Wood v. CIBC Mortgages Inc. Date:, 2012 BCPC 12

Citation: Wood v. CIBC Mortgages Inc. Date: 20120119 2012 BCPC 0012 File No: 46128 Registry: Vernon IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SUSAN FAE WOOD CLAIMANT AND: C.I.B.C. MORTGAGES INC. DEFENDANT AND: LEANNE F. RUTLEY and NIXON WENGER L.L.P. THIRD PARTIES REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE MCKIMM Counsel for the Claimant: Unrepresented Counsel for the Defendant: Ian D. Maclaren Counsel for Third Parties: Ian D. Maclaren Place of Hearing: Vernon, B.C. Date of Hearing: October 24, 2011 Date of Judgment: January 19, 2012 [ 1 ] In a pre-trial conference of this matter, counsel for the defendants CIBC Mortgages Inc., applied for a

summary dismissal of the claimant's claim. The issue that arises here is twofold: First, whether and in what circumstances the Provincial Court ought to grant

summary judgment relief. Second, whether on the facts of this case it is appropriate to order

summary judgment. For the reasons that follow, the application is allowed and the claimant's case against the respondent is dismissed. The Facts [ 2 ] In January 2008, Ms. Wood approached CIBC Mortgages Inc., “the Bank” to obtain a mortgage. At the time of the application she was endeavoring to purchase, among other things, her husband's interest in the matrimonial home because they had recently separated. There is some conflict as to how exactly the conversation proceeded between the employee of CIBC, Ms. Briskham and Ms. Wood. Sometime in early February, Ms.

Wood was directed to a lawyer’s office to complete the mortgage documents. That lawyer was the Third Party, Ms. Rutley of the firm Nixon Wenger L.L.P. [ 3 ] At the hearing of this application, Ms. Wood took the position that she understood that she was receiving an open mortgage. In support of this understanding she pointed to a Form B registration document created under the Land Title Act R.S.B.C. 1996 Ch. 250 & 225 which indicates that the mortgage was in the principal amount of $430,000 with an interest rate of 5.841% per annum and in

section 10 provides, "THIS MORTGAGE IS A FIXED RATE OPEN MORTGAGE." Ms. Wood agreed at the hearing of the application that she did not really understand the difference between an open mortgage and a closed mortgage.

[4] Ms. Briskham for the Bank and Ms. Rutley, as the bank’s assigned lawyer for Ms. Wood, filed “will say” statements indicatingthat they fully advised Ms. Wood about the terms of the mortgage and specifically that this was a “closed mortgage". Indeed theyindicated in their “will say” statements that there was a great deal of discussion about the substantial penalties that Ms. Wood wouldincur if she tried to pay off this mortgage before the end of its four-year term. The lawyer indicated that the addition of the term "THISMORTGAGE IS A FIXED RATE OPEN MORTGAGE” was a clerical error.

From a review of all of the evidence, that statement iscorrect. [5] When Ms. Wood left her lawyer’s office, she had signed, among other things, a document titled “Mortgage Approval". Thatdocument is written in plain English and makes it clear that the mortgage Ms. Wood accepted was a closed mortgage with substantialpenalties for early payment. Furthermore, the document provides: Where the terms of this approval and the mortgage vary, the terms of this approval will prevail and continue to prevail even after thesigning, registration and delivery of the mortgage and the advance of any funds.

The “Mortgage Approval” document represents the true contract between the Bank and Ms. Wood. The Form B mortgage document, onthe other hand, simply reflects notice to third parties with respect to the contract between the Bank and Ms. Wood and its security againsther property. [6] Some 18 months into the term of the mortgage, Ms. Wood decided to refinance the mortgage and pay out the entire principal thendue and owing. Before paying out the mortgage, CIBC required that Ms.

