Scotia Mortgage Corporation v. Aab, 2012 ABQB 464

Court of Queen ’ s Bench of Alberta Citation: Scotia Mortgage Corporation v. Aab, 2012 ABQB 464 Date: 20120718 Docket: 0801 11586, 0801 15769, 0801 15772, 0901 08795, 0901 02613, 0801 11583, 1001 06815, 0801 13889, 0801 14525 Registry: Calgary Between: Action No. 0801 11586 Scotia Mortgage Corporation Plaintiff - and - Paula Aab Defendant And Between: Paula Aab Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim

- and - Christopher Souster, Bernadette Lim, Alana Korek, Nirvana Condo Developments Ltd. and Firzana Kanji Defendants by Counterclaim Between: Action No. 0801 15769 Scotia Mortgage Corporation Plaintiff - and - Clark Andersen and Melodie Schilling Defendants And Between: Clark Andersen and Melodie Schilling Plaintiffs by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Firzana Kanji, Christopher Souster, Bernadette Lim,

Alana Korek, Nirvana Condo Developments Ltd. and Gary Wojiechowski Defendants by Counterclaim Between: Action No. 0801 15772 Scotia Mortgage Corporation Plaintiff - and - Trevor Foster and Carrie Adams-Foster Defendants And Between: Trevor Foster and Carrie Adams-Foster Plaintiffs by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Firzana Kanji, Christopher Souster, Bernadette Lim, Alana Korek, Nirvana Condo Developments Ltd. and Gary Wojiechowski Defendants by Counterclaim

Between: Action No. 0901 08795 Scotia Mortgage Corporation Plaintiff - and - Mila Graham Defendant And Between: Mila Graham Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Firzana Kanji, Christopher Souster, Bernadette Lim, Alana Korek, Nirvana Condo Developments Ltd. and Gary Wojiechowski Defendants by Counterclaim Between: Action No. 0901 02613 Scotia Mortgage Corporation

Plaintiff - and - Kenneth Power Defendant And Between: Kenneth Power Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Firzana Kanji, Christopher Souster, Bernadette Lim, Alana Korek, Defendants by Counterclaim Between: Action No. 0801 11583 Scotia Mortgage Corporation Plaintiff - and -

Mike Rezansoff Defendant And Between: Mike Rezansoff Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Roma Aijaz, Christopher Souster, Bernadette Lim, Curtis Long and Malek Farah Defendants by Counterclaim Between: Action No. 1001 06815 Scotia Mortgage Corporation Plaintiff - and - Fedelita Sinoy Defendant And Between: Fedelita Sinoy

Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim - and - Scotia Mortgage Company, Christopher M. Souster, Christopher M.A. Souster Professional Corporation, Bernadette Lim, Nirvana Condo Developments Inc., Alana Korek Rafeat Kanjiand John or Jane Doe Defendants by Counterclaim Between: Action No. 0801 13889 Scotia Mortgage Corporation Plaintiff - and - Kevin Williams and Mary-Jane Block Defendants And Between: Kevin Williams and Mary-Jane Block Plaintiffs by Counterclaim - and -

Scotia Mortgage Corporation Defendant by Counterclaim - and - Firzana Kanji, Christopher Souster, Bernadette Lim, Alana Korek, Nirvana Condo Developments Ltd., and Gary Wojiechowski Defendants by Counterclaim Between: Action No. 0801 14525 Scotia Mortgage Corporation Plaintiff - and - Ryan Wright Defendant And Between: Ryan Wright Plaintiff by Counterclaim - and - Scotia Mortgage Corporation Defendant by Counterclaim

- and - Firzana Kanji, Christopher Souster, Bernadette Lim, Alana Korek, Nirvana Condo Developments Ltd., and Gary Wojiechowski Defendants by Counterclaim _______________________________________________________ Memorandum of Decision of J.L.

Mason, Master in Chambers _______________________________________________________ Introduction [ 1 ] The defendants in these nine actions were straw buyers in a classic mortgage fraud scheme involving three condominium complexes in southwest Calgary. [ 2 ] Each of the defendants were paid $3,000.00 or $5,000.00 to apply to the plaintiff, Scotia Mortgage Corporation, for mortgage financing to purchase the condominium units. Some were told that new immigrants with employment wanted to purchase the units, but given their recent arrival could not themselves qualify for mortgage financing.

Others were told that the units were being

renovated and would be flipped for a profit, and others simply that it was an “investment opportunity”. [ 3 ] In every case, the defendants were assured by Alana Korek or Malek Farah, the purported representatives of condominium developers, that although their names would go on the mortgage, they would never be required to make the payments.

