Ezajul Hoque Chowdhury - v. -, 2016 SKPC 62

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2016 SKPC 062 Date: April 28, 2016 File: 331/2015 Location: Saskatoon _____________________________________________________________________________ Between: Ezajul Hoque Chowdhury - and - Cece Chongo and Mortgage Architects Inc. Self For the Plaintiff J. Maslowski For the Defendant ______________________________________________________________________________ JUDGMENT Q. D.

AGNEW , J ______________________________________________________________________________ [ 1 ] In spring 2014 the plaintiff, Ezajul Chowdhury, wished to purchase a house at 943 Pringle Cove, Saskatoon. In order to obtain a mortgage for this purpose, he dealt with the defendant mortgage broker, Mortgage Associates Inc., through its local representative, the defendant Cece Chongo. They obtained for him a mortgage commitment from a mortgagee called Lendwise Mortgages. Unfortunately, things did not proceed well after that, at a significant cost to the plaintiff, allegedly due to the fault of the defendants.

The plaintiff sues to recover his losses. The issues are whether the defendants breached a legal duty to the plaintiff, and

whether the plaintiff suffered any loss legally related to any such breach. [ 2 ] The mortgage commitment obtained by the defendants for the plaintiff in the spring of 2014 was for $405,000.00, at an interest rate of 3.09% per annum for a term of five years. That mortgage required that the plaintiff make a down payment on the house of $20,250.00. For reasons which were never brought out in evidence, that mortgage commitment was later cancelled. That cancellation was never communicated to the plaintiff.

Accordingly, when he went to finalize the purchase of his house on October 20, 2014, he was unpleasantly surprised to learn from his lawyer that the mortgage commitment was not in place, there was no mortgage to be placed against the Pringle Cove house, and no mortgage funds were available for the purchase of the Pringle Cove property. [ 3 ] The plaintiff immediately attempted to contact Ms. Chongo, both by telephone and by text message. He tried multiple times that day, without success.

He eventually received a message from her simply stating that she was trying to fix the problem, that his attempts to communicate with her were “distracting” and asking him if he wanted her to stop trying to fix the problem. When he texted to her that he would wait for her to finish what she was doing and to let him know exactly what the problem was, her response by text was that he should wait until she had “sorted it out”. This exchange occurred on October 20. Throughout that day, the plaintiff was also trying to meet with Ms.

Chongo or to learn from her what the difficulty was, what options he might have and what steps could be taken. Ms. Chongo’s response was that if she stopped to meet with him, it would delay her attempts to solve the problem. [ 4 ] The plaintiff heard nothing further from Ms. Chongo until the next day when he again asked for information about what was happening. At that point, from the time on October 20 when the plaintiff had learned that there was in fact no mortgage available, he had sent Ms. Chongo 14 text messages and additionally had made telephone calls, all attempting to determine from Ms.

Chongo what the problem was and what could be done to fix it. The only responses he had received from her, including to his request that she telephone him or meet with him in person, were text messages telling him to wait while she attempted to resolve the problem. There was no information as to what the problem was, what steps Ms. Chongo was taking to attempt to resolve it, what the prospects of success were, what other options might be available, or indeed any other information whatsoever. Accordingly, when the plaintiff texted Ms.

Chongo for the first time on October 21, he asked her to call him immediately and said that he would speak with her manager if she did not “cooperate”. Her response was to advise him that she would cease “processing the application”. Within two hours of that text conversation, Ms. Chongo advised the plaintiff that she had been willing to “finish the mortgage” but “under the circumstances I have had to step down”. [ 5 ] The plaintiff heard nothing further from Ms. Chongo or Mortgage Architects Inc.

He was at that time in the unenviable position of attempting to complete the purchase of 943 Pringle Cove with no mortgage in place. He attempted to obtain a mortgage through another mortgage broker and was eventually successful in doing so. The terms of that mortgage, with Canadian Western Trust Company, were not nearly as advantageous as the Lendwise mortgage. The interest rate on the new mortgage was 3.99%, it was for a term of one year and it required that the plaintiff increase the amount of his down payment by $60,000.00.

