Tomsik v Golub, 2016 ABQB 478

Court of Queen ’ s Bench of Alberta Citation: Tomsik v Golub, 2016 ABQB 478 Date: 20160829 Docket: 1403 01695 Registry: Edmonton Between: Elvin Tomsik, aka Elemir Tomsik, aka Emil Carl Tomsik by his Litigation Representative, Jerry Hrycak Plaintiff - and - Maria Golub and Michael Golub, also known as Mike Karpan and Michael Carpan Defendants _______________________________________________________ Memorandum of Decision of the Honourable Madam Justice J.B. Veit _______________________________________________________

Summary [ 1 ] Wheels on 66 th St. Used Cars Ltd. asks for an order: restoring its caveat on Lot 10, block 24, Plan . . . .; placing a caveat on Lot 9, block 24, Plan . . .; requiring Tomsik to repay approximately $61,000.00 that had been paid out by court order to Tomsik after Lot 9 was sold; and, awarding it solicitor-client costs. It argues that the court should not have re-instated Mr. Tomsik’s certificate of lis pendens on Lot 9 without notice to Wheels, and without granting Wheels equitable relief by extending its caveat to Lot 9.

[ 2 ] Elvin Tomsik was the original owner of lots 9 and 10. In February 2013, Mr. Tomsik was defrauded, as the court subsequently ruled, of ownership of those lots by the defendants whose fraudulent title to the lots was recorded in the Land Titles registry. On November 19, 2013, Wheels loaned Maria Golub $28,000.00 and, by promissory note she agreed to repay $33,000.00 and to charge lot 10 with the repayment obligation. On November 27, 2013, Mr. Tomsik filed a certificate of lis pendens on Lots 9 and 10; that clp was based on Mr. Tomsik’s statement of claim asking for recovery of those lands from the Golubs.

On December 13, 2013 Wheels, which is a commercial lender, registered a caveat on lot 10 in relation to the loan it had made to Ms. Golub on November 19, 2013. On January 24, 2014, the Golubs fraudulently, as the court subsequently ruled, removed Mr. Tomsik’s clp from lots 9 and 10. Later in 2014, Wheels loaned money to the defendants and subsequently, on each occasion, filed a caveat against lots 9 and 10.

On March 23, 2015, in foreclosure proceedings, a mortgagee which had loaned money to Maria Golub in exchange for a mortgage of lot 9 obtained an order confirming sale and vesting title of lot 9 in a party other than Tomsik or the Golubs and paying the excess proceeds, amounting to approximately $61,000.00 into court to the credit of this action. On October 13, 2015, on a

summary application, this court struck the Golubs’ statement of defence in this action and ordered that Tomsik was entitled to apply for judgment on the basis of affidavit evidence. After having received affidavit evidence, on January 4, 2016 this court transferred lot 10 back to Tomsik free from encumbrances, including the caveats filed by Wheels, and approved the payment out to Mr.

Tomsik of the approximately $61,000.00 in proceeds arising from the sale of Lot 9 in the foreclosure. [ 3 ] Wheels’ application is denied. [ 4 ] There are three main reasons for denying the application: first, and most important, Wheels’ caveat was filed on land which not owned by the Golubs to whom it had loaned money.

Now that the title has been rectified, it is clear that Wheels has no claim against Tomsik property. [ 5 ] Second, even assuming that the promissory note obtained by Wheels from Maria Golub justified a caveat, that caveat is limited to lot 10; it absolutely does not include lot 9 which is the property that was sold and with respect to which net proceeds were paid out. [ 6 ] Third, there is no equitable reason to interfere with the application of the law in relation to Wheels’ interest in lot 10.

By the time Wheels registered its caveat against lot 10, Tomsik had registered a clp on the title; that clp gave notice to Wheels that Tomsik was asking for rectification of legal title to lot 10 – and indeed lots 9 and 6 – based on what he alleged was fraud on the part of the Golubs. Cases and authority cited [ 7 ] By the court : Bank of Montreal v 1323606 Alberta Ltd . 2013 ABQB 596 ; Big Bend Alberta Ltd. v Alberta (Registrar of the South Alberta Land Registration District) [1975] A.J. No. 46 (T.D.) ; Cooper v Vesey (1882) 20 Ch.

