/or Ms. Craig were involved in or must have been aware of the alleged forgery of the RBC Charge by Mr. Yassine or that her husband must have arranged for another female to attend as Ms. Ghraoui and execute the RBC loan documentation. This submission as to Mr. Nassar and Ms. Craig does not exceed speculation.
[246] Undisclosed misconduct by another person, such as forgery by another person, is not a ground to deny subrogation to the payor of the valid outstanding debts owed by Ms. Ghraoui: Mutual Trust para 45.
[247] If Ms. Ghraoui in fact did not sign the RBC Charge, the evidence at its strongest would support the argument that Mr. Nassar and Ms. Craig each failed to take steps available to RBC to ensure that the RBC Charge was executed by the plaintiff. Any such negligence is less than and not equivalent to knowing about or participating in the forgery of the RBC Charge. There is no evidence beyond impermissible speculation to support that more serious level of misconduct.
NEGLIGENCE AND SUBROGATION
Ms. Ghraoui submits that RBC was negligent as:
a. It failed to require production of identification from a female who allegedly attended and signed the RBC Charge documentation, or
b. It failed to require her attendance and identification and to witness her signature of the RBC Charge; and
c. It failed to require that she obtain independent legal advice as to the grant of the RBC Charge.
[248] Negligence however is not an automatic bar to a remedy of subrogation. The courts have developed several principles why negligence of a claimant generally does not necessarily defeat a claim for a subrogated equitable charge.
[249] Subrogation, notwithstanding negligence and absent injury occasioned by a charge granted by subrogation, is generally awarded: Armitage, para 24.
[250] Negligence because of mistake, carelessness or inadvertence by a claimant is commonly the basis of a claim for subrogated rights. Such carelessness or negligent misconduct accordingly is not determinative even where the entire situation arises because of the negligence of the party claiming negligence. The issue in the face of such negligence remains one of fairness: Mutual Trust para 23 and 27, Elias para 50 and Central Guaranty Trust paras 44 to 46;
[251] Even proven gross negligence by the claimant will not in every case disentitle that party to the subrogated relief requested: Mutual Trust para 28 and Brown v McLean (1989) 18 O.R. 533 p. 537.
[252] Established negligence by the party claiming a subrogated mortgage involves consideration by the court of the particular facts in each case. In the face of negligence by a claimant for a subrogated charge, the court will weigh the competing interests of and may prefer the interests of:
a. A negligent claimant and grant an equitable charge of property, over;
b. An innocent recipient of a windfall enrichment;
where:
a. There is no juristic reason to allow the recipient to retain the money; and
b. The recipient of the windfall enrichment cannot demonstrate prejudice in being required to relinquish the disputed funds: Central Guaranty Trust paras 44 and 45.
[253] Prejudice to the recipient of the windfall enrichment can often be redressed by limiting a subrogation claimant’s rights to the amount it advanced to discharge the recipient’s former charge: Midland Mortgage, para 19 and Elias para 51.
[254] Courts tend to grant subordinated equitable relief notwithstanding very clear established negligence by the claimant even where their use of ordinary care might have prevented the need for that relief, where such equitable relief would not cause injury to the party against whom the relief is granted: Mutual Trust: para 28
[255] In weighing the competing interests of a negligent claimant and an innocent recipient of a windfall enrichment, courts often prefer the interest of the claimant of equitable relief where the recipient of the money cannot demonstrate prejudice in being required to relinquish the disputed funds: Central Guaranty Trust para 45.
[256] The above law and the evidence in this case favor the granting of equitable relief based upon RBC’s payment of Ms. Ghraoui’s liabilities, TD #4 and TD #5 totalling $721,234, the latter of which was secured by TD #5 against the Property, her admitted knowledge that such TD loans and mortgages were being transferred to RBC and her subsequent knowledge that such TD liabilities had in fact been paid off.
[257] The remedy of subrogation should not be denied on this basis.
WHETHER ALTERNATE REMEDIES PREVENT GRANTING EQUITABLE MORTGAGE BY SUBROGATION
[258] Ms. Ghraoui submits RBC should not be granted an equitable charge of the Property as it has other recourse against Mr. Yassine to recover the money it advanced.
[259] RBC holds the consent judgment against Mr. Yassine totalling $968,004, which includes the $721,234 in issue which Ms. Ghraoui owed to TD.
[260] The value of such a judgment against an individual depends upon the ability to recover all or part of the same. A judgment for a monetary sum normally is of lesser value than a registered and enforceable charge of real property, particularly where the value of the security approaches, equals or exceeds the liability.
