Armatage Motors Ltd. v. Royal Trust Corp. of Canada et al., (1997) 102 O.A.C. 308 (CA)

• Judge: Brooke, Osborne and Austin, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: August 11, 1997
• Jurisdiction: Ontario
• Citations: (1997), 102 O.A.C. 308 (CA)

Armatage Motors Ltd. v. Royal Trust (1997), 102 O.A.C. 308 (CA)

MLB headnote and full text

Temp. Cite: [1997] O.A.C. TBEd. SE.003

In The Matter Of the Registry Act, R.S.O. 1990, c. R-20

Armatage Motors Limited (applicant/respondent in appeal) v. Royal Trust Corporation of Canada, Edward Richard Sawyer, Susan Mary Sawyer, Royal Bank of Canada and J. David Moore (respondents/appellants in appeal)

(C22276)

Indexed As: Armatage Motors Ltd. v. Royal Trust Corp. of Canada et al.

Ontario Court of Appeal

Brooke, Osborne and Austin, JJ.A.

August 11, 1997.

Summary:

Royal Trust agreed to refinance the Sawyers' first mortgage held by the Cana­dian Imperial Bank of Commerce (C.I.B.C.). The Sawyers did not disclose that there was a second mortgage in favour of Armatage registered on title that was then overdue and on which payments of interest only were being made. Royal Trust's solicitor failed to discover the second mortgage. The Royal Trust mortgage was registered and its funds advanced for full payment to C.I.B.C. The C.I.B.C. mortgage was discharged. The Sawyers defaulted on the Armatage mort­gage. Armatage issued a notice of sale. Royal Trust sued the Sawyers and recovered default judgment. Armatage applied for a declaration that its mortgage ranked in pri­ority to Royal Trust's mortgage.

The trial judge allowed the application and granted the declaration. Royal Trust appealed. At issue was whether the trial judge was right in denying Royal Trust the remedy of subrogation.

The Ontario Court of Appeal, Brooke, J.A., dissenting, affirmed the trial judge's decision and dismissed the appeal.

Editor's note: This appeal was argued with appeals reported at 102 O.A.C. 246 and 102 O.A.C. 226.

Mortgages - Topic 1046

Priorities - Between mortgagees - Effect of refinancing - Royal Trust agreed to refinance a first mortgage held by the Canadian Imperial Bank of Commerce (C.I.B.C.) - The mortgagors did not dis­close that Armatage held a second mort­gage that was then overdue and on which only interest was being paid - Royal Trust's solicitor failed to discover the second mortgage - When Armatage dis­covered the Royal Trust mortgage it took no action pursuant to a legal opinion that its mortgage had priority - Eventually, the Sawyers defaulted on the Armatage mort­gage - The Ontario Court of Appeal granted Armatage a declaration that its mortgage ranked in priority to the Royal Trust mortgage - The court denied Royal Trust the remedy of subrogation where Royal Trust had an alternative remedy against its lawyer and Armatage would suffer prejudice if Royal Trust was subrogated to the rights of C.I.B.C.

Subrogation - Topic 1103

Particular applications - Mortgages - When available - [See Mortgages - Topic 1046 ].

Cases Noticed:

Browne v. McLean (1889), 18 O.R. 533, refd to. [para. 24].

Mutual Trust v. Creditview Estate Homes Ltd., [1997] 102 O.A.C. 246 (C.A.), refd to. [para. 25].

Midland Mortgage Corp. v. 784401 Ontario Ltd., [1997] 102 O.A.C. 226 (C.A.), refd to. [para. 25].

771225 Ontario Inc. v. Bramco Holdings Co. et al. (1995), 77 O.A.C. 75; 21 O.R.(3d) 739 (C.A.), refd to. [para. 48].

Peter v. Beblow, [1993] 1 S.C.R. 980; 150 N.R. 1; 23 B.C.A.C. 81; 39 W.A.C. 81, refd to. [para. 48].

International Corona Resources Ltd. v. Lac Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 48].

Boscawen v. Bajwa, [1995] 4 All E.R. 769 (C.A.), refd to. [para. 49].

Coupland Acceptance Ltd. v. Walsh, [1954] 2 D.L.R. 129 (S.C.C.), refd to. [para. 51].

Bramber Consulting Management & Serv­ice Corp. v. Commerce Capital Mort­gage Corp. et al. (1981), 36 O.R.(2d) 601; 22 R.P.R. 17 (H.C.), refd to. [para. 53].

Central Guaranty Trust Co. v. Dixdale Mortgage Investment Corp. (1994), 77 O.A.C. 253; 24 O.R.(3d) 506 (C.A.), refd to. [para. 55].

Metropolitan Trust Co. of Canada v. Henneberry et al. (1995), 80 O.A.C. 106; 22 O.R.(3d) 703 (C.A.), refd to. [para. 55].

Authors and Works Noticed:

Maddaugh and McCamus, The Law of Restitution (1990), p. 159 [para. 23].

Counsel:

Stanley G. Fisher, Q.C., Ian Godfrey and Barbara J. Nicholls, for the appellants, Royal Trust Corporation of Canada and J. David Moore;

Eric R. Williams, for the respondent.

This appeal was heard on May 15, 16, 1997, before Brooke, Osborne and Austin, JJ.A., of the Ontario Court of Appeal.

On August 11, 1997, the following opin­ions were released:

Austin, J.A. (Osborne, J.A., concurring) - see paragraphs 1 to 34;

Brooke, J.A., dissenting - see paragraphs 35 to 56.