Executive Summary: Key Legal and Evidentiary Issues

• A commercial mortgage lender sought court confirmation of a mortgage debt as part of a residential foreclosure redemption application.
   
• Disputed charges included a mortgage impairment insurance premium allocation, an administration fee, and default and late payment fees.
   
• Evidentiary gaps in the lender's Affidavit of Default included the absence of an account ledger and insufficient proof that claimed amounts were actually paid to a third party.
   
• Consumer Protection Act provisions governing default penalties and permissible mortgage charges were central to the court's analysis.
   
• Interest Act restrictions on fines or penalties that effectively raise the interest rate on arrears were also applied to disallow certain fees.
   
• The court declined to finally determine the total amount owing, instead directing the lender to correct its materials and return for further hearing.
   

Facts of the case

CMT CAN Holdings GP Inc. (CMT) brought a residential foreclosure application against Sakattar Singh Sandhu and Gurjit Kaur Sandhu, seeking court confirmation of the amount owing under its mortgage as a step toward a redemption order. CMT's Statement of Secured Indebtedness claimed $364,042.25. The application was heard in morning chambers on June 11, 2026, with additional materials submitted by desk application on July 18, 2026, and the Honourable Applications Judge S. Wanke issued written reasons on August 5, 2026, in the Court of King's Bench of Alberta, Edmonton registry.

Policy and legislative provisions at issue

CMT's mortgage contained an insurance chargeback clause at section 3.1(g), permitting CMT to add insurance costs to principal only where the borrower failed to maintain satisfactory insurance or upon cancellation of insurance. The court also applied section 69 of the Consumer Protection Act, RSA 2000, c C-26.3 (CPA), which prohibits default penalties in consumer mortgages beyond compensation for costs actually incurred from a dishonoured payment, along with sections 96 and 99 of the CPA addressing refunds and statutory or exemplary damages for breaches. Section 6(2)(d) of the CPA, concerning unfair pricing practices, was also referenced without a final finding being made on that point. Section 8 of the Interest Act, RSC 1985, c I-15, which bars fines or penalties that increase the effective charge on mortgage arrears beyond the interest rate on principal not in arrears, was applied to the late and default fees, with reference to the reasoning in P.A.R.C.E.L Inc v Acquaviva, 2015 ONCA 331. Section 39(1) of the Law of Property Act, RSA 2000, c L-7, governing the court's foreclosure practice and procedure, and provisions of the Financial Consumer Protection Framework Regulations, SOR/2021-181, defining "principal," were also discussed.

Reasoning and analysis

The court disallowed $6,895.81 of the $364,042.25 claimed. Of the $5,645.81 CMT claimed for "insurance paid," the court found this was not a lender-placed policy chargeback but instead comprised $5,364.98 for a portion of CMT's own commercial mortgage impairment insurance premium, a $200.00 administration fee, and $80.83 in interest. The court found no evidence that CMT's chargeback right under section 3.1(g) had been triggered, no evidence CMT was an insured party under the impairment policy (which named a different entity, Caplink Financial Corporation, as insured), and no adequate explanation of how the $5,364.98 pro-rated figure was calculated, describing the supporting affidavit evidence as a conclusion rather than a calculation. The $500.00 default fee and $750.00 in late fees ($150.00 x 5) were found unenforceable under both section 69 of the CPA and section 8 of the Interest Act, as they were not tied to a dishonoured payment or an actual compensatory cost. The court further found CMT's Statement of Secured Indebtedness materially inaccurate for including these amounts, and its Affidavit of Default deficient for lacking sufficient particulars and any account ledger, contrary to the court's established practice for foreclosure applications.

Ruling and overall outcome

The court did not finally confirm the amount owing under the mortgage. Instead, it directed CMT to provide a supplemental Affidavit of Default including a two-year ledger, with the unenforceable charges, fees, and related interest removed, before returning the redemption order application to the court on notice to the Respondents. CMT was also directed to address, at that further hearing, its position on costs and available remedies under the CPA, including the possibility that its conduct cumulatively amounted to misconduct in the proceeding. The Respondents, Mr. Sandhu and Ms. Sandhu, succeeded in having the impairment insurance charge, administration fee, and default and late fees disallowed, but no final monetary determination or costs award was made at this stage, and the total amount owing remains Not Specified pending CMT's compliance with the court's directions.