A Manitoba mortgage investor can enforce a loan against Winnipeg borrowers despite the broker’s admitted misconduct, the province’s Court of Appeal has ruled, leaving an order for possession and sale of the property in place.
In Caplan and Company Ltd v Lyons, 2026 MBCA 84, released October 15, 2026, the Court of Appeal of Manitoba dismissed the borrowers’ appeal. The court found no evidence that the investor, Gary Curtis Golf Shop Ltd., participated in or knew about the wrongdoing by Sigmar Mortgage Services Ltd. and its president, Thomas Standing.
The decision upheld the investor’s right to collect the mortgage debt. It does not establish that the property has already been sold or that the borrowers have been evicted.
A mortgage broker failed to pay off an earlier loan
The three borrowers obtained an $80,000 mortgage through Sigmar in 2013. Although the mortgage was registered in the broker’s name, outside investors supplied the money. Sigmar arranged the financing, administered the mortgage and forwarded the borrowers’ payments to those investors.
Most of the new loan was supposed to pay existing debts, including an earlier mortgage held by B2B Trust. The borrowers received the remaining advance after other agreed payments and fees.
Sigmar did not pay off the B2B mortgage in 2013 as promised. The borrowers were alerted to its continued registration in 2014 and received a lawyer’s letter in 2015 advising that B2B had started foreclosure proceedings. They contacted Sigmar and their own lawyer and were told Sigmar would address the problem.
The broker eventually paid B2B from its general account in November 2019, and the earlier mortgage was discharged the next month.
Meanwhile, the original investors wanted to withdraw their investment. Curtis Golf provided funds in June 2019 to buy them out and began receiving the borrowers’ mortgage payments through Sigmar.
Complaints by the borrowers and others led to a Manitoba Securities Commission investigation. The commission froze Sigmar’s and Standing’s accounts in March 2021. Both later made assignments in bankruptcy, and Caplan and Company Ltd. became trustee.
The borrowers acknowledged that they stopped making mortgage payments in March 2021 and that money remained owing. They argued, however, that the broker’s wrongdoing and the change in investors prevented Curtis Golf from enforcing the debt.
Documents established the investor’s ownership
The enforcement proceeding began in 2022. Curtis Golf was added as a plaintiff in 2024 and continued the claim. The lower court decided the dispute by summary judgment, with the parties agreeing that no genuine issue required a trial. It dismissed the borrowers’ counterclaim and granted enforcement relief in August 2025.
On appeal, Justice Holly Beard, writing for a unanimous three-judge panel, found ample documentary support for Curtis Golf’s beneficial ownership: its payment to Sigmar, a signed letter confirming that Sigmar would hold the investment in trust, repayment of the original investors, and the subsequent flow of mortgage payments to Curtis Golf.
Beneficial ownership meant Curtis Golf held the investment interest even while the mortgage remained registered in someone else’s name. The court reviewed that finding for a palpable and overriding error—a clear error affecting the result—and found none.
The borrowers suggested that Curtis Golf’s money had instead acquired the B2B mortgage. The records did not support that theory. B2B was paid months after the original investors, from Sigmar’s general account; its mortgage was discharged, not purchased.
Curtis Golf also became the mortgage’s legal owner after the bankruptcy trustee registered a transfer to it in November 2023. That transfer reinforced its right to enforce the security.
Lack of consent did not invalidate the transfer
The borrowers argued that their agreement was with Sigmar, not Curtis Golf, and that they had neither known about nor consented to the new investor’s involvement.
The court distinguished making a new contract from transferring an existing mortgage. Curtis Golf relied on the latter. Manitoba’s Real Property Act transfers enforcement rights with the mortgage, and the lower court had also relied on the common-law ability to transfer mortgage security without the borrower’s agreement.
The appeal court upheld the finding that these ownership changes did not require the borrowers’ knowledge or consent and remained valid despite the absence of either.
A separate licensing argument also failed. The borrowers maintained that the Mortgage Brokers Act prevented Curtis Golf from collecting payments without registration. The court found that the relevant exemptions applied to the investor and mortgage owner, rejecting the contention that payment or collection would be prohibited.
Broker misconduct did not defeat this investor’s claim
The court did not excuse Sigmar’s or Standing’s conduct. It expressly acknowledged their admitted significant misconduct and misuse of lenders’ money.
But it found no evidence connecting Curtis Golf to that wrongdoing. It also upheld the finding that Sigmar’s failure to discharge the B2B mortgage on time had not caused the borrowers a loss: the broker ultimately paid that mortgage in full and secured its discharge at no cost to them.
The borrowers had continued treating their own mortgage as valid and paying it for years after learning about the B2B problem. If they had suffered consequential losses, the appeal court said, a claim would lie against Sigmar or Standing rather than invalidate this mortgage.
That reasoning was tied to the ownership evidence, the completed B2B payout and the absence of investor involvement. The decision does not announce a blanket rule that misconduct by a mortgage broker can never support a borrower’s defence.
Possession and sale order remains in place
The borrowers also sought to have another lender, AAR Mortgage Services Ltd., added to the case. The appeal court found no evidence of a formal motion or an appealable order on that issue. Adding the lender shortly before two scheduled hearings would have caused delay, and the other dispute did not concern this mortgage’s validity.
The appeal was dismissed in full, with tariff costs awarded to the respondents. No dollar amount for those appeal costs was fixed in the reasons.
The upheld lower-court order permits possession and sale of the property. It also requires a $460 final-payment credit against the principal and provides for pre-judgment and post-judgment interest at 10.5 per cent. The appeal reasons do not fix a new final total debt award or report that a sale has taken place.
