Executive Summary: Key Legal and Evidentiary Issues

• Jurisdiction to reopen foreclosure proceedings was confirmed, but the applicant failed to present an arguable legal defence.

• Substitutional service was initially authorized but later overridden by a judicial order requiring personal service.

• Actual notice of proceedings was not received by Jason Short, rebutting the presumption of effective service.

• The court emphasized that hardship or illness alone does not justify setting aside default judgments in foreclosure cases.

• Failure to personally serve the Order Nisi rendered it ineffective and delayed the foreclosure process.

• The foreclosure may proceed only after personal service, ensuring procedural fairness going forward.

Ownership of property and mortgage default

Jason and Cara Short were the registered owners of a residential property in Regina, Saskatchewan, purchased in October 2018 for $265,000. They financed the purchase through a mortgage loan from B2B Bank in the amount of $261,820. The mortgage term expired on November 30, 2023, and the loan was not renewed. The last mortgage payment was made in August 2023.

Initiation of foreclosure and method of service

After mortgage default, B2B Bank initiated foreclosure proceedings. The bank applied for substitutional service, which was granted under the Klatt Order in September 2024. This allowed the bank to serve all legal documents by posting them on the front door of the property. The bank proceeded with this method to serve the application for leave, the Statement of Claim, and later the application for Order Nisi.

Granting of the Order Nisi with conditions

On May 8, 2025, the court granted the Order Nisi for Foreclosure. However, Justice Robertson specifically amended the draft order to require personal service of the Order Nisi on the defendants. This amendment overrode the earlier Klatt Order. Despite this, the bank proceeded to post the Order Nisi at the property, contrary to the revised service requirements.

Application by Jason Short to set aside foreclosure

Jason Short filed an application on June 23, 2025, seeking to stay the foreclosure proceedings, set aside the Order Nisi, and obtain leave to defend. He supported the application with affidavits explaining that he was suffering from addiction during the relevant time period and did not receive actual notice of the proceedings. He only learned of the foreclosure after the Order Nisi was posted on the property on May 13, 2025.

Legal tests applied to the application

The court applied the standard test for setting aside default judgment: timely application, reasonable explanation, arguable defence, and absence of prejudice to the plaintiff. The court accepted that Jason Short applied promptly and credibly explained his failure to respond. However, he failed to disclose any legal defence to the mortgage debt. The court emphasized that hardship or intention to negotiate is not a legal defence in foreclosure law.

Findings on improper service and legal effect

Although the application was dismissed, the court found that the bank had not complied with the requirement for personal service of the Order Nisi. The bank’s failure to follow the Robertson Order meant that the Order Nisi was not yet legally effective. As a result, the 90-day redemption period had not begun. The court held that any further steps in the foreclosure must be preceded by personal service of the Order Nisi and future applications.

Equitable considerations and procedural fairness

The court acknowledged the difficult circumstances faced by Jason Short, including his recovery from addiction. However, it emphasized that courts must balance equitable considerations with the need for finality, reliability of court orders, and protection of the mortgage enforcement process. Exceptional circumstances must be shown to justify setting aside orders, and this threshold was not met.

Conclusion and directions moving forward

The court dismissed Jason Short’s application but made clear that the Order Nisi cannot be enforced until it is personally served. The bank was directed to personally serve all future documents on both Jason and Cara Short. The court also encouraged both parties to explore alternative resolutions such as private sale or refinancing. No costs were awarded, and the court retained jurisdiction only for the purpose of amending the Order Nisi if needed.