Meadow Ridge Estates Inc. v. Moskowitz Capital Mortgage Fund II Inc., 2016 NSSC 261

SUPREME COURT OF Nova Scotia Citation: Meadow Ridge Estates Inc. v. Moskowitz Capital Mortgage Fund II Inc. , 2016 NSSC 261 Date: 2016-09-29 Docket: Hfx No. 453470 Registry: Halifax Between: Meadow Ridge Estates Inc., Shirestone Developments Ltd., Kurt Repchull, Shelly Repchull, James Jonasson, Natalie Jonasson Applicants v. Moskowitz Capital Mortgages Fund II Inc. Respondents Library Heading Judge: The Honourable Justice James L. Chipman Heard: September 8, 2016, in Halifax, Nova Scotia Written Decision: September 29, 2016 Subject: Civil Procedure Rule 46 and Real Property Act R.S.N.S 1989, c. 385 ( RPA ) s. 28

Summary: The Applicants moved for an order permitting them to pay into court $322,535.75; i.e., the exact amount demanded by the Respondent in their Notice of Default. Relying on Rule 46 and RPA s. 28, the Applicants say that upon such payment into court, that their term sheet, mortgage and collateral security should be immediately discharged. Issues: 1 . Does Rule 46 permit a payment into court such as contemplated by the Applicants? 2 . Does s. 28(2) of the RPA permit the applicants to pay the $322,535.75 into court and obtain a release of the mortgage?

Result: The Court found that Rule 46 allows payment into court on notice in order to “provide security required by an order”. Accordingly, determined that Rule 46 is not a bar to the Applicants’ motion. With respect to s. 28(2) of the RPA , the Court relied on Ontario decisions interpreting the analogous s. 12 of the Mortgages Act RSO 1990, c M.40 which held that the overriding purpose of the

section is to provide a remedy to an equitably disadvantaged mortgagor. Since the RPA should not be interpreted to provide commercial convenience to a mortgagor at the expense and contrary to the expectations of the mortgagee, determined there was a lack of compelling equitable justification to grant the discretionary remedy sought. In the result, the Application was dismissed with costs payable forthwith by the Applicants to the Respondent in the amount of $1,000. THIS INFORMATION SHEET DOES NOT FORM PART OF THE COURT'S DECISION. QUOTES MUST BE FROM THE DECISION, NOT THIS LIBRARY SHEET.

SUPREME COURT OF Nova Scotia Citation: Meadow Ridge Estates Inc. v. Moskowitz Capital Mortgage Fund II Inc. , 2016 NSSC 261 Date: 2016-09-29 Docket: Hfx No. 453470 Registry: Halifax Between: Meadow Ridge Estates Inc., Shirestone Developments Ltd., Kurt Repchull, Shelly Repchull, James Jonasson, Natalie Jonasson Applicants

v. Moskowitz Capital Mortgages Fund II Inc. Respondents Judge: The Honourable Justice James L. Chipman Heard: September 8, 2016, in Halifax, Nova Scotia Counsel: Ezra B. van Gelder, for the Applicants Adam D. Crane and Matthew N. Wallace (articled clerk), for the Respondent By the Court: Overview [2] In 2015, Meadow Ridge Estates Inc. planned to develop a residential real estate project in Upper Sackville, Nova Scotia. Shirestone Developments Ltd. was the project manager. Kurt Repchull is the president of Meadow Ridge and Shirestone. [3] On behalf of Meadow Ridge and Shirestone, Mr.

Repchull approached Muskowitz Capital Mortgages Fund II Inc. to finance the project and ultimately executed a term sheet on August 31, 2015, and a mortgage on September 28, 2015. Mr. Repchull and the other individual Applicants executed the term sheet as guarantors. [4] Moskowitz agreed to finance the project for a total principal amount of $1,120,000. This amount consisted of a land cost facility in the amount of $250,000 and a hard cost facility in the amount of $870,000.

Moskowitz advanced the land cost facility on November 24, 2015, but as of the date of the application had not advanced any part of the hard cost facility. The Applicants allege that Moskowitz has unreasonably and intentionally refused to advance the hard cost facility, has deprived Meadow Ridge of substantially the entire benefit of the term sheet and related security documents, and has therefore repudiated both. [5] On July 7, 2016, Meadow Ridge accepted Moskowitz’s alleged repudiation and cancelled automatic mortgage payments.

