Home theft by title fraud, defamation for false claim of sexual abuse on Facebook, child support and bankruptcy

 

This week on Legally Speaking with Michael Mulligan:

Protecting property owners from impersonation & fraud

Land title fraud can result in the loss of your home. Efforts to fraudulently impersonate property owners have increased along with the use of remote transactions.

With property, other than real estate, if someone steals something and then sells it to an innocent third party, the original owner of the property stills owns it. The legal concept is the namo dat rule. The thief doesn’t own the stolen item and so can’t sell what they don’t own.

If the stolen property is located, it would be returned to the original owner, and the innocent third party purchaser would need to locate and sue the thief to get their money back.

In British Columbia, the rules are different with respect to real estate.

Real estate is treated differently to permit greater certainty of ownership and in order to make transactions easier.

If you applied the namo dat rule to real estate, a purchaser would need to be concerned about all of the previous transactions involving the property to determine if the person selling it was actually the legal owner and able to transfer the property to them. This could involve attempting to verify many previous transactions because if any of them was improper, the current “owner” might not own anything at all.

In BC, we have a Torrens system for land titles. This involves the concept of indefeasible title. If someone is the registered owner of real property, they own it and this can’t be revoked or made void, absent very limited circumstances.

If, however, a fraudster is able to impersonate a property owner and is successful in having a property sold to an innocent third party, the new purchaser becomes the owner. In this circumstance, the original owner, who was impersonated, would be compensated from a special fund. They would not, however, get their property back.

Over the past ten years, there have been two people who were compensated as a result of their property being stolen in this way.

Damages for Facebook accusations

Also discussed on the show is a recent case involving a BC woman making false claims on Facebook, and in instant messages, that another woman had engaged in child sexual abuse.

In order to be liable for defamation, the plaintiff needs to establish that:

1) The impugned words were defamatory in that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person;

2) That the words referred to the plaintiff; and

3) That the words were published; i.e. communicated to at least one person other than the plaintiff.

In the case discussed, all three of these requirements were met. The wrongly accused woman was awarded $20,000 in general damages, and an additional $10,000 in aggravated damages because the woman posting the false accusations continued to do so after receiving a cease-and-desist letter from the plaintiff’s lawyer.

The judge hearing the case also issued a permanent injunction to stop posting the false claims.

High conflict family court case

Finally, on the show, a high-conflict family court case results in a 12-day trial over various issues and a $34,481 costs award against an ex-wife. The ex-wife then declares bankruptcy, which would avoid her needing to pay the costs award.

The ex-husband was ordered to pay retroactive child support, in the amount of $19,475.

The ex-husband tried, unsuccessfully, to have the judge apportion all of the costs award to the issue of child support, because child support, and costs awards relating to it, are not eliminated by bankruptcy.

 

Legally Speaking with Michael Mulligan is live on CFAX 1070 every Thursday at 10:30 am. It’s also available on Apple Podcasts, or wherever you get your podcasts.

An automated transcript of the show:

Legally Speaking April 1 2021

Adam Stirling [00:00:00] Time for Legally Speaking on CFAX 1070, joined as always, by Michael Mulligan Barrister and Solicitor with Mulligan Defence Lawyers. Michael, good morning. How are you?

Michael T. Mulligan [00:00:09] Good morning. I’m doing great. Always good to be here.

Adam Stirling [00:00:12] I had occasion earlier this hour to speak with the brother of a title holder of a property in the Oak Bay Area that was unbeknown to her, put up for sale recently due to suspected fraudulent activity. I understand that prospect is our first topic.

Michael T. Mulligan [00:00:27] Yes, indeed, that’s right. You have to now be concerned with the prospect of somebody, not, simply stealing something from your house, but stealing your entire house. And to explain what’s going on, I think we need to start with how we deal generally with property that might be stolen and how that could occur and what somebody could do with it.

Adam Stirling [00:00:49] Mm hmm.

