An Ontario Superior Court judge has refused to grant a private lender’s request for immediate possession of a property in Meaford, Ontario, ruling that a full trial is necessary to investigate serious allegations of conspiracy and fraud1. The decision comes after the borrowers, a family who defaulted on their mortgage payments, filed a counterclaim alleging that the lender colluded with their mortgage brokers to force them into a financially disadvantageous loan agreement. The case highlights the complex evidentiary issues that can arise when private lending transactions intersect with allegations of predatory brokerage practices.
The legal dispute centers on a property located at 46337 Old Mill Road in Meaford. The borrowers are Adly Mikhail, Giuseppina Di Biase, and Michael Mikhail. RND Capital, a private lending company, brought a motion for summary judgment against Adly Mikhail and Giuseppina Di Biase to enforce a mortgage debt of $535,318. RND Capital sought a court order to take possession of the land and to collect the principal amount, interest, and legal fees. The lender argued that the case was a straightforward matter of a defaulted loan where the borrowers had failed to make payments since September 2023.
Under normal circumstances, a lender can move for summary judgment to obtain a quick resolution without the time and expense of a full trial if there is no genuine issue in dispute. RND Capital took the position that the documents proved the money was lent, the mortgage was registered, and the borrowers had stopped paying. They argued that these facts were sufficient to warrant an immediate order for possession and payment. However, the borrowers, who are also plaintiffs by counterclaim, presented a much more complicated narrative involving alleged misconduct by third parties.
The background of the transaction dates back to 2021, when the Mikhail family was attempting to purchase a home. Michael Mikhail, his wife Giuseppina Di Biase, and his father Adly Mikhail were seeking a property that could accommodate Michael’s mother, who was bedridden and required twenty-four-hour care. Michael Mikhail acted as the primary contact for the family during the financing process. He worked with a group of mortgage brokers to secure the necessary funds. Specifically, he dealt with Samantha Bacchus, who claimed to work for Ian Vilafana and his brokerage, Valor Financial Corp.
According to the evidence provided by Michael Mikhail, the family faced significant delays and difficulties in securing a mortgage through traditional “B lenders.” The brokers allegedly required a commitment letter to prepare documentation, but the process dragged on. These delays resulted in the family missing their closing date twice. Each extension of the closing date cost the family a penalty of $10,000 paid to the seller. With the final closing date approaching and the family fearing they would lose the home and their deposit, the brokers informed them that the B lender financing had fallen through.
Faced with the immediate risk of failing to close the transaction, the family felt forced to accept a private mortgage arrangement. This is when RND Capital entered the picture. RND Capital’s president, Eric Gupta, stated that his company was contacted on October 14, 2021, by a lawyer named Amandeep Dullet. The request was for a short-term private mortgage to save a closing scheduled for just five days later, on October 19, 2021. The loan was structured as a six-month term with an interest rate of 8.99 percent per annum, requiring monthly interest payments of over $4,300. The agreement also stipulated that after the mortgage matured in April 2022, the interest rate would jump to 12 percent.
The deal closed on October 21, 2021, and RND Capital advanced the funds. For nearly two years, the borrowers managed to make their payments. However, the mortgage eventually went into default on September 19, 2023. RND Capital subsequently filed a lawsuit to recover their money and the property. In response, the borrowers filed a counterclaim seeking $4 million in damages and $1 million in punitive damages. They alleged that RND Capital, Eric Gupta, and the mortgage brokers had conspired to create a situation of financial desperation. The family argued that the delays were manufactured to force them into a high-interest private mortgage with unfavorable terms.
A critical element of the borrowers’ defense involved the professional standing of the mortgage brokers they had used. Evidence submitted to the court showed that the Financial Services Regulatory Authority of Ontario (FSRA) had revoked the mortgage broker licenses of Ian Vilafana and Valor Financial Corp. The regulatory body found that Valor Financial was not suitable to be licensed due to the past conduct of Vilafana. The regulator determined there were reasonable grounds to believe the business was not being carried on with integrity and honesty. While this did not directly implicate RND Capital, it provided context for the borrowers’ claims regarding the brokers’ conduct.
