Zabanah v. Capital Direct Lending Corp. et al., 2014 ONCA 872

• Judge: Blair, Watt and Lauwers, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: December 05, 2014
• Jurisdiction: Ontario
• Citations: 2014 ONCA 872;(2014), 328 O.A.C. 395 (CA)

Zabanah v. Capital Direct Lending Corp. (2014), 328 O.A.C. 395 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. DE.020

Diana Zabanah (plaintiff/appellant) v. Capital Direct Lending Corp., Anderson Sinclair LLP, Constantine Glinos and Chicago Title Insurance Company (defendants/respondents)

(C58755; 2014 ONCA 872)

Indexed As: Zabanah v. Capital Direct Lending Corp. et al.

Ontario Court of Appeal

Blair, Watt and Lauwers, JJ.A.

December 5, 2014.

Summary:

In 2007, Zabanah purchased, through a broker, a second mortgage as an investment. The mortgagor had fraudulently informed the broker that the balance of the first mortgage was $83,000, when it in fact exceeded $200,000. The broker purchased title insurance and assigned the policy to Zabanah. Zabanah learned of the fraud in 2008, but still renewed the second mortgage in 2008, 2009 and 2010. In 2010, the mortgagor became bankrupt. The sale of the home yielded insufficient proceeds to pay off the first mortgage, leaving nothing for Zabanah. Zabanah filed a statement of claim in November 2011. The action for damages against the broker claimed negligence, breach of contract and breach of fiduciary duty. Zabanah also sought an order enforcing her claim under the title insurance policy. The broker moved for summary judgment on the ground that the two year limitation period had expired. The title insurer sought summary judgment on the ground that the policy excluded recovery for any loss or damage arising under the first mortgage. The motions judge granted summary judgment dismissing the claims against the broker and insurer. Zabanah appealed.

The Ontario Court of Appeal dismissed the appeal. The loss suffered was not covered by the insurance policy. The claim against the broker was statute-barred by the two year limitation period in the Limitations Act. The 10 year limitation period in s. 43 of the Real Property Limitations Act did not apply.

Insurance - Topic 10105

Title insurance - Coverage - Scope of - [See Limitation of Actions - Topic 4141 ].

Limitation of Actions - Topic 4141

Recovery of land - Application of limitation period - General - In 2007, Zabanah purchased, through a broker, a second mortgage as an investment - The mortgagor had fraudulently informed the broker that the balance of the first mortgage was $83,000, when it in fact exceeded $200,000 - The broker purchased title insurance and assigned the policy to Zabanah - Zabanah learned of the fraud in 2008, but still renewed the second mortgage in 2008, 2009 and 2010 - In 2010, the mortgagor became bankrupt - The sale of the home yielded insufficient proceeds to pay off the first mortgage, leaving nothing for Zabanah - Zabanah filed a statement of claim in November 2011 - The action for damages against the broker claimed negligence, breach of contract and breach of fiduciary duty - Zabanah also sought an order enforcing her claim under the title insurance policy - The broker moved for summary judgment on the ground that the two year limitation period had expired - The title insurer sought summary judgment on the ground that the policy excluded recovery for any loss or damage arising under the first mortgage - The motions judge granted summary judgment dismissing the claims - The Ontario Court of Appeal dismissed Zabanah's appeal - The loss suffered was not covered by the insurance policy - The policy covered only the validity and priority of the second mortgage (which were not in issue) - The policy did not provide "investment" insurance - The claim against the broker was statute-barred by the two year limitation period in the Limitations Act, which commenced running in April 2008 when Zabannah had knowledge of the fraud - The 10 year limitation period in s. 43 of the Real Property Limitations Act (RPLA) did not apply - The action was simply a contract and negligence claim, not a claim to an interest in land as required by the RPLA.

Cases Noticed:

Kowal et al. v. Shyiak et al. (2012), 296 O.A.C. 352; 13 C.L.R.(4th) 7; 2012 ONCA 512, refd to. [para. 8].

Equitable Trust Co. v. 2062277 Ontario Inc. et al. (2012), 289 O.A.C. 345; 109 O.R.(3d) 561; 2012 ONCA 235, dist. [para. 14].

Counsel:

Antonio Conte, for the appellant;

Anthony Cole and Kim T. Duong, for the respondent, Capital Direct Lending Corp.;

Ted Evangelidis, for the respondent, Chicago Title Insurance Company.

This appeal was heard on November 27, 2014, before Blair, Watt and Lauwers, JJ.A., of the Ontario Court of Appeal.

On December 5, 2014, the following judgment by the court was released.