Wood pay prepayment penalties in the amount of $21,693.98,the full amount possible under the prepayment provisions under the mortgage agreement between Ms. Wood and the Bank. Ms. Woodnow brings this action against the bank asserting that she should never have been charged the prepayment penalty prior to paying off themortgage. Issues 1. Is it possible to obtain

summary judgment under the Small Claims Act and Rules? 2. In an application for

summary judgment prior to trial, what evidence will be considered? 3. Is this an appropriate case for

summary judgment? Analysis 1.

Summary judgment in Small Claims Court [7] The Small Claims Act provides that the purpose of the Act and the Rules is to allow people to resolve their disputes in a “just,speedy, inexpensive and simple manner”. (Act § 2.) It further gives the Provincial Court the authority to, “make any order… it thinksnecessary to achieve the purpose of this Act”. (Act § 2) An order for

summary judgment in a case where it is apparent on thedocumentary evidence that the case has no prospect of success is entirely consistent with those purposes. The same would be true wherethere was no likelihood of success on those facts which the parties generally accept as true. [8] Authority for

summary judgment granted at a settlement conference is found in Artisan Floor Company v. Lam (BC SC), 76 B.C.L.R. (2d) 384 (B.C.S.C.) where the Chief Justice wrote, “I think it is clear that the judge presiding at a settlementconference has power to give judgment, at least where, in the words of rule 17 (14)(b), he is dealing with ‘issues that do not requireevidence’”. It seems to me that the same must also be true in cases where evidence may be required to properly resolve the issue and thatevidence is, as in this case, evidence that is accepted by both parties. [9] Judge Stansfield, P.C.J. took a similar approach to allowing an application for

summary judgment in an action under the FamilyRelations Act when he wrote: I conclude that this Provincial Court possesses an inherent procedural jurisdiction which is, as Jacob suggests (at page 50),"complementary" to the Rules of the court. In the absence of a contrary binding authority I conclude such jurisdiction exists as anessential corollary to the establishment of the court and the substantive jurisdiction which it is charged to administer. L.C.C. v. P.G.

(1994) B.C.J. No. 1591 (B.C. Prov Ct.) This analysis commends itself particularly to proceeding in this Court under the Small Claims Act and Rules. It is certainly consistentwith the principal and purposes of the Act that the Court be at liberty to dismiss actions which are, on the face of the documents alone,destined to fail at trial. [10] This leaves the question of the evidence on which this Court ought to proceed given that there are no rules specifically drafted forsuch an application. 2. What evidence will be necessary to grant an application for

summary judgment in Provincial Court? [11]

Section 16 of the Small Claims Act provides that a Judge is able to adjudicate disputes on evidence that they find credible or

trustworthy. Rule 10(1 )(

b) provides that the Court may “receive evidence in any other way that the Judge thinks is appropriate”. A trial judge sitting on a

summary judgement application Court will need to determine on a case-by-case basis the amount and quality of evidence they will require to reach a just result. In this case I am relying significantly on the admitted documents, but also on the submissions made to the Court by the claimant regarding her state of awareness at the time she executed the mortgage agreement. [ 12 ] There is no doubt that in some instances the Court may well require affidavits. In this case, counsel for the Bank provided an affidavit of Ms. Rutley roughly outlining the steps she took in acting for Ms. Wood.

The nature and effect and execution of the documents were not disputed by Ms. Wood. Nor did Ms. Wood advance any facts in her submissions that would lead to even an inference of duress, that she did not understand what she was signing, or any other common law defence to her contractual obligations found in the Mortgage Agreement document. Rather she simply submitted that she was not paying particular attention to the documents given the circumstances she found herself in at the time of the application and execution of the contract with the Bank.

She simply states that she thought that she was signing a fixed rate open mortgage. While it is evident that she has a different view of what took place in her meeting with the bank official, Ms. Briskham , it is equally clear that any of those discussions are overridden by the express terms of the Mortgage Agreement. 3. Is this an appropriate case for

summary judgment? [ 13 ] Regrettably, even if Ms. Wood did not fully understand the nature and terms of the agreement, the onus is on her, given the clear terms of the agreement, to provide some explanation why the agreement should not be relied upon. I am particularly persuaded by the language of our Court of Appeal in Van Der Ross v. Van Der Ross,

(2003) B.C.C.A. 270. In that case the trial judge dealing with a debtor arguing that the agreement being sued upon could not be enforced relying on the doctrine of non est factum found the following facts: We are simply faced with a situation where, unfortunately, this lady, whether she was pressed of time with work, whether she was pressed because her husband said “sign it", even though he said it was for the loan from his parents, decided not to read it. She did not say, “I need an opportunity to read it" and was denied it.