[261] Lending institutions do not incur the cost and risk of litigation if the realizable asset value of Mr. Yassine is sufficient to satisfy RBC’s consent judgment against him.
[262] The availability of alternate recourse to the claimant of equitable relief is one factor for the court to consider as to the competing interests of the parties and the court’s determination as to what is just and equitable in the circumstances. The availability of that alternate recourse is not however determinative as to whether the court may or should grant equitable relief in a given case: Armitage, para 33.
[263] Ms. Ghraoui’s liability under an equitable charge of the Property, if granted, will decrease by any recovery by RBC of the same underlying debt from Mr. Yassine.
[264] The likelihood of recovery and recourse against Mr. Yassine are unknown. That judgment and not a bar to the equitable relief claimed.
COMPENSATION FUND
[265] Ms. Ghraoui submits RBC has an alternative right to recover the monies it advanced from the insurance compensation fund under sections 57(4.2) and 57(5.1) of the Land Titles Act, because the RBC Charge is a forgery. In this regard, Ms. Ghraoui relies upon the decision in Lawrence v. Wright, Maple Trust, et al., 2007 ONCA 74.
[266] Those provisions of the LTA state:
S. 57(4.2) - Members of the prescribed class are entitled to compensation from the insurance fund if the court under s.13 (b) orders such an instrument be deleted from the register thereby resulting in a loss to the person who has claimed compensation within 6 years of suffering such loss.
S.57( 5.1) provides that an application for compensation payment may be made within 6 years of the loss.
[267] It is now more than 6 years after the April 2011 default and nonpayment of the loan secured by the RBC Charge resulting in a loss to RBC.
[268] Equitable interests in land registered under the Land Titles system may be created, will be recognized and will be protected under the Land Titles system: Midland Mortgage para 17 and Mutual Trust para 30 and 32.
[269] The Land Titles compensation fund is only a potential alternate remedy if the court at trial concludes that Ms. Ghraoui’s signature of the RBC Charge is a forgery. That remains to be decided.
[270] This conditional potential remedy is not a reason to deny the equitable remedy sought on the facts in this case.
CONCLUSION AS TO RBC’S REQUEST FOR EQUITABLE SUBROGATED CHARGE REGARDING TD #5
[271] Based on the above review and conclusions as to the evidence, the equities and the law, the court exercises its discretion and grants the remedy of subrogation in the form of an equitable charge of the Property in favor of RBC:
a. in the amount of the TD #5 liability, namely $370,804 paid by RBC to TD;
b. to include TD’s standard charge terms, No. 0280235, subject to the following;
c. with simple, not compound, interest since March 22, 2010 on the above principle amount at the rate of 3.9% per annum.
[272] Simple instead of compound interest is appropriate pending the outcome of the trial as to whether Ms. Ghraoui signed the RBC Charge.
[273] The above equitable charge shall be first priority against the Property. It is enforceable in accordance with its terms at the election of RBC notwithstanding any trial of the outstanding issues.
WHETHER TD #4 DISCHARGED IN ERROR
[274] RBC seeks a second equitable charge of the Property for the TD #4 liability of Ms. Ghraoui it paid to TD. That debt had been secured by the TD #4 Charge until TD’s discharge thereof on March 2, 2009, one year prior to the March 22, 2010, RBC Charge.
[275] RBC submits it has proven that TD discharged the TD #4 Charge in error. Ms. Ghraoui submits RBC has failed to prove that fact. She submits that discharge was intended and was not an error.
[276] The analysis of the evidence, principles and law which led to the grant of the above equitable charge by subrogation as to the TD #5 Charge is applicable to the TD #4 liability and Charge, its payment by RBC and the benefit thereby received by Ms. Ghraoui.
[277] Of interest are the facts that:
a. The TD #4 liability owed by Ms. Ghraoui to TD had always been secured by the TD #4 Charge against the Property since the extension of that credit on October 12, 2005;
b. The liability owing and secured by the TD #4 Charge in February, 2009, throughout March 2009 and thereafter remained in the range of $349,644 to $351,072 until RBC paid that full liability to TD on March 15, 2010; and
c. That $350K of liability remained outstanding for one year after and despite the discharge of the TD #4 Charge in March 2009 which secured that liability.
[278] Ms. Ghraoui submits RBC has failed to demonstrate the discharge was an error and that the evidence of Mr. Campbell does not establish such error.
