Executive Summary: Key Legal and Evidentiary Issues

• Scope of the motion was confined to fixing the exact amount owing under a residential mortgage following a prior summary judgment decision.
• Competing payoff calculations turned on how prior payments were applied, whether interest continued to accrue after default, and the bank’s entitlement to a prepayment charge and tax account balance.
• The court rejected the borrowers’ attempt to use a Notice of Application to re-litigate or expand issues already decided in their dismissed counterclaim, emphasizing issue estoppel and cause of action estoppel.
• Disagreement over whether the bank had agreed to waive further interest failed for lack of written evidence, leading the court to apply the contractual mortgage interest as written.
• A prior summary judgment had already determined defaults on the mortgage, line of credit, and Mastercard, granted money judgments on the unsecured debts, and dismissed all borrower counterclaims about alleged harassment and false credit reporting.
• The bank’s mortgage calculation, including contractual interest, a prepayment charge, and tax account payoff, was accepted as the correct amount owing, leaving only costs to be determined later if the parties cannot agree.

Background and parties
Bank of Montreal (BMO) sued its borrowers, Harpreet Kaur Dua and Nanak Partap Singh, on a residential mortgage, a line of credit, and a Mastercard account. The defendants were the registered owners of the mortgaged property and had granted BMO a mortgage in November 2016 as security for a $900,000 loan. BMO’s standard charge terms 201506 formed part of the mortgage, and the relationship was governed by those written terms together with the bank’s loan and credit documentation. The litigation produced two key decisions: a 2025 summary judgment decision by Justice Christie, and a 2026 decision by Justice Charney determining the precise mortgage amount owing.

The mortgage, tax arrears, and default
The initial mortgage term ran from 2016 to 2021 at a fixed rate of 2.55% per annum, with bi-weekly payments of $1,639.13 on principal and interest only. When the mortgage was renewed in July 2021, it was converted to a variable rate at BMO’s prime rate from time to time minus 1.04%, and the regular bi-weekly payment was reset to $1,480.99 for principal and interest. As prime rose, the effective mortgage rate reached 4.95% per annum by March 13, 2025. The default that triggered enforcement did not arise from missed principal and interest installments, but from unpaid municipal property taxes. The borrowers disputed the tax amount with the municipality and failed to pay, which led BMO to advance $23,964.18 to clear the arrears and to require ongoing tax deposits of $302 bi-weekly on top of the $1,480.99 mortgage payment. Although the defendants eventually repaid the tax advance by September 1, 2023 and caught up the mortgage arrears by June 7, 2024, they refused to pay BMO’s enforcement costs or provide proof of insurance. Under the mortgage terms, non-payment of property taxes and failure to cover enforcement costs constituted defaults, and the court later confirmed that the municipal dispute did not excuse compliance with the clear mortgage obligation that unpaid taxes would place the loan in default.

The commencement of the action and the 2025 summary judgment motion
BMO commenced the action in May 2023, seeking payment of the amount owing under the mortgage (then alleged at about $824,456), possession of the property, and payment of outstanding line of credit and credit card balances. The defendants responded with a defence and counterclaim, alleging among other things that BMO refused to mediate, harassed them, and had made mischievous and false reports to credit bureaus. BMO brought a summary judgment motion. Both sides accepted that summary judgment was an appropriate procedure, and Justice Christie framed the issues as: whether the defendants had defaulted on the mortgage, the line of credit, and the Mastercard; whether BMO was entitled to the relief it sought; and whether the bank’s alleged conduct gave rise to a valid counterclaim. Justice Christie found that defaults had indeed occurred on all three credit facilities. On the mortgage, she held that the borrowers’ ongoing dispute with the municipality about tax assessments did not relieve them from their contractual obligation to keep property taxes current and that the mortgage clearly stipulated that unpaid taxes would amount to default. On the line of credit, she concluded that BMO’s rights were defined by the statements and the governing contract and that the bank had no obligation to reduce interest or forgive principal, entitling it to judgment for the full balance with interest. On the Mastercard, the court accepted that the card had been used over years, payments had fallen behind, the account was closed for default in January 2023, and the minimum amounts remained unpaid, again warranting judgment for the outstanding balance plus interest.