They were told that the condominium developers would make all mortgage payments pending the transfer to others, which would take place shortly after the placing of the mortgage. [ 4 ] Predictably, there were no such buyers and the condominium developers did not make the mortgage payments.

The mortgages signed by the defendants went into default and the bank commenced foreclosure proceedings. [ 5 ] All the units were sold to the bank by previous order at their respective appraised fair market values, and those values credited to the outstanding mortgage balance in each action. [ 6 ] The bank now applies for deficiency judgment against each of the defendants, and dismissal of the counterclaims filed against the bank.

The parties consented to an order directing that the applications be heard together in one special chambers application, given the commonalities in parties and facts. [ 7 ] The defendants submit the bank’s evidence is insufficient to support the final relief sought. They further assert that there are genuine issues for trial in regard to the application of section 43(4.1) of the Law of Property Act , R.S.A. 2000, c.

L-7, the knowledge and involvement of agents and employees of the bank in the fraudulent scheme, and the application of the principles of non est factum . [ 8 ] For the reasons that follow, the bank’s applications are dismissed. There are genuine issues for trial. Test for

Summary Judgment [ 9 ] Rule 7.3 of the Alberta Rules of Court provides that a party may apply for

summary judgment in respect of all or part of a claim, on the ground that there is no merit to a claim or part of it. [ 10 ] The bar on a motion for

summary judgment is high: Canada (Attorney General) v. Lameman , 2008 SCC 14 , [2008] 1 S.C.R. 372 . A party bringing a motion for

summary judgment bears the legal onus of showing no genuine issue for trial: Murphy Oil Co. v. Predator Corp. , 2006 ABCA 69 , 384 A.R. 251 . [ 11 ] Several defences have been raised, but only some were advanced by the defendants in response to these applications by the bank. In the context of these applications, the court must determine the following questions: Is the bank’s evidence sufficient to support the final relief sought? Is there a genuine issue for trial as to the application of section 43(4.1) of the Law of Property Act ?

Is there a genuine issue for trial as to the knowledge or participation by the bank’s agents or employees in the fraudulent scheme? Is there a genuine issue for trial as to the application of the principles of non est factum ? [ 12 ] I will address each question in turn.

Is the bank’s evidence sufficient to support the final relief sought? [13] Rule 13.18(3) provides that if an affidavit is to be used in support of an application that may dispose of all or part of a claim,the affidavit must be sworn on the basis of personal knowledge. [14] The defendants point out that the bank’s deponent, Jan Austen: had no role in the approval or granting of the mortgages; wasnot present at their execution; was not present when financial information was provided by the defendants; was not present during anydiscussions that may have taken place between the defendants and others referenced in the defendants’ affidavits; and has no knowledgeof who the defendants were dealing with or whether any of the defendants actually executed or understood the terms of the mortgage. [15] Affidavits of default in foreclosure actions are routinely sworn by representatives of the bank who were not personallyinvolved in the mortgage transaction at issue.

Generally, these deponents have access to the relevant books and records of the bank andare informed of the requisite elements of the relief claimed (the mortgage, insurance details, the advance, the default and the amountoutstanding), based on review of the business records of the bank. Thus, their affidavits typically meet the requirements of Rule 13.18(3):see for example, Alberta Treasury Branches v. Leahy (1999), 1999 ABQB 185 , 234 A.R. 201 (Q.B.) at paragraphs 45-60,citing Advance Rumely Thresher Co. v. Laclair, [1917] 1 W.W.R. 87 (Alta. C.A.); Alberta Treasury Branches v.

Wenley Enterprises& Sales Ltd. (1985), (AB KB), 66 A.R. 232 (Master); Bank of Montreal v. Beacon Industrial DevelopmentCorp.(1986), (AB KB), 70 A.R. 218 (Master); Principal Savings & Trust (Liquidator of) v. Bowlen (1991), 1 C.P.C.(3d) 206 (Alta. Q.B.); Federal Business Development Bank v. Caskey (1992), (AB KB), 1 Alta. L.R. (3d) 58(Master); and Alberta Treasury Branches v. Wenley Enterprises & Sales Ltd. (Master). [16] Here, in regard to each action, Ms. Austen deposes that she is a Branch Manager with the Bank of Nova Scotia, the parent ofScotia Mortgage Corporation.

