Manias v. Norwich Financial Inc. et al., 2008 ONCA 532

• Judge: Feldman, MacPherson and Cronk, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: June 30, 2008
• Jurisdiction: Ontario
• Citations: 2008 ONCA 532;(2008), 238 O.A.C. 253 (CA)

Manias v. Norwich Financial (2008), 238 O.A.C. 253 (CA)

MLB headnote and full text

Temp. Cite: [2008] O.A.C. TBEd. JL.029

Arnold Manias (respondent/applicant) v. Norwich Financial Inc. , Household Realty Corporation Limited and Wanda Diepstra (appellant/respondent)

(C48184; 2008 ONCA 532)

Indexed As: Manias v. Norwich Financial Inc. et al.

Ontario Court of Appeal

Feldman, MacPherson and Cronk, JJ.A.

June 30, 2008.

Summary:

In 2002, a mortgagor secured funds by a first mortgage to Manias and a second mortgage to Household Realty Corp. (HRC). Contrary to the knowledge of all parties, the HRC mortgage was mistakenly registered as a first mortgage and the Manias mortgage was registered as a second mortgage. The mortgagor gave a third mortgage to Norwich. When the mortgagor defaulted on the Manias mortgage, the registration error was discovered and HRC acknowledged that the Manias mortgage had priority. Norwich, with knowledge of the error, took an assignment of the HRC mortgage and claimed priority over the Manias mortgage based on the registration. An applications judge rejected Norwich's priority claim on the grounds that (1) Norwich was bound by its actual knowledge that the Manias mortgage had priority; (2) Norwich would be unjustly enriched if the HRC mortgage had priority; and (3) since HRC acknowledged that the Manias mortgage had priority, and communicated that to Norwich before the assignment, Norwich could be in no better position than HRC. Norwich appealed.

The Ontario Court of Appeal dismissed the appeal, stating that "the application judge's factual finding that Norwich had actual notice of the fact that the Manias mortgage was in first position is a complete answer to Norwich's priority claim". Norwich was not a bona fide purchaser for value without notice of the priority of the Manias mortgage. Actual knowledge precluded reliance on s. 78(5) of the Land Titles Act.

Mortgages - Topic 311

Land titles (Torrens) system - Priorities - [See Real Property - Topic 8064 ].

Real Property - Topic 8008

Title - Registration of instruments, etc. - Land titles system - Bona fide purchaser - What constitutes - [See Real Property - Topic 8064 ].

Real Property - Topic 8064

Title - Registration of instruments, etc. - Notice of prior instrument - General - Actual knowledge of prior instrument - In 2002, a mortgagor secured funds by a first mortgage to Manias and a second mortgage to Household Realty Corp. (HRC) - Contrary to the knowledge of all parties, the HRC mortgage was mistakenly registered as a first mortgage and the Manias mortgage was registered as a second mortgage - The mortgagor gave a third mortgage to Norwich - When the mortgagor defaulted on the Manias mortgage, the registration error was discovered and HRC acknowledged that the Manias mortgage had priority - Norwich, with knowledge of the error, took an assignment of the HRC mortgage and claimed priority over the Manias mortgage based on the registration - An applications judge rejected Norwich's priority claim on the grounds that (1) Norwich was bound by its actual knowledge that the Manias mortgage had priority; (2) Norwich would be unjustly enriched if the HRC mortgage had priority; and (3) since HRC acknowledged that the Manias mortgage had priority, and communicated that to Norwich before the assignment, Norwich could be in no better position than HRC - The Ontario Court of Appeal dismissed Norwich's appeal, stating that "the application judge's factual finding that Norwich had actual notice of the fact that the Manias mortgage was in first position is a complete answer to Norwich's priority claim" - Norwich was not a bona fide purchaser for value without notice of the priority of the Manias mortgage - Actual knowledge of the prior mortgage precluded reliance on s. 78(5) of the Land Titles Act.

Cases Noticed:

Dominion Stores Ltd. v. United Trust Co. et al., [1977] 2 S.C.R. 915; 11 N.R. 97, refd to. [para. 8].

Counsel:

Matthew R. Todd, for the appellant;

Amanda Jackson, for the respondent.

This appeal was heard on June 30, 2008, before Feldman, MacPherson and Cronk, JJ.A., of the Ontario Court of Appeal.

The following judgment was delivered orally by the Court on June 30, 2008, and released on July 3, 2008.