Michael T. Mulligan [00:00:50] So the starting point is this concept in law called Nemo Dat, that is sometimes referred to as the Nemo Day rule. And the idea there is that a person can’t transfer or sell to somebody else something which they don’t own. And so, here’s how that would play out. Let’s say a thief comes onto your property and steals your bicycle and then takes it away, lists for sale at a reasonable price and sells it to some innocent person.

Adam Stirling [00:01:20] Yes.

Michael T. Mulligan [00:01:20] You then see the innocent person riding your nice bicycle down the road. You say, hey, stop, that’s my bike. And indeed, it is still your bike. And the concept there is that the thief who stole your bike doesn’t have any authority to transfer ownership to some innocent third party. It is still your bike.

Adam Stirling [00:01:40] Yes.

Michael T. Mulligan [00:01:40] And so if you were to call the police and say, look, that’s my bike, here’s my driver’s licence number is emblazoned underneath the seat or whatever, indeed, you’ll get the bike back.

Adam Stirling [00:01:51] hmm.

Michael T. Mulligan [00:01:51] And the remedy for the innocent person who bought that bike online or at a store or whatever it might be, would be tracked down the thief and sue them. Right.

Adam Stirling [00:02:00] hmm.

Michael T. Mulligan [00:02:01] Often kind of cold comfort, but that’s how that would play out. Now, that’s not how it works in British Columbia with respect to real property. And there’s good reason why it doesn’t work that way. If that’s how it worked with respect to real property, every time you went to try to buy a house or other piece of property, you’d have to be very concerned with, does this person actually own this property? I don’t want to give them a pile of money for something that isn’t theirs. Right.

Adam Stirling [00:02:32] Yeah.

Michael T. Mulligan [00:02:32] Because of that principle of Nemo Dat apply. Well, I might be getting nothing. And moreover, you’d have to be concerned not simply with does this person own the property you’d have to be concerned with? Does the person who they bought it from, did they own the property?

Adam Stirling [00:02:45] Yeah.

Michael T. Mulligan [00:02:45] And you know, how far down the line do you want to go? Because just like in the bike with the bicycle example, there’s that bike changed hands five times. It’s still your bike.

Adam Stirling [00:02:56] Yeah,.

Michael T. Mulligan [00:02:56] Right. And so, you wouldn’t want to buy a house and then have somebody knock on your door three years later and say, hey, by the way, I was in South Africa, that’s my house. You know that person you bought it from bought it from some other person who bought it from a father. Sorry, it’s still mine.

Adam Stirling [00:03:10] Yeah.

Michael T. Mulligan [00:03:11] And so to avoid that problem and all of the complexities that that would entail, trying to deal with a big asset, like a real property or a home our system in British Columbia is referred to as the Torrens system.

Adam Stirling [00:03:25] mmhmm.

Michael T. Mulligan [00:03:26] And the concept there is that we have a land title office. And when somebody is listed as being the owner of property in the land title office, it’s referred to as indefeasible title. It’s theirs. They absolutely own the thing, and they can deal with it and you can rely upon that. And so, the concern, of course, is where fraud is introduced to the equation.

Adam Stirling [00:03:51] Yeah.

Adam Stirling [00:03:51] And here’s how that could be a problem. Now, in the couple of cases, that prompted an alert that went out to the legal profession and an alert by BC Land Title and Survey, the scenario appeared to be somebody using forged South African passports in order to. (indiscernible) brother who was on commented.

Adam Stirling [00:04:14] Yeah.

Michael T. Mulligan [00:04:14] They were using these to persuade a property manager and ultimately a real estate agent and in one case, it was a lawyer or a notary, to believe that they were the owner of the home. And in one case, the property was actually transferred, and the fraud artist was listed, you know, got the property transferred to somebody else.

Adam Stirling [00:04:36] Wow.

