Case snapshot
At a glance
- Case
- When Does the Limitation Clock Start on a Hidden Mortgage Claim in Ontario?
- Court / Tribunal
- Ontario Superior Court of Justice
- Citation
- 2026 ONSC 5833 ↗
- Date
- October 15, 2026
- Area of law
- Litigation Law
- Key issue
- Whether defendants to a mortgage fraud and conspiracy claim showed there was no genuine issue requiring a trial on their limitation-period defence or on the conspiracy claim.
- Outcome
- The Ontario Superior Court of Justice dismissed the defendants' summary judgment motions. The defendants had not shown that the owner and her daughter knew, or ought to have known, the material facts of their claims more than two years before the April 27, 2017 notice of action, and the circumstances of the mortgages and the parties' relationships were evidence that could support the conspiracy claim at trial. The court expressly did not decide whether any conspiracy existed.
- Why it matters
- People who learn years later that loans or mortgages were registered against their property may still have time to sue. This decision shows that the limitation clock depends on when the owner knew the material facts of the claim, not simply when documents were registered or signed.
Legal principle
The rule from this case
Under Ontario's Limitations Act, 2002, a claim must be started within two years of the day it was discovered, meaning the day the person knew, or a reasonable person in their circumstances ought to have known, the material facts that support a plausible inference of liability against the defendant. A defendant can rely on the presumption that the claim was discovered when the events happened, but once the plaintiff shows actual discovery came later, the defendant must prove earlier actual or constructive knowledge. On a summary judgment motion, the court grants judgment only where there is no genuine issue requiring a trial, following Hryniak v. Mauldin. Here the defendants carried the burden on both the limitation defence and the conspiracy claim. On conspiracy, the court said the plaintiff did not have to prove on the motion that a conspiracy existed. The defendants had to show that no evidence supported it, and they did not.
Important limits
What this does not mean
This decision does not find that anyone committed fraud or took part in a conspiracy. The judge wrote that the court was not determining that conspiracies existed. The allegations remain to be proved at trial. It also does not mean that a property owner can always wait to sue until they hire a lawyer. A plaintiff must act with due diligence, and the limitation period does not stop running while a person sits idle. The result here depended on a record that included an elderly owner who did not read English, blank and allegedly forged documents, no reporting letters, and defendants who did not address what diligence the family could have exercised.
When Does the Limitation Period Start if You Didn’t Know About a Mortgage?
In Ontario, the two-year limitation period runs from when you discovered your claim, not automatically from when a mortgage was registered. In Garofalo et al. v. Khanna et al., 2026 ONSC 5833 (CanLII), the Superior Court of Justice refused to throw out a lawsuit over several private mortgages on a Hamilton property, because the defendants had not proved that the owner and her daughter knew the material facts of their claims more than two years before they sued.
What Happened in This Case?
The property owner was an elderly woman who spoke Italian and did not read or write English. Her daughter’s unchallenged evidence was that her cognitive problems existed long before she was found incapable in 2022. She died in 2025 at 91, and her daughter continued the action as estate trustee.
The plaintiffs say they thought they were getting a $10,000 personal loan in 2012, received only about $5,000, and did not know that a series of private mortgages at 15% interest were registered against the home between 2012 and 2013. They allege the mortgages were fraudulent and part of a scheme among a mortgage broker, his company, and several lenders. The plaintiffs say they learned of the mortgages only in 2016, after retaining a lawyer. The notice of action was issued on April 27, 2017.
The defendants brought three summary judgment motions. They argued the claim was out of time because the family knew of the mortgages when they were registered, while they were in place, or at the latest when a new mortgage was registered in April 2014. They also argued there was no evidence of a conspiracy.
Why Did the Limitation Defence Fail on the Motion?
The defendants had the burden of proving the family knew, or ought to have known, of the claims before April 27, 2015, and the court found they had not met it. Much of the daughter’s evidence went uncontradicted:
- The broker never told them he was registering mortgages, and they received no reporting letters.
- They signed documents that were blank and were told they related to a personal loan, and some signatures are alleged to be forged.
- No evidence showed that a lawyer acted for the owner on the disputed mortgages.
- Monthly cheques they wrote did not mention any mortgage.
One lender pointed to letters headed “Mortgage Payment” and a money order the daughter marked as a mortgage payment. The court called this the most compelling evidence that the family may have known of one mortgage, but found it did not meet the lender’s burden when weighed with everything else. A lawyer’s certificate of independent legal advice for the 2014 mortgage also did not settle the question, since it did not show the advice was translated and did not list the documents reviewed.
The court also stressed that discovery means knowing the material facts of a claim, not just knowing a mortgage existed. The defendants had not shown the family knew the mortgage amounts, the fees charged, a default judgment and its payout discrepancy, or the relationships among the defendants. None of the defendants explained what diligence the family could have exercised to find out sooner.
Why Did the Conspiracy Claim Survive?
To prove an unlawful conduct conspiracy, a plaintiff must show the defendants acted together, their conduct was unlawful and directed at the plaintiff, they should have known injury was likely, and injury resulted. The defendants relied on the daughter’s discovery evidence that she could not explain the details of any agreement among them.
The court said evidence of a conspiracy can come from the circumstances of the transactions and the relationships between the parties. It pointed to family and business ties among the defendants, a lender who advanced $30,000 on a brief email without mortgage documents and then continued despite calling it a “very dangerous file,” and a payout statement that added money said to be owed to the broker. The court was clear that it was not deciding whether any conspiracy existed. It found only that the defendants had not shown there was no genuine issue for trial.
What Happens Next?
The motions were dismissed, and the action stays on the November 16, 2026 trial list. If the parties cannot agree on costs of the motions, they may file brief written submissions; if none are received by October 30, 2026, costs are deemed settled.
If you have discovered loans, mortgages, or other registrations on your property that you did not knowingly agree to, our Ontario litigation lawyers can help you assess limitation issues and your options.
Questions and Records to Discuss with a Lawyer
- When did you first learn that each mortgage or loan was registered on your title, and how did you find out?
- Did you receive reporting letters, payout or discharge statements, or court documents about the loans?
- Did anyone act as your lawyer or give you independent legal advice, and was it in a language you understand?
- Which documents did you sign, and were any blank or not signed by you?
- What steps did you take to investigate once you suspected something was wrong?
To discuss a property, mortgage, or limitation dispute, reach out to UL Lawyers through our contact page.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
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