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 the bona 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. The interview contains a fairly detailed discussion about the implications of the lower court ruling to the integrity of the land titles system had it not been overturned, commentary on the implications of Bill 27 at second reading stage before the Ontario Legislature in early 2017 (and which proposes further pertinent changes to theLand Titles Act), as well as a general discussion about mortgage and title fraud and the “insurance principle” of the land titles system.
Link to Article
Update on a Morgage Priority Appeal: TheCourt.ca Interviews Ben Frydenberg,
counsel in CIBC vs Computershare by Patricia Joseph on January 23, 2017