Executive Summary: Key Legal and Evidentiary Issues

• Defendants failed to deliver a defence despite being served with a Statement of Claim clearly outlining consequences of non-response.

• No evidence was presented to challenge RFA’s position that no payments were made after January 23, 2024.

• Standard mortgage terms entitled RFA to accelerate the debt and pursue legal action upon default.

• Defendants’ explanations for non-compliance were found implausible and unsupported by evidence.

• The court found no arguable defence on the merits, including no evidence of ability to pay arrears or redeem the mortgage.

• Motion to set aside default judgment was dismissed, with costs of $6,000 awarded to RFA.

Background and context of the dispute

In RFA Bank of Canada v. Weinkauf, the Defendants, Lee Darvin Weinkauf and Merlie Otadora Weinkauf, sought an order to set aside a Default Judgment issued on May 10, 2024, along with related enforcement actions including a Notice of Sale and Notice Demanding Possession. The motion was heard on January 23, 2025.

The Defendants claimed they were unable to make their mortgage payments due to their bank account being compromised or hacked, and that RFA acted without notice or fairness in terminating the mortgage and pursuing judgment. They asserted that they were unsophisticated borrowers and that RFA should have advised them to obtain legal counsel and warned them of the consequences of failing to file a defence.

The mortgage was scheduled to mature on December 20, 2023. RFA sent a renewal offer on November 6, 2023, which the Defendants signed and returned on December 5, 2023. However, the mortgage was not up to date at that time, with defaults already occurring in November 2023. RFA stated it could not process the renewal. Communication followed between the parties from November 2023 to January 2024, during which partial payments were made. The last was on January 23, 2024, for $999.50.

RFA’s evidence showed the January 2024 payment was never made. After failed attempts to contact the Defendants, a demand letter was sent on February 15, 2024, requiring full payment of $445,103.52 by February 22, 2024. On February 23, 2024, RFA confirmed no renewal would be offered and legal proceedings would continue.

RFA issued a Statement of Claim on March 18, 2024. Ms. Weinkauf was personally served on March 21, 2024, and Mr. Weinkauf was served by an alternative method the same day. A Notice of Sale was sent on March 28, 2024, and a payout statement was provided on April 9, 2024, referencing a closing date of April 15, 2024. On May 6, 2024, RFA noted the Defendants in default, and a Default Judgment was issued on May 10, 2024. A Notice Demanding Possession was served on May 15, 2024. The Defendants retained counsel and served notice of the motion on July 26, 2024. RFA paused enforcement pending the outcome.

Policy terms and clauses at issue

The mortgage’s standard charge terms stated that upon default, all amounts owing would become immediately due if the lender chose, allowing the lender to demand payment, initiate legal proceedings, or sell the property. RFA invoked these provisions after defaults in November 2023 and January 2024. The court confirmed that RFA was entitled to enforce its rights under the mortgage based on these terms.

Arguments raised and court’s reasoning

The court considered the five established factors for setting aside a default judgment:

1. The motion was brought promptly, and RFA did not contest this.

2. The Defendants' explanations for not responding—confusion, stress, lack of understanding—were found implausible. The court emphasized that the demand letters and the Statement of Claim clearly communicated the situation and consequences.

3. There was no evidence that the Defendants intended to defend the claim at the time or had requested an extension or legal advice.

4. The Defendants claimed defences such as the right to redeem, unfair conduct by RFA, and damages, but provided no evidence to support these. They also did not challenge the fact that no payments were made after January 23, 2024.

5. The court found the Defendants had been living on the property without making payments for over a year and had no viable defence on the merits.

Even if the mortgage had been renewed, it would have matured by December 2024, requiring full payment. The court noted that there was no evidence the Defendants were capable of paying the arrears or redeeming the mortgage. The amounts claimed were not substantively challenged by the Defendants, who only stated that they believed the $446,660.10 claimed was incorrect without supporting documents.

Outcome and final order

The motion to set aside the Default Judgment was dismissed. The court held that enforcing the mortgage did not constitute prejudice and delaying it would unfairly burden RFA. The integrity of the justice system supported upholding the Default Judgment. Costs of $6,000 were awarded to RFA, payable within 30 days.