Michael T. Mulligan [00:04:37] That particular degree of transfer can be fixed because that fraudulent transfer can be set aside. But if it was sold on to some innocent third party and they get registered on title, it’s their home. That’s it. The original person who was defrauded is out of luck. And we have a compensation fund, which could compensate them, and that’s been used apparently twice in the past 10 years, but their property is gone, and you can imagine just exactly how upsetting it would be for that to happen.

Adam Stirling [00:05:15] Yeah.

Michael T. Mulligan [00:05:16] And so the reminder from the Law Society that went out to lawyers is to remind lawyers who do that work to ensure that they are taking steps to verify the identity of their client, the person who’s selling the property. And that’s become more challenging in the age of covid because you have more transactions that are occurring online.

Adam Stirling [00:05:41] mmhmm.

Michael T. Mulligan [00:05:42] And you have people that are out of the province and can’t come back here right. if you’re not a citizen, you can’t just fly here from South Africa. Deal with my property.

Adam Stirling [00:05:51] mm hmm.

Michael T. Mulligan [00:05:51] Terribly sorry. You’re staying in South Africa. You’re not a Canadian citizen. No, I don’t know that person’s status, but they’re all kinds of reasons why somebody would have to deal with something remotely. And so, the Law Society is put in place a requirement that when a lawyer is dealing with a client, they need to verify their identity. And here, of course, the fraud or just produce these fraud, these forged South African passports. So that’s a problem.

Adam Stirling [00:06:21] Yeah.

Michael T. Mulligan [00:06:22] What lawyers are supposed to be doing is to have somebody, independently, an agent, in the jurisdiction where the person resides, go, and verify their identity. And even that can be a challenge. One of the alerts of the Law Society pointed out is that fraud artists have in some cases tried to persuade lawyers to use a particular person as the agent. Hey, why don’t you call this lawyer?

Adam Stirling [00:06:46] Oh, and that person’s in on it. Oh, wow.

Michael T. Mulligan [00:06:48] They’re in on it. So, the lawyer here says, oh, great. Well, I got a letter from the lawyer in South Africa that says they verified the passport of this person is who they say they are. Okay, very good. File the documentation, transfer the property. Which, of course, is the problem. And so, the Law Society has pointed out that lawyers should not use anyone suggested by the purported client that they should be trying to independently verify the identity of the agent who’s verifying the ID, by doing things like looking at government databases. Is this person a lawyer in that city? You select them without any regard to the client or the person who says that they are your client. And so, this is a real problem. Right. And there are all kinds of professionals involved in these transactions, real estate agents and lawyers, property managers and so on. And all of them just need to use extra care to avoid this kind of fraud. There are other versions of this fraud that have gone on for some time. And, you know, we’ve talked about that concept of indefeasible title. It’s like, look, I’m on title in the land title office. You can absolutely rely on that. I am the owner.

Adam Stirling [00:08:06] Yeah.

Michael T. Mulligan [00:08:06] But how far does that go? And one of the issues a few years ago that the B.C. Court of Appeal had to deal with was, well, look, does that protect somebody who is a mortgage lender? Because that’s the other way in which land title records are used. If a bank or a private individual is going to lend money secured by a mortgage, they need to be satisfied. Are you the actual owner of this property? And so, the bank or person might be lending money would ordinarily look at, well, show me the title and the land title office. Oh, yes, John Doe. You’re the owner. Very good. And then there could be money lent on the strength of you being the owner and granting a mortgage against that property. But what is the person doing that is a fraud artist and they’re not the owner. And so that was the fact pattern the Court of Appeal had to deal with a few years ago where the fraud artist managed to get a property transferred to a third party they were working with, and then that third party went and got a mortgage against the property. This case was forty thousand dollars.

Adam Stirling [00:09:17] Mhmm.

Michael T. Mulligan [00:09:18] And then the fraud was discovered. Okay, well, now what? Because that transfer to the person working with the fraud artist, was a fraud, they were able to set aside that transaction. The title can be put back. But does it go back with the mortgage on title?

