Date Issued: November 9, 2023

File: SC-2022-009290

Type: Small Claims

Civil Resolution Tribunal

Indexed as: Whittome v. Bains, 2023 BCCRT 974

Between:

AMY SUE WHITTOME and LAWREN NEIL SMITH

Applicants

And:

GURSHER BAINS and SAVENDRA SINGH

Respondents

REASONS FOR DECISION
Tribunal Member:	Peter Mennie

INTRODUCTION

1.      This dispute is about alleged negligence in obtaining a mortgage.

2.      The applicants, Amy Sue Whittome and Lawren Neil Smith, needed a mortgage to purchase a property with a mobile home. Their realtor referred them to the respondent, Savendra Singh, who identifies themself as a financial consultant. Savendra Singh referred the matter to a mortgage broker, the respondent Gursher Bains.[1]

3.      The applicants say Savendra Singh told them that their mortgage was secured and they could proceed with their home purchase. However, financing fell through a few days before their property deal closed and they had to pay the sellers a $5,000 fee to extend the closing date and obtain a mortgage from a different lender. The applicants say the respondents were negligent and claim $5,000 as damages.

4.      Gursher Bains says that they completed all necessary steps to obtain a mortgage for the applicants, however the lender pulled financing at the last minute when it discovered that the building on the property was a mobile home. Savendra Singh says they only acted as a financial consultant and adopts Gursher Bains’ position.

5.      All parties are self-represented.

JURISDICTION AND PROCEDURE

6.      These are the formal written reasons of the Civil Resolution Tribunal (CRT). The CRT has jurisdiction over small claims brought under section 118 of the Civil Resolution Tribunal Act (CRTA). Section 2 of the CRTA states that the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly.

7.      Section 39 of the CRTA says the CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. Here, I find that I am properly able to assess and weigh the documentary evidence and submissions before me. Further, bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I find that an oral hearing is not necessary in the interests of justice.

8.      Section 42 of the CRTA says the CRT may accept as evidence information that it considers relevant, necessary and appropriate, whether or not the information would be admissible in a court of law.

ISSUE

9.      The issue in this dispute is whether either of the respondents must pay the applicants $5,000 as damages for negligence.

EVIDENCE AND ANALYSIS

10.   In a civil proceeding like this one, the applicants must prove their claim on a balance of probabilities. I have read all the parties’ submissions and evidence but refer only to the evidence and argument that I find relevant to provide context for my decision. The applicants did not provide any final reply submissions and Savendra Singh did not provide any documentary evidence, despite all having been given the opportunity to do so.

11.   It is undisputed that the applicants offered to purchase a property with a mobile home for $415,100. The offer was subject to obtaining a mortgage. The applicants say their real estate agent referred them to Savendra Singh to obtain a mortgage and they were under the impression that Savendra Singh was their mortgage broker. The applicants say they removed subjects and agreed to purchase the property when Savendra Singh advised that it was safe to do so.

12.   The applicants’ property deal was set to close on January 10, 2022. The applicants say that Savendra Singh called them a few days prior and said there was an issue with the mortgage. The applicants say Savendra Singh informed them that Gursher Bains was their mortgage broker and they should contact them. The applicants say Gursher Bains was unhelpful and told them to call the lender. The lender’s representative told the applicants that the lender does not approve mortgages for properties with mobile homes and there was nothing it could do so close to the property sale closing date.

13.   The applicants paid $5,000 to the sellers as a non-refundable fee to extend the closing date. The applicants then obtained financing elsewhere without the help of the respondents and purchased their property.

14.   The applicants have provided a letter from their realtor, Tristan Jones, who says that the MLS listing for the property shows that it is a mobile home. Tristan Jones says this was a case of not reading the MLS listing carefully. The MLS listing is also in evidence. I accept that the MLS listing shows that the building on the property is a mobile home.

15.   Gursher Bains says they were not negligent in their work as a mortgage broker. They say they provided all required information and documents to the lender. They say that the lender approved the mortgage subject to a few conditions unrelated to whether the property had a mobile home, but the lender later realized its mistake and refused to provide a mortgage to the applicants. They say that this was the lender’s error in approving the mortgage when it was a mobile home. Gursher Bains admits that brokers rarely deal with mobile home purchases.

16.   Gursher Bains submitted as evidence an approval letter dated January 7, 2022, from the lender confirming that the mortgage would be issued. The approval was subject to the lender receiving an appraisal confirming that the property was worth $415,100.

17.   Savendra Singh, in brief submissions, says they assisted Gursher Bains “on a financial consultant capacity” and that they and Gursher Bains are not at fault. Savendra Singh says they disclosed to the applicants that they are a financial consultant and work with mortgage brokers on a referral basis.

