Executive Summary: Key Legal and Evidentiary Issues

• Foreclosure proceedings were initiated following a $4 million loan default secured by real property.

• Substituted service was granted but not fully executed, leading to improper notice to the respondents.

• Petitioner attempted to rely on common law service despite non-compliance with the court’s order.

• The foreclosure order (order nisi) included an interest rate found to be unlawful under the Interest Act.

• Respondents claimed they were unaware of the proceedings until after the foreclosure order was issued.

• The court set aside the order nisi and dismissed the petitioner’s request to amend it under the slip rule.

Facts and outcome of the case

Background and loan default

Amur Capital Income Fund Inc. filed foreclosure proceedings against multiple respondents—namely, 1365650 B.C. Ltd., Jaswant Singh Dhillon, Jaswinder Kaur Dhillon, and Global City Properties Ltd.—after a loan default. On June 13, 2023, these parties borrowed $4,000,000 from Amur Capital. The loan was secured by a mortgage on real property. The respondents defaulted on the loan by November 15, 2023. The petitioner filed its foreclosure petition on January 30, 2024.

Service issues and court order

Initially, Amur Capital was unable to personally serve the Dhillons with the petition and therefore obtained a court order permitting substituted service. The order required that petition documents be posted at the Dhillons’ residence and sent by regular mail. While the documents were posted, they were never mailed—resulting in non-compliance with the court’s explicit terms for substituted service. Nonetheless, the petitioner proceeded to obtain an order nisi on May 16, 2024.

Respondents’ motion and grounds

The respondents applied to set aside the order nisi, arguing that: (a) they were not properly served, (b) the order was granted prematurely—before the deadline to respond had expired, and (c) the order included an unlawful interest rate that inflated the redemption amount by approximately $129,000. Evidence from Jaswant Dhillon and Mandeep Dhillon supported the claim that they did not receive notice of the petition until after the foreclosure order was granted. Mandeep also made efforts to refinance the mortgage but was unable to secure enough funding due to the inflated amount based on the illegal interest rate.

Petitioner’s defense and slip rule application

Amur Capital admitted it had not mailed the documents as required but argued that the Dhillons should have known about the petition, referencing interactions with their son Mandeep and service on related corporate entities. It attempted to justify its position using “common law service,” and asked the court to validate the order under Rule 13-1(17) (the slip rule), claiming the inclusion of the unlawful interest rate was an accidental error.

Court’s findings on service and prejudice

The court firmly rejected the petitioner’s reliance on common law service, aligning with appellate authority that disallows this approach when the Supreme Court Civil Rules provide specific procedures. The court held that non-compliance with the substituted service order was not a technicality but a substantive irregularity that deprived the respondents of procedural fairness. The foreclosure order was also granted prematurely, further compounding the prejudice suffered by the respondents.

Decision and consequences

Justice Laurie ruled in favor of the respondents. The order nisi was set aside, and the petitioner’s application to amend it under the slip rule was denied. The judge found that the incorrect interest rate in the order nisi was not a clerical error but a potentially deliberate inclusion that fell outside the ambit of Rule 13-1(17). Costs were awarded to the respondents in any event of the cause. The petitioner was granted leave to re-apply for foreclosure but must now comply with proper procedural rules.