A Property Nightmare
The Durranis had set out to purchase a lawnmower, but the discovery of a judgment registered against the title of their home was a shock to the couple. The discovery of this judgment occurred while a routine credit check was performed. The couple has three adult children. The home is their main asset for their retirement.
Auran Durrani, the Durranis’ 35 year old son, met the defendant, Gideon Augier, a paralegal, under the assumption that Mr. Augier could help him with the incorporation of his company. This is the only work that Mr. Augier performed and it soon ended when a company project failed to move forward. Mr. Augier claims that Auran owed him $10,000. Mr. Augier then proceeded to sue both Auran and his company to recover the fee. Mr. Augier never served Auran and got a judgment using phony paperwork.
Following this situation, Mr. Augier created a document called a “collateral loan agreement” which included information he acquired of the Durranis three years ago. The document set out a loan agreement between Auran and Mr. Augier, using the Durranis’ house as a part of the collateral for the loan. Mr. Augier arranged to have notice of the loan agreement registered on title. Two weeks later, Mr. Augier commenced an action for foreclosure and for a writ of possession on the Durranis’ home based on the collateral loan agreement. He then listed the property for sale with Joanna Jones, a real estate agent.
Mr. Augier considered himself a paralegal. He also sold security on properties, including mortgages on properties; later found to be forgeries. Mr. Augier had a criminal record for fraud.
The truth is that no one in the Durrani family borrowed money from or through Mr. Augier that was secured by the Durrani home. There was no evidence that any of the Durrani’s signed any of the documents presented by Mr. Augier. These documents were similar to the documents used in other fraudulent activities conducted by Mr. Augier.
When the Durranis discovered a problem with their credit check, they consulted a lawyer and learned that a person by the name of Gideon Augier had registered a judgment against their property. The Durranis had absolutely no knowledge of the activities of Mr. Augier regarding their property.
After corresponding with Mr. Augier’s lawyer, it was evident that Mr. Augier was now trying to sell the Durrani property as quickly as possible. Mr. Garda was a purchaser interested in the property and wished to pass it on to a Mr. Mangos for $176,000. The agent involved on behalf of Mr. Mangos was Joanna Jones. In short, the entire transaction failed to close and Mr. Augier decided to sell to Melanie and Sophia Zettler for $160,000, well below market value. The Zettler sisters are Ms. Jones’s daughters and are registered on the property as owners. Along with the agreement of purchase and sale, there was a side agreement. This agreement was to insure that part of the deal would be kept confidential. The Zettlers and Mr. Augier signed the agreement. A mortgage was registered with the Royal Bank on the property with the Zettlers as the mortgagors. For the purpose of obtaining the mortgage, Ms. Jones gave the Bank a different agreement of purchase and sale omitting the so-called side agreement.
The Durranis brought a motion to overturn the default judgment. Mr. Augier claims that his lawyer assured him that he may proceed with the sale. The lawyer denies giving this assurance to Mr. Augier and actually advised towards the opposite, not to sell.
The Durranis had changed their lawyer and Mr. Augier changed his lawyer to represent him in the sale of the property. The overall feeling is that Mr. Augier did in fact know that the sale could not be completed due to the motion to overturn the default judgment.
The Zettlers are regarded as purchasers in the agreement of purchase and sale, however they took title in trust of their mother Ms. Jones. On the same day that the property closed, Mr. Augier proceeded to amend the register to reflect his interest which came from the amended judgment and the writ of foreclosure.
Ms. Durrani received a telephone call from Ms. Jones, declaring that she was buying the home. Ms. Durrani replied that her home was not for sale and that it was a fraudulent situation now before the courts. Ms. Jones insisted that she was indeed buying the property. Ms. Jones claims that she only called to inform the Durranis that she purchased the home and nothing more.
The main issues are if Mr.Augier, The Zettlers, Ms. Jones and the Royal Bank have any legitimate interest in the Durrani property. Another issue arising from this case is if a relief is available under the Land Titles Act for any party found to have a valid interest in the property.
A fraudulent document does not become valid as soon as it is registered. The Land Titles Act protects bona fide purchasers who become registered owners. Mr. Augier did not have a legitimate title or interest in the property nor did the Zettlers. The court ruled that the Durranis had a valid title to the property. Complete ownership is restored to them.
The Royal Bank’s mortgage was ruled to be valid because they had no knowledge of the fraud. The Bank could not, however, recover the amount owing from the Durranis. In contrast, the order for payment of the mortgage was issued against the Zettlers.
The Durranis were awarded judgment against Mr. Augier for punitive damages of $25,000 and costs of $100,000. The Zettlers were required to pay the Durranis $15,000 and the Bank at $25,000 along with the amount of the mortgage owing.
The government of Ontario has established The Land Titles Assurance Fund as a way to compensate people who are prejudiced by the use of the Act. The Bank could pursue a claim against the Fund if it could not recover the money from the Zettlers.