18.   To succeed in their negligence claim, the applicants must prove the following:

a.    The respondents owed the applicants a duty of care,

b.    The respondents breached the applicable standard of care,

c.    The applicants suffered damages, and

d.    The damages were a reasonably foreseeable consequence of the respondents’ negligent act.

19.   I begin with the applicants’ claim against Gursher Bains.

20.   I find that Gursher Bains owed a duty of care to the applicants. The test to establish a duty of care is (1) whether there was a sufficiently close relationship between the parties such that harm to the applicants was a reasonably foreseeable consequence of the respondents’ negligence, and (2) whether there are any policy considerations to negate a duty of care (Cooper v. Hobart, 2001 SCC 79). Here, Gursher Bains was a mortgage broker providing professional services to the applicants. I find that this was a sufficiently close relationship such that carelessness on their part could foreseeably lead to harm to the applicants. There are no policy considerations to limit the duty of care in this case.

21.   The standard of care for a mortgage broker does not require perfection, but does require the exercise of reasonable care (Normak Investments Ltd. v. Belciug, 2015 BCSC 700 at paragraph 125). Expert evidence is usually required to prove the standard of care of professionals. The two exceptions to this are when the deficiency is not technical in nature, or where the work is obviously substandard (Schellenberg v. Wawanesa Mutual Insurance Company, 2019 BCSC 196 at paragraph 112).

22.   I find it obvious that Gursher Bains, as a professional mortgage broker, should have known that there were additional considerations when securing a mortgage where the property has a mobile home. The approval letter provided by the lender was subject to an appraisal showing there was $415,100 of value in the property. A mortgage will secure a lender’s financial interest on the property itself but not on a mobile home if it is a chattel (see, for example, CMIC Mortgage Investment Corp. v. Rodriguez, 2010 BCSC 308). I find that Gursher Bains breached their standard of care in failing to make further inquiries with the lender about how to secure a mortgage on a property with a mobile home.

23.   I find that the applicants suffered damages which were a reasonably foreseeable consequence of Gursher Bains’ negligence. Persons who hold themselves out as professionals prepared to provide service for a fee invite reliance and create a risk of harm if they fail to meet the appropriate standard of care (Brownjohn v. Pillar to Post, 2003 BCPC 2 at paragraph 20). In this case, section 12 of the Contract of Purchase and Sale for the property states that if payment is not made on the closing date then the sellers have the option to terminate the contract and keep the applicants’ deposit. Financing fell through days before the closing date, and I accept that the applicants had to offer a $5,000 payment to keep their deposit and ensure the purchase completed at a later date. I find that the applicants suffered $5,000 in damages as a result of Gursher Bains’ negligence.

24.   I turn to the applicants’ claim against Savendra Singh.

25.   Savendra Singh acted as the applicants’ financial consultant. I find their relationship was sufficiently close such that Savendra Singh did owe the applicants a duty of care. However, I find that there is no evidence that Savendra Singh breached their standard of care. It is undisputed that Savendra Singh referred the mortgage application to Gursher Bains and was not involved in the mortgage application process. So, I dismiss the applicants’ claim against Savendra Singh.

26.   Based on my conclusions above, I find Gursher Bains liable to pay the applicants $5,000 in damages.

27.   As noted above, Gursher Bains says that the lender made an error in approving the mortgage without realizing it was a mobile home. As Gursher Bains has not filed a third party claim against the lender for indemnification, I will not address that issue here. Nothing in this decision prevents Gursher Bains from pursuing a claim for indemnification against the lender.

28.   The Court Order Interest Act applies to the CRT. The applicants are entitled to pre-judgment interest on the $5,000 from January 11, 2022, the date the applicants paid the sellers, to the date of this decision. This equals $253.23.

29.   Under section 49 of the CRTA and CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. I see no reason in this case not to follow that general rule. I find the applicants are entitled to reimbursement of $175 in CRT fees. None of the parties claimed any dispute-related expenses.

ORDERS

30.   Within 30 days of the date of this order, I order Gursher Bains to pay the applicants a total of $5,428.23, broken down as follows:

a.    $5,000 as damages,

b.    $253.23 in pre-judgment interest under the Court Order Interest Act, and

c.    $175 in CRT fees.

31.   The applicants are entitled to post-judgment interest, as applicable.

32.   I dismiss the applicants’ claim against Savendra Singh.

33.   Under section 58.1 of the CRTA, a validated copy of the CRT’s order can be enforced through the Provincial Court of British Columbia. Once filed, a CRT order has the same force and effect as an order of the Provincial Court of British Columbia.