Executive Summary: Key Legal and Evidentiary Issues

• The mortgagee sought a writ of possession and the discharge of a Certificate of Pending Litigation (CPL) after default on a second mortgage.

• The third parties opposed the CPL discharge, claiming an ongoing property interest due to a disputed past conveyance.

• The court assessed whether the CPL retained legal or practical value where no equity remained in the property.

• Although the property was found unique from the third parties' perspective, this did not outweigh the mortgagee’s right to enforce security.

• Evidence showed the mortgage was in default, the property had negative equity, and the CPL impaired sale efforts.

• The court granted the writ of possession and ordered the CPL discharged upon registration of a transfer under power of sale.

Facts and outcome of the case

Hansa Mortgage Investment Corporation was the second mortgagee on a residential property in Ottawa. The borrowers, Cleveland Irving and Ngoza Simwanza, defaulted on the mortgage, leaving an unpaid balance of over $214,000. A first mortgage of nearly $894,000 and property tax arrears brought the total encumbrances to over $1.26 million, while the property was appraised at approximately $930,555. In light of this negative equity, Hansa brought a motion for a writ of possession and an order to discharge a Certificate of Pending Litigation (CPL) registered on title.

The CPL had been filed by the Fuamba family, third parties who had lived in the property for more than 15 years. Faith Chantal Fuamba had transferred the property to the defendants in 2021 and subsequently initiated legal proceedings to challenge the conveyance. The Fuambas claimed the home was still effectively theirs and sought declaratory and financial relief in separate litigation. As part of that action, they registered the CPL to protect their alleged proprietary interest.

In the motion before the Ontario Superior Court of Justice, Hansa Mortgage requested immediate leave to issue a writ of possession to facilitate sale under power of sale. The Fuambas did not oppose the writ itself but asked the court to delay enforcement until after July 15, 2025, to allow a child to complete the school year. The court granted the delay.

The core dispute centered on the CPL. The Fuambas argued the CPL remained essential to protect their ongoing claim. Hansa countered that the CPL was impeding the property’s sale, served no practical purpose due to the negative equity, and should be discharged once a transfer occurred under the mortgagee’s statutory power of sale.

The court applied section 103(6) of the Courts of Justice Act and reviewed numerous discretionary factors from leading case law. It acknowledged the subjective uniqueness of the property to the Fuamba family, but noted that they had agreed to vacate by July 15, 2025. The court concluded that any remaining interest was subordinate to the mortgagee’s claim, and the CPL no longer served a useful legal or equitable purpose. It found no evidence of improper purpose by the Fuambas but held that allowing indefinite delay in enforcement due to a CPL in a property with no equity would undermine the mortgagee’s rights.

Ultimately, the court granted Hansa Mortgage leave to issue the writ of possession, to be executed after July 15, 2025, and ordered the CPL to be discharged upon registration of a transfer under the power of sale. The decision reflects a pragmatic and equitable approach to balancing secured lending rights with unresolved property claims.