Executive Summary: Key Legal and Evidentiary Issues

• Equitable Bank sought enforcement of a standard form mortgage after Elizabeth Trissha Taylor defaulted on a $472,000.00 mortgage secured against property at 651 Marine Drive SE, Calgary, Alberta.
   
• Central to the appeal was whether Applications Judge Farrington erred in granting a Redemption Order despite Ms. Taylor's challenges to the validity and enforceability of the Mortgage.
   
• Ms. Taylor alleged the Mortgage was unenforceable because she signed it without independent legal counsel and was misled into believing the builder's counsel was acting on her behalf.
   
• Four expert reports filed as new evidence on appeal — addressing mortgage overcharges, structural deficiencies, and accounting discrepancies — were found to be irrelevant and immaterial to the core issue before Judge Farrington.
   
• Disputed amounts under the Mortgage could not defeat the Redemption Order, as any balance discrepancy was addressed through a built-in assessment officer review and a three-month window for Ms. Taylor to apply to vary the amount owing.
   
• Justice Kuntz dismissed the appeal and accepted EQB's written submissions for costs in accordance with Schedule C.

Facts of the case

Equitable Bank (EQB) provided Elizabeth Trissha Taylor with a mortgage in the principal sum of $472,000.00 on November 22, 2022 (the Mortgage), for her purchase of the property at 651 Marine Drive SE, Calgary, Alberta, T3M 2Z6 (the Property). The Mortgage included a Standard Form Mortgage and had a maturity date of November 24, 2024. The Mortgage went into and out of arrears beginning in April 2023. EQB sent various demand letters requesting payment of applicable arrears and legal fees. Ms. Taylor paid arrears for certain periods but not others, and did not pay the legal fees.

On November 27, 2023, EQB filed a Statement of Claim naming Ms. Taylor as a defendant and seeking to foreclose on the Mortgage (the Foreclosure Action). The Statement of Claim included a claim for legal fees associated with the demand letters, which fees had been capitalized into the Mortgage pursuant to its terms. Ms. Taylor filed a Statement of Defence on January 2, 2024, an Amended Statement of Defence on February 23, 2024, a Third Party Claim against the builder and counsel to the builder, and a further Amended Statement of Defence on February 26, 2024, followed by a Counterclaim on September 10, 2024. The Third Party Claim was summarily dismissed by Applications Judge Mason on March 18, 2024, in part because the record showed Ms. Taylor had been advised of her right to independent legal advice and had signed a disclaimer in that regard.

On March 15, 2024, EQB filed its Application for a Redemption Order, returnable April 2, 2024. In support, EQB filed an Affidavit of Default sworn by Han Chen, Mortgage Defaults Officer, on January 4, 2024, a Supplemental Affidavit of Michael Akinlade, Mortgage Defaults Officer, sworn March 7, 2024, an Affidavit of Value estimating the Property's value between $698,000 (forced sale) and $735,000 (direct comparison approach), and a Certified Copy of Title. The Affidavit of Default confirmed the balance outstanding as of January 3, 2024, was $479,844.62, with a payout statement dated the same day showing a total amount owing of $479,248.32, plus per diem interest of $79.90. On July 23, 2024, EQB filed an Updated Affidavit of Default sworn by Han Chen on July 16, 2024, which included a payout statement showing a balance of $493,592.85 owing as of February 22, 2024, and an Arrears Statement dated April 23, 2024, and one as of July 9, 2024. EQB's affidavit filed September 30, 2024, explained the capitalization of legal fees into the Mortgage and attached a payment history from November 22, 2022, to August 22, 2024, showing a principal balance owing of $471,940.36.

Ms. Taylor filed her responding affidavit on March 18, 2024, asserting that the Property should not have been sold to her because it failed to meet mandatory building and safety standards, that she signed the Mortgage without the benefit of legal counsel and was misled into believing the builder's counsel was acting for her, and that she was not told to retain independent legal counsel. She also swore that the builder and the builder's counsel had "falsified critical elements and calculations in [her] mortgage agreement." The parties appeared in court on multiple occasions between March and October 2024, with Ms. Taylor applying to stay or dismiss the Foreclosure Action and for an interlocutory injunction, all of which were ultimately unsuccessful.

