Executive Summary: Key Legal and Evidentiary Issues

• Timeliness and good faith of the defendant’s late motion to amend her defence and add a third-party claim on the eve of an already-scheduled mortgage enforcement summary judgment motion.
• Effect of prior failed motions and related proceedings (St. Catharines and Oshawa actions) on whether the new motion and proposed amendments amount to an abuse of process.
• Viability of new defences and counterclaims alleging fiduciary breach, statutory breach, misrepresentation by omission, unconscionability and improvident bargain based on an undisclosed familial relationship between the lender and the mortgage broker.
• Interpretation and application of Rule 26.01 (amendments to pleadings) and Rule 29.01 (third-party claims) in the context of a late-stage mortgage enforcement action.
• Scope of duties owed by lenders and brokers under the Mortgage Brokerages, Lenders and Administrators Act, 2006 and its Standards of Practice, and whether those duties can support private law claims against a lender.
• Case management concerns around keeping the plaintiffs’ Rule 20 summary judgment motion on track while permitting limited amendments and a third-party claim against the broker and brokerage.

Background and mortgage enforcement context
The proceeding arises from a mortgage enforcement action concerning four collateral second mortgages registered against four properties owned by the defendant, Merium Shahid. The plaintiffs, Sam Folino and Inet Lending Corp., advanced approximately $425,000 under these second mortgages. The mortgages went into default, and the default is admitted. The plaintiffs also claim they were contractually entitled to pay out a defaulted first mortgage on one of the properties and tack that amount onto the second mortgage indebtedness, bringing their total claimed exposure to about $1,078,532.22 as of April 28, 2025. Those substantive enforcement issues are slated to be determined at a Rule 20 summary judgment motion already scheduled for March 9, 2026.

Procedural history and earlier related proceedings
Following commencement of the action and delivery of a defence, the defendant launched related proceedings in multiple courts. She brought a motion in St. Catharines seeking an interim injunction or a stay over one of the four properties; that motion was dismissed. She then moved before Justice Kurz to discharge all four collateral mortgages upon paying $400,000 into court, contending that this was the correct amount owing. Justice Kurz dismissed the motion as “ill-conceived,” holding that the wrong rule had been used, confirming the plaintiffs’ right to pay off the first mortgage and add that sum to the second mortgage debt, and rejecting $400,000 as an appropriate discharge figure. Costs of $9,000 were ordered against the defendant, and later an attempt to obtain leave to appeal was refused with an additional $4,882.50 in costs ordered. Meanwhile, a strict timetable for the plaintiffs’ summary judgment motion was set at triage in July 2025, with deadlines for responding affidavits, reply material, cross-examinations, undertakings, factums and a triage return date. In parallel, the defendant commenced an Oshawa proceeding in July 2025 (structured as an action but in substance an application), naming the same lender parties as defendants. In that proceeding she sought, among other things, assessment of payout statements, payment into court of an “undisputed” discharge amount, a discharge order upon payment of the assessed amount, a declaration of bad faith and costs. Although she served a notice of discontinuance on the eve of the Oshawa hearing, the matter proceeded nonetheless before Justice Bhangu, where she abandoned the bad faith relief without explanation. Justice Bhangu dismissed the motion, holding that it sought essentially the same relief already denied by Justice Kurz and that it did not make sense to deal with it separately from the summary judgment process in Milton. She described the motion as “ill-conceived” and ordered that the defendant was not to bring similar motions without leave until the Rule 20 motion was determined. Throughout, the defendant has been represented by counsel.

New evidence alleged and nature of the proposed amendments
In January 2026, shortly before the March 2026 summary judgment hearing, the defendant swore an affidavit asserting that she had belatedly uncovered evidence that the mortgage broker involved in the transaction, Satindar (or Satinder) Gill, and the lender, Maninder Gill, are brothers. The evidence was said to consist of screenshots of social media profiles and posts from 2013–2014 suggesting a familial relationship and depicting the two men together at social events. The screenshots relied upon were taken on December 27, 2025, although the affidavit did not pinpoint when, after pleadings closed, the defendant first learned of the alleged relationship. The defendant contended that the broker and lender were not independent of each other, that the relationship was not disclosed in any closing documents, and that this non-disclosure fundamentally altered the character of the transaction. She claimed that if the relationship had been disclosed, she would have treated the broker’s advice differently and possibly refused to proceed. On this basis she alleged that the mortgage had been advanced in furtherance of interests adverse to her own and in breach of the broker’s fiduciary and professional duties, and she reported the broker to the Financial Services Regulatory Authority, issuing formal notices of repudiation and regulatory complaint. Attached to her affidavit were: a draft amended statement of defence, adding an expanded unconscionability and improvident bargain narrative plus a counterclaim; and a draft third-party claim against the broker and his brokerage. The proposed amended defence asserted that the mortgages are “void, voidable or unenforceable” for breaches of statutory and fiduciary duties, misrepresentation by omission, unconscionability and non-compliance with applicable legislation. The proposed counterclaim sought declarations that the mortgage is void, rescission and discharge of all charges, an accounting, damages, injunctive relief and full indemnity. The third-party pleading mirrored these allegations against the broker and brokerage.