Thus, the principle was lower but the interest rate was substantially higher, and the term was significantly shorter. [ 6 ] In order to raise the additional $60,000.00 the plaintiff had to take out various loans, including borrowing from friends, using overdraft on bank accounts and borrowing through credit cards. To repay those debts, he placed a second mortgage against a house he owned at 330 Rosewood Boulevard, Saskatoon. That mortgage, in the amount of $51,250.00, had an interest rate of 13.25% and a term of 12 months. [ 7 ] In the meantime Ms.

Chongo, unbeknownst to the plaintiff, had apparently continued her efforts to obtain a new mortgage for him on the Pringle Cove house. Not only did she not communicate this to the plaintiff, this was directly contrary to her last communication to him noted above, in which she stated unequivocally that she “had to step down” as his mortgage broker. On October 30, the plaintiff was sent a new mortgage commitment by Ms. Chongo. That mortgage commitment was again based on a down payment of slightly over $20,000.00, at a better interest rate than the original commitment, namely 2.89%, and was again for five years.

The plaintiff testified that at this point he had lost all faith in the defendants and was not willing to deal with them with respect to a mortgage. [ 8 ] The defendants argued at trial that taking this mortgage as opposed to the Canadian Western Trust Company mortgage on the Pringle Cove address would clearly have been advantageous to the plaintiff. It was for a substantially lower interest rate, and did not require a large increase in the down payment.

The defendant argued that by refusing to take this mortgage, the plaintiff failed to mitigate his losses; indeed, he might well have had no losses at all had he taken this mortgage.

[ 9 ] This argument has a superficial attractiveness. However, there is one substantial flaw with it. On page 4 of the mortgage commitment, one of the terms which Mr. Chowdhury was required to meet in order to take advantage of this mortgage commitment was to prove, via the past two years’ income tax filings, that his annual income was $113,000.00. [ 10 ] The plaintiff testified that he did not know where Ms. Chongo had found that number, as his actual income was in fact nowhere close to that amount. Oddly, the mortgage commitment which Ms.

Chongo had previously obtained for the plaintiff had the same requirement - but referring to an annual income of $54,000.00. That document appears to have been created in early May 2014: the necessary conclusion is that in May 2014, Ms.

Chongo understood the plaintiff’s income to have been $54,000.00 per year, but in late October 2014 she obtained a mortgage commitment for him, whereby he could obtain an advantageous mortgage only if he could prove that his income was more than double the income she had understood him to have in May. [ 11 ] It was clear from the evidence that the plaintiff could not comply with this condition. There is no evidence of anything that would have caused Ms. Chongo to believe that the plaintiff’s income had increased. Accordingly, the new mortgage commitment obtained by Ms. Chongo was worthless to the plaintiff.

This manipulation of income figures could of course only increase the plaintiff’s sense of distrust in the defendants. [ 12 ] I note in passing that there may well have been a problem for the plaintiff even with respect to the income of $54,000.00 in the initial mortgage commitment. The plaintiff’s tax returns for 2012 and 2013 (being the two most recent years as of the applicable date in this action) show an income in both of those years substantially below even the $54,000.00 figure. Had there been further information at the trial, this latter point might have developed into a significant issue.

However, the only witness at the trial was the plaintiff. He testified that he provided to Ms. Chongo all of the documentation that she requested in order to comply with the first mortgage commitment. That evidence was not contradicted, or even seriously challenged. Counsel for the defendant, at the commencement of trial, indicated that he had not been able to contact Ms. Chongo and that although he had expected her at trial, she was not present. I asked if he wished to request an adjournment and he indicated that he did not: accordingly, the trial proceeded.

It may well be that some of the plaintiff’s testimony might have been challenged had Ms. Chongo been available to testify; on the other hand, it might be that the evidence would have been even less favourable to the defence. It is a matter of speculation, of course, what other evidence might have come out or what view I might have taken of the plaintiff’s evidence had Ms. Chongo testified. The fact is, she did not.

I am left with the plaintiff’s testimony. [ 13 ] The essence of the plaintiff’s case is that he provided the defendants with all the documentation and information that they requested and that he was never informed that the mortgage commitment had been cancelled. As there is no evidence from the defence, I have nothing but hearsay through the plaintiff as to why the Lendwise mortgage was cancelled. His understanding is that it was because information was not provided; however, he denies that there was any information requested that he did not provide.

