James A. Butson

This was a default application by a mortgagee seeking to set aside an unauthorized tenancy agreement and obtain possession of a condominium unit due to the unit owner's mortgage default and breach of a mortgage term prohibiting leasing without lender approval.

The unit owner had leased the property for five years to a respondent who then sublet it for short-term rentals.

The respondents did not contest the application.

The court granted the application under Section 52 of the Mortgages Act, finding that the tenancy impeded the mortgagee's remedies and that setting it aside would not prejudice any party, as the unit was not a permanent residence.

Costs were awarded to the applicant.

The plaintiff bank brought a motion for summary judgment to recover amounts owing under a small business line of credit and a personal guarantee.

The defendants argued that the bank had effectively created a new loan with different terms and that the claim against the guarantor was statute‑barred because the guarantee was described as “continuing, absolute and unconditional.” The court found there was no new loan, only an internal reclassification of the same demand credit facility, and the contractual interest rate remained unchanged.

It further held that where a guarantee requires payment on demand, the demand is a condition precedent to liability and to the commencement of the limitation period under the Limitations Act, 2002.

As the demand and action were brought within the limitation period and no genuine issue required a trial, summary judgment was granted.