D. 611 (C.A) ; CIBC Mortgages Inc. v Saskatchewan (Registrar of Titles) 2005 SKQB 470 ; Hryniak v Mauldin 2014 SCC 7 ; Land Titles Act , RSA 2000, c. L-4; La Forest, Anger & Honsberg – Law of Real Property , 3 rd ed., Canada Law Book, (looseleaf) Appendix: Promissory note, dated November 19, 2013 1. Background [ 8 ] Wheels on 66 St. Used Cars Ltd. operates a pawn shop; as part of that business, it sometimes loans money. It has, on several occasions as described below, loaned money to Maria Golub and her son, Michael Golub – who is sometimes known as Michael Karpan and Michael Carpan.

Wheels maintains that it is at arms’ length from the Golubs, although it acknowledges that there may be some dispute on that status; on at least one occasion, it accompanied the defendants to court. There is also a suggestion in the evidence that the principal of Wheels is the boyfriend of Maria Golub. [ 9 ] Elvin Tomsik, who is in his early 60s, had been employed as a dishwasher, but he has not been employed for approximately 10 years. Mr.

Tomsik’s cousin is married to Michael Golub. [ 10 ] Elvin Tomsik was, prior to February 2013, the sole registered owner of three parcels of land, Lot 9 and Lot 10, Block 24 . . . , Plan . . . . and Lot 6, Block . . ., Plan . . . (the block and plan numbers are known to the litigants and their identification is not in dispute; the redacting of these reasons is made for privacy reasons). Mr. Tomsik asserts that the total value of the lands exceeds $1 million. [ 11 ] Mr.

Tomsik alleged, in the statement of claim in these proceedings, that the defendants Maria and Michael Golub swindled him out of the three properties by making false representations to him and by exerting pressure on him. The misrepresentations related to the actions of an individual who had: loaned Mr. Tomsik and his brother $2,500.00; placed a caveat on the lands; been repaid the $2,500.00; and, who ultimately withdrew his caveat on March 10, 2013. Mr. Tomsik alleged that the Golubs told him that they would protect him from the caveator. [ 12 ] Mr.

Tomsik transferred lots 9 and 10 to Maria Golub on February 22, 2013 and transferred title to lot 6 to her on March 8, 2013. Neither of the Golubs ever paid Mr. Tomsik any money or gave him anything of value in exchange for any of the properties. Overall, after title to each of the properties had been registered in the names of the Golubs, the Golubs mortgaged or otherwise charged the lands for approximately $705,300.00, $407,000.00 of which was to Aaron Acceptance and $298,300.00 was to Wheels. Mr. Tomsik received none of that money. The Golubs allowed the properties to go into foreclosure.

A more specific history of dealings on the properties follows. [ 13 ] On February 22, 2013, Tomsik transferred lots 9 and 10 to Maria Golub. [ 14 ] On March 4, 2013, Maria Golub obtained a $39,000.00 loan from Wheels; on March 15, 2013, Wheels registered a caveat to secure payment of the loan with interest payable at 15.04% per annum. [ 15 ] On March 8, 2013, Tomsik transferred lot 6 to Maria Golub.

[ 16 ] On April 9, 2013, Maria Golub obtained a loan in the amount of $150,000.00 from Aaron Acceptance Corporation and mortgaged Lots 9 and 10 as security for repayment of the loan at prime business rate plus 7%. On April 11, 2013, Aaron registered a mortgage against Lots 9 and 10. When the defendants mortgaged the lands on April 9, the Wheels caveat was paid out on April 15, 2013 by the defendants’ lawyer. Wheels demanded $51,900.00 as a payout as of April 16, 2013, notwithstanding that the loan of $39,900.00 at 15.04% interest had been placed only 43 days earlier on March 4, 2013.

Mathematically, the interest payment should have been $706.91 for a total payout of $40,606.91. [ 17 ] On April 16, 2013, Mr. Tomsik filed a certificate of lis pendens on lots 9 and 10 and on lot 6. [ 18 ] On May 21, 2013, Maria Golub borrowed $34,900.00 from Wheels with per annum interest at 7.56% and charged Lots 9 and 10 with repayment of that loan. On May 28, 2013, Wheels registered a caveat in relation to the loan. [ 19 ] On June 4 and June 30, 2013, Maria Golub obtained two loans totalling $17,900.00 from Wheels and charged lot 9 with repayment of that loan.

