‘Internal error’ cost bank its ability to claim mortgage payout, B.C. court rules

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A national bank has been ordered to discharge its mortgage from the title of a Coquitlam home that was sold last year, after a B.C. Supreme Court judge found it had violated the provincial Land Title Act.

Justice Catherine Murray’s decision—issued orally in September and published online Friday—does not specify how much the two mortgages and an assignment of rents on the property’s title were worth, in total.

It does, however, specify that Equitable Bank provided a pay-out statement to Shahrzad Pakravan and Ambleside Law LLP, the lawyers for the sellers of the home, that only accounted for one of the two mortgages.

“Equitable Bank advised the petitioners that the pay-out statement did not include the second mortgage and that that was due to an internal error,” the decision reads.

According to the decision, Pakravan sent an email to the bank on Oct. 31, 2024, requesting the pay-out statement.

The email listed all three charges that were registered on the title to the home in Equitable Bank’s favour and included their charge numbers as listed on the title document.

The bank responded the following day, quoting Pakravan an amount it said was “the total amount required to fully pay out your loan,” according to Murray’s decision.

“The bank’s pay-out statement did not refer to the charges using the registration numbers, as used by Ms. Pakravan,” the decision reads. “Rather, it used an internal bank number, which was mortgage number 429852. Ms. Pakravan attests that she believed that the bank’s pay-out statement pertained to all three charges. The single number did not cause her to question that, as she believed that all three charges could be under one internal file number.”

Equitable Bank told the court that Pakravan “ought to have known” from a follow-up letter it sent on Nov. 27, 2024, that the pay-out statement it sent was referring only to the first mortgage and the assignment of rents, but Murray disagreed.

The Nov. 27 letter advised Pakravan of a shortfall of one day’s interest. It did not specify that the second mortgage had not been discharged, according to the court decision.

Moreover, Pakravan’s response to the letter once again specified the three charges she was seeking to clear from the title, once again using their registration numbers.

“Ms. Pakravan could not have been clearer in her correspondence with the bank,” the decision reads. “The law is clear that where a bank provides a pay-out statement and a lawyer reasonably relies on that bank statement to their detriment by providing an undertaking to the purchasers to discharge the bank mortgage, the bank is then estopped from later taking the position that additional funds are required to discharge the mortgage beyond those stated in their pay-out statements.”

The decision indicates Pakravan relied on the bank’s pay-out statement when she proceeded with the transfer of the title and provided proceeds to the sellers. It was not until January of this year that she received further correspondence from Equitable Bank about the undischarged second mortgage.

As a result of the bank’s error, according to the decision, the purchasers of the home commenced a court action against Pakravan and Ambleside Law. She also had to report herself to the Law Society of B.C.

Having found in Pakravan’s favour, Murray ordered that Equitable Bank’s outstanding mortgage be cleared from the home’s title, costing the bank its ability to recover whatever amount remained unpaid.