Executive Summary: Key Legal and Evidentiary Issues

• BMO sought default judgment against Afroza Mary Mir for failure to defend a mortgage enforcement action.
• Default occurred under the mortgage on or about December 1, 2024, triggering the full outstanding balance.
• Compound interest at the contractual rate of 4.82% per annum, calculated semi-annually, was at issue after the Registrar initially rejected the requisition for default judgment on that basis.
• Deemed admissions arising from the defendant's noted-in-default status formed a key part of the evidentiary basis for liability.
• Entitlement to a writ of possession turned on whether all persons in actual possession of the property had received sufficient notice of the proceeding.
• Costs on a substantial indemnity basis were claimed under the Standard Charge Terms incorporated into the mortgage.

Facts of the case

The plaintiff, Bank of Montreal ("BMO"), commenced a mortgage enforcement action against the defendant, Afroza Mary Mir, in respect of a property located at 722-20 Meadowglen Place, Toronto, Ontario. On September 10, 2024, the defendant charged the property in favour of BMO for a term of three years, securing a principal amount of $415,000 at an annual interest rate of 4.82%, calculated semi-annually, with monthly blended installments of $2,371.31 payable to and including October 1, 2029. The mortgage incorporated Standard Charge Terms filed as 201506. Default occurred on or about December 1, 2024, and a Notice of Sale was issued on May 7, 2025. A Statement of Claim was issued on April 29, 2025 and served on the defendant by alternate to personal service on April 30, 2025. The defendant did not defend the action and was noted in default. BMO brought a motion for default judgment, which was authorized to proceed in writing on February 19, 2026. The Registrar had initially rejected BMO's requisition for default judgment on the basis that interest was being calculated on a compound basis.

Contractual terms at issue

The mortgage terms were central to the dispute. The Standard Charge Terms provided that, upon default, BMO was entitled to possession of the property, the full outstanding principal balance together with all accrued interest, and all costs and expenses on a lawyer-and-client basis incurred to collect amounts owing. These same terms expressly entitled BMO to recover legal costs on a substantial indemnity basis. The enforceability of compound interest at the contractual rate of 4.82% was specifically considered by the court, as the Registrar's rejection had placed that provision in question.

Reasoning and analysis

Justice Mathen applied the three-part test for default judgment set out in Elekta Ltd. v. Rodkin, 2012 ONSC 2062, examining what deemed admissions of fact arose from the Statement of Claim, whether those admissions established liability in law, and whether any additional admissible evidence filled any remaining gaps. The court was satisfied that the affidavit of Jocelyne Sauve, Manager, National Special Handling Collections Office for BMO, sworn November 4, 2025, together with the deemed admissions, established liability on a balance of probabilities. On the interest question, the court held that compound interest was not a bar to default judgment, citing the Supreme Court of Canada's finding in Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, that compound interest is "commonplace" and that "the common law now incorporates the economic reality of compound interest." The court found the contractual rate of 4.82% was not onerous and that, absent exceptional circumstances, effect should be given to an interest rate to which the parties had agreed. As of March 10, 2025, the outstanding balance for principal and interest stood at $422,484.91. On the writ of possession, the court was satisfied that the defendant — the only person shown to be in actual possession — had received sufficient notice of the proceeding. Costs on a substantial indemnity basis in the amount of $3,435.25, inclusive of disbursements, were found to be fair and reasonable and consistent with the contractual entitlement under the Standard Charge Terms.

Ruling and overall outcome

BMO's motion for default judgment was granted in its entirety. The court ordered the defendant to pay $444,355.04, comprising the outstanding balance of $422,484.91 plus prejudgment interest at 4.82% per annum from March 10, 2025 to April 6, 2026, in the amount of $21,870.13. Post-judgment interest continues to accrue on the sum of $444,355.04 at the rate of 4.82% per annum commencing April 6, 2026, while costs bear interest at 4% per annum from the date of judgment. BMO was also granted a writ of possession over the mortgaged property and was awarded costs fixed at $3,435.25.