The standard of proof in a case such as this is a balance of probabilities, and although there were some issues on the evidence with the plaintiff’s credibility, reliability and probity, I am satisfied that the evidence meets that standard in favour of the plaintiff.

I am satisfied that he complied with all applicable conditions to obtain the Lendwise mortgage in accordance with the commitment the defendants provided to him in spring, 2014; I am also satisfied that he was never informed that the mortgage had been cancelled until he went to his lawyer’s office on October 20, 2014. [ 14 ] I am also satisfied that the defendants had a duty to advise the plaintiff that his mortgage commitment had been cancelled within a reasonable time after that had happened.

That duty arises either through contract, or through tort. [ 15 ] The evidence does not disclose whether there was a contract between the plaintiff and the defendants. Unfortunately, neither party made any effort in the evidence to clarify their relationship. It may be that the defendants were in a contractual relationship with the plaintiff, to provide mortgage brokerage services to him.

If so, I consider that it would at least be an implied term of such a contract that they would inform the plaintiff that the mortgage commitment had been cancelled, and to do so with reasonable dispatch. [ 16 ] However, it is also possible that the defendants were not in a contractual relationship with the plaintiff, and were in fact acting on behalf of the mortgage company. In such event, obviously there would be no such contractual obligation to the plaintiff.

The defendants would still, in my view, be liable to the plaintiff in negligence. [ 17 ] The defendants clearly owed a duty to the plaintiff, as defined in terms of foreseeability: as mortgage professionals, I am willing to believe that they would know the types of problems which would be experienced by a mortgagor/purchaser who finds themselves unexpectedly without a mortgage on or near the closing date. The duty was to inform the plaintiff, with reasonable dispatch,

that the mortgage commitment had been cancelled. [ 18 ] The defendants clearly breached such duty: so far as the evidence discloses, the defendants took no steps whatsoever to advise the plaintiff that the mortgage commitment had been cancelled.

The evidence does not disclose when it was cancelled, or when the defendants became aware of that fact; however, as this is information within the knowledge of the defendants which they chose not to bring into evidence, I am willing to accept that it is not favourable to them. [ 19 ] The defendants clearly knew that the plaintiff was using the funds to purchase a house, from his mortgage application, and as noted above they would know of the difficulties the plaintiff would encounter by not being informed that the mortgage commitment had been cancelled. [ 20 ] Finally, the plaintiff clearly suffered loss as a result of the defendants’ breach, in terms of the additional expenses he incurred. [ 21 ] I am unable to come to a conclusion as to why the mortgage was cancelled; however, I do not find it necessary to do so.

There is no suggestion in the evidence that the cancellation was caused by the plaintiff’s action or inaction; and there is no suggestion that the cancellation was unknown to the defendants, as it was to the plaintiff. The evidence before me, which I accept, is that the plaintiff was not so informed of the cancellation, and that accordingly when the time came for him to pay his builder he was unpleasantly surprised to find that he was unable to do so. [ 22 ] His builder was also unpleasantly surprised to find that it was not going to receive money at that time.

The evidence from the plaintiff, which I accept, is that the builder was somewhat accommodating and willing to wait while the plaintiff dealt with his financing issue for the delay in payment. [ 23 ] This of course would not be unusual: it is common for contracts dealing with the purchase and sale of real estate to include a provision for daily interest on unpaid funds beyond the closing date.

However, the contract between the plaintiff and his builder was never entered in evidence; the plaintiff did not testify as to the terms under which the builder would be entitled to charge such a payment; and the only evidence of a late charge is an e-mail purportedly from the builder stating that the late charge was $3,900.00, of which the plaintiff as of December 2015 had paid $1,000.00. There is nothing specified as to how such a surprisingly round number was calculated, or what the legal basis is for that claim. So far as the evidence is concerned, the builder might simply have made this number up.

Furthermore, the email itself is hearsay. The fact that well over a year has passed without the builder taking any steps to obtain the balance of its money from the plaintiff might mean that it has a good working relationship with him, and that it understands his financial predicament; or it might mean that the builder recognizes that it does not have a valid basis for such a claim. On the evidence, I cannot determine which. That being the case, even on a balance of probabilities I cannot conclude that the plaintiff owes the builder a further $2,900.00.