The central issue for Justice Wilkinson was whether RND Capital was merely an arm’s-length lender or if they were involved in the alleged scheme with the disgraced brokers. Eric Gupta, representing RND Capital, vehemently denied any conspiracy or collusion. He testified that he did not know the brokers, Ian Vilafana or Samantha Bacchus, and that RND Capital always required property appraisals before advancing loans. He maintained that his only contact regarding the deal was through his lawyer, Mr. Dullet.
However, the documentary evidence raised questions that contradicted Mr. Gupta’s testimony. During cross-examination and in the review of documents, inconsistencies emerged regarding the relationship between the lender and the brokers. The property appraisal report, which RND Capital relied upon, explicitly stated that it was requested by “Valor Financial as facilitator for RND Capital.” Furthermore, when the appraisal company emailed the report to RND Capital, they copied Samantha Bacchus on the correspondence. This suggested a direct line of communication or a pre-existing relationship that Mr. Gupta had denied.
Mr. Gupta attempted to explain this discrepancy by suggesting that Valor Financial might have originally ordered the appraisal and that it was later redirected to RND Capital. He speculated that his lawyer must have communicated with the broker to arrange this. However, the court noted that RND Capital did not provide an affidavit from the appraiser to confirm this explanation. There was also an unexplained gap in dates. The appraisal inspection occurred on August 27, 2021, but the report was not signed until October 19, 2021. No explanation was provided regarding who possessed the report during that two-month interval.
Another evidentiary gap concerned how the deal originated. While Mr. Gupta claimed no brokers were involved in the transaction from his side, he could not explain how the lawyer, Amandeep Dullet, became aware of the borrowers’ need for a mortgage. The court inferred that it was likely the brokers who contacted Mr. Dullet, who then approached RND Capital. This chain of events, if proven, would contradict Mr. Gupta’s assertion that no brokers were involved in the deal. Additionally, an email from RND Capital to Mr. Dullet explicitly asked the lawyer to have his “broker/agent” review the mortgage, further suggesting the involvement of an intermediary.
The court also found it notable that RND Capital performed almost no risk assessment on the borrowers before lending them over half a million dollars. Mr. Gupta admitted this during his cross-examination. Justice Wilkinson noted that such a lack of due diligence might support an inference that the lender was relying on a third party, such as the brokers, to assess the risk, or that the approval was pre-arranged as part of the alleged scheme.
The legal standard for summary judgment requires the moving party to prove that there is no genuine issue requiring a trial. The judge must be able to reach a fair and just determination on the merits based on the written evidence. If there are serious credibility issues or factual disputes that require oral testimony to resolve, summary judgment is generally not appropriate. In this case, Justice Wilkinson determined that the inconsistencies in Mr. Gupta’s evidence and the documents regarding the brokers created a genuine issue for trial.
The court acknowledged that RND Capital had undeniably advanced the funds and that the borrowers had defaulted. However, the judge ruled that the counterclaim and the main action were too intertwined to be separated. If the allegations of conspiracy and fraud were proven at trial, it could vitiate the mortgage agreement or result in damages that would offset the amount owed. The judge emphasized that she could not assess Mr. Gupta’s credibility solely based on the paper record and that the enhanced fact-finding powers available to judges on summary judgment motions were insufficient to resolve these specific conflicts.
Justice Wilkinson also pointed out that the brokers, who are defendants in the counterclaim, have not yet been examined for discovery. Their evidence would be crucial in determining the truth of the conspiracy allegations. Since the regulatory body had already found against the brokers regarding their honesty and integrity, the court suggested that further investigation was warranted before a final judgment could be rendered regarding the possession of the property.
As a result of the ruling, the motion for summary judgment was dismissed. The court established a timetable for the litigation to proceed to trial. The parties are required to exchange documents by the end of 2025, conduct examinations for discovery by May 2026, and set the action down for trial by October 2026. While the court declared that the advancement of funds and the default were established facts, the trial will determine whether the lender colluded with the brokers, which terms of the mortgage are enforceable, and whether the borrowers are entitled to damages that could reduce or eliminate their debt.
This decision serves as a reminder of the scrutiny courts will apply when allegations of fraud or conspiracy are raised in mortgage enforcement proceedings. Even when a debt is clearly owed, the circumstances surrounding the origination of the loan can halt immediate enforcement if there is evidence suggesting that the lender may not have acted at arm’s length from brokers accused of misconduct. The Mikhail family will now have the opportunity to present their full case in court, while RND Capital must wait for a trial to attempt to enforce its security.
