Executive Summary: Key Legal and Evidentiary Issues

• Dispute arose over a mortgage default and the lender’s right to enforce the charge after non-renewal

• Defendants claimed mortgage renewal was unfairly denied due to their personal circumstances, including pending criminal charges

• Court assessed whether there was a genuine issue requiring trial under Rule 20.04 of the Rules of Civil Procedure

• Evidence of alleged misrepresentation and unequal bargaining power was deemed insufficient to prevent summary judgment

• The mortgage terms expressly gave the lender full discretion to refuse renewal

• Summary judgment was granted as there were no material facts in dispute requiring a full trial

Background and parties involved

Home Trust Company brought a civil action against Lauriston Maloney and Amber-Lee Maloney to recover the balance of a mortgage loan and obtain possession of the mortgaged property. The Defendants were the registered owners of a residential property and had taken out a $1,690,000 mortgage in February 2022 for a two-year term. The mortgage was initially issued by Computershare Trust Company and later transferred to Home Trust Company in May 2024.

Terms of the mortgage and default

The mortgage contained a renewal clause giving the lender the exclusive right to decide whether to offer a renewal. It explicitly stated that the borrower had no right to renew unless the lender agreed in writing. The mortgage matured on May 1, 2024, and the borrowers failed to pay the balance owing. They also failed to reach a new agreement with Home Trust. As a result, the lender issued a Notice of Sale and later served a demand for possession.

Defendants’ position and allegations

The Defendants admitted that they did not pay the balance upon maturity and that no renewal or extension agreement had been made. However, they argued that they had been led to believe they would be able to renew the mortgage and that the lender’s refusal to do so was unfair. They claimed that their vulnerability due to pending criminal charges placed them at a disadvantage, amounting to an unconscionable imbalance of power. They also referred to conversations with an unidentified representative from Home Trust who allegedly indicated a renewal might be possible.

Plaintiff’s response and evidence

Home Trust Company denied making any promise to renew. Their underwriter filed evidence stating that all communications were through a mortgage broker and not directly with the Defendants. There was no documentation supporting the Defendants’ claim that they had been assured of renewal. The Plaintiff relied on the plain language of the mortgage agreement, which made clear that renewal was at the lender’s discretion and not guaranteed.

Legal framework for summary judgment

The court applied Rule 20.04 of the Rules of Civil Procedure, which allows summary judgment if there is no genuine issue requiring a trial. The judge considered whether the evidence presented was sufficient to resolve the dispute without a trial. The court referred to the Supreme Court’s guidance in Hryniak v. Mauldin, confirming that summary judgment is appropriate where the facts are undisputed and the legal issues can be decided based on the record.

Analysis and rejection of defences

The court found no evidence of unconscionability. The mortgage agreement was signed in February 2022, well before the Defendants’ arrest in July 2023. Their criminal charges, therefore, had no bearing on the fairness of the agreement. Furthermore, the court held that the doctrine of unconscionability could not be used to compel a lender to enter into a new agreement. The claim of misrepresentation was also dismissed due to lack of credible or documented proof that such an assurance was ever made.

Decision and remedies granted

The court granted summary judgment in favor of Home Trust Company. The Defendants were ordered to pay the outstanding mortgage amount of $1,639,856.42, with interest at 2.99% per annum from August 26, 2024. They were also required to deliver possession of the mortgaged property. In addition, the Plaintiff was granted liberty to issue a writ of possession. Costs of $17,383 were awarded on a substantial indemnity basis.

The total monetary judgment therefore amounted to $1,657,239.42 plus continuing interest at 2.99% per annum until full payment.