Moskowitz immediately provided the Applicants with a Notice of Default demanding payment of $322,535.75. The Notice of Default gave the Applicants until July 15, 2016 to pay the entire amount claimed. On that day, pursuant to s. 244(1) of The Bankruptcy and Insolvency Act , Moskowitz sent the Applicants its Notices of Intention to Enforce Security. [6] On July 15, 2016, the Applicants filed a Notice of Application in Court alleging that Moskowitz repudiated the term sheet and mortgage.

In their Notice, the Applicants seek damages, interest and costs, along with a direction that the Applicants set off any damages against any amounts due to Moskowitz pursuant to the term sheet and mortgage. [7] On August 5, 2016, Moskowitz filed a Notice of Contest alleging 30 grounds as the basis that the Application should be dismissed. [8] By Amended Notice of Motion filed July 20, 2016, the Applicants moved for an order permitting them to pay into court $322,535.75; i.e., the precise amount demanded by Moskowitz in their Notice of Default issued July 7, 2016.

Upon such payment into court, the Applicants request that the term sheet, mortgage and collateral security be immediately discharged. [9] In their brief filed July 20, 2016, the Applicants provide the following rationale for their application: Meadow Ridge has attempted to obtain alternate financing for the Project, so far without success because of Moskowitz’s existing security. It expects to obtain that financing once Moskowitz’s security is discharged. This funding is essential to the Project’s progress – the very purpose of the funding that Meadow Ridge thought it had obtained from Moskowitz.

The Applicants did not file their Application until July 15, 2016, because the parties remained in what the Applicants had hoped would be productive negotiations. Unfortunately, those negotiations did not result in a resolution of the disputes between the parties. Moskowitz now refuses to consent to a payment into court, delaying discharge of the Term Sheet, Mortgage, and Collateral Security. [10] By supplemental affidavit of Brian Moskowitz, sworn September 8, 2016, and entered as Exhibit 1 at the hearing, Mr.

Moskowitz deposed as follows: It has very recently come to my attention that Meadow Ridge executed a further collateral mortgage on August 15, 2016 and registered with the Halifax County Land Registration Office on August 18, 2016 as Document #109441494. [11] On September 9, 2016, the Court received from the Applicant an affidavit sworn on the same day by Mark A. Beaubien, solicitor for Canadian Mortgage Inc. with respect to financing provided to Meadow Ridge. It is apparent from Mr.

Beaubien’s affidavit that the mortgage is intended to be placed in first position following the discharge of the Moskowitz security. Accordingly, if the Moskowitz security cannot be discharged either by way of court order or agreement between the parties, the Applicants say that other

arrangements will have to be made for them to secure the necessary project funding. [12] The within motion was scheduled during an August 9, 2016 Motion for Directions. During the Motion for Directions, Justice Pickup scheduled the main application in this matter to take place on February 13, 14 and 15, 2017. Evidence Received by the Court on the Within Motion [13] In addition to the above-noted Exhibit 1 and Affidavit of Mr. Beaubien, the Court reviewed the following evidence: • July 20, 2016 affidavit of Mr.

Repchull; • July 20, 2016 affidavit of Jennifer Hartlen (a title searcher employed at Mr. van Gelder’s law firm); • July 25, 2016 affidavit of Mr. Moskowitz; and • Exhibits 2-5, Property Online searches of the lands in question. [14] By preliminary motion of the Respondent, I struck paras. 13 and 14 of Mr. Repchull’s affidavit as they consist of hearsay evidence. Otherwise, the affidavits and exhibits went in by consent and without cross-examination of the deponents.

Governing Law [15] The parties agree that the within motion is governed by Civil Procedure Rule 46 and s. 28 of the Real Property Act R.S.N.S. 1989, c. 385 ( RPA ). Rule 46 [16] Subject to Rule 46.05, Rule 46.02 permits the payment of money into court for certain specified purposes: Purposes of payment 46.02 A party may make a payment into court to do any of the following: … (

e) obtain a discharge of a conditional claim to property under legislation, such as an order vacating the registration of a lien under the Builders’ Lien Act ; … Payment into court on order 46.05

(1) A payment into court not referred to in Rule 46.04 must be made under an order.

(2) A person who is allowed or required by legislation to pay money into court, and who is not a party to a proceeding in which the money is at issue, may apply for an order for payment into court.