Adam Stirling [00:09:35] Oh, yeah.

Michael T. Mulligan [00:09:36] Who loses? Somebody has got to lose in this circumstance, right? We’re probably not finding the fraud artist. And so, who’s out the $40,000, the homeowner who got defrauded or the mortgage lender and the Court of Appeal determined, and it was an interpretation of what is the language mean in our land title legislation. They concluded that, that concept of the title being indefeasible, once it’s registered, does not go so far as to protect the prospective mortgage lender. It does serve to ensure that you are the owner. So, if you happen to buy a property and it turns out that two transactions ago, this was a property transferred by a fraud artist, you actually absolutely owned the property. The original person who the first fraud artist defrauded over their property is out of luck and has to go to that compensation fund. But that doesn’t go so far as to protect mortgage lenders. And in some cases, you might say, well, that’s so sophisticated. Often they’re sophisticated banks or other institutions. You know, maybe we’re not crying too many tears over that, but that’s not always so. And you can have circumstances where private individuals or smaller organizations are lending money on the strength of will this person, look their own title. You know, what more can I do to verify that they own the property? And so, well, we are protecting the owner by our title system. It doesn’t protect the mortgage lender. And so, this is just an ongoing problem. And what’s occurred recently is a reminder to everyone involved with these kind of very large transactions is that we just need to be taking these additional steps to try to ensure that people are who they say they are. And there are other tips that they send out, including things like real estate agents and lawyers and others should be looking for signs of things that can indicate odd transactions, including things like somebody who says, well, I’m a very private person. I don’t really want to put it on MLS.

Adam Stirling [00:11:50] mmm.

Michael T. Mulligan [00:11:51] Or, you know, I don’t really want a for sale sign up. I don’t want to, you know, cause issues with the neighbours, you know, just a hot market so you can do to sell this thing. Right.

Adam Stirling [00:12:01] Yeah.

Michael T. Mulligan [00:12:01] Or somebody saying, well, you know, I’m not too concerned with the price. I want this done quickly. Should be a red flag. The other thing that professionals have been cautioned about are things like a client changing how they want to be communicated.

Adam Stirling [00:12:16] Hmm.

Michael T. Mulligan [00:12:16] With the case to the caller, somebody said, oh, I’m the Mrs. So-and-so, the owner of this property. I live in South Africa, by the way. I’ve got a new cell phone. Here’s my new number. And also, here’s my new email address. Right. So that might be a cause for concern as well. So, there are various things that we might all look for, people that are involved in that work. But it’s a worry. You don’t want to come along and find out that you no longer own your home when you get back from your time overseas thinking that you had just rented it out.

Adam Stirling [00:12:51] yeah.

Michael T. Mulligan [00:12:51] And depending how exactly that plays out, you may, in fact, no longer own your home and you may simply be left with the compensation and need to find somewhere else to live.

Adam Stirling [00:13:00] Let’s take our first break Michael Mulligan with Mulligan Defence Lawyers, Legally Speaking. We’ll continue in just a moment on CFAX 1070.

[00:13:07] COMMERCIAL.

Adam Stirling [00:13:07] And this is Legally Speaking on CFAX 1070 as we continue our conversation with Michael Mulligan Barrister and Solicitor with Mulligan Defence lawyers. Michael, I’ve been asked during the break by Texter, is there insurance that one can purchase against the prospect of the type of fraud that you’ve described?

Michael T. Mulligan [00:13:25] Indeed there is. There’s a type of insurance called title insurance that somebody would be able to buy that would be a private, private insurance that would insure you against problems with the title to your property. And in fact, that would be the mainstay of how property transactions would occur in jurisdictions that don’t have the Torrens system. If you’re in some jurisdictions in the United States, for example, Washington State, for example, they don’t have Torrens system. And so, you would have private companies that would be involved in land transfer transactions and they would be selling you potentially quite expensive private title insurance in order to guard against the prospect that, that condo or house you bought turned out not to belong to the person who sold it to you, or somewhere down the chain of elephants, each standing on one other’s back.

