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Posted on December 1, 2009 | Posted in Collections

This is a variation on the theme of the previous case. In this situation, the borrower blames someone else for his woes and then states that, consequently, the bank should not be able to claim repayment of the debt. This was the situation in The Toronto-Dominion Bank v. Campian, a 2009 Ontario Superior Court of Justice decision. 


The borrower was moving to set aside a default judgment. One of the requirements for the borrower to do so was to demonstrate a defence on the merits. The standard for this test is very low.

The borrower claimed that he and a bank employee had a partnership to acquire houses, renovate them, and then sell them for a profit. The role of the employee was to arrange financing with the bank.

The borrower purchased a house for the partnership in the name of the borrower’s grandfather. The bank provided the financing and took a mortgage from grandfather. One month later, grandfather transferred the house to the borrower alone, without notice to the bank. No doubt, this contravened the usual mortgage provision that the bank had to consent to all transfers.

The borrower stated that the employee had pressed him to have grandfather transfer the house because grandfather was not in good health. The borrower alleged that the employee represented to him that the borrower would not be liable on the mortgage. 


On cross-examination, the borrower admitted that, when he put the house in grandfather’s name, he had told grandfather that both the employee and the borrower would be liable to ensure that the mortgage was paid. Once he admitted that, the writing was on the wall. He had expected to be liable as soon as grandfather took title and he knew he did not rid himself of that liability by taking title to the house from grandfather. 


The judge held that it was clear from the cross-examination that the employee was acting at all times as the borrower’s partner, and not as an employee of the bank, and what the borrower really wanted was to claim a 50% contribution from the employee. Since this had nothing to do with the bank, the judge held that there was no defence on the merits and refused to set aside the judgment.


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