She states in her answers to interrogatories that her information as to what took place in regard to themortgages is based in part on her review of documents maintained by the bank in the ordinary course of business. She exhibits copies of:the mortgage; the title showing the registration of the mortgage; insurance details; the credit application; the credit agreement; andfinancial information relating to each of the defendants. Ms. Austen also deposes to the advance of the mortgage proceeds and the defaultin payment in each action. [17] Ms.

Austen’s affidavits and exhibited records make out a prima facie case in support of the bank’s applications for deficiencyjudgment in these actions. Whether or not the bank has met its burden of establishing that there is no genuine issue for trial is a separatequestion and is discussed below. Is there a genuine issue for trial as to the application of section 43 (4.1) of the Law of Property Act? [18]

Section 40 of the Law of Property Act prohibits actions on the covenant to pay contained in a mortgage. [19] Section 43(4.1) of the Law of Property Act excepts high ratio mortgages from the prohibition against actions on the covenant,as follows: 43(4.1) Sections 40 and 41 and subsections (2) and (5) of this

section do not apply to a high-ratio mortgage, as defined in the regulations, (

a) given to secure a loan under the National Housing Act (Canada), or (

b) insured by an insurer licensed under the Insurance Act to undertake mortgage insurance in Alberta.

[ 20 ] “High ratio mortgage” is referenced in section 1(2) of the Law of Property Regulation AR 89/2004 as follows: For the purposes of sections 43(4.1) ... of the Law of Property Act and this Regulation, “high ratio mortgage” means a mortgage of land given to secure a loan under which the specific principal sum of the mortgage... exceeds 75% of the market value of the land at the time the mortgage is given. [ 21 ] The defendants assert that the bank’s admission that no appraisals were conducted when the loans were advanced is fatal to the bank’s contention that the subject mortgages are high ratio mortgages and caught by the exception contained in section 43(4.1) of the Law of Property Act . [ 22 ] There is no requirement in the Law of Property Act or the Law of Property Regulation that an appraisal be conducted in order to establish that the loan exceeds 75% of the market value of the property. [ 23 ] Market value can be determined in a number of ways, one of which is by operation of the market itself.

In each of the nine actions, the principal sum of the mortgage requested and granted exceeds 75% of the purchase price reflected in the real estate purchase contracts. Those contracts are regular on their face and serve to confirm that the mortgage loans exceed 75% of the market value of the lands. [ 24 ] The defendants also argue that there is insufficient evidence that the mortgages were granted under the National Housing Act , R.S.C. 1985 c. N-11 or privately insured.

I agree with the defendants’ submissions that a reference by a bank deponent that the mortgage in question is an “insured mortgage” or a “high ratio mortgage” is insufficient. Documentary evidence is necessary to establish that a mortgage falls within the exception in

section 43 of the Law of Property Act . [ 25 ] The scope of this evidentiary requirement is addressed by Justice Burrows in MCAP Service Corp. v. Doiron , 2006 ABQB 821 , additional reasons at 2006 ABQB 837 , affirming MCAP v. Doiron, 2004 ABQB 795 (Master). [ 26 ] The mortgage in that case was not in the usual CMHC form and did not purport to be securing a loan under the National Housing Act .

The evidence consisted only of copies of a Purchaser’s Acknowledgment and a Certificate of Insurance issued by CMHC. [ 27 ] Justice Burrows held that the Purchaser’s Acknowledgment simply established that at the time of execution, the mortgagors acknowledged that the mortgage was to be insured under the National Housing Act .

It did not “unequivocally establish that that plan was followed” ( 2006 ABQB 837 at paragraph 5 ). [ 28 ] The Certificate of Insurance issued by CMHC prior to the execution of the mortgage stated in part: Pursuant to a request for loan insurance submitted by the Approved Lender and in reliance on the information contained therein and subject to compliance with the National Housing Act , the National Housing Loan Regulations, the Master Loan Policy - Terms and Conditions dated December, 1990 and any special conditions listed therein, CANADA MORTGAGE AND HOUSING CORPORATION (CMHC) hereby agrees to insure the loan made by MCAP Service Corporation as set out in the request for loan insurance and identified herein. ...

The receipt and filing or recording by CMHC of notification that the loan has been fully advanced and the receipt by CMHC of the loan insurance premium in respect thereof shall constitute the issue of the loan insurance policy. The Approved Lender may request confirmation of the loan insurance from CMHC.

[ 29 ] Justice Burrows held that the Certificate evidenced a willingness of CMHC to insure the loan if the legislative and master policy requirements were satisfied, but that if the confirmation of loan insurance referred to at the end of the quotation was ever requested or issued, it was not in evidence.