Legal framework for amendments and third-party claims
The court approached the request to amend the defence and add a counterclaim under Rule 26.01, which requires leave to be granted on just terms unless there is non-compensable prejudice, the proposed pleading is scandalous, frivolous, vexatious or abusive, or it discloses no reasonable cause of action. The test drew on the Ontario Court of Appeal’s guidance in 1588444 Ontario Ltd. v. State Farm Fire and Casualty Co., which parallels the Rule 21 standard of asking whether it is plain and obvious that no reasonable claim can succeed. For the proposed third-party claim, the court considered Rule 29.01, which allows a defendant to bring a claim against a non-party who may be liable over, liable on an independent but related claim, or who should be bound by the court’s determination of an issue in the main action. Because the pleading stage had long passed, Rule 29.01(1.2) required either consent or leave, with the court directed to grant leave unless the plaintiff would suffer prejudice. In assessing prejudice for late third-party claims, the court adopted factors from Farrell v. Costco Wholesale and Townley v. Saunders, including delay in raising the claim, availability of underlying facts, explanations for delay, potential merit, risk of inconsistent verdicts, the state of discoveries and trial scheduling, and the impact on the plaintiff.

Analysis of abuse of process and viability of the new causes of action
On abuse of process, the court expressed serious concerns about the timing and context of the defendant’s motion, noting that it was brought very close to the long-scheduled summary judgment date, after a history of overlapping and unsuccessful motions and satellite proceedings designed to challenge the same mortgage indebtedness and security. The timing also effectively deprived the plaintiffs of a real opportunity to cross-examine on the new affidavit evidence if they wished to avoid adjourning summary judgment. However, the court distinguished concerns about the motion as a procedural vehicle from the status of the proposed pleading itself. Dismissing the motion outright as abusive would preclude the defendant from even advancing potentially viable substantive defences, a step the court was reluctant to take at the pleadings stage. As such, the abuse-of-process concerns were reserved primarily for the question of costs, and the court proceeded to examine whether each new pleaded cause of action disclosed an arguable claim.
On fiduciary duty, the court noted that the case law establishes that an ordinary lender–borrower relationship does not give rise to a fiduciary duty on the part of the lender. It relied on Baldwin v. Daubney, in which the Court of Appeal affirmed that a fiduciary relationship requires a structure where one party undertakes to act for or on behalf of another and to protect the other’s best interests, unlike a typical commercial lending relationship in which each side seeks to protect its own interests. The defendant’s authorities focused on a broker–borrower fiduciary relationship, not on a lender–borrower duty. Accepting the alleged familial relationship between lender and broker as true for pleading purposes, the court held that this alone did not transform the plaintiffs’ role into that of fiduciaries to the defendant; key indicia of a fiduciary relationship as articulated by the Supreme Court in Alberta v. Elder Advocates of Alberta Society were not present. Accordingly, the proposed claims that the plaintiffs breached a fiduciary duty were found to be untenable, and leave to amend to advance fiduciary duty claims (as defence or counterclaim) was refused.
On statutory breach, the defendant relied on duties in the Mortgage Brokerages: Standards of Practice (O. Reg. 188/08) under the Mortgage Brokerages, Lenders and Administrators Act, 2006, particularly provisions concerning disclosure of conflicts by mortgage brokers. The court observed that these standards impose obligations on brokerages and brokers, not on lenders. Whatever their potential significance for a claim against the broker, they could not support a cause of action against the lender plaintiffs, to whom the regulation does not apply. Leave to amend to allege breach of these Standards of Practice by the plaintiffs was therefore refused. However, the court permitted expanded pleading of alleged breaches of the MBLAA itself to the extent they elaborated defences already raised in the existing statement of defence.
On misrepresentation by omission, the defendant framed the failure to disclose the familial relationship as a “material misrepresentation by omission” that induced her to enter the mortgage agreement, saying she would not have proceeded on the same terms, or at all, if informed. The court treated this as a negligent misrepresentation theory and applied the five-part test from Marks v. Ottawa (City): a duty of care arising from a special relationship, untrue or misleading representation, negligent making of that representation, reasonable reliance, and resulting damage. The court held that the pleading arguably satisfied all elements except the first: there was no pleaded special relationship creating a duty of care from lender to borrower. Again drawing on Baldwin v. Daubney, the court held that, absent special facts not present here, a lender does not owe this sort of advisory duty to a borrower. The defendant had not pleaded fraudulent misrepresentation, nor any material facts that might support vicarious liability for any misrepresentation by the broker. As a result, the misrepresentation-by-omission theory against the plaintiffs was struck as disclosing no reasonable cause of action, and leave to amend to add it was denied.
By contrast, the court accepted that the proposed amendments expanding the existing allegations of unconscionability and improvident bargain could proceed, including reliance on the undisclosed relationship as part of the factual matrix. These theories had already been raised in the original defence; the amendments merely elaborated upon them and added new supporting facts without creating a new, self-standing and legally defective cause of action.

