The appellant mortgagee appealed an order dismissing its claim against two original mortgagors on the basis of novation.
The court held that, despite a fraudulent scheme by a third party and subsequent assumption and renewal of the mortgage, the agreed facts stipulated that the fraud did not affect the appellant's legal position.
Applying the novation framework, the majority concluded that the no prejudice clause preserved the mortgagee's rights and that the evidence did not establish a novation releasing the original mortgagors.
The appeal was allowed and judgment was substituted for the outstanding mortgage balance, with costs to the appellant here and below.
