Andrea M. Hill

The appellants held first and second mortgages over properties owned by the respondents.

Following defaults, the parties entered into a settlement agreement and an amending agreement providing for a series of payments.

The appellants appealed a motion judge's decision that $871,345.95 in payments made by the respondents, including proceeds from a judicial sale, should be applied first to retire the first mortgages before reducing the second mortgages.

The Court of Appeal dismissed the appeal, finding it was open to the motion judge to conclude that the context of the agreements and the ongoing threat of foreclosure on the first mortgages indicated the payments were intended to pay down the first mortgages.

The appellants appealed an order refusing to grant relief from ex-parte foreclosure judgments obtained by the respondents.

The Court of Appeal found that the respondents failed to make full, fair, and frank disclosure when obtaining the ex-parte orders, specifically by failing to properly account for monies paid by the appellants under minutes of settlement.

The appeal was allowed, and the ex-parte foreclosure orders were set aside.