The applicant, a first mortgagee, sought a declaration of entitlement to a yield maintenance payment of approximately $1.5 million following the court-appointed receiver's sale of two commercial properties.
The mortgagors and a second mortgagee opposed the payment, arguing it was not contractually authorized, offended the anti-deprivation rule, violated the Interest Act, and that the receiver's sale constituted a realization on security triggering the equity of redemption.
The court held that the mortgages were closed and, under common law, the mortgagee was entitled to lost future interest upon early discharge.
The court rejected the statutory and common law defenses, noting the court orders explicitly deemed the mortgagee was not realizing on its security.
The applicant was awarded $1,473,141.82.