On July 18, 2013, Wheels registered a caveat on the lot in relation to the loan. [ 20 ] On November 13, Michael Golub coerced Mr. Tomsik into signing a discontinuance of claim in the first action which he has filed in these proceedings and which was the basis for the April 16, 2013 clp. Mr. Tomsik has sworn that Michael Golub arrived at his residence with two females whom Golub fraudulently represented as being police officers there to arrest Tomsik if the latter did not sign the discontinuance of claim. Mr.

Tomsik has also sworn that when he tried to telephone a friend for advice, Michael Golub physically barred him from doing so. [ 21 ] On November 15, 2013, Mr. Tomsik commenced a second action in relation to these properties. [ 22 ] On November 19, 2013, the defendants obtained a loan in the amount of $257,000.00 from Aaron Acceptance Corporation in exchange for which Maria Golub mortgaged lots 9 and 10. On November 26, 2013, Aaron Acceptance Corporation registered a mortgage against lots 9 and 10. The Wheels caveat was paid out on November 22, 2013 by the defendants’ lawyer.

Wheels demanded $55,150.00 for a payout, notwithstanding the fact that the loans of: $34,000.00 had only been made on May 21, 2013 and the loans for a total of $17,900.00 had only been made on June 4 and June 30, 2013, all at a rate of 7.56% per year. The interest on all three loans should have totalled $1,903.30 and the total payout should have been $53,803.30. [ 23 ] On November 19, 2013, Wheels loaned Maria Golub $33,000.00 ($28,000.00 plus $5,000.00 fee) on the basis of a promissory note which charged lot 10: see Appendix. [ 24 ] On November 27, 2013, Mr.

Tomsik filed a second certificate of lis pendens on lots 9 and 10 and on lot 6; this clp was based on his second action commenced on November 15, 2013 [ 25 ] On December 13, 2013, Wheels registered a caveat in relation to the November 19, 2013 promissory note. [ 26 ] On January 24, 2014, the defendants forged Mr. Tomsik’s signature to a second discontinuance of action and, on the same date, registered a discharge of the November 27, 2013 clp. Mr. Tomsik has filed expert evidence relating to the forged signature. [ 27 ] On February 3, 2014, Mr.

Tomsik commenced a third action in relation to these properties and filed a third certificate of lis pendens on the same date.. [ 28 ] On April 1, 2014, the defendants obtained a $84,000.00 loan from Wheels and charged lots 9 and 10 with repayment of that loan. On August 14, 2014, Wheels registered a caveat on lots 9 and 10 in relation to that loan. [ 29 ] On April 22, 2014, the defendants obtained a $84,000.00 loan from Wheels. Ms. Golub charged lot 6 with repayment of that loan.

On May 6, 2014 Wheels registered a caveat on lots 9 and 10 in relation to that loan. [ 30 ] On May 9, 2014, the defendants obtained a $5,500.00 loan from Wheels. Ms. Golub then charged lot 6 with repayment of that loan. On August 16, 2014, Wheels registered a caveat on lots 9 and 10 in relation to that loan. [ 31 ] The defendants allowed lots 9 and 10 to go into foreclosure. [ 32 ] On March 23, 2015, Aaron Acceptance obtained an order confirming sale and vesting title with respect to lot 9. Lot 9 was sold for $380,000.00.

The order required that, after payment of all encumbrances and costs, any remainder was to be paid into court to the credit of this action. [ 33 ] On May 14, 2015, the mortgagee paid $60,794.33 into court pursuant to the March 23, 2015 order. Lot 10 was released from the foreclosure as the sale of lot 9 covered all the costs. [ 34 ] From mid-July 2014 onward, on many different occasions, the court ordered the defendants to provide records, to attend for questioning, to answer undertakings, and to pay costs.