[279] RBC filed an affidavit of Mr. Campbell, a business analyst at TD. Mr. Campbell in his affidavit addresses the TD #3, TD #4 and TD #5 Charges. He states therein that:
a. TD engaged and instructed First Canadian Title (“FCT”) to register the TD #5 Charge, as it was a refinancing which TD did not retain solicitors for;
b. As to those instructions to register the TD #5 Charge, TD incorrectly instructed FCT to discharge the TD #4 Charge which occurred on March 2, 2009. Those instructions were an error and should have instructed FCT to postpone the TD # 4 Charge behind the TD #5 Charge, not discharge it.
c. The TD #4 Charge postponement behind TD #5 Charge should have mirrored the postponement of the TD #3 Charge behind the TD #5 Charge, as occurred on May 19, 2009.
d. TD upon registration of the TD #5 Charge in February 2009, according to his affidavit, should thereupon have held the TD #5, the TD #4 and the TD #3 Charges against the Property. Instead and as a result of this error, TD had only registered charge TD #5 and TD #3. On cross-examination, he stated he was unsure as to that statement regarding the TD #3 Charge and would have to check.
e. The $350,000 TD #4 indebtedness secured by TD #4 Charge remained outstanding after the incorrect discharge of the TD #4 Charge on March 2, 2009, until TD’s receipt of payment of that liability together with the debt secured under the TD #5 Charge from the RBC in March 2010; and
f. The error in instructing FCT to discharge The TD #4 charge is evidenced by the continuation of the TD #4 credit facility given the amount thereof without the security of the TD #4 Charge after March 2, 2009 until payment of that liability by RBC on March 15, 2010.
[280] TD according to Mr. Campbell instructed FCT to register the TD #5 Charge and discharge the TD #4 Charge. Those instructions may apparently exist via computer but are not in evidence beyond a brief email exchange.
[281] There is a limited email exchange on February 6 and 10, 2009, of messages between TD and & FCT in which to requested the discharge of the TD #4 Charge and the registration of the TD #5 Charge.
[282] This email exchange begins with FCT asking TD on February 6, 2009 what were its instructions as to the TD #4 and TD #3 Charges then registered against the Property. An unidentified person from TD responds and instructs FCT to discharge the TD #4 Charge and to postpone the TD #3 charge behind the new TD #5 Charge to be registered.
[283] Mr. Campbell on cross-examination stated:
a. He was not involved in the origin or the administration of the TD #1 to TD #5 loans and Charges;
b. He did not speak to the TD loan officers involved in the TD #1 to TD #5 loans and Charges or as to the postponement and discharges of those charges;
c. His information was based on his review of the TD #4 loan and credit file documents along with unspecified TD computer information regarding some of the other credit facilities to Ms. Ghraoui and Mr. Yassine but he did not review the credit files as to TD #3 and TD #5;
d. He did not review the TD credit facilities of Mr. Yassine’s corporations including Express and Wireless and their $300K credit lines;
e. He did not speak to and does not know who from TD instructed FCT to discharge the TD #4 Charge on February 6, 2009 and does not know what TD’s then intention was or why that instruction was given, compared to his belief that a credit facility in that amount should not have remained extended without security; and
f. He looked for but could not find other TD documentation as to the above February 6, 2009 instruction to discharge the TD #4 Charge.
[284] As to his statement that the discharge of the TD #4 Charge was an error given the amount of that liability, Mr. Campbell in cross-examination stated:
a. He was unaware of what was happening in February, 2009 between TD, the Ottawa TD branch involved and the borrowers including Ms Ghraoui and Mr. Yassine;
b. His belief that the amount of the TD #4 liability required that it be secured was subject to the fact that there can be exceptions;
c. Later in his cross-examination, he returned to his statement that the approximate $350,000 credit extension should always have been secured as the maximum amount of unsecured TD credit facility was $50,000. He stated he would look for any internal TD policy in support of that opinion, which is not in evidence;
d. He stated that given his lack of knowledge as to the surrounding circumstances and the TD instruction to discharge the TD #4 Charge, there could potentially be explanations for the instruction to FCT to discharge that charge, but then stated that none of those explanations would lead to leaving a $350,000 line of credit open without security;
e. he then stated that customers might be able to negotiate opening a separate unsecured line of credit, but they would not be able to negotiate leaving this particular TD “product” open without security; and
f. he did not know when TD learned of their alleged mistake in discharging the TD # 4 Charge or how they responded to that.
[285] Mr. Yassine upon learning of Ms. Ghraoui’s challenge of the RBC Charge following their January 2011 separation sought written confirmation from TD to challenge her position. He obtained a letter from K. Agnew of TD Private Client Services, dated March 18, 2011.
