Admin and legal fees were for reimbursing mortgagee’s expenses arising from default

Real property - Mortgages - Interest

Principal and interest were due and owing since mortgage matured on November 1, 2018, and mortgagors were in default. Mortgagee sought principal and interest, as well as additional amounts specified in mortgage, and possession of property. Mortgagors conceded that principal and interest were owing, but took issue with demand for payment of additional three months of interest, administrative fees and legal fees. Mortgagee brought motion for summary judgment. Motion granted in part; principal, interest and fees were to be paid within 30 days, failing which there would be order for possession; additional three months interest was not payable. Section 17 of Mortgages Act had no impact; mortgage contained specific provision on default that mortgagee had right to seek additional three months' interest on default as “liquidated damages” arising from default. Mortgagee was not entitled to additional three months' interest, as it was prohibited under s. 8 of Interest Act. Mortgagors were not seeking to retire mortgage early and paying for that privilege. Mortgagors were in default of paying principal back, and mortgagee was relying on provision that had effect of increasing charge on arrears beyond rate of interest payable on principal money not in arrears. Provision was void and unenforceable. As administrative and legal fees were intended to reimburse mortgagee for expenses incurred arising from default, those were permissible.

Benson Custodian Corporation v. Situ et al. (2019), 2019 CarswellOnt 8312, 2019 ONSC 3077, Schabas J. (Ont. S.C.J.).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

Free newsletter

Our newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please enter your email address below to subscribe.

Recent articles & video

Imran Kamal told his story about addiction, hoping to encourage the legal profession to be more open

Ontario Court of Justice welcomes four new justices: Frank, Hanna, Harris, Marcon

Ont. Superior Court denies disability benefits due to lack of a causal link to 40-year-old accident

Ont. Superior Court dismisses individual's insurance claim but allows corporate claim to proceed

Ontario Superior Court rejects lawyer's request to intervene in fatal vehicle collision

Slip-and-fall on black ice is an 'accident' under Statutory Benefits Schedule: Ont. Superior Court

Most Read Articles

Imran Kamal told his story about addiction, hoping to encourage the legal profession to be more open

Ontario Superior Court rejects lawyer's request to intervene in fatal vehicle collision

Slip-and-fall on black ice is an 'accident' under Statutory Benefits Schedule: Ont. Superior Court

Ontario Court of Justice welcomes four new justices: Frank, Hanna, Harris, Marcon