He concluded that MCAP’s evidence fell short of establishing with appropriate certainty that the mortgage loan was under the National Housing Act and that there was a genuine issue for trial in this regard. [ 30 ] Here, copies of a “Mortgagor’s Acknowledgment” signed by all but two defendants are exhibited in the defendants’ affidavits. Ms. Austen exhibited copies of Certificates of Insurance from CMHC with the same language reproduced above, in regard to several of the disputed mortgages. The balance of the mortgages are insured by Genworth Financial Mortgage Insurance Company Canada.

The Genworth certificates in evidence similarly reflect a willingness to insure but not final confirmation that the insurance was placed. All the certificates pre-date the mortgages. According to MCAP Service Corp. v. Doiron , these documents are not sufficient without more to establish that the mortgages were to secure a loan under the National Housing Act or by extension, privately insured. [ 31 ] However, there are additional documents in evidence in these actions beyond what was available to the Court in MCAP Service Corp. v.

Doiron . [ 32 ] Each of the mortgages before me is a “check the box” mortgage that clearly indicates that it is a high ratio mortgage subject to the following provision: This mortgage is a high ratio mortgage to which sections 43(4.1) and (4.2) and 44(4.1) and (4.2) of the Law of Property Act apply.

You and anyone who, expressly or impliedly, assumes this mortgage from you, could be sued for any obligations under this mortgage if there is a default by you or by a person who assumes this mortgage. [ 33 ] Further, ccopies of the Cost of Borrowing Disclosure Statement in regard to each mortgage are also exhibited to Ms. Austen’s affidavits. These documents pre-date the mortgages and viewed in isolation, confirm only that a mortgage default insurance premium was to be included in the approved loan amount. However, Ms.

Austen deposes to the amount advanced and in each case, the advance matches the approved loan amount, confirming that the premium was charged and included in the mortgage loan.

The mortgage default insurance premium corresponds to the premium referenced in the Certificate of Insurance in each case. [ 34 ] Taken together, the documents before the court in each of these nine actions establish that the mortgages were to secure a loan granted under the National Housing Act or privately insured. [ 35 ] Accordingly, there is no genuine issue for trial as to the application of section 43(4.1) of the Law of Property Act in these actions. Is there a genuine issue for trial as to the knowledge or participation by the bank ’ s agents or employees in the fraudulent scheme?

The bank ’s agents [ 36 ] In each transaction at issue, the defendant by counterclaim Christopher Souster acted for both the bank and the defendant mortgagors. [ 37 ] None of the defendants met with Mr. Souster. Each defendant deposes that no one explained the requirements for and/or the consequences of granting a high ratio mortgage. In action 0801 11583, the defendant Mike Rezansoff deposes that he had a short meeting in his car in the parking lot of an Edmonton hotel with a Mr. Long, a lawyer that he says was Mr. Souster’s agent. Mr. Rezansoff deposes that Mr.

Long did not offer any explanation or consequences of the documents he was signing, which he says he did not even realize were mortgage documents. All the defendants assert that the lawyers’ failures constitute misrepresentation by omission by the bank’s agent.

[38] Mr. Souster’s paralegal, Bernadette Lim, met with the defendants in eight of the nine actions to execute the mortgagedocumentation. The defendants in action 0801 15772, Trevor Foster and Carrie Adams-Foster, provided evidence of express statementsmade to them by Ms. Lim, regarding their non- responsibility for mortgage payments and the assumability of the mortgage. Thedefendant in action 0801 11586, Paula Aab, deposes that Ms. Lim remained silent when Ms. Aab asked whether the documents includedthe clause stating that the condominium developer would be responsible for all mortgage payments. Mr. Foster, Ms.

Adams-Foster andMs. Aab were given two mortgages to sign by Ms. Lim, securing two different units, clearly inconsistent with the requirement of insuredmortgages that the mortgagor reside in the property. The defendant in action 0901 08795, Mila Sinoy, deposes that she tried to reviewthe documents Ms. Lim presented her to sign. She states that Ms. Lim told her there was not enough time to review the documents, butassured her as to their legality, indicating she should not worry as she was in a lawyer’s office. [39] In MCAP Service Corp. v.

Doiron, Justice Burrows considered a defence raised by the borrowers that MCAP had retained anumber of persons, including the lawyer (also acting for the borrowers) and the mortgage broker, to assist it in the transaction. Theborrowers argued that these people were the agents of MCAP and had misrepresented to them that there was a house on the property, amisrepresentation they relied on. They argued that MCAP was bound by this misrepresentation of its agents. [40] Justice Burrows observed that MCAP failed to address this issue in its evidence.