I am satisfied, however, that: (1) the plaintiff paid the builder $1,000.00 for late payment of the purchase funds; (2) the plaintiff was legally obliged to pay at least that amount; and (3) the reason for the late payment was the unexpected news of the cancellation of the mortgage commitment. The plaintiff is entitled to recover the $1,000.00 he paid. [ 24 ] The plaintiff has also claimed as damages the amount of interest he had to pay on his borrowing to make up the extra $60,000.00 he was required to place against the purchase in order to obtain the new mortgage.

He says that he borrowed $15,026.60 on credit cards at various rates of interest and because those rates of interest varied, he calculates his damage on the basis of a 12% rate of interest, for a total $1,803.12. Unfortunately, he did not enter any of this information by way of documentation, even though his total is a very precise one. That is, other than him giving me the total, I have no evidence to confirm either the total or the interest rate. I do not know from whom he received money, how much from each, what the terms were of such loans, when or whether they have been paid back, or any other details.

I have concluded that the plaintiff has not proven this loss on a balance of probabilities. [ 25 ] The plaintiff claims the costs of the second mortgage for one year, being $11,874.00 in interest and mortgage costs, and $1,354.00 for the legal expenses involved in placing that second mortgage. Those figures are all supported by documentation. [ 26 ] I am satisfied that these costs are justified under the circumstances. The plaintiff took reasonable steps to deal with the situation when it arose.

However, I do not think that he is entitled to damages for interest beyond the first year, as there was no information with respect to this mortgage, whether it was paid out after the first year, whether the interest rate changed or whether any other steps were taken to deal with the situation.

[ 27 ] Accordingly, I award him this portion of his claim. [ 28 ] The plaintiff also claims the increased interest cost for one year between the Lendwise mortgage he was originally to have obtained through Ms. Chongo, and the interest cost he paid on his new mortgage. The defendants point out that his principal is substantially lower on the mortgage he in fact obtained, although the interest rate is higher, and suggest that he may not in fact have suffered a loss. Unfortunately, neither the plaintiff nor the defendant provided me with any calculations regarding this aspect of the claim.

I have accordingly performed those calculations myself. I recognize that every payment against the mortgage will have resulted in a slight decrease in the principal, thereby affecting the amount of interest paid on each subsequent payment. However, in the first year of the mortgage (amortized over 300 months in the case of the Lendwise mortgage and 360 months in the case of the Canadian Western Trust Company mortgage) the amount of principal paid off will be very small and I have accordingly disregarded it for the purposes of this calculation.

For the Lendwise mortgage, 3.09% interest for one year on $396,869.62, being the amount borrowed as specified in the mortgage commitment, equals $12,263.27. On the Canadian Western Trust Company mortgage, $331,075.20 at 5.957% equals $19,722.15. The difference is $7,458.88. Bearing in mind the decreasing principle through the course of the year, and the deficient nature of the plaintiff’s evidence in this regard, I award him $7,000.00 for this aspect of his claim.

If either party wished a more precise calculation of the loss, it was open to them to bring that evidence forward. [ 29 ] I have again considered interest damages only for a period of one year. The Canadian Western Trust Company mortgage was only for a term of one year (as opposed to five years for the Lendwise mortgage which was originally to be placed) and I have no evidence as to what has happened since the one year term of that mortgage expired. It may well be that the plaintiff was able to re- finance that mortgage at a substantially lower interest rate, for example.

Any damages beyond the first year, therefore, are not proven. [ 30 ] The plaintiff also claimed damages for loss of rental income. This was not proven, either as to its existence or quantum, and I therefore do not award the plaintiff any amount for this claim.

Similarly, the plaintiff failed to prove his claim regarding loss of income for time he lost from work dealing with this situation. [ 31 ] The plaintiff did not claim pre-judgment interest or costs, and accordingly no such amounts are awarded. [ 32 ] I have found in favour of the plaintiff with respect to $1,000.00 paid to the builder, $11,874.00 for the interest and mortgage costs of the second mortgage, $1,354.00 for the costs of placing the second mortgage, and $7,000.00 for the increased interest on the first mortgage. The total of these amounts is $21,228.00.

At the time this action was commenced, the monetary limit of this Court’s jurisdiction was $20,000.00, and the plaintiff abandoned any portion of his claim above that amount. There will accordingly be judgment for the plaintiff in the amount of $20,000.00. Q. D. Agnew, J