



COURT OF APPEAL FOR ONTARIO

CITATION: Concentra Financial Services Association v.
    Rawling, 2017 ONCA 348

DATE: 20170501

DOCKET: C62864

Juriansz, Pepall and Miller JJ.A.

BETWEEN

Concentra Financial Services Association

Plaintiff (Respondent)

and

Kenneth Rawling

Defendant (Appellant)

Michael S. Deverett, for the appellant

Benjamin Frydenberg, for the respondent

Heard and released orally: April 26, 2017

On appeal from the judgment of Justice D.K. Gray of the
    Superior Court of Justice, dated October 4, 2016 and the costs endorsement
    dated October 17, 2016.

ENDORSEMENT

[1]

The appellant appeals from the October 4, 2016 judgment granting summary
    judgment to the respondent and ordering the appellant to pay approximately
    $311,000 on account of a mortgage debt.  In addition, the motions judge dismissed
    the appellants counter-claim seeking a refund of the payments he had made to
    the respondent on the mortgage.

[2]

The motions judge found that the appellant was a direct participant in
    the shady transaction in issue.  The true owner of the property was Edwards but
    he could not qualify for a mortgage.  The appellant therefore put himself
    forward as the face of the purchase.  He obtained a letter verifying his income
    from his place of employment, he supplied Canada Revenue Agency (CRA) notices
    of assessment to the respondent and signed all documents knowing that he would
    be taking title and signing the mortgage in favour of the respondent.  Indeed,
    he signed a statutory declaration in which he was identified as both the
    purchaser and mortgagor of the property.  Significantly, the appellant was paid
    $5,000 for his participation knowing that he was assuming the risk of payment
    if Edwards failed to make payments on the mortgage.

[3]

When that eventuality arose, the appellant paid some arrears and then
    made the regular monthly payments on the mortgage for seven years.  He did not
    disavow his obligation to the respondent.  In September 2015, the mortgage went
    into default and the respondent sued and subsequently moved for summary
    judgment.

[4]

The appellant brought a cross-motion for summary judgment on his
    counter-claim.  The motions judge granted the summary judgment motion requested
    by the respondent and dismissed that of the appellant.

[5]

The appellant advances, in essence, two grounds of appeal.  First, he
    asserts that the motions judge failed to apply rule 20.02 because the
    respondent did not provide evidence of a witness with personal knowledge of the
    contested facts and the motion judge ought to have drawn an adverse inference
    against the respondent.  Moreover, the respondent should have been sanctioned
    for its failure to produce relevant documents.

[6]

We disagree.

[7]

Rule 20.02 is discretionary and not mandatory.  The motions judge
    considered the appellants argument and dismissed it, noting that there was no
    real dispute on the facts and no dispute that the appellant had signed the
    mortgage.  Approximately three weeks prior to the hearing of the summary
    judgment motions, the respondent produced its entire file to the appellant. 
    There was no evidence that the respondent had actual knowledge of a mortgage
    fraud prior to advancing funds.  The respondent offered to produce a witness
    from its indemnity department but the appellant did not proceed with an
    examination.  Moreover, even if the respondent could and should have uncovered
    the fraud prior to advancing funds, given the appellants active participation,
    the respondents role would not provide a defence to the appellant.

[8]

We could not give effect to this ground of appeal.

[9]

Secondly, the appellant submits that a mortgage based on a fraudulent
    agreement of purchase and sale is unenforceable.  There is no suggestion here
    that the vendor was not paid for the purchase of the property in the
    appellants name or that the mortgage proceeds given by the respondent were not
    used to fund the purchase of the property.  The appellant was not an innocent
    party and the transfer and the mortgage are valid instruments.  Moreover, no declaration
    that the mortgage was unenforceable was sought by the appellant in its
    counter-claim.

[10]

Lastly, in his factum, the appellant seems to submit that the motions
    judge erred in failing to impute the lawyer Gertners knowledge to the
    respondent.  The motions judge considered this issue in considerable detail and
    concluded that Gertners involvement did not assist the appellant because his
    actions represented those of Edwards and the appellant in fraudulently
    representing to the respondent that the mortgage was what it appeared to be and
    that the appellant was the true mortgagor and responsible for the payments.  We
    see no palpable and overriding error in the motions judges findings of fact.

[11]

For these reasons, the appeal is dismissed with costs as agreed, on a
    substantial indemnity scale fixed in the amount of $11,911.31 to be paid to the
    respondent.

R. Juriansz J.A.

S.E. Pepall J.A.

B.W. Miller J.A.