It did not deal with the allegedmisrepresentation by its agents as to the state of the land and its value. He found that this unanswered evidence gave rise to triable issues. [41] In First National Financial GP Corporation v. Kulaga, 2012 ABQB 8, John Cumming was the lawyer acting for both thebank and the defendant mortgagor, Dr. Kulaga. There was evidence showing that the lawyer had two real estate purchase contracts onhis file, one with a much higher sale price. The mortgage was obtained on the basis of the higher price. The bank chose to provide noexplanation of this situation, and did not deny that Mr.

Cumming was its lawyer for the transaction and it may be bound by his acts asagent. Master Hanebury stated that Mr. Cumming’s actions raised questions as to his knowledge of, and acquiescence in, the fraudulentscheme. She concluded that while Dr. Kulaga was not an innocent party, neither was it obvious that the bank itself came to the court withclean hands. A trial was necessary to determine whether the bank was entitled to the entire claim it was making against Dr. Kulaga. [42] The bank relied on Capital City Savings & Credit Union v. Prostilo, 2002 ABQB 1004.

In that case, Master Funduk held thatduties owed by a lawyer to the borrower and to the lender are separate duties. The borrower can only claim against the lawyer forbreaches of the lawyer’s duty to him. [43] In Royal Bank of Canada v. Levy [1], 2012 ABQB 310, Justice Romaine addressed a similar argument.

She stated atparagraph 34 that she was “not satisfied that... the state of the law is beyond dispute that where a lawyer acts for both a borrower and alender, any claim for misrepresentation can only be made against the lawyer and not the lender”. [44] The bank further argued that a principal is not bound by the actions of its agent if it is in the interests of the agent to concealthe truth from its principal: Re Durbin et al and Manseat Investments Ltd. (1978), (ON CA), 20 O.R. (2d) 181. [45] Justice Romaine also addressed that argument in Royal Bank of Canada v. Levy.

She concluded that in the circumstances ofthe cases before her and in view of the unanswered allegations of misrepresentation made by the defendants, the applicability of thisprinciple could not be ascertained without consideration of a full record and full legal argument at trial (at paragraphs 19-20). [46] In these actions before me, there is no dispute that Mr. Souster was acting for both the bank and the defendant mortgagors.While there is no evidence that Mr. Souster or Mr.

Long made any express representations relied on by the defendants in entering intothe mortgages, there is some evidence in actions 0801 15772 , 0801 11586 and 0901 08795 of misrepresentations made by Ms. Lim, Mr.Souster’s paralegal. The bank has left this evidence unanswered. There are genuine issues for trial in this regard in these three actions. The bank’s employees [47] The defendants accepted payment of $3,000.00 or $5,000.00 in exchange for obtaining a mortgage loan, purportedly for thebenefit of other individuals. They did not intend to reside in the units, nor make payments on the mortgages.

They did not disclose the

true nature of the transactions to the bank. While it appears they too were duped, the defendants are clearly not innocent victims. [48] However, as Master Hanebury points out in First National Financial GP Corporation v. Kulaga at paragraph 24, thisprinciple cuts both ways. If the lender was involved in some way in the fraud, it too may have difficulty enforcing the contract due to itslegality: Letkeman v.

Zimmerman (SCC), [1978], 1 S.C.R. 1097. [49] The bank submits that no facts or evidence have been provided by the defendants to substantiate their allegations that thebank’s employees were participants in the mortgage fraud. [50] However, the defendants’ affidavits set out that each one of them visited the same branch in northwest Calgary over a periodof several weeks in late 2007 to early 2008. These visits were coordinated and in most cases, also attended by Ms. Korek, one of thepurported representatives of the condominium developers.

The defendants in six of the nine actions met with the same bank employee,Firzana Kanji. One met with Roma Aijaz. Two others met with an unnamed male bank employee. [51] Each of the defendants deposes that Ms. Kanji or the other bank employee with whom they met at the branch to signdocumentation did not ask them any questions about their financial situation, did not offer any explanation of the documents, and did notgive them an opportunity to read or review the documents, nor provide copies of the documents as requested.

