Executive Summary: Key Legal and Evidentiary Issues

• Sharmila Diane Salman challenged Home Trust Company's September 2024 power of sale of her residential property at 112 Watercrest Drive, Stoney Creek, Ontario.
• Central to the dispute was whether Home Trust Company, as mortgagee in possession, breached its duty to take reasonable precautions to obtain the true market value of the property.
• At issue was whether the applicant's submission of a $2.75 million third-party offer in February 2024 constituted a valid exercise of her right of redemption.
• The court examined whether the respondent's eventual acceptance of a $1.9 million cash offer — against earlier appraisals of $2.65 million — rendered the sale improvident.
• Evidence considered included multiple appraisals, listing histories, agent communications, and a series of offers received and rejected throughout the sale process.
• No breach of fiduciary duty or right of redemption was established, and market decline was found to be the primary cause of the price gap between early valuations and the final sale.

Facts of the case

Sharmila Diane Salman was the owner of a residential property located at 112 Watercrest Drive, Stoney Creek, Ontario. In 2022, she negotiated a loan and a mortgage was registered against the property, which was subsequently assigned to Home Trust Company. The assigned mortgage was in the principal sum of $2,640,000.00, with interest at a rate of 7.990% per annum. At the time of the power of sale proceedings, a second mortgage in favour of a third party in the principal amount of $450,000, and a writ of execution in the amount of $409,041.85, were also registered against the property.

The mortgage went into default on October 1, 2023. Home Trust Company issued a notice of sale on November 28, 2023, and subsequently obtained judgment for payment of $2,813,949.70. On January 12, 2024, the respondent took possession of the property and commenced power of sale proceedings. The sale was completed on September 12, 2024, at a final price of $1.9 million. Salman challenged the sale on the grounds that the respondent had failed to allow her to exercise her right of redemption and that the sale was improvident.

Mortgage terms and duties at issue

The core legal obligations examined were those of a mortgagee in possession. As described in Manufacturers Life Insurance Co. v. Granada Investments Ltd. (2001), these duties include accounting to the mortgagor, managing the property in a reasonable way as a prudent owner would, and acting with reasonable care to obtain a true price — or the best price in the circumstances — upon exercising the power of sale. The standard, as confirmed in Centurion Farms Ltd. v. Citifinancial Canada Inc., 2013 ONCA 79, is one of reasonableness, not perfection. Further, even if a breach were established, the onus falls on the mortgagor to prove that a higher price would have been obtained but for that breach, per Oak Orchard Developments v. Iseman.

On the right of redemption, the applicable principle — drawn from Attalla v. Moody, 2017 ONSC 1971, and The Township of Scarborough v. Greater Toronto Investment Corporation — is that the full amount owing must be tendered in order to redeem.

Court's reasoning and analysis

The court reviewed a detailed chronology of the sale process. On February 1, 2024, the respondent obtained an appraisal valuing the property at $2.65 million. On February 24, 2024, the applicant received a direct offer to purchase the property for $2.75 million, but this offer was conditional on financing and on inspection, both for 10 days after acceptance. The respondent declined to allow the applicant to complete the sale herself, advising instead that the would-be purchaser should direct their offer to the respondent's listing, which was to be published shortly thereafter. On March 8, 2024, the respondent listed the property at $2.8 million. Over the following months, the respondent received and signed back multiple offers it considered too low, reduced the listing price progressively, and obtained a second appraisal in late May 2024 that valued the property at $2.5 million. Two offers in late August 2024 — one for $1.945 million inclusive of GST, conditional on financing, with a proposed closing of October 2, 2025, and one for $1.9 million in cash with a proposed closing of September 16, 2024 — were received. The respondent accepted the latter on the basis that it offered an earlier closing date and involved no financing condition, after two prior conditional agreements had failed to close.

The court found that the respondent had provided ample evidence of having obtained appraisals, retained a qualified and active agent, and engaged in broad marketing that included multiple open houses, entertainment of offers, and refusals to sell when prices appeared too low. The decision to accept the $1.9 million cash offer over the $1.945 million conditional offer was found to be reasonable, given the $45,000 price difference and the earlier, unconditional closing. The court concluded that market decline, and not any breach of duty, explained the variation between early appraisals and the final sale price.

On the right of redemption, the court rejected the applicant's argument that forwarding the $2.75 million third-party offer constituted a valid exercise of that right. The applicant had never tendered the full amount owing to the respondent. The court further noted that the applicant — herself a real estate broker — had always been free to find a buyer and direct them to the respondent, but her request for a further appraisal in September 2024 came after the respondent was already contractually bound to close the sale, rendering it too late.

Ruling and outcome

The court dismissed the application in its entirety. Justice S. Antoniani found that Home Trust Company had not breached its fiduciary obligations to the applicant, that the September 2024 sale was not improvident, and that the respondent had not breached the applicant's right of redemption. Home Trust Company was the successful party. As the application was dismissed, no monetary award or damages were ordered in favour of the applicant. On costs, the court directed written submissions within prescribed timelines but determined no costs amount in the endorsement, noting that if no submissions were received, the parties would be deemed to have resolved the issue of costs between themselves.