





CITATION: Isaacs v. Royal Bank of
      Canada, 2011 ONCA 88



DATE: 20110201



DOCKET: C52454



COURT OF APPEAL FOR ONTARIO



OConnor A.C.J.O., MacPherson and Cronk JJ.A.



BETWEEN



Angelita Isaacs



Plaintiff/Appellant



and



Royal Bank of Canada



Defendant/Respondent



AND BETWEEN



Royal
          Bank of Canada



Plaintiff by Counterclaim



and



Angelita
          Isaacs
and Mark Anthony Forrest



Defendants to the Counterclaim







Avrum D. Slodovnick, for the plaintiff/appellant /defendant
          to counterclaim, Angelita Isaacs



Leigh Ann Sheather, for the defendant/respondent/plaintiff
          by counterclaim



Heard and released orally: January 28, 2011



On appeal from the judgment of Justice Anne M. Molloy of the
          Superior Court of Justice, dated June 17, 2010.



ENDORSEMENT



[1]

Angelita Isaacs (the appellant) appeals from the motion judges ruling
    on a summary judgment motion dismissing her action and granting the respondent Banks
    counterclaim for damages in respect of monies owed under a residential
    mortgage.

[2]

The central issue is who, as between two allegedly innocent victims of
    mortgage fraud (the appellant and the Bank), should bear the loss occasioned by
    the fraud.  The appellant contends that, in this case, the Bank was in the
    superior position to avoid the fraud and therefore should bear its own loss. 
    The motion judge rejected this argument, holding that it was the appellant who
    was in the best position to detect and prevent any fraud.

[3]

We agree.  A simple review by the Bank of the mortgage documents
    submitted by or on behalf of the appellant could not and did not reveal any
    prospect of fraud to the Bank.  In sharp contrast, as the motion judge found,
    had the appellant taken the simple precaution of reading the many documents she
    signed, the fraudulent nature of the mortgage transaction would have been
    immediately apparent.  There was ample evidence on this record to support the
    motion judges finding that the appellant was in the best position to detect
    and prevent the fraud.

[4]

Moreover, contrary to the appellants submission, this is not a case involving
    two equally innocent parties.  The appellant was not entirely innocent of any
    wrongdoing.  She agreed to serve as an accommodation mortgagor for a stranger,
    for compensation, without disclosure to the Bank of the nature of the
    transaction.

[5]

The motion judge found that, in so doing, the appellant assisted the
    fraudsters to perpetuate the fraud even if she did not know the particulars of
    the transaction.  This finding was open to the motion judge on the evidence.

[6]

The Banks conduct, at its highest, was careless.  But the appellants
    conduct was more than careless.  It involved affirmative action on her part
    that facilitated the fraud.  This is a significant distinction between the
    nature of the parties conduct.

[7]

This factor also distinguishes this case on the facts from
Marvco
    Colour Research Ltd. v. Harris
, [1982] 2 S.C.R. 774, where two innocent
    parties fell victim to fraud by third parties.  In this case, as we have said,
    both parties were careless.  However, both parties were not innocent of any
    wrongdoing.  On these facts, where the carelessness of one party involves active
    participation in the fraudulent scheme and results in the wrongdoing being able
    to inflict the loss, that party must bear the burden of the loss.

[8]

Further, as the motion judge found, the appellant in the end got what
    she bargained for.  She received $6,000 for her assumption of the risk of
    making payments on the mortgage.  That is the risk that eventually
    materialized.

[9]

The appellant relies on several deferred indefeasibility cases to
    argue that, as the Banks carelessness in this case was at least equal to that of
    the appellant, the Bank should not be permitted to escape all contributory
    liability for the outstanding mortgage debt.

[10]

In our view, these cases do not assist the appellant.  They involve
    theft of the identities of persons who had no involvement in the fraudulent
    activity that effected the frauds.  In contrast, as we have indicated, in this
    case the appellants participation was part of the fraudulent scheme itself. 
    Her actions directly contributed to the Banks advance of funds to its
    detriment.

[11]

In all these circumstances, the motion judge did not err in concluding
    that there was no genuine issue requiring a trial in this case.

[12]

The appeal is therefore dismissed.  In our view, this is not an
    appropriate case for an award of the costs of the appeal.

Dennis
    OConnor A.C.J.O.

J.C.
    MacPherson J.A.

E.A.
    Cronk J.A.


