Court File and Parties

COURT FILE NO.: CV-22-00684976 DATE: 20240226 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: MENGCHONG SUN and ZHAOPING LIU, Applicants -and- RYAN MORTGAGE INCOME FUND INC. and THE DIRECTOR OF TITLES, Respondents

BEFORE: FL Myers J

COUNSEL: Jennifer Vrancic, counsel, for the Applicants

HEARD: February 26, 2024

Endorsement

[1] This application is unopposed. The applicants ask the court to direct the Director of Titles to rectify the register under s.57 (13) of the Land Titles Act, RSO 1990, c L.5.

[2] The applicants ask the court to find that the mortgage registered against their home as Instrument No. PR3905413 is void and a fraudulent instrument.

[3] Under s. 57 (13) of the statute, to obtain relief, the applicants are required to establish one of the following facts:

(a) a registered instrument would be absolutely void if unregistered;

(b) the Director of Titles or a court, as the case may be, is satisfied, on the basis of evidence that the Director of Titles specifies or the court orders, that a fraudulent instrument has been registered on or after October 19, 2006; or

(c) the effect of the error, if not rectified, would be to deprive a person of land of which the person is legally in possession or legally in receipt of the rents and profits.

[4] A fraudulent instrument is defined in s. 1 of the statute as follows:

“fraudulent instrument” means an instrument,

(a) under which a fraudulent person purports to receive or transfer an estate or interest in land,

(b) that is given under the purported authority of a power of attorney that is forged,

(c) that is a transfer of a charge where the charge is given by a fraudulent person, or

(d) that perpetrates a fraud as prescribed with respect to the estate or interest in land affected by the instrument;

[5] A fraudulent person is defined to include someone who forges an instrument.

[6] The mortgage is in the applicants’ names. But, they say, with solid evidence, that they never signed it. The identification provided by the borrowers to the mortgagee was forged. The signatures on the mortgage documents were not their signatures. They were forged. They did not receive the mortgage advance.

[7] The title insurer for the mortgagee apparently investigated and does not contest these facts.

[8] It therefore appears that the subject mortgage is a fraudulent instrument as it was forged. I find it was therefore given by a fraudulent person and it perpetuates a fraud.

[9] I am satisfied that this is a proper case in which to grant the order sought.

[10] The respondents required the applicants to bring this proceeding to remove the fraudulent mortgage from title to their property. The applicants commenced the application in October, 2022. Because of the shortage of judges hearing civil matters in Toronto, the applicants had to wait until today for this matter to be heard.

[11] It is not clear to me why the mortgagee did not simply discharge its mortgage upon accepting that the applicants and the mortgagee had been defrauded. Similarly, the Director of Titles did not make the decision that was open to him to make under the same section of the statute under which the court has acted.

[12] The true identities of the fraudsters are not known. They are not parties to this proceeding. They are not before the court. I have no better evidence than was presented to each of the respondents and their investigators. In fact, I probably have somewhat less evidence than is in their files.

[13] Neither respondent opposes the relief sought. So why didn’t they act to remove the forged mortgage themselves?

[14] If there was a reason that the mortgagee and the Director of Titles were not willing to act, perhaps they ought to have told me. Otherwise, there is no apparent reason why they felt it necessary to require the applicants to endure the court’s 16-month backlog and to incur unrecoverable costs to obtain the cover of a court order rather than making the decision themselves.

[15] Moreover, both the mortgagee and the Director of Titles could have consented to the relief sought rather than saying they were “unopposed.” Had they consented to the relief sought, the matter could have been heard in writing more than a year ago. Instead, they chose to leave the court to wonder if anything was preventing them from accepting the applicants’ evidence other than a bureaucratic desire to have someone else take responsibility for the decision that each of them was empowered to make without the need for this proceeding. They each had counsel and yet neither instructed their counsel to attend to make submissions to explain why they required the applicants to bring this proceeding or why they were not consenting to it.

[16] Absent a good reason to require this matter to come to court, it appears to have been an unnecessary proceeding. Moreover, it seems cruel to have required the applicants to wait from October, 2022 until today to obtain the relief that the respondents themselves could have granted without the cost or delay of this lawsuit.

[17] Given that the public knows about this court’s backlog and constrained resources, the respondents’ decisions to require the applicants to bring this unnecessary proceeding could have attracted costs sanctions against them under Rule 57.01 of the Rules of Civil Procedure.

[18] Had I been asked and had notice been given, I would have considered a request to order the mortgagee and the Director of Titles to pay the applicants’ full costs. Both respondents had the ability to obviate the need for these apparently unnecessary proceedings.

[19] The applicants’ counsel submitted that they just want the matter concluded. So they do not seek costs today.

[20] The Director of Titles knows that he is a mandatory and necessary party to this type of proceeding under s. 57 (14) of the statute. He therefore appears to be at least prima facie subject to the court’s discretion to award costs under s. 131 of the Courts of Justice Act.

FL Myers J Date: February 26, 2024