Mortgage terms at issue

The Mortgage included a Standard Form Mortgage. Legal fees associated with EQB's demand letters were capitalized into the Mortgage pursuant to its terms. Ms. Taylor disputed the capitalization of these legal fees and alleged that other fees were improperly rolled into the Mortgage balance, citing accounting errors and overcharges. An interior appraisal report dated January 23, 2024, attached to Ms. Taylor's affidavit as Exhibit A, showed that the Property had a market value of $710,000.

Court's reasoning and analysis

On October 18, 2024, the parties appeared before Applications Judge Farrington, who granted the Redemption Order. Judge Farrington found that Ms. Taylor entered into the Mortgage with EQB to purchase the Property and that EQB had advanced the funds for that purpose. He held that the issue of what was owing under the Mortgage was separate from the issue of the Property's quality, and that the Mortgage balance could be resolved by calculation. Judge Farrington further held that a dispute over the precise amounts owing could not be used to extend a foreclosure action indefinitely, because at its core the foreclosure action concerned funds advanced to purchase a home. He found that there was a valid and subsisting Mortgage in default, and directed a Redemption Order — Judicial Listing in its template form, declaring $482,361.38 due and owing as of October 18, 2024, plus costs on a solicitor and client basis as worded in the Mortgage, plus interest thereafter at the mortgage rate, plus other amounts chargeable under the Mortgage. The Redemption Order provided that, prior to its entry, an assessment officer would check the amounts claimed in the statement of secured indebtedness. Judge Farrington also gave Ms. Taylor three months from service of the Redemption Order to apply to vary the amount declared owing and leave to question EQB remotely.

On appeal, Justice Kuntz considered five grounds: (1) reliance on new expert evidence; (2) reliance on untested affidavit evidence; (3) failure to reconcile inconsistencies in the Mortgage calculation; (4) denial of procedural fairness; and (5) the validity of the Mortgage. Applying the correctness standard from Bahcheli v Yorkton Securities Inc, 2012 ABCA 166, and conducting a de novo review given the new evidence filed on appeal per Rayner v Mizier, 2026 ABKB 160, Justice Kuntz found that the four expert reports filed by Ms. Taylor on appeal were not relevant and material to the core relief sought before Judge Farrington, which concerned enforcement of a standard form mortgage, not the disputed ancillary matters raised in the reports. The expert reports could only have been relevant to the Mortgage balance, and Ms. Taylor was required to file them within the three-month window provided by Judge Farrington — a step she did not take. On the issue of untested affidavit evidence, Justice Kuntz found that Judge Farrington did not rely solely on an outdated affidavit; rather, EQB had filed an Updated Affidavit of Default sworn July 16, 2024, and a further affidavit sworn September 30, 2024. EQB's evidence remained untested because Ms. Taylor failed to comply with Justice Prowse's direction to provide her proposed cross-examination questions in advance. Justice Kuntz also found that Judge Farrington was not required to reconcile alleged discrepancies in the Mortgage balance, having subjected the balance to two layers of review: assessment officer scrutiny and Ms. Taylor's three-month application window. On procedural fairness, Justice Kuntz found that Ms. Taylor had been granted three adjournments leading up to the October 18, 2024 hearing, and that EQB offered her cross-examination dates after the hearing, which she declined. On the validity of the Mortgage, Justice Kuntz held that Judge Farrington's decision was correct on the record before him, and that any impact on related proceedings could be considered by the presiding judge in that separate action.

Ruling and overall outcome

Justice Kuntz dismissed Ms. Taylor's appeal in its entirety. EQB's Redemption Order, granted by Applications Judge Farrington on October 18, 2024, was upheld. Ms. Taylor had subsequently sold the Property; on December 10, 2024, her lawyer provided EQB with a trust cheque in the amount of $537,042.24, representing the outstanding balance on the Mortgage, and EQB discharged the Mortgage. Justice Kuntz accepted EQB's written submissions for costs in accordance with Schedule C, with any issues in respect of the total amount owing to be taken to an assessment officer. EQB was the successful party.