Outcome of the 2025 summary judgment decision
Justice Christie declined to grant immediate judgment for the full mortgage balance and possession because, by the time of the hearing, the defendants had paid all amounts owing under the mortgage other than BMO’s legal fees. She considered it unfair and unjust to enter judgment for the entire mortgage debt and possession in those circumstances. Instead, she imposed a conditional remedy: if the defendants paid “reasonable legal fees” of $3,000 (all-inclusive) to BMO within 90 days, the mortgage would be reinstated. If they failed to pay within that period, BMO would be entitled to judgment for the full amount owing under the mortgage and possession of the property. On the unsecured facilities, she granted full monetary relief. For the line of credit, she ordered the defendants to pay $71,480.88 plus pre-judgment interest from March 12, 2023 and post-judgment interest at 9.81% per year. For the Mastercard account, she ordered Ms. Dua to pay $30,557.81 plus pre-judgment interest from February 18, 2023 and post-judgment interest at 24.99% per year. She dismissed the counterclaim entirely, holding that BMO had no duty to reduce the amount owing or interest rate, there was no mandatory mediation requirement, pursuing legal remedies was not harassment, and the defendants had not offered specific, persuasive evidence that any credit reporting was false or caused the alleged loss of income. That decision resolved all liability issues in BMO’s favour, subject only to the 90-day mortgage-reinstatement condition and a later appeal initiated by the defendants.

The 2025 case conference and the need to fix the mortgage payoff amount
Following the summary judgment decision, the defendants asked for a case conference about the bank’s discharge statement. At the July 16, 2025 case conference, Justice Sutherland recorded that Mr. Singh wished to pay off the mortgage but that the parties disagreed on the outstanding amount. The summary judgment reasons had not fixed the numerical mortgage balance. Justice Sutherland directed that a hearing “pursuant to the Mortgages Act” was required in order to determine the amount owing and expressed concern about a $20,000 holdback on appeal costs that the bank had included on a June 23, 2024 discharge statement. A timetable was set for motion materials, and the scope of the future hearing was clearly limited to determining the amount owing under the mortgage. The defendants, however, did not follow that direction precisely. Instead of serving a motion record confined to the payoff issue, they served a document titled “Notice of Application” in January 2026, using the same court file number. The court treated this “application” as a motion in the existing action, to comply with Justice Sutherland’s endorsement. But the borrowers’ pleading went far beyond the single issue of calculating the mortgage balance. They sought orders discharging the mortgage, finalizing payout statements, holding BMO responsible for allegedly obstructing discharge, imposing damages and special damages for alleged wilful credit-score damage and lost opportunities, and even declaring BMO and its directors liable under the Mortgages Act, the Consumer Reporting Act, and other statutes. Justice Charney held that only the request to “finalise the mortgage payout statement” came within Justice Sutherland’s narrow direction and that all of the other requested relief was procedurally improper. The expanded claims either re-argued issues that had already been finally dismissed by Justice Christie on summary judgment, triggering issue estoppel and cause of action estoppel, or related to alleged post-decision conduct that could only be advanced, if at all, by starting a fresh action with a Statement of Claim. In addition, the post-decision damages claims did not fall within any category of application authorized by Rule 14.05(3) and involved disputed facts unsuited to an application record. Justice Charney therefore confined himself strictly to the permitted question: the amount owing under the mortgage.