(3) A person who applies for an order for payment of money into court must include, as respondents, all persons who are known to have an interest in the money and, include in the affidavit, evidence of all of the following: (

a) the material facts and documents giving rise to the payment; (

b) persons who may have an interest in the disposition of the money; (

c) all known information about an interested person’s identity and residence. RPA [17] Section 28(2) of the RPA reads as follows: Encumbrances 28

(2) Where the holder of an encumbrance cannot be found or is dead and there is no duly authorized personal representative available to act or where from any other cause a proper release or discharge of the encumbrance cannot be obtained or cannot be obtained without undue delay or expense, the court may, upon application, (

a) where there is money owing upon the encumbrance, (

i) permit payment into court of the amount due and order a release or discharge of the encumbrance, or (ii) where by the terms of the encumbrance the money is payable by instalments, some of which is not yet due, appoint a trust company or the Public Trustee to receive the payments due under the encumbrance and authorize the trustee to give a release or discharge of the encumbrance upon fulfillment of the terms of the encumbrance; or (

b) where all money due on the encumbrance has been paid to the person entitled to receive the money or where in any other case it appears that all the money due on the encumbrance has been paid, order the release or discharge of the encumbrance.

Positions of the Parties Applicants [18] The Applicants submit that the combination of Rule 46 and s. 28(2) of the RPA contemplates and specifically authorizes the payment into court of the funds now claimed by Moskowitz. They go on to say, “there is absolutely no prejudice” to Moskowitz if this motion is granted. To quote from Mr. van Gelder’s brief at p. 5: By its Notice of Default, Moskowitz demanded payment of $322,535.75 – the very amount the Applicants seek to pay into court. The Applicants dispute their liability for that amount, hence why they have not paid it in exchange for a discharge.

The resolution of those disputes is for another day. In the interim, though, the Applicants simply seek to replace the security Moskowitz currently holds again the Project and the Applicants’ various properties with cash – thereby removing any need for Moskowitz to take steps to enforce, saving all involved the cost of additional and, in our submission, unnecessary legal proceedings. If Moskowitz is ultimately successful in defending the Applicants’ application, then the Court will order the funds to be released. In other words, Moskowitz will have to take no further steps to realize on its security.

And, in the meantime, the Project can proceed unhampered by the present dispute between the parties. Simply put, the relief sought by the Applicants is both practical and equitable to all involved. We respectfully submit that Rule 46 was specifically designed for disputes like this: it provides a commercially efficient way of protecting all parties to a dispute. Respondent [19] It is Moskowitz’s position that the Rule relied upon by the Applicants to pay money into court does not provide the authority to do so. In this regard, they say that 46.02(

e) only permits the discharge of property claims created “under legislation”. Accordingly, Moskowitz argues this provision does not contemplate non-statutorily created property claims, such as contractually created mortgages. [20] With respect to s. 28 of the RPA , the Respondent states that the Applicants are attempting to use this

section in a manner which is not contemplated under the RPA , and in a way that has been rejected by Ontario courts. In the result, Moskowitz says that the Applicants’ motion should be dismissed with costs. Issues 1. Does Rule 46 permit a payment into court such as contemplated by the Applicants? 2. Does s. 28(2) of the RPA permit the applicants to pay the $322,535.75 into court and obtain a release of the mortgage? Law and Analysis Issue 1 – Interpreting Rule 46 [21] Rule 46.02(

e) allows a party to make a payment into court in order to “obtain a discharge of a conditional claim to property under legislation”. In my view, this is properly interpreted as referencing a discharge granted under legislation, rather than requiring that the claim be created by statute. This is apparent from the Rule’s reference to an order vacating a lien under the Builders’ Lien Act , R.S.N.S. 1989, c. 277. [22] Rule 46.05 is less clear. The Rule states that payment into court can be made on order where the applicant is not a party to a proceeding in which the money is at issue.

The Respondent submits that this prevents a payment into court where the amount due on the mortgage is the subject of a commenced proceeding. However, accepting that a payment into court pending adjudication of a mortgage claim is a valid use of s. 28(2) of the RPA , there is no apparent justification for distinguishing between an application made within a filed claim and one made just prior to commencing a proceeding. [23] Further, other payments into court clearly contemplated under Rule 46.02 would necessarily be made by parties to proceedings in which the money is at issue.

