Stephen R. Cameron

The applicants sought to discharge a collateral mortgage without paying a $4.25 million 'Participation Amount' owed to the respondents.

The applicants argued the Participation Amount was invalid on several grounds, including that it was a clog on the equity of redemption, offended section 8 of the Interest Act, constituted a criminal rate of interest under section 347 of the Criminal Code, violated the Unconscionable Transactions Relief Act, and was an unenforceable penalty.

The court rejected all these arguments, finding the Participation Amount was a valid collateral advantage agreed to by sophisticated commercial parties in exchange for forbearance.

The court ordered the funds held in court to be paid to the respondents.

The mortgagors brought a motion for leave to file an expert report regarding the calculation of a criminal rate of interest under s. 347 of the Criminal Code, after having conducted cross-examinations.

The mortgagees opposed the motion and brought a cross-motion seeking an order that the mortgagors pay an additional sum into court to secure the increased interest and costs resulting from the delay.

The court granted the mortgagors leave to file the expert report, but ordered them to pay an additional $106,500 into court to mitigate the prejudice to the mortgagees caused by the delay and the need to respond to the late-filed report.