[286] Ms. Agnew states therein that upon registration of the TD #5 Charge, the TD #4 Charge was thereupon to have been postponed behind TD #5. She states that TD’s March 2, 2009 discharge of the TD #4 Charge was an error and that the TD #4 Charge should then have been postponed in priority behind the TD #5 Charge.
[287] It seems unusual that a bank would extend credit of $350,000 without security, particularly given this history of secured TD lending to these parties. However this is approaching impermissible speculation involving these two individuals, their multiple personal loans and those of related corporations with that lender over a 10 year period.
[288] The uncertainty and therefore problem with the evidence from Mr. Campbell as to the discharge of the TD #4 Charge and the relationship of that loan facility to the TD #3 and TD #5 loans and charges is his lack of involvement and therefore knowledge. That is not surprising given that his TD career to date is in Mississauga; whereas the Property, the parties and their dealings with TD were in Ottawa.
[289] What is absent is information from the Ottawa TD representatives who dealt with and administered the TD # 3, the TD #4 and the TD # 5 Charges and loans to Ms. Ghraoui, Mr. Yassine and his related corporations which were secured against her Ottawa property, including what was discussed and determined.
[290] What is important and missing is who from TD gave FCT the instruction to discharge the TD # 4 Charge and why. That missing information addresses the issue whether this discharge was an error, when was that learned and what was TD’s response thereto during the following year until March of 2010.
[291] The court has no information as to the level of personal involvement or knowledge of Ms. Agnew in these matters and should not be deciding an issue of this value based upon her short letter without explanation as to her conclusion therein.
[292] The answers to the above questions undoubtedly exist but are not before the court.
[293] This is not a case of refusing summary judgment because more information may be available, which is not the test on a summary judgment motion. What is missing is the relevant and informative information available as to this issue whether this discharge was an error or intended.
[294] RBC has failed to present that available relevant TD information which addresses whether the discharge of TD #4 Charge was a mistake.
CONCLUSION AS TO RBC SUMMARY JUDGMENT MOTION REGARDING TD # 4
[295] RBC’s motion for an equitable charge by subrogation as to the $350K, TD #4 liability is accordingly dismissed. A trial of the issue whether the TD #4 Charge was discharged in error is required. If successful at trial in establishing that error, it will then be necessary to decide whether RBC is then entitled under subrogation to a second equitable charge.
[296] RBC is however granted judgment against Ms. Ghraoui:
a. in the amount of $350,429 being the amount of her TD #4 liability paid for her benefit by RBC; plus
b. prejudgment interest from the date this cause of action arouse, in accordance with s. 128 of the Courts of Justice Act, R.S.O. 1990, c. C.43, having taken into consideration the provisions of s. 130(2) and subsection (2)(b) in particular.
[297] The trial whether this discharge was an error and whether RBC is entitled to a further subrogated equitable charge will proceed in the trial of the issue whether Ms. Ghraoui signed the RBC Charge.
[298] Counsel can consent to an order settling the steps and time frame to bring these matters to trail or bring a motion before this court to determine the same.
STATUS OF RBC CHARGE
[299] Given the court’s award of an equitable charge to RBC by subrogation as to the TD #5 Charge and RBC’s agreement in argument given that result, the RBC Charge is declared a nullity and shall be removed from title of the Property by the Office of the Land Registrar. That discharge however is without prejudice to the trial of the above outstanding issues.
[300] Ms. Ghraoui is prohibited from encumbering the Property without prior court order prior to the trial decision of the above issues in order to protect the unencumbered interest therein and its value should the court at trial grant a further subrogated charge to RBC.
COSTS
[301] Logically, the costs of these motions should await the outcome of trial.
[302] Either party seeking costs now however shall serve and file written submissions within 30 days which shall include a R. 57.07.01(7) cost outline with a chronology of services provided and hourly rates charged. Any reply thereto will be served within 20 days thereafter.
Mr. Justice Paul Kane
Released: 2017/08/29
CITATION: Grahoui v. Yassine, 2017 ONSC 5108
COURT FILE NO.: 11-50594
DATE: 2017/08/29
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROLA GHRAOUI
Plaintiff
– and –
MARK YASSINE (a.k.a. MOHAMED YASSINE, MOHAMAD IHAB YASSINE, MARK MOHAMAD YASSINE, IHAB YASSINE), BRIGHTEL VOIP SERVICES COPR., 3217400 CANADA INC., EXPRESS CELLULAR INC., X MARK GROUP, BRIGHTEL, JANE DOE and ROYAL BANK OF CANADA
Defendants
SUMMARY JUDGMENT MOTIONS
Kane J.
Released: 2017/08/29