Orders permitting these payments, including one under s. 28(2) of the RPA , are explicitly provided for by legislation and the Rules and should not be frustrated by a narrow reading of Rule 46 . [24] It is also of note that Rule 46.04(1) allows payment into court on notice in order to “provide security required by an order”, such as one that would result from a successful application under s. 28(2) . In all of the circumstances, I do not see Rule 46 as a bar to the Applicants’ motion. Issue 2 –

Interpretation of s. 28 of the RPA [25] Section 28(2) (a)(

i) of the RPA states that the court may permit payment into court of the amount due on the mortgage and order a release of the encumbrance in cases where: [T]he holder of an encumbrance cannot be found or is dead and there is no duly authorized personal representative available to act or where from any other cause a proper release or discharge of the encumbrance cannot be obtained or cannot be obtained without undue

delay or expense. [26] There is only one case interpreting this section, Bank of Montreal v Lucas (1998), 1998 NSSC 81 , 1998 CarswellNS302, 175 NSR (2d) 394 (NSSC). In that case, despite the debt in question having been paid in full, the holder of a security interest wasrefusing its release for reasons unrelated to the applicant.

Justice Goodfellow found it appropriate to make an order for discharge. [27] Section 12(3) of the Ontario Mortgages Act, RSO 1990, c M.40 (OMA) contains essentially the same wording as s. 28(2) of theRPA, permitting payment into Court and discharge where the mortgagor wishes to pay off the mortgage and the mortgagee cannot befound, is dead, or “where from any other cause a proper discharge cannot be obtained, or cannot be obtained without undue delay.” Aminimal distinction is that the Nova Scotia

section refers to both undue delay and undue expense. [28] Section 12(6) of the OMA is nearly indistinguishable from s. 28(4) of the RPA. Both allow the court to require an excess sumpaid into court where the amount “admitted to be due … appears to be open to question.” [29] The unifying characteristic in the Ontario cases is the need for judicial discretion.

In Botiuk v Hurowitz, (ONSC), 1975 CarswellOnt 943, 9 OR (2d) 299 (Ont Div Ct), Justice Goodman emphasized the discretionary nature of s. 12(3), stating thatthis discretion needs to be exercised judicially by taking into account all of the relevant evidence (see paras. 12, 13). [30] This approach was later confirmed by the Ontario Court of Appeal in Graystone Properties Ltd v. Smith, (ON CA), 1982 CarswellOnt 1273, 39 OR (2d) 709.

In that case, Justice Blair held that discretion had not been exercised judicially asthe lower court based its decision on an incorrect principle of law. [31] More recently, the discretionary nature of the

section was revisited in Fernicola (In Trust) v. Creview Development Inc, 2008CarswellOnt 6088, [2008] OJ No 4112 (Ont Sup Ct J). Justice Trotter declined to grant the remedy to the plaintiffs, stating at paras. 7and 8: …The decision under s. 12(3) is discretionary and must be exercised judicially: Graystone Properties. This, in my view, entails aconsideration of all of the circumstances.

In a case like this, in addition to establishing that a timely discharge is not forthcoming becauseof a dispute as to the amount owed, the mortgagor must also demonstrate that the relative equities of the case favour making an orderunder s. 12(3).

I am not persuaded that, considering all of the relevant factors, this is an appropriate case in which to exercise my discretion in favour ofthe Plaintiffs. … [32] The Ontario decisions confirm the approach that courts are unlikely to grant a remedy when they perceive the applicant’sintention to be paying into court rather than directly to the mortgagee as a tactic to ensure execution in the event that they win theiroverall case. [33] In 5 Fairview Mall Drive Ltd v.

Lehndarff Canadian Pension Properties Ltd, 1989 CarswellOnt 573, [1989] OJ No 1005 (OntHCJ), the applicants did not dispute the $11 million due on the mortgage, but maintained a separate $1 million claim for damages. Theapplicants sought to pay this $1 million into court pending the outcome of the proceedings. Justice Potts refused the application, statingat para. 16: This strikes me as a situation … where the mortgagor is attempting to get a mareva-type injunction under the Mortgages Act.

What themortgagor seems to want is to have the amount of its claim for damages held in court so that payment is readily available should it obtainjudgment at trial. In my opinion, this is not the purpose of subs. 11(6) or of subs. 11(3) [now 12(6) and 12(3)]. Accordingly, I do not feelthat this is an appropriate case in which I should exercise my discretion to order a discharge of the mortgage between the parties pursuantto subs. 11(6) of the Mortgages Act. [34] Similarly, in Vine v.

