Bhanwadia v. Clarity Financial Corp., 2012 ONSC 6393

The applicant mortgagor challenged various fees included in two mortgage discharge statements provided by the respondent mortgagees.

The court disallowed the renewal fees, finding no evidence of an agreement to renew.

The court also struck the NSF and late payment administration fees, ruling they constituted unlawful penalties under section 8 of the Interest Act as there was no evidence they reflected actual administrative costs.

The legal and power of sale fees were referred to an Assessment Officer under the Mortgages Act.

The plaintiff mortgagee brought a motion for summary judgment to enforce a $1.6 million matured mortgage.

The defendant's last-minute request for an adjournment was denied due to a lack of extenuating circumstances.

The court granted judgment for the principal debt, accrued interest, and possession.

However, the court dismissed the plaintiff's claims for various administrative fees and a three-month interest charge, finding them to be unenforceable penalties at common law and in violation of section 8 of the Interest Act, as the plaintiff provided no evidence that they were genuine pre-estimates of damages or actual costs incurred.

The applicants sought a declaration to redeem a third mortgage and an injunction to prevent the mortgagees' power of sale.

The court dismissed the application, finding that an additional fee in the Notice of Sale, calculated as three months' interest, did not violate section 8 of the Interest Act as it was an independent fee for enforcement costs, not a penalty on arrears.

Furthermore, the mortgagees were not obliged to provide a discharge statement under section 22 of the Mortgages Act because an action for enforcement had already commenced and a conditional agreement of purchase and sale was in place.

The applicants had also failed to tender the redemption amount, which is a condition precedent.