Rather, the meetings werebrief and the defendants were told to sign the documents where indicated. In action 0901 08795, when the defendant Ms. Sinoy tried toreview the documents Ms. Kanji provided her to sign, she was told that there was not enough time and told simply to sign them. Ms.Kanji approved every one of the mortgages in question. Ms. Kanji has since left the employ of the bank. [52] It is at least arguable that this evidence gives rise to an inference that Ms. Kanji, Ms.

Aijaz and the unnamed employees wereinvolved in the fraudulent scheme to some extent. [53] The bank chose to remain silent on the involvement of its employees. In response to interrogatory questions in regard to thecircumstances of Ms. Kanji’s departure from the bank and whether the bank conducted any investigation into her role in the placement ofthese mortgages, Ms. Austen answered that such questions were “irrelevant”. Beyond that, Ms.

Austen simply deposed that she hadreviewed the mortgage application documents and did not find any evidence that would lead her to believe that these were fraudulenttransactions. In the circumstances, this is not sufficient to extinguish the questions raised by the defendants’ evidence. [54] This is similar to MCAP Service Corp. v. Doiron and Royal Bank of Canada v. Levy, where as noted above, the lenders’failure to answer evidence from the defendants raised a triable issue. [55] The defendants further submit that Ms.

Kanji inputted false information relating to the defendants’ finances and employment.It is not clear from the evidence as to whether the information was provided to Ms. Kanji in that form by the representatives of thecondominium developers, or whether Ms. Kanji altered the information. [56] Ms. Austen’s affidavit cryptically states that the bank was “provided with” this documentation, but given that Ms. Austen hadno personal knowledge of the dealings between the bank and the defendants, and was not present when the bank received theinformation, this is not sufficient. In one case, 0901 08795, the defendant Ms.

Sinoy expressly advised Ms. Kanji that she was not aregistered nurse, but a health care aide. Yet the MINS report apparently completed by Ms. Kanji states that this defendant was aprofessional. While certainly this evidence is open to

interpretation, again the bank chose not to elaborate further as to the particulars ofits receipt of this information. [57] In

summary, there is some evidence from which a trial judge could infer that Ms. Kanjii and others at the bank were aware ofor involved in the mortgage fraud to some extent. The bank did not specifically address the involvement of its employees. Ms. Austen’sstatement that on her review of the files, she could not find any evidence that would lead her to believe that these were fraudulenttransactions, is not sufficient in the circumstances.

[58] There is a genuine issue for trial as to the knowledge or participation of the bank’s employees in the fraudulent scheme inthese nine actions. Is there a genuine issue for trial as to the application of the principles of non est factum? [59] The defendants assert that the principles of non est factum should apply to relieve them of the consequences of the mortgagesthey signed. [60] The leading case on non est factum is Marvco Color Research Ltd. v.

Harris, (SCC), [1982] 2 S.C.R. 774.The circumstances before me in these actions appear to be classic examples of careless execution of documents as described in that case.Each of the defendants admit they signed a mortgage without reading it, relying on representations from others as to their contents andeffect. [61] However, Marvco Color Research Ltd. v. Harris confirms at paragraph 27 that whether carelessness will obviate a party’sright to disavow a document they have signed must depend on the facts in each case.

Here, there are triable issues raised on the evidenceas to the potential knowledge or participation of the bank’s agents and employees in the fraudulent scheme. In these circumstances, theallocation of loss as between the bank and the defendants should also be determined at trial: MCAP Service Corp. v. Molina-Tan, 2009ABQB 472 at paragraphs 23-33 (Master); Toronto Dominion Bank v. Khosla, 2010 ABQB 652 (Master) at paragraphs 15-22. [62] In these circumstances, there is a genuine issue for trial as to the application of the principles of non est factum in these nineactions.

Conclusion [63] There are genuine issues for trial regarding the knowledge or participation of the bank’s agents and employees in thefraudulent scheme and the application of the principles of non est factum. These issues similarly arise in the counterclaims advancedagainst the bank. The bank’s applications for

summary judgment against the defendants and dismissal of the defendants’ counterclaimsagainst it are denied. If the parties cannot agree on costs, they may approach me. Heard on the 17th day of May, 2012. Dated at the City of Calgary, Alberta this 18th day of July, 2012. J.L. Mason M.C.C.Q.B.A. Appearances: Mark H. Demas

Duncan & Craig LLP for the Plaintiff Kenneth P. Reh Davis LLP for the Defendants [1] See also Bank of Nova Scotia v. Villafuerte (2007), R.P.R. (4 th ) 148 (Ont. S.C.J.); MCAP Service Corp. v. Allen , 2007 CarswellOnt 943 (S.C.J.) .