Third-party claim against the broker and brokerage
The defendant also sought leave to bring a third-party claim against Verico Mortgage Brokers of Canada Inc. and the broker, Satinder Gill, alleging breaches of fiduciary and statutory duties, non-compliance with the MBLAA and its regulations, and negligent misrepresentation. The plaintiffs did not oppose the issuance of this third-party claim, provided that their summary judgment motion could still proceed as scheduled. They argued that allowing the third-party claim could help “crystallize” any alleged losses the defendant might attribute to the broker and would ultimately assist in efficiently resolving all related issues. Applying Rule 29.01 and the prejudice factors, the court concluded that there was a sufficient explanation for the timing of the proposed third-party claim (the new familial-relationship information and its late discovery), and that, on the threshold “plainly and obviously” standard as clarified by the Court of Appeal in Maillet v. Deren, the allegations against the broker and brokerage had enough apparent merit to justify leave. The main concern was potential prejudice to the plaintiffs’ ability to advance their enforcement claim swiftly, particularly insofar as the summary judgment motion might have to be reframed as partial summary judgment, engaging appellate cautions about such motions as articulated, for example, in Fraser v. Pearson. Nonetheless, because the plaintiffs themselves did not oppose the third-party claim on this ground and maintained that summary judgment should still proceed, the court granted the defendant leave to issue the third-party claim and left it to the summary judgment judge to determine whether and how the new parties and issues should affect the conduct of that motion.

Timetabling, costs and overall outcome
On terms, the plaintiffs requested that any leave be conditioned on immediate payment of outstanding costs orders, a guarantee that the summary judgment motion would not be adjourned, a compressed timetable for focused supplementary materials and a potential mini-trial under Rule 20’s enhanced powers, and costs of the motion. The defendant sought such directions as were necessary to ensure procedural fairness, potentially including an amended timetable, leave to file supplementary materials and additional responsive steps. The court declined to tie the effectiveness of the amendments to payment of earlier costs orders, reasoning that such a condition could undermine the timely hearing of the already-fixed March 9, 2026 summary judgment motion. It also declined to dictate how the summary judgment judge should exercise Rule 20 powers. Instead, the court imposed a narrow, accelerated timetable limited to materials addressing only the approved amendments: the defendant was ordered to deliver any supplemental record by February 18, 2026; the plaintiffs were to deliver any supplemental reply by February 23, 2026; any examinations were to be completed by February 27, 2026; five-page legal submissions were to be exchanged by March 4, 2026; and all additional materials, including affidavits of service, were to be uploaded to Case Center by March 5, 2026. On costs of this motion, the court noted that while the plaintiffs were “largely successful” in resisting most of the new causes of action, the defendant had obtained limited but significant relief (narrow amendments and leave to bring a third-party claim). The judge encouraged the parties to agree on costs; if they could not, written submissions were to be exchanged on a short schedule, with no reply submissions to follow.
In overall outcome, the plaintiffs, as moving respondents, were substantially successful in knocking out the proposed fiduciary duty, statutory breach (as against the lender), and misrepresentation-by-omission claims, thereby constraining the defendant’s new theories to a narrower set of unconscionability and improvident bargain allegations and preserving the trajectory of their pending summary judgment motion. The defendant, however, did secure leave to amend her defence in a limited way and, importantly, to issue a third-party claim against the broker and brokerage. Because this endorsement does not fix any specific dollar amount of costs for the motion and leaves the quantification of any further costs or substantive monetary relief to subsequent steps, the total amount ordered in favour of the largely successful plaintiffs cannot be determined from this decision alone.