Executive Summary: Key Legal and Evidentiary Issues

• Whether Jonny’s Antiques was in default under the mortgage, justifying 264 Ontario’s enforcement steps and sale of the property.
• Evidentiary sufficiency for the finding that the commercial property was vacant and that 264 Ontario obtained vacant and peaceable possession when it changed the locks in April 2024.
• Appropriateness of vacating the ex parte certificate of pending litigation (CPL) and declaring that 264 Ontario was lawfully in possession, even though such declaratory relief was not pleaded in the original statement of claim.
• Procedural fairness concerns about enforcing mortgage remedies (including sale) by motion rather than after a full trial, in light of the Mortgages Act and standard mortgage terms.
• Application of Hume v. 11534599 Canada Corp. to determine peaceable possession and the standard of appellate review for these fact-specific findings.
• Proper use and timing of a motion to quash an appeal as allegedly abusive or devoid of merit, particularly where the appeal has already been perfected and argued on the merits.

Factual background

The dispute arises out of a mortgage loan secured against a commercial property in Shakespeare, Ontario, owned by Jonny’s Antiques Ltd. 2642948 Ontario Inc. (“264 Ontario”) was the mortgagee and alleged that Jonny’s Antiques had defaulted on its obligations under the mortgage. 264 Ontario commenced an action to enforce its rights under the mortgage, while Jonny’s Antiques defended and advanced a counterclaim seeking various forms of relief and damages. The property at issue was the business premises of Jonny’s Antiques and the address set out on title as the address for service under the mortgage. Over 2023 and early 2024, the relationship between the parties deteriorated around payment of the principal and enforcement steps under the mortgage and related security.

Events leading to enforcement and the CPL

The conflict crystallized after 264 Ontario delivered a lawyer’s letter on July 14, 2023, demanding payment of the principal by October 10, 2023. Jonny’s Antiques never responded to this demand and made no payment toward the principal, a key factual finding from which the motion judge and the Court of Appeal inferred default under the mortgage. Later, in December 2023, 264 Ontario sent a Notice of Sale Under Mortgage and a Notice of Intent to Enforce Security under the Bankruptcy and Insolvency Act to the property address by registered mail. Those documents were returned unclaimed, suggesting that no one was attending at the premises. A process server then went to the property several times in February 2024 in an effort to serve the statement of claim and found no one present on each visit. These attempts at communication and service framed the later question whether the property was truly vacant when 264 Ontario physically entered and secured it.

Taking of possession and the vacant premises finding

In April 2024, 264 Ontario took physical steps to secure the property. A bailiff acting for 264 Ontario attended at the premises on April 12, 2024, found it appearing vacant, entered without incident and changed the locks. The Court of Appeal emphasized that the cumulative evidence—the unclaimed registered mail, repeated unsuccessful service attempts, and the bailiff’s observations—amply supported the motion judge’s conclusion that the premises were vacant when 264 Ontario entered. Jonny’s Antiques challenged this finding on appeal, arguing that the motion judge mischaracterized an email from its lawyer sent in February 2024 and that this error undermined the conclusion that the property was vacant. The Court of Appeal accepted that the email may have been misdescribed but held that any such mischaracterization was not a palpable and overriding error. The email was not central to the core factual finding that the property was vacant and that 264 Ontario achieved peaceable possession when it changed the locks.

The certificate of pending litigation and declaratory relief

The security and possession dispute soon spilled over into competing procedural steps. After 264 Ontario entered the property and changed the locks, the principal of Jonny’s Antiques tried to re-enter by breaking in but was unsuccessful. Jonny’s Antiques then obtained, on an ex parte basis, a certificate of pending litigation (CPL) and registered it on title. The CPL effectively impeded 264 Ontario’s ability to sell the property to recover the mortgage debt. In response, 264 Ontario brought a motion to set aside the CPL and also sought a declaration that it was lawfully in possession of the property. By the time the motion was decided, 264 Ontario had entered into an agreement of purchase and sale for the property, making removal of the CPL urgent from its perspective. The motion judge vacated the CPL, finding that 264 Ontario had taken vacant and peaceable possession in April 2024, and declared that 264 Ontario was in lawful possession. On appeal, Jonny’s Antiques argued that this declaration was unavailable because 264 Ontario had not pleaded it in the original statement of claim. The Court of Appeal rejected that argument. When the claim was issued, 264 Ontario had not yet taken any steps to enter and occupy the property and therefore had no factual basis to plead a declaration of lawful possession. By the time it moved to vacate the CPL, the facts had changed, and the requested declaration was properly set out in the notice of motion and granted on that basis.