The Golubs consistently failed to comply with court orders. [ 35 ] On October 13, 2015, this court granted Mr. Tomsik an order striking the defendants’ Statement of Defence, granting him leave to apply for judgment on the basis of affidavit evidence, and awarding him costs. As of the commencement of the October 13, 2015, hearing the total costs payable by the defendants to Mr. Tomsik amounted to $19,128.50. [ 36 ] On January 4, 2016, on the basis of affidavit evidence provided by Mr. Tomsik, I gave judgment in favour of Mr.

Tomsik, which judgment: - ordered the Registrar of the Alberta Land Registration District to cancel the existing certificate of title to lot 6 and to issue a new certificate of title to the property in the names of the plaintiff and his brother as tenants in common of the property, subject to two identified instruments, a certificate of lis pendens and a tax notification;

- ordered the Registrar to issue a new certificate of title to lot 10 in the name of the plaintiff, free from all encumbrances; - ordered the clerk of the court to pay out the $60,794.33 plus any accrued interest to the plaintiff through his solicitors; - gave judgment to the plaintiff against the defendants in the amount of $319,205.67 plus prejudgment interest since March 23, 2015 in the amount of $2,607.87; - gave judgment to the plaintiff against the defendants in the amount of $19,128.50; - gave judgment to the plaintiff against the defendants for costs of the October 13, 2015 hearing and costs of the action in the amount of $21,839.45; and, - gave judgment to the plaintiff against the defendants for exemplary damages in the amount of $25,000.00. 2.

Wheels was not entitled to notice of Tomsik’s application to reinstate his certificate of lis pendens [ 37 ] Clearly, Wheels has been affected by Tomsik’s various applications. The determinative issue from Wheels’ perspective was not the re-instatement of the Tomsik certificate of lis pendens , it was Tomsik’s success in striking out the Golubs’ defence to Tomsik’s statement of claim which, in turn, had the effect of returning ownership of lots 9 and 10 to Tomsik.

The result was, from Wheels’ perspective, that it had loaned money to the Golubs in exchange for a promise to pay and a charge on land the Golubs didn’t own. (It is not necessary for the purposes of this decision to decide if Wheels loaned the money to Maria Golub on the strength of the promise of a charge on land; if it had been necessary to do so, I would have had to consider the history of dealings between Wheels and the Golubs and the fact that, on several occasions, Wheels did not, in a timely way, register a caveat after having loaned money to the Golubs.) [ 38 ] Obviously, not every person who is affected by a decision has the status to appear in the proceedings which gave rise to the decision.

Just to give one example in relation to charges on land: a residential mortgage financer may be negatively affected by the termination of the homeowner’s employment, but that does not give the mortgagee status to appear in the unlawful dismissal trial brought by the home owner/mortgagor/employee. [ 39 ] Here, the issue of who actually owned the land in question – Tomsik or Maria Golub – is an issue that is strictly between Tomsik and the Golubs; the only way in which Wheels might have been involved in those proceedings is if the Golubs had called it to give evidence of some participation by Wheels in the fraudulent dealings with the land.

As I indicated during the course of the hearing, either Wheels was part of the Golubs’ wrongdoing – in which case Wheels is tainted by the same wrongdoing as the Golubs – or it is a stranger to the dealings, in which case it has nothing to do with the issue of who owns the property in question. [ 40 ] The court has found that the Golubs have no defence to Tomsik’s claim that he was defrauded of lots 9, 10 and 6; the immediate result of that decision is that, to the extent that the property remained in the hands of the Golubs, the property was returned to Tomsik.

As to where that left Wheels, the resulting situation is analogous to that of subordination – if the Golubs don’t own the property, Wheels has no charge on the property. [ 41 ] The use of

summary proceedings, as was the case in the October 13, 2015 and January 4, 2016 decisions of this court, is acceptable where the court is satisfied that the process is fair: Hryniak . Here, the only parties who had status in the lawsuit were the Golubs. The Golubs had received many opportunities to provide evidence in relation to the proceedings and had contemptuously failed to do so. On the contrary, the Golubs acknowledged that they were required to make Mr. Tomsik whole, asked for time to do so, and then failed to provide satisfaction to Mr. Tomsik. The court was therefore justified in proceeding on a

summary basis. [ 42 ] As a corollary to the status issue in relation to the ownership of the property itself, it is equally clear that in a dispute between Tomsik and the Golubs relating to what was determined to have been a fraudulent removal of a clp, Wheels has no status because, unless it was acting in concert with the Golubs, it is a stranger to the action by which a clp was fraudulently removed. It therefore had no status to argue the clp dispute. [ 43 ] There is no equitable issue here.