Adam Stirling [00:14:23] Yes.

Michael T. Mulligan [00:14:24] Somebody in that chain turned out not to be a legitimate owner or something was fraudulent somewhere along the way. So indeed, there is. But that process means that you’re going to pay and everyone along the chain is going to be paying for private title insurance that in some cases can be quite expensive. And so, the land title system we have in British Columbia is a very good one. Right? It sort of it’s world renowned. It’s an excellent model. And, you know, ordinarily you’d say, look, we want to have an ease of transaction certainty as to who owns something right, all of those are positive attributes. So, there are other models, and you can even also buy title insurance here for less than what you would pay in other places, because we do have that concept that once you’re registered, that’s yours come hell or high water.

Adam Stirling [00:15:15] And it’s interesting, the concept of verification, notary’s, of course, pre covid serving the role of making sure that a signature on a document when that document is executed is indeed signed by the person to whom it says signed it. How does that work during covid? Is that done over Zoom or is it still done in person? I don’t even know.

Michael T. Mulligan [00:15:36] Well, there are now provisions to do some of these transactions online so you can have transactions occurring where the person is being witnessed by a lawyer or notary signing things over a zoom connection. Interesting, for example. But you’re supposed to, in those cases, confirm the identity of the individual using an agent who you’ve selected independently to try to be sure that this is indeed Mrs. Smith or whoever it might be signing and conveying the document.

Adam Stirling [00:16:08] Interesting.

Michael T. Mulligan [00:16:08] You know, I’m not sure how far we can go relying on, you know, untrained people to figure out, does that look like the signature of Mrs. Smith?

Adam Stirling [00:16:14] Yeah.

Michael T. Mulligan [00:16:15] We don’t we need to do more than that. And indeed, we do.

Adam Stirling [00:16:18] All right. Recent award I’m reading here of $30,000 after text messages and Facebook postings making allegations with respect to sexual assault.

Michael T. Mulligan [00:16:28] Yes, I think this is a really timely one, given some of what’s been going on in Victoria. This was a case, a decision that just came out last month. It involved two women in their mid-forties, one of whom was sending text messages and putting things on Facebook, alleging, amongst other things, that the plaintiff, that woman, had engaged in sexual misconduct. And she had posted things claiming that, for example, the plaintiff had sexually abused a, “younger peer” at some point in the past. Apparently, that was some reference to something when the woman was a child involving some other child who was a year younger than her. But she’s giving the impression that this person was involved in child sexual abuse and simply no such thing had occurred.

Adam Stirling [00:17:21] hmm.

Michael T. Mulligan [00:17:21] And so the woman who was the recipient of these messages online sued and the judge agreed. There’s a concept, the concept of defamation. You have to look at, you know, would the words tend to lower the reputation of the person in the eyes of a reasonable person,.

Adam Stirling [00:17:39] indeed.

Michael T. Mulligan [00:17:39] You know, in that kind of thing certainly would.

Adam Stirling [00:17:41] yep.

Michael T. Mulligan [00:17:41] Do they referred to the plaintiff. Yes, they do. Where they published and that’s an important publication. Doesn’t mean in the newspaper. It means communicated to at least one person other than the plaintiff.

Adam Stirling [00:17:51] Yes.

Michael T. Mulligan [00:17:51] ding, ding ding, all those are met.

[00:17:54] And so the judge awarded in this case $20,000 for by way of general damages. And then because the woman who is the defendant, despite a letter from the lawyer of the plaintiff telling her to stop doing this, continued to post derogatory things online. She got hit with an additional $10,000 in aggravated damages. And I should say all of this could have been vastly more in terms of the award, although the judge found in this case that the failure of the plaintiff’s business wasn’t proven to be the result of the comments by the defendant. If it were, they would have been vastly more money involved. So, don’t think things you’re doing online are going to be in any way actually anonymous or that there’s some impunity to make remarks in that kind of a forum.

