





CITATION:
Elle Mortgage
          Corporation v. Roscoe, 2011 ONCA 254



DATE: 20110405



DOCKET: C52777 and C53112



COURT OF APPEAL FOR ONTARIO



Armstrong, Juriansz and Watt JJ.A.



BETWEEN



Elle Mortgage Corporation



Plaintiff (Respondent in Appeal)



and



Peter Karl Roscoe



Defendant (Appellant)



AND BETWEEN



Peter Karl Roscoe



Plaintiff by Counterclaim
          (Appellant)



and



Elle Mortgage Corporation
,
Terry M. Walman
and
Sub-Prime Mortgage Corporation




Defendants by Counterclaim (
Respondents
in Appeal)




Peter Roscoe, in person



Glenn E. Cohen, for the respondent Elle Mortgage Corporation
          and Sub-Prime Mortgage Corporation



Joseph Y. Obagi, for the respondent Terry Walman



Heard: March 23, 2011



On appeal from the judgment of
          Justice A.J. Roy of the Superior Court of Justice, dated September 30, 2010
          (C52777), and the order of Justice V. J. MacKinnon of the Superior Court of
          Justice, dated October 28, 2010 (C53112).



ENDORSEMENT



[1]

Roscoe is the appellant in two appeals.  He contests the summary judgment of Roy J.
    granting possession of real property he owned to the respondent Elle Mortgage
    Corporation and dismissing his counterclaim against Elle and Sub-Prime Mortgage
    Corporation. He also appealed the order of MacKinnon J striking his statement
    of defence and counterclaim against the respondent Walman.

[2]

Roscoe also brought a motion to admit fresh
    evidence, which was initially opposed.  However, as both Roscoe and counsel for the respondents made generous
    reference to the fresh evidence, we admitted it.

[3]

The thrust of Roscoe's position, the foundation
    of all of his arguments in relation to both appeals, is that his arrangement of
    a first mortgage with Elle and a second mortgage with Sub-Prime were a single
    package that was divided into the two mortgages by Walman. He argues that since
    the two mortgages were intrinsically linked, that it was the failure of Sub-Prime
    to advance funds that caused him to default on the Elle mortgage.

[4]

The action for possession was brought by Elle.
    The appellant involved Sub-Prime in the litigation by his counterclaim.

[5]

Having both mortgages disbursed at the same time
    was undoubtedly important to Roscoe's business plan. This may have caused him
    to lose sight of the fact that he arranged two separate mortgages. The
    documents he received from his broker when the financing was first arranged set
    out clearly and in detail that there would be two separate mortgages. Roscoe
    signed an acknowledgment of the arrangements in regard to each of the
    mortgages. He signed two separate mortgages and, contrary to his assertions, he
    received copies of two mortgages. In November, 2009, when Roscoe first
    protested there was a second mortgage, his broker reminded him in an e-mail
    that he had signed a letter arranging the second mortgage, that he had received
    a copy of the terms of the second mortgage when he met with his own lawyer, and
    that a copy of the executed second mortgage had been provided to him.

[6]

The mortgage terms that Roscoe executed
    authorized Sub-Prime to register the mortgage before disbursing the funds. Sub-Prime's
    subsequent refusal to advance funds was due to Roscoe's own failure to remove
    an execution filed by the Family Responsibility Office (FRO) on the property
    and to provide a fresh appraisal. The evidence establishes that he was well
    aware of both these requirements. Contrary to his oral submission that Sub-Prime
    should have disbursed funds to remove the execution, his lawyer's letter dated
    July 24, 2009 shows that he gave instructions that funds were not to be
    remitted with respect to the FRO execution.

[7]

In his oral submissions, the appellant submitted
    strenuously that the Sub-Prime mortgage should have been discharged. However,
    the evidence establishes that prior to the commencement of the litigation,
    Roscoe never asked for its discharge. To the contrary, the evidence indicates
    that he continued to press for funds to be advanced under the Sub-Prime
    mortgage.

[8]

Roscoe did allude to the discharge of the Sub-Prime
    mortgage in his defence and counterclaim. In its defence, Sub-Prime pleaded
    that it was ready and willing to provide a discharge upon payment of its costs
    of defending Roscoe's counterclaim.

[9]

Significantly, Roscoe filed no evidence that the
    registration of the Sub-Prime mortgage interfered with his ability to arrange a
    different second mortgage. He simply submitted that with the Sub-Prime mortgage
    registration, he was maxed out. He gave no indication of having considered
    that a new second mortgage might be arranged on the basis that the Sub-Prime
    mortgage would be removed from title on or before closing. The only documentary
    evidence on this point in the record indicates that the appellant was offered a
    complete refinancing of the property. While he explained why he refused the
    refinancing, the offer of the mortgage broker indicates the Sub-Prime mortgage
    on title was not an impediment. The offer notes only the total of the actual
    charges outstanding against the property.

[10]

The material before Roy J. left no doubt that
    the Elle mortgage was in default and that Sub-Prime's withholding of the
    mortgage funds was due to Roscoe's own failures.

[11]

In the second appeal, Roscoe's claim against
    Walman was properly struck as disclosing no cause of action. Roscoe made a
    litany of complaints against Walman, but could substantiate none of them. For
    example, Roscoe said he did not know who acted for Sub-Prime and that Walman
    refused to tell him. However, Roscoe could not point to any document which
    showed he asked Walman if he acted for Sub-Prime, and documents Roscoe tendered
    as fresh evidence show that his own broker advised him at the outset that
    Walman acted for both Elle and Sub-Prime.

[12]

Roscoe's inability to substantiate his
    complaints is beside the point because, on a pleadings motion, the allegations in
    the claim must be taken to be established. The pleadings point is that Walman
    had no duty of care to Roscoe. Walman acted for Elle and Sub-Prime. Roscoe was
    represented by his own lawyer and had his own mortgage broker. Walman had no
    duty to Roscoe to disburse the Sub-Prime mortgage, but rather had a duty to his
    client Sub-Prime to refuse to disburse the mortgage funds until Roscoe
    fulfilled the requirements of removing the FRO execution and providing a fresh
    appraisal. Roscoe has no cause of action against Walman.

[13]

The court expressed concern about certain
    aspects of the case. It is doubtful that, absent default on the second
    mortgage, Sub-Prime was entitled to treat its mortgage as security for the
    costs of defending the counterclaim. Elle and Walman provided no explanation
    why Roscoe was never provided with a statement accounting for the proceeds of the
    sale of his property. At the courts direction, a statement was obtained and
    provided to him. These concerns, however, do not affect the resolution of the
    issues raised and the outcome of the appeals. Counsel for Walman and Elle each
    gave the court their personal undertaking that they would bring an interpleader
    motion within 30 days in regard to the  proceeds of the sale of the property.

[14]

Both appeals are dismissed.  The respondent, Elle Mortgage Corporation,
    shall have its costs of the appeal and three interlocutory motions fixed in the
    amount of $15,000 inclusive of disbursements and applicable taxes.  The respondent, Terry M. Walman, shall have
    his costs of the appeal fixed in the amount of $5,000 inclusive of disbursements
    and applicable taxes.

Robert
    P. Armstrong J.A.

Russell
    Juriansz J.A.

David
    Watt J.A.


