Following a power of sale by the first mortgagee, surplus funds were paid into court.
The second mortgagee and the Ministry of Finance both brought motions claiming priority to the surplus funds.
The Ministry claimed priority for unremitted retail sales tax collected by the mortgagors.
The court held that the deemed trust provisions under section 22 of the Retail Sales Tax Act gave the Ministry priority over all other security interests, including the registered second mortgage.
The Ministry was awarded its claim from the surplus funds, with the balance to the second mortgagee.
