The subject of the interview is a successful appeal from a lower court decision which granted priority to Computershare over CIBC, where Computershare’s mortgage had been fraudulently discharged by the property owners more than two years before CIBC obtained what it thought to be a first ranking charge. As the property was in the land titles system, CIBC had contended that it was entitled to rely on the register which showed it in first position. The judge at first instance found that because the property owners had given a first mortgage to Computershare, they could not legally give a first ranking charge to CIBC, and as such, CIBC’s mortgage was a “fraudulent instrument”. On appeal, the Divisional Court agreed that the CIBC mortgage could not be a fraudulent instrument as it was obtained from thebona fide owners of the property, and not from a fraudster who lacked good title to the property. While the Computershare mortgage discharge was fraudulent and of no effect, its mortgage was reinstated in a subordinate position to CIBC, as CIBC was entitled to rely on the mirror and curtain principles, which were basic principles of the land titles system allowing CIBC to treat the register as an accurate mirror of title, and did not require them to go behind the curtain of the Computershare discharge to further investigate its validity.
Link to Article:
Divisional Court overturns mortgage priority decision by Alex Robinson on December 16, 2017