Fiducie Pret v. Canada Mortgage and Housing Corp., (1991) 136 N.R. 129 (FCA)

• Judge: Décary, Hugessen and Desjardins, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: September 10, 1991
• Jurisdiction: Canada (Federal)
• Citations: (1991), 136 N.R. 129 (FCA)

Fiducie Pret v. Canada Mortgage & Housing (1991), 136 N.R. 129 (FCA)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Fiducie, Pret et Revenu (appelante) v. Société Canadienne D'Hypothèques et de Logement (S.C.H.L.) (intimée)

(A-64-86)

Indexed As: Fiducie Pret v. Canada Mortgage and Housing Corp.

Federal Court of Appeal

Décary, Hugessen and

Desjardins, JJ.A.

September 20, 1991.

Summary:

Fiducie made mortgage loans which were insured by Canada Mortgage and Housing Corp. (C.M.H.C.). The loans were renewed by Fiducie at a higher interest rate. Later the borrower defaulted and C.M.H.C. paid Fiducie $1,866,295 under the insurance contract. Fiducie claimed an additional $227,286, being the difference between the original interest rates and the renewal rate.

The Federal Court of Canada, Trial Divi­sion, in a decision reported at 5 F.T.R. 218, dismissed the claim by Fiducie because the renewal was not authorized by the National Housing Loan Regulations and was not made in accordance with the applicable provincial law. Fiducie appealed.

The Federal Court of Appeal allowed the appeal.

Evidence - Topic 2401

Special mode of proof - Presumptions - Inference from failure to call available evidence - A lender insured two loans with Canada Mortgage and Housing Corp. (C.M.H.C.) - The loans were renewed at a higher interest rate - C.M.H.C. submitted that as a third party, the renewal could not be enforced against it because it was not on notarial form and was not registered - However, there was evidence that C.M.H.C.'s employees were aware of the renewal negotiations and agreement - C.M.H.C. declined to call its employees to rebut that evidence - The Federal Court of Appeal observed that C.M.H.C.'s silence constituted an admis­sion that it had knowl­edge of the renewal - See paragraph 23.

Government Programs - Topic 2326

Housing - Mortgage loan insurance - Liability of insurer, for interest rate increase on renewal - Following a default a mortgagee lender claimed against Canada Mortgage and Housing Corp. (C.M.H.C.) for additional interest, being the difference between the original interest rates and the higher rate on renewal - C.M.H.C. sub­mitted that the renewal was invalid because it was premature (i.e., made before the expiry of the original five year term required by the National Housing Loan Regulations) - Also, the renewal was not notarized and registered - The Federal Court of Appeal held C.M.H.C. liable for the interest at the higher renewal rate.

Government Programs - Topic 2326

Housing - Mortgage loan insurance - Liability of insurer, for interest rate increase on renewal - A lender made two loans that were insured by Canada Mort­gage and Housing Corp. (C.M.H.C.) - The loans were renewed at a higher interest rate - Upon default, the lender submitted that C.M.H.C. was liable for interest at the higher renewal rate - C.M.H.C. submitted that the renewal was invalid because it was not in notarial form nor was it registered - The lender claimed that defence could only be invoked by third parties - The Federal Court of Appeal stated that C.M.H.C. was a participant in a common venture of housing construction and not a third party - See paragraph 22.

Government Programs - Topic 2326

Housing - Mortgage loan insurance - Liability of insurer, for interest rate increase on renewal - A lender made two loans that were insured by Canada Mort­gage and Housing Corp. (C.M.H.C.) - The lender renewed the loans at a higher inter­est rate - Upon default, the lender claimed interest from C.M.H.C. based on the higher renewal rate - The lender sued to enforce its claim - On appeal, the lender claimed that it was entitled to interest at the renewal rate up to the date of the appeal court's judgment - The Federal Court of Appeal held that from the date of the trial decision, interest was payable only at the legal rate - See paragraph 25.

Interest - Topic 3061

Statutory interest - Interest Act - Mort­gages - General - [See third Govern­ment Programs - Topic 2326 ].

Joint Ventures - Topic 5

General principles - What constitutes a joint venture - Mortgage insurance - Judgment interest - [See second Govern­ment Programs - Topic 2326 ].

Cases Noticed:

Robitaille v. Madill et al., [1990] 1 S.C.R. 985; 111 N.R. 155; 29 Q.A.C. 91, refd to. [para. 4, footnote 1].

Potash v. Royal Trust Co., [1986] 2 S.C.R. 351; 69 N.R. 286; 44 Man.R.(2d) 30, refd to. [para. 20].

Banque Mercantile du Canada v. Yves Germain Inc., [1984] S.C. 856, refd to. [para. 22, footnote 22].

Russell v. Lefrançois (1883), 8 S.C.R. 335, consd. [para. 23].

Léger v. Poirier, [1944] S.C.R. 152, refd to. [para. 23, footnote 23].

Talbot v. Talbot, [1959] S.C. 513, refd to. [para. 23, footnote 23].

Touchette v. Touchette, [1974] C.A. 575, refd to. [para. 23, footnote 23].

Meskinis v. Rabell, [1975] C.A. 657, refd to. [para. 23, footnote 23].

Strasser v. Roberge, [1979] 2 S.C.R. 953; 29 N.R. 541, refd to. [para. 23, footnote 23].

Statutes Noticed:

National Housing Act, R.S.C. 1970, c. N-10, sect. 8(1)(a), sect. 8(1)(c) [para. 2]; sect. 6(1)(d), sect. 6(1)(h), sect. 6(1)(j) [para. 3].

National Housing Loan Act Regulations, C.R.C. 1978, c. 1108, sect. 9(3), sect. 17(1), sect. 35(1), sect. 35(2)(b) [para. 4].

National Housing Loan Regulations - see National Housing Loan Act Regulations.

Authors and Works Noticed:

Ciotola, Droit des sûretés, 2e éd., 1987, pp. 312-313 [para. 22, footnote 21].

Deslauriers, Précis de droit des sûretés, 1990, p. 277 [para. 22, footnote 21].

Dussault and Borgeat, Traité de droit administratif, 2e éd., 1984, p. 423 [para. 15, footnote 15].

Counsel:

Raymond Lessard, for the applicant;

René LeBlanc, for the respondent.

Solicitors of Record:

Flynn, Rivard, Québec, Quebec, for the applicant;

John C. Tait, Q.C., Deputy Attorney Gen­eral of Canada, Ottawa, Ontario, for the respondent.

This appeal was heard in Montréal, Que­bec, on September 10, 1991, by Décary, Hugessen and Desjardins, JJ.A., of the Fed­eral Court of Appeal. The decision of the court was delivered in Ottawa, Ontario, by Décary, J.A., on September 20, 1991.