Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff successfully enforced a second mortgage after the court found no genuine issue requiring a trial.

• Defendants’ argument of non est factum failed due to inconsistent and unsupported affidavit evidence.

• Allegation of mortgage fraud by defendants’ son did not meet statutory definition under the Land Titles Act.

• The court found that legal advice had been properly provided and understood by the mortgagors.

• No liability attached to the lawyer involved, as she met the professional standard of care.

• Summary judgment motions eliminated two parties (plaintiff and third-party lawyer), streamlining further litigation.

Facts and procedural background

The plaintiff, Indigoblue Mortgage Investment Corporation, sought to enforce a $596,000 second mortgage registered against a residential property owned by Muhammad Ahmad and Sajidah Kausar. The mortgage was registered on July 29, 2022. The proceeds were used in part to discharge a prior mortgage and the balance deposited into a joint RBC account held by the defendants. After missed interest payments in May and June 2023, the mortgage went into default.

The defendants alleged they had not knowingly entered into the mortgage. They claimed their son, Awais Ahmad, impersonated them, signed documents without their knowledge, and used funds for his personal debts and pre-construction condominium deposits. Based on these claims, the defendants initiated third-party proceedings against their son, their lawyer Toloue Ghahraei, her law firm, and the Royal Bank of Canada.

All parties brought motions for summary judgment: the plaintiff against the defendants, the defendants against the lawyer, and the lawyer against the defendants.

Plaintiff’s motion for summary judgment

The court granted the plaintiff’s motion, finding that the defendants’ defences lacked merit. Though Awais may have misused funds, the court held this did not negate the enforceability of the mortgage. A substantial portion of the mortgage proceeds was used to pay off an existing, unchallenged mortgage. The remainder was deposited into the defendants’ own bank account. The real grievance, according to the court, was that the defendants failed to monitor access to their joint account.

The non est factum defence was rejected due to credibility concerns. Although the defendants claimed they lacked English proficiency and did not understand the transaction, their affidavits showed signs of inconsistency, absence of translation evidence, and internal contradictions. The court preferred the evidence of the legal professionals involved, who detailed how the documents were reviewed and explained during meetings.

The fraud and forgery defence under the Land Titles Act was also dismissed. The court held that the legal standard for a “fraudulent instrument” was not met. Even if Awais clicked the DocuSign button, the defendants had knowingly participated in the mortgage process, and legal advice had been provided.

Defendants’ motion against the lawyer

The defendants accused Ghahraei of negligence, arguing that she failed to assess their capacity, detect red flags of undue influence, and improperly allowed Awais to participate in legal meetings. The court dismissed these claims.

It found that Ghahraei only acted for Muhammad Ahmad and that Kausar received independent legal advice from a different lawyer. Both legal professionals provided credible accounts of explaining the mortgage terms, ensuring understanding, and verifying voluntariness. The court also noted that any involvement by Awais had been authorized by the defendants themselves.

The defendants’ reliance on an expert report critical of Ghahraei’s conduct was undermined by the fact that the report was based solely on the defendants’ unaccepted evidence. The court preferred the competing expert opinion supporting Ghahraei’s adherence to the professional standard of care.

Lawyer’s motion for summary judgment

Although Ghahraei had not filed a formal motion, the court granted her what it termed a “boomerang” summary judgment. It held that the evidence conclusively demonstrated no genuine issue requiring trial, justifying a judgment in her favour to streamline the proceedings.

The court emphasized that summary judgment in her favour would reduce litigation costs and complexity, especially since the remaining claims—against RBC and Awais—were factually and legally distinct.

Outcome

The plaintiff was granted summary judgment and allowed to proceed with possession of the property. The third-party claim against Ghahraei was dismissed, and her summary judgment motion was granted. The defendants’ motion was dismissed in its entirety. The case proceeds only against the remaining third parties, RBC and Awais Ahmad.