Executive Summary: Key Legal and Evidentiary Issues

• Cannect Mortgage Investment Corporation sought summary judgment to enforce a second mortgage against Faisal Ayub Raja, who admitted he was in default.
• Mr. Raja challenged the mortgage as unconscionable, arguing inequality of bargaining power and an improvident bargain, but the court found none of the required elements were established.
• Duress was also raised as a defence, but the evidence showed it was Mr. Raja who actively pursued and negotiated the mortgage with Cannect.
• Alleged technical defects in the Notice of Sale did not constitute a substantive defence given Mr. Raja's admitted default on principal and interest.
• No breach of contract or breach of the duty of good faith in performance was found against Cannect.
• Costs sought by Cannect on a full indemnity basis were reduced from $236,923.28 to $100,000 as the original claim was found grossly disproportionate and unreasonable.

Facts of the case

Cannect Mortgage Investment Corporation commenced an action for summary judgment to enforce a second mortgage registered against property owned by Faisal Ayub Raja. Mr. Raja had first obtained a second mortgage from Cannect in 2019, which was subsequently renewed in 2020 and 2021. In June 2022, Mr. Raja sought another renewal and was presented with several financing options. At the time, he was well-educated, experienced with mortgages, and represented by independent legal counsel. After several discussions with Cannect regarding terms, the mortgage was agreed upon in the fall of 2022 and registered on title in January 2023.

Mortgage terms at issue

The mortgage carried a principal amount of $263,000 and an eighteen-month term. The interest rate was 11.04% per annum for the first twelve months, rising to 21.99% per annum for the remaining six months. Repayment was structured as monthly interest-only payments, with the full principal due on July 17, 2024. The mortgage also incorporated Standard Charge Terms by reference and entitled Cannect to its legal fees on a solicitor-and-client basis in the event of enforcement.

Reasoning and analysis

Mr. Raja fell into default as of February 17, 2024. Cannect accommodated him by accepting partial payments while he sought refinancing, and extended the date for full payment when the mortgage matured on July 17, 2024. No payments were made after May 2024. On September 17, 2024, Cannect delivered a Notice of Sale and Notice to Enforce Security under the Mortgages Act, and subsequently commenced this action. Mr. Raja, under cross-examination, admitted he owed the amounts claimed for principal and interest.

Mr. Raja's primary defence was that the mortgage was unconscionable. The court applied the four-part test from Titus v. William F. Cook Enterprises Inc., 2007 ONCA 573, requiring: a grossly unfair and improvident transaction; lack of independent legal advice; an overwhelming imbalance in bargaining power due to the victim's vulnerability; and the other party's knowing exploitation of that vulnerability. The court found none of these elements were established. Mr. Raja had appointed his own lawyer, consulted with counsel before signing, and acknowledged receiving independent legal advice both in the signed documents and under cross-examination. He was well-educated, familiar with mortgages, and had engaged in substantive negotiations with Cannect — including corresponding directly with Cannect's CEO to seek a lower interest rate. While the mortgage was not a favourable deal for Mr. Raja, the court found it did not unduly advantage Cannect or unduly disadvantage Mr. Raja within the meaning of Uber Technologies Inc. v. Heller, 2020 SCC 16.

The duress argument likewise failed. The court noted that it was Mr. Raja who continued to press Cannect for a deal and actively engaged in negotiations, falling well short of the standard required to establish duress as set out in Flexpark Inc. v. Ercolani, 2025 ONSC 1520. The court also rejected any claim of breach of contract or breach of the duty of good faith, finding no supporting evidence. Disputed charges in the Notice of Sale did not constitute a substantive defence where default on principal and interest was admitted, consistent with We Care Funding Limited Partnership v. LDI Lakeside Developments Inc. et al., 2021 ONSC 7466.

On the question of costs, Cannect sought $236,923.28 on a full indemnity basis pursuant to the mortgage's solicitor-and-client costs clause. The court acknowledged its discretion to scrutinize costs for reasonableness, citing United Soils Management Ltd. v. Mohammed, 2019 ONCA 128. It found the claim grossly disproportionate: the pleadings and motion materials were straightforward, no Cannect representative was cross-examined, Mr. Raja was cross-examined for just over two hours, and the hearing itself lasted approximately two hours, yet at least three lawyers worked extensively on the file. The court noted that a legal bill approaching a quarter of a million dollars was nearly as much as the principal amount of the mortgage itself.

Ruling and outcome

The court granted summary judgment in favour of Cannect. Cannect was awarded the full principal amount plus interest at the contractual rates, together with all additional expenses, charges, and enforcement costs provided for under the mortgage terms. Vacant possession of the property was also ordered, with leave granted to issue a writ of possession. On costs, the court fixed the amount at $100,000 — down from the $236,923.28 claimed — reflecting what it considered a reasonable full indemnity award for the nature and complexity of the proceeding. The decision was rendered by Justice Paul B. Schabas on May 19, 2026.