Mortgage terms, self-help remedies and peaceable possession

Although the decision does not reproduce the exact wording of the standard mortgage terms, the Court of Appeal accepted the motion judge’s interpretation that those terms allowed 264 Ontario, upon default, to resort to self-help remedies. These included entering and taking possession of the mortgaged premises and selling the property to recover the debt owed, provided the mortgagee obtained “vacant and peaceable possession.” The Court noted that nothing in the Mortgages Act required a mortgagee in these circumstances to obtain a writ of possession before taking physical possession of a vacant commercial property. Instead, the Act operates alongside contractual mortgage remedies, and the key constraint is that self-help steps must not breach the peace. The motion judge applied the criteria from the earlier Court of Appeal decision in Hume v. 11534599 Canada Corp. to determine whether 264 Ontario had obtained peaceable possession. The relevant factors include the nature of the entry, the presence or absence of occupants, and whether any resistance or disturbance occurred. Based on the uncontested evidence that the property was vacant and that the bailiff entered and changed the locks without incident, the motion judge found that peaceable possession was achieved on April 12, 2024. The Court of Appeal treated this as a fact-specific finding entitled to deference and concluded that Jonny’s Antiques had not shown any palpable and overriding error that would justify appellate intervention.

Procedural fairness and the need for a trial

Jonny’s Antiques further argued that the motion judge’s approach was procedurally unfair. It contended that allowing 264 Ontario to enforce its mortgage rights—including taking possession and later selling the property—on a motion, without a full trial, violated its procedural entitlements and improperly bypassed the safeguards in the Mortgages Act. The Court of Appeal disagreed. It held that in the specific circumstances of this case—where the mortgage terms clearly authorized self-help remedies upon default, and the evidence overwhelmingly supported a finding of vacancy and peaceable possession—a trial was not required simply to confirm 264 Ontario’s contractual enforcement rights. The motion judge’s use of a motion to address the CPL and related declaratory relief was a permissible and efficient way to resolve the core issues. The Court reinforced that where there is a clear evidentiary foundation, courts may make substantive determinations about mortgage enforcement and possession on a motion record, especially when third-party transactional interests (such as a pending sale) are engaged.

The appeal and the motion to quash

The proceedings then shifted to the Court of Appeal. Jonny’s Antiques appealed the motion judge’s order vacating the CPL and declaring 264 Ontario to be in lawful possession. 264 Ontario, in turn, brought a motion to quash the appeal, arguing that it was clearly without merit and an abuse of process. By the time of the appeal, the property had already been sold on April 24, 2025, and earlier the Court of Appeal had dismissed a stay motion brought by Jonny’s Antiques, allowing the sale to proceed. However, 264 Ontario did not seek to have the appeal dismissed as moot, nor did either party present submissions on mootness. The Court of Appeal ultimately dismissed both the appeal and the motion to quash. On the motion to quash, the Court stressed that dismissing an appeal as entirely devoid of merit is an exceptional step. Where a litigant has a statutory right of appeal and has complied with the procedural requirements to file and perfect it, they are ordinarily entitled to argue the appeal, even if the grounds are weak or marginal. The Court emphasized that 264 Ontario’s motion to quash, based solely on alleged lack of merit and brought only after the appeal was perfected, served little useful purpose and mainly added expense, particularly when scheduled on the same day as the merits hearing.

Outcome, successful party and monetary relief

In its reasons, the Court of Appeal explained why it had orally dismissed the appeal and the motion to quash at the conclusion of the hearing. The Court rejected each of Jonny’s Antiques’ four grounds of appeal: it held that default was implicit in the motion judge’s findings; the vacancy and peaceable possession conclusions were well supported; the declaratory relief was properly granted on the motion record; and there was no procedural unfairness in deciding these issues without a trial. As a result, the motion judge’s order vacating the CPL and confirming 264 Ontario’s lawful possession—and thus its ability to complete the sale of the property—remained in force. On the cross-motion, the Court of Appeal concluded that the appeal was not so devoid of merit or abusive as to justify being quashed. In terms of litigation success, 264 Ontario prevailed on the core issue: Jonny’s Antiques’ appeal against the mortgage enforcement and possession order was dismissed. Jonny’s Antiques, however, succeeded in resisting the motion to quash, leading the Court to characterize the result as “divided success.” Reflecting that split outcome, the Court of Appeal ordered no costs to either party. The decision does not state the amount of the mortgage debt, the sale price of the property, or any quantified damages. Accordingly, while 264 Ontario is the successful party on the appeal, there was no monetary award, damages or costs ordered in its favor in this decision, and the total amount ordered in its favor cannot be determined from the judgment.