Executive Summary: Key Legal and Evidentiary Issues

• Respondent obtained summary judgment declaring a mortgage void as a fraudulent conveyance.

• Appellant failed to file evidence or comply with discovery obligations, leaving the respondent's record unchallenged.

• Numerous badges of fraud were established, supporting the finding of a sham mortgage.

• The court upheld the motion judge’s use of summary judgment, finding no genuine issue requiring a trial.

• Hearsay objections to the respondent’s affidavit were dismissed due to procedural history and admissibility of attached sworn statements.

• The appeal was dismissed and the respondent awarded partial indemnity costs of $10,797.15.

Background and parties involved

Chris Jamie Sapusak, the respondent, was the owner of a residential property on Royal Terrace Crescent in Caledon, Ontario. In 2018, the property was sold under power of sale by Roy D’Mello, through his companies, who held a mortgage on it. After this sale, a new mortgage was registered in favour of the appellant, Canguard Group Limited, by the purchaser under power of sale—Bangia Property Services Ltd.

Mr. Sapusak alleged that the sale to Bangia and the subsequent mortgage in favour of Canguard were fraudulent transactions designed to improperly strip him of his property. In 2023, a court had already set aside the original sale to Bangia as fraudulent and restored title to Mr. Sapusak. The remaining issue was whether the mortgage in favour of Canguard should also be voided.

Summary judgment motion and findings

Mr. Sapusak brought a motion for partial summary judgment seeking a declaration that the Canguard mortgage was void as a fraudulent conveyance. He submitted a detailed evidentiary record identifying multiple badges of fraud, including lack of documentation, unexplained timing, and the absence of any real financial consideration.

Canguard did not file any responding evidence, failed to deliver an affidavit of documents, and did not cross-examine Mr. Sapusak on his affidavits. The motion judge accepted Mr. Sapusak’s evidence as unchallenged and found that the mortgage was indeed a sham transaction. The judge granted summary judgment declaring the mortgage void and ordered its deletion from the land title registry.

Issues on appeal

Canguard appealed, arguing that the motion judge erred in relying on a lawyer’s affidavit which contained hearsay and in granting partial summary judgment without trial. The Court of Appeal dismissed these arguments. It found that the affidavits attached to the lawyer’s affidavit were previously filed and sworn by the respondent and that Canguard had multiple opportunities to challenge them but did not.

The court emphasized that the summary judgment process was appropriate and efficient given the overwhelming uncontradicted evidence and the lack of meaningful participation by the appellant. It rejected the argument that other encumbrances on title affected the decision, clarifying that the order only concerned Canguard’s mortgage.

Conclusion and outcome

The Court of Appeal dismissed the appeal in full. It upheld the summary judgment order voiding the mortgage and affirmed that there was no genuine issue requiring a trial. The court ordered Canguard Group Limited to pay $10,797.15 in costs to Mr. Sapusak on a partial indemnity basis. The decision reinforces that parties who fail to engage with the litigation process, especially at the summary judgment stage, do so at their own risk.