She did not say, "Give me five minutes." Did not even read the last two sentences immediately before the words “agreement acknowledged," which would have demonstrated that, "Return the copy of a letter to me endorsed by yourself as principal debtor and your wife as guarantor." Those words were right there. They are not hidden. The language is not complex. The lady is literate. She is capable of understanding and appreciating the language. She acknowledged in her examination for discovery that she had read it , ( sic.) she would have known what it was and she would not have signed it.

I think that is clearly what the Supreme Court of Canada was directing its mind to in Marvco . You cannot sit idly by, having signed a document, having an opportunity, if you wish to exercise it, to look at it, decide not to read it, then complain about the results." The Court of Appeal in dismissing the appeal wrote: This principle was adopted in Canada in Marvco , supra. In that case a married couple signed a collateral security agreement upon which the plaintiff relied.

They did not read the instrument before signing it, but relied on the fraudulent misrepresentations of their trusted son- in-law as to its nature. The Court applied Saunders and held the couple were not entitled to rely on the non est factum in defense of the plaintiff's claim because of their carelessness in failing to determine the nature of the documents they were signing.

The court noted that the question was which of two innocent parties should bear the loss and said (at page 786): This principle of law is based not only upon the principle of placing the loss on the person guilty of carelessness, but also upon a recognition of the need for certainty and security and commerce. The Saunders and Marvco decisions were followed by this court in Adera , supra, the case where a guarantor pleaded non est factum as a defense to the plaintiff's action for judgment on the guarantee of the debt of his business partner.

The court, per Hutcheon J.A., said (page 54), in the passage quoted by the trial judge that “…it is unlikely that the plea would be available to a person who signed a document without informing himself of its meaning." Van Der Ross @ Page 7 Banks also need to rely on the fact that their clear and unequivocal agreements will be upheld even if the client fails to adequately turn his or her mind to the precise terms and consequences of the agreement. [ 14 ] Given Ms.

Wood’s candid admission that she did not pay particular attention to the terms of the agreement, I am satisfied that she either understood, or certainly ought to have understood, the terms of the agreement that she was signing. To my knowledge there are no other factual defences available to her on these facts. The continuation of this matter would be an exercise in futility. [ 15 ] I am satisfied in this case that Ms. Woods does not have any likelihood of success in this matter as it relates to the action between herself and the Bank.

The documents are clear and make apparent to anyone that if the lender wanted to pay off the loan before the end of the term that there would be a number of different pay-out penalties. Those penalties range from three months of interest to the entire amount of interest owing to the end of the term of the mortgage. How much that penalty is, is entirely at the discretion of the bank. [ 16 ] In spite of this and in the face of information from the Bank when she sought to re-finance the mortgage that she would face penalties, she chose to refinance the mortgage and incur the loss complained of in this action.

[ 17 ] With respect to the actions of the Third party lawyer and law firm, I make no comment as to whether the error on the part of the lawyer in the completion of the Form B was either negligence or led to damages on the part of Ms. Wood. In dismissing the action between Ms. Wood and the Bank, I do so without prejudice to her claim to commence proceedings against the third parties, although the action against the third party effectively comes to an end with this Order. [ 18 ] As a result of all of the above, the action by Ms. Woods against the respondent CIBC Mortgages Inc. is dismissed.

The Bank is entitled to their filing fees and service expenses and disbursements as determined by the Registrar pursuant to Rule 20(2) and I decline to order any other penalties under Rule 20(5) this matter not having, ”proceeded through trial and no reasonable basis for success." _____________________________ The Honourable Judge McKimm