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1934 Supreme(SC) 19
Privy Council At Ontario
Alness, Wright , Russell of Killowen, Thankerton, Justice Lords Merrivale, JJ.
H.A. Morine -Appellant
Versus
London Loan Assets Ltd. and others -Resopndent
Appeal No. 94 of 1933
Decided On : 17-04-1934
H. Douglas, Tilley , Cyeil Salmon, Alfred Marine
Appellate courts will not disturb findings of fact regarding witness credibility made by a trial judge unless the burden of proof is overwhelmingly met. Additionally, defenses not pleaded or argued in lower courts cannot be raised for the first time before a second appellate tribunal.
Headnote:(A) Mortgage Law - Power of Sale and Merger - Fictitious sale of mortgaged property - Where a sale conducted under the power of sale is found to be a sham and the purchaser is merely a nominee of the mortgagor, such a transaction does not discharge the mortgagor's personal liability nor does it result in a merger of the mortgage and the equity of redemption.
(B) Evidence - Findings of Fact - Credibility of Witness - A litigant seeking to reverse findings of fact arrived at by a trial judge and confirmed on appeal bears a heavy burden, particularly where the principal witness has been discredited by the trial judge based on demeanour and conduct.
(C) Civil Procedure - New Defenses - Defenses such as laches or lack of notice of assignment which were neither pleaded nor argued in the courts below are not open to the appellant at the second appellate stage.
Facts of the case:
A mortgagor was personally liable under three mortgages. The mortgagee exercised the power of sale, conveying the property to a third party. It was later alleged that this sale was fictitious and the purchaser was a nominee for the mortgagor to avoid liability. The mortgagor claimed he was freed from liability via a discharge document and by the doctrine of merger, as the mortgagee eventually held both the mortgages and the equity of redemption.
Findings of Court:
The trial court found the sale to be fictitious and a contrivance to relieve the mortgagor of liability. The discharge document was held to be invalid and unauthorized. Consequently, no merger occurred, and the mortgagor remained liable under the mortgages.
Issues: Whether the sale of the property was genuine or a fictitious transaction to avoid liability; whether the discharge document was valid; and whether the doctrine of merger extinguished the mortgagor's liability.
Ratio Decidendi: Findings of fact by a trial judge, especially regarding witness credibility and demeanour, are entitled to great weight and should not be disturbed by appellate courts unless there is a compelling reason. Furthermore, new legal defenses cannot be raised for the first time in a final appellate court if they were not pleaded or argued in the lower courts.
Result: Appeal dismissed.
Legal Category Hierarchy
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property law
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mortgages
- power of sale
- discharge of mortgage
- merger
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mortgages
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practice and procedure
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evidence
- witness credibility
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appeals
- reversal of findings of fact
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pleadings
- laches
-
evidence
Lord Russell of Killowen:-
In this case one Morine appeals from a judgment of the Appellate Division of the Supreme Court of Ontario, which dismissed his appeal from a judgment of Wright, J. The relevant facts out of which the litigation originated may be stated briefly. On 8th June 1923, there were in existence three mortgages affecting a property in Toronto, subsequently known as "Buckingham Apartments," viz.-(1) a mortgage dated 7th February 1923, and made between one Green and Morine as mortgagors (their wives joining to, bar dower) and the Huron and Erie Mortgage Corporation (hereinafter called the Huron Corporation) as mortgagees, to secure a principal sum of $150,000 and interest; (2) a mortgage dated 13th February 1923, and made between the said Green and Morine as mortgagors (their wives joining to bar dower) and the London Loan and Savings Company of Canada (hereinafter called the Loan Company) as mortgagees to secure a principal sum of $35,000 and interest, and (3) a mortgage dated 23rd May 1923, and made between the said Green and Morine as mortgagors (their wives joining to bar dower) and the Loan Company as mortgagees, to secure a principal sum of $20,000 and interest. Under or by virtue of each of these mortgages Morine was personally liable for the payment of the principal moneys and interest thereby secured. On 8th June 1923, Green conveyed and released to Morine all his interest in the property. Morine, as sole owner, subsequently negotiated a further loan on the property from one Renton, who represented a group of Scottish investors. For the purpose of carrying this transaction through, Morine assigned his equity of redemption in the property to his son-in-law, Dyas, who created a fourth mortgage (dated 10th August 1923) on the property in favour of Rentonn to secure a principal sum of $46,000 and interest.
In the month of June 1925, the Loan Company, after an attempted sale by public auction, sold the property to one Durno, in exercise of their powers under the mortgage of 23rd May 1923. The price stated in the conveyance to him (dated 1st June 1925) to have been paid by Durno is the sum of $227,500. No moneys, were, in fact, paid by Durno, the price being satisfied or accounted for as follows : Durno took his conveyance subject to the Huron Corporation's mortgage upon the security of which the sum of $147,000 and no more was then due. Durno executed a mortgage (dated 1st June 1925) in favour of the Loan Company to secure a principal sum of $77,000, which represented the amounts due to the Loan Company in respect of the mortgages for $35,000 and 20,000 and other items; the balance of $3,500, payable in cash, was never in fact paid. Durno then executed a conveyance of the property (dated 26th June 1925) to the Consolidated Trusts Corporation in trust, his wife joining to bar dower; but by an indenture dated 8th July 1925, Durno granted and released to the Consolidated Trusts Corporation (nearly all the stock of which was owned by the Loan Company) all his right, title and interest at law or in equity in the property. In the meantime, by a document dated 3rd July 1925, and purporting to be under the seal of the Loan Company, it was certified that all money due under the said mortgage of 13th February 1923, had been satisfied. The conveyance to Durno, the mortgage by him to the Loan Company, the conveyance by Durno to the Consolidated Trust Corporation of 26th June 1925, and the document of 3rd July 1925, were all registered on 8th July 1925. The identure of 8th July 1925 was never registered. By an indenture dated -7th February 1928, the Loan Company paid off the Huron Corporation, and the Huron Corporation assigned to the Loan Company all moneys due or to become due in respect of the said mortgage of 7th February 1923, and the security for the same.
The result of the transactions with Durno, if those dealings were binding on the Loan Company, would be to put an end to the mortgages for $35,000 and $20,000, and