As Law of Real Property summarizes, see commentary at 30-30-20, in a Torrens system the distinction between legal and equitable has essentially been rendered obsolete.

The application of equitable principles would not, in any event, assist Wheels in relation to its $33,000.00 caveat: if it was intending to only lend money if it could charge land with the loan, then it should have searched the registry for encumbrances on the land at the moment it extended the loan and filed its caveat; in other words, checking the registry on November 19, 2013 was clearly pointless unless the exchange of the money and the registration of the caveat were also done on that date. Moreover, the fraudulent removal of a clp could not improve Wheels’ claim.

Had it checked the registry on the date when it loaned Maria Golub $33,000.00, Wheels would have known that Tomsik was claiming the Golubs had defrauded him of lots 9 and 10 and that Maria Golub may not be the real owner of the property. The registry system therefore accomplished one of its aims, by warning Wheels that what did in fact come to pass might come to pass. [ 44 ] What is important in the land registry system is registration. The general approach to the Torrens system was usefully outlined by Topolniski J. in Bank of Montreal .

An erroneous entry in a land registry can be corrected: Big Bend Alberta Ltd . Indeed, s. 187 (1)(

c) and (

d) of the Land Titles Act specifically authorize the Registrar to correct the registry. Even at common law, it was clear that fraudulent entries in a registry system could be corrected: Cooper .

Because Alberta’s Land Titles Act does not say otherwise, the common law principle that a forged document is a nullity and is “properly removable from title” continues to apply here: CIBC Mortgages Inc . [ 45 ] The most that can happen in a situation such as this one where a lender took security on land which was not actually owned by the borrower is a claim against the Land Titles assurance fund and a claim against the borrower. Neither of those is the subject of this lawsuit. 3. Wheels is not entitled to any part of the proceeds of the sale of Lot 9: it never had security on that lot

[ 46 ] In any event, it is clear from the evidence, see the promissory note attached hereto, the very best which Wheels ever could claim was an agreement by Maria Golub to charge lot 10. Wheels never had more than that. Indeed, if it became necessary to do so, based on the inadequacies of the document itself which had been prepared by Wheels and was therefore subject to the contra proferentem rule, the court would have been able to conclude that the promissory note which Wheels obtained from Maria Golub was not even adequate to charge lot 10, let alone lot 9.

But it is not necessary to go into the frailties of the promissory note because it was lot 9 that was sold, not lot 10. In the result, Wheels has absolutely no claim to the proceeds from the sale of lot 9. 4. Wheels is not entitled to an order restoring its caveat on Lot 10 [ 47 ] Wheels is not entitled to an order restoring its caveat on lot 10 because the Golubs don’t own lot 10 – Tomsik does. 5. Wheels is not entitled to solicitor-client costs [ 48 ] Case law establishes that an award of costs on an accelerated basis such as on a solicitor-client basis requires justification.

Even if Wheels had been successful in establishing that it had status in the Tomsik/Golubs dispute, and even if it had been successful in establishing that it was entitled to a say in the disposition of the proceeds from the sale of lot 9, and even if it had been successful in establishing that it was entitled to the re-instatement of its caveat on lot 10, Wheels would not have been entitled to solicitor-client costs. 6.

Costs [ 49 ] Wheels has been totally unsuccessful on this application; therefore, by application of the usual principles relating to the award of costs, Tomsik is entitled to costs against Wheels. [ 50 ] However, it may be that either of the parties made a formal or an informal offer prior to the hearing which would have an effect on costs. If that were the case and if there were an issue in relation to a settlement offer, I would hear that application within 30 days of the date of receipt of this decision. Heard on the 08 th day of June, 2016.

Dated at the City of Edmonton, Alberta this 26 th day of August, 2016. J.B. Veit J.C.Q.B.A. Appearances: Ben A. Guido, Odishaw & Guido for the Applicants, Wheels on 66th Used Cars Ltd. Nestor Makuch, Wheatley Sadownik for the Respondent, Tomsik

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