Executive Summary: Key Legal and Evidentiary Issues

• The borrower sought to appeal a costs award made in a mortgage enforcement action, claiming the costs were excessive and misattributed.

• The Court of Appeal emphasized that appeals on costs require leave and are rarely granted absent clear error or principle.

• The borrower failed to explain a significant delay in seeking leave to appeal, weakening the motion’s procedural footing.

• No credible evidence supported the borrower’s claim that an earlier judge had capped costs at a lower amount.

• The lower court had correctly applied the contractual term entitling the lender to solicitor-client costs.

• The appellate court found no merit in the proposed appeal and dismissed the motion to extend time.

Background and mortgage enforcement
The case involved a mortgage enforcement dispute between 1803275 Ontario Limited and Ardler Farms Inc. (the lenders) and Deerbourne Estates Corporation and South Dundas Waterfront Development Corporation (the borrowers). The underlying litigation began as a foreclosure action and was later converted into an action for sale. The lenders were ultimately successful, receiving over $2 million in sale proceeds from the mortgaged property.

Following the conclusion of the sale, the matter was reported as settled, with the issue of costs reserved. The motion judge later awarded full solicitor-client costs to the lenders, fixed at $78,855.83, in accordance with the standard charge terms of the mortgage agreement. The borrowers contested the award, asserting that a previous judge had capped the costs at $20,000 and that the lenders were the losing parties in the proceedings.

Borrower’s motion to appeal and delay
Deerbourne Estates Corporation, as the appellant, filed a motion seeking an extension of time to apply for leave to appeal the costs order. The Court of Appeal addressed this motion on the basis of written submissions. The appellant had filed its notice of motion nearly six weeks after the release of the costs decision—well outside the prescribed timelines under the Rules of Civil Procedure.

Justice Lauwers applied the standard test for extending time to appeal, which requires a good-faith intention to appeal, an explanation for delay, absence of prejudice to the responding party, and most importantly, merit to the proposed appeal. While he acknowledged that there was no real prejudice to the lenders, the borrower had failed to provide any explanation for the delay and could not demonstrate any merit in the proposed appeal.

Costs discretion and contractual entitlement
The Court found that the motion judge below had appropriately exercised discretion in awarding solicitor-client costs. The borrowers’ mortgage agreement clearly entitled the lenders to such costs in enforcement proceedings, and the judge found that the lenders’ actions were reasonable and necessary following the borrowers’ default. The court also noted the borrowers had significantly overestimated the property’s value throughout the litigation and that the lenders’ position ultimately prevailed in the form of full payment.

Rejection of appeal grounds
The appellant’s claim that a previous judge had limited costs to $20,000 was not supported by any record, and had not been raised in the lower court. The Court of Appeal reiterated that it will generally not entertain arguments not raised before the trial judge, and highlighted that costs awards are highly discretionary and subject to deference unless plainly wrong.

Conclusion and dismissal
The Court of Appeal dismissed the motion to extend the time for leave to appeal. It found no error in the lower court’s decision, and emphasized that the borrowers’ position lacked legal merit. As a result, the lenders’ entitlement to the full costs award remained undisturbed.