Adam Stirling [00:18:45] Yeah.

Michael T. Mulligan [00:18:46] Because if you see something that damages a person’s reputation, you may be on the hook for a very large sum of money, those pieces that are real. And you have to be just so careful that you not be posting or repeating false statements. They’re going to damage somebody’s reputation or you’re going to find yourself in court.

Adam Stirling [00:19:06] Yeah, indeed. Interesting, because defamation, of course, strict liability, tort damages are presumed, but they’re not presumed to be substantial. So, the minimum quantum could be like a dollar. But in this case, as you mentioned, it could have been a lot higher than just $30,000

Michael T. Mulligan [00:19:19] Yes, indeed. Right. You’re posting messages saying somebody is engaged in the sexual abuse of children. What could be more damaging to somebody’s reputation? If you’re wrong, you’re going to be on the hook for it.

Adam Stirling [00:19:29] Absolutely. We have, let’s see, two and a half minutes left. How shall we spend them?

Michael T. Mulligan [00:19:35] Sure. I think we can describe the last case and about that time. So, the last case to talk about is a high conflict family dispute, which, of course, are the kind of disputes that eat up all kinds of court time. This one involved a 12-day trial for things involving parenting time decision meeting, making retroactive child support, undue hardship, income distribution, division of property. Frankly, everything anyone can imagine.

Adam Stirling [00:20:03] mmm.

Michael T. Mulligan [00:20:03] And the person who lost at trial was the mother in this case, she was trying to resist, amongst other things, sharing, parenting responsibility. And she wound up with a costs award of $34,48 against her. The ex-husband was in turn ordered to pay $19, 475 in back child support.

Adam Stirling [00:20:24] mmm

Michael T. Mulligan [00:20:25] But things got even more contentious because shortly after that, the mother who had the cost of word against her because parenting time was awarded equally, no surprise, went bankrupt. And so, I said, well, I don’t have to pay the $34,000. The husband then came and said, look, you should court attribute all of that money costs award to being with respect to child support because child support obligations are exempt from bankruptcy.

Adam Stirling [00:20:56] Oh yeah.

Michael T. Mulligan [00:20:56] You can’t get rid of child support by declaring bankruptcy. So that’s what he was trying to do, say, hey, this isn’t fair, I have to pay. She’s supposed to pay me $34,000; I’m supposed to be her $19,000. This isn’t fair. But he was unsuccessful. The court found that much of the trial was not to do with child support. It had to do with all these other things these people were fighting about.

Adam Stirling [00:21:18] Yeah.

Michael T. Mulligan [00:21:19] And the judge found that the bankruptcy was as a result of the ex-wife hair salon closing due to Covid. And so, the high conflict goes on. In this case, the mother has avoided the$34,000 cost bill despite the 12 unsuccessful trial, trying to avoid her ex-husband having time with the children. But he nonetheless is on the hook for the child support of $19,000 and and I guess some insult to that injury, he’s also having to pay costs for the application, trying to get the ex-wife to have to continue to pay the cost from the last application. So, I guess the takeaway for people is try to get along, folks. If you spend all of your time and money in court fighting over these things, you’re going to rack up large bills. And at the end of the day, you know, the likely outcome in both cases is going to be like in this case, you get equal time with the children and pay your child support. So, try to work it out.

Adam Stirling [00:22:16] Michael Mulligan Barrister and Solicitor with Mulligan Defence Lawyers. Legally speaking, in the second half hour, second hour every Thursday on CFAX1070. So many thanks so much, Michael. Until next week.

Michael T. Mulligan [00:22:25] Thanks so much. Always a pleasure.

Adam Stirling [00:22:26] All right. Bye now.
Automatically Transcribed on April 6, 2021 – MULLIGAN DEFENCE LAWYERS