The applicant mortgagee sought an order under s. 52 of the Mortgages Act to set aside a tenancy agreement, arguing it was entered into by the mortgagors after default with the object of discouraging the mortgagee from taking possession or adversely affecting its security.
The court applied a three-pronged test, finding that while the tenancy was entered into after a default (non-payment of municipal taxes), the mortgagors' primary object was to mitigate their financial difficulties from owning two properties, not to harm the mortgagee.
The application was dismissed.
