The borrowers alleged that:
- The loan monies were not advanced to them.
- The lender’s claim is fraudulent in intending to mislead the court to believe that the lender provided valuable consideration to the defendants.
- The loan application was prepared by a mortgage originator, as agent of the lender. It was forged and included false and misleading information regarding the employment and financial situation of the borrowers.
- The lender was aware of serious and unlawful acts, including forgery and fraud, that were committed by its agent.
- The lender was reckless and wilfully blind to the illegal actions of its agent, including failure to comply with lending guidelines and the mortgage originator’s code of practice.
The borrowers sought determination of a separate question, namely whether the lender had standing to sue, however, the judge held:
But as I currently understand their case, the borrowers allege that the lender obtained its registered interest as a result of fraud either its own fraud, or fraud of an agent that can be brought home to the lender. Alternatively, the borrowers may seek to establish in personam rights against the lender under which they are entitled to a remedy which binds the lender to give up its registered interest. On either basis, the preliminary trial will inevitably require findings on complex and contested questions of fact. Those questions are not suitable for a preliminary hearing