The competing mortgage calculations and contractual terms in play
On the motion before Justice Charney, the defendants argued that the outstanding mortgage amount was $581,933.28. They began from a stated balance of $645,149.88 as of January 8, 2026, then subtracted $53,062.80 they said had been paid after July 1, 2025, a $5,520 e-transfer made on March 1, 2026, and a “prepayment charge loss incurred” of $7,633.80. Their approach effectively treated these sums as additional reductions of the January 8 balance and was premised on the assumption that no further interest had accrued in the interim. By contrast, BMO calculated the total owing at $791,159.83. The bank likewise started from a January 8, 2026 principal balance of $645,149.88 but explained that this figure already reflected the $53,062.80 paid by the defendants, which had been applied entirely to principal as the mortgage terms allowed following default. On that view, deducting $53,062.80 again meant the defendants were double-counting the payment. BMO then added contractual interest of $133,389.46 from March 2025 to March 2026, a prepayment charge of $5,515.55 (reflecting the early payout of a mortgage renewed for a five-year term in July 2021), and $7,104.94 required to clear the tax account. One of the central evidentiary disputes was whether BMO had agreed to waive further interest. The defendants asserted that it had, but the court noted there was no written documentation of any such waiver. BMO flatly denied agreeing to waive interest. In the absence of written confirmation contradicting the mortgage terms, Justice Charney found that no waiver had been granted and that the mortgage continued to accrue interest according to its contractual provisions. In addition, following concerns raised at the earlier case conference, BMO removed a controversial $20,000 holdback for anticipated appeal costs from its calculation. Justice Charney observed that this holdback would have been objectionable if it had been retained, though the ultimate allocation of actual appeal costs would depend on the Court of Appeal’s decision.

Determination of the amount owing in 2026
Justice Charney accepted BMO’s explanation of how prior payments had been applied and rejected the defendants’ double-counting methodology. The parties agreed that as of January 8, 2026, the principal balance outstanding was $645,149.88, and the court accepted BMO’s evidence that this figure already incorporated the $53,062.80 payment entirely as a principal reduction. Because the defendants had defaulted, BMO was entitled under the standard charge terms to allocate payments in that fashion, and the court enforced that contractual allocation. Given the absence of any proven interest waiver, the court also accepted BMO’s calculation of $133,389.46 in additional interest from March 2025 to March 2026, calculated in accordance with the mortgage’s variable-rate provisions. Further, because the mortgage had been renewed on July 2, 2021 for a five-year term, the defendants’ proposed prepayment before the July 2026 maturity date triggered a contractual prepayment charge of $5,515.55. The bank was also entitled to recover the $7,104.94 needed to clear the tax account so the property taxes would be fully up to date. With the earlier $20,000 appeal-cost holdback removed, Justice Charney concluded that BMO’s composite figure was the correct payoff amount. He held that the amount owing under the mortgage as of March 19, 2026 was $791,159.83. He then invited brief written submissions on costs if the parties could not agree, leaving the precise costs award for later determination.

Overall outcome and financial consequences
Taking both decisions together, BMO prevailed on every substantive issue. The 2025 summary judgment decision confirmed defaults on the mortgage, line of credit, and Mastercard, dismissed the defendants’ counterclaim in its entirety, and granted BMO money judgments on the unsecured debts: $71,480.88 on the line of credit with pre-judgment interest from March 12, 2023 and post-judgment interest at 9.81% per year, and $30,557.81 on the Mastercard with pre-judgment interest from February 18, 2023 and post-judgment interest at 24.99% per year, together with a $3,000 all-inclusive legal-fees condition for reinstating the mortgage. In 2026, the court resolved the remaining mortgage-payoff dispute in BMO’s favour by fixing the amount owing under the mortgage as of March 19, 2026 at $791,159.83, including contractual interest, a prepayment charge, and a tax-account payoff, while also striking the improper $20,000 appeal-cost holdback from the discharge figure. In total, the successful party is Bank of Montreal, and the decisions establish (1) judgments totalling $105,038.69 in principal on the line of credit, Mastercard, and mortgage legal fees, plus substantial contractual pre- and post-judgment interest, and (2) a determined mortgage payoff amount of $791,159.83 as of March 19, 2026; however, because interest continues to run on the money judgments and the costs of the 2026 motion were left to later written submissions, the exact final aggregate sum in BMO’s favour, including all interest and costs, cannot be fully determined from the decisions alone.