Iwasykiw, (ON SC), 1992 CarswellOnt 600, 11 OR (3d) 34 (Ont Ct J (Gen Div)), themortgage amount was not in dispute but the applicants wanted to pay into court to form a “pool of assets” to ensure execution on theoutcome of their substantial set-offs and counterclaims. Justice Roberts rejected this use of the OMA, finding that a set-off does notbring the amount due into question, and that the plaintiffs’ intention was to obtain execution prior to judgment.

Accordingly, he refusedto exercise his discretion to grant the remedy (see paras. 27 and 37). [35] In 536344 Ontario Co. v. 238728 Holdings Ltd, 1987 CarswellOnt 5169, [1987] OJ No 760 (Ont HCJ), the mortgagors wererefusing to pay the amount due on the mortgage because they had claims against the mortgagee that would amount to a greater sum thanthat owed. Justice Southey refused the application for a discharge on payment into court on the premise that they could not be said to“desire” to pay off the mortgage as contemplated by the provision (see para. 2).

Justice Southey felt that this went beyond the parametersof s. 12(6), which was limited to disputes about the amount owed on the mortgage. [36] On the other hand, in cases where the applicant wishes to pay the sum of the mortgage into court and obtain a dischargepending a judicial determination of the actual amount due, courts have been more likely to grant the release. In Schrittweiser v.

Morris, (ON SC), 1987 CarswellOnt 692, 62 OR (2d) 177 (Ont HCJ), Justice Rosenberg commented on the purpose of thesections at para. 10: The Legislature cannot intend that the mortgagee demand any amount that he wishes and that the only way a mortgagor can obtain adischarge is to pay that amount and to later sue for the overpayment. The

section is, in my view, for the purpose of allowing a mortgagee[sic] who disputes the amount claimed to pay the amount claimed plus some reasonable amount to cover costs into court and obtain adischarge pending an adjudication as to the proper amount due. [Emphasis added] [37] The applicants sought to have the mortgage declared null and void on the basis of fraud. Justice Rosenberg permitted payment

into the court to await the outcome of the action and ordered the discharge of the mortgage. [38] This reasoning was followed in Metroview Investment Corp v. Araujo , 2000 CarswellOnt 2183, [2000] OJ No 2403 (Ont Sup Ct J) . Justice Nordheimer was of the view that a dispute over the amount claimed is a valid cause of undue delay or expense under the wording of the

section (see para. 19). The defendants had obtained a mortgage from the plaintiff. As the defendants were Portugese immigrants who did not understand English, they relied on their real estate agent to explain all of the terms. After seven years of payments, the plaintiff informed them that there had been no reduction on the principal of the loan. The impact of this was that the defendants could not proceed with the sale of their home.

Justice Nordheimer noted that there was a serious issue to be tried, and based on his weighing of the circumstances, found that it was appropriate to exercise his discretion in favour of the defendants and grant the release upon payment into court. [39] In NLG 2011 Inc v. Central 1 Credit Union , 2012 CarswellOnt 10674, 2012 ONSC 4944 , the parties disagreed about the

interpretation of the mortgage commitment letter, and thus the amount payable on the mortgage. After citing the purpose identified in Schrittweiser , Justice Ray determined an amount to be paid into court that he regarded as appropriate, emphasizing at para. 8: [T]he stipulated amount that I must order is not the final amount but for security pending final determination; and that while the amount should be sufficient it should not constitute an unfair burden on either of the parties. [40] In the above cases, the courts found it was an appropriate use of the

section to permit an applicant to pay a determined amount into court as security in order to discharge the mortgage prior to adjudication of the claim on its merits. However, this is not always the case. In this regard the jurisprudence confirms that the decision is ultimately one of discretion and involves a consideration of all relevant circumstances.

For example, in Fernicola , Justice Trotter declined to grant relief under s. 12(3) , stating at paras. 6 and 7: The specific language of s. 12(3) refers to "a mortgagor or any person entitled to pay off a mortgage" who "desires to do so." It does not refer to a mortgagor who is unable to obtain a discharge because he/she refuses to pay the amount said to be owed, which is the situation in this case. I doubt that s. 12(3) is meant to furnish a discharge to a mortgagor on the mere demonstration that a discharge is not forthcoming because of a dispute as to the amount owed. While the

section protects the mortgagee by substituting one form of security (the mortgage) for another (payment into court), it also has the effect of depriving the mortgagee of actual payment on the mortgage while a court sorts out the dispute in the meantime. [41] A number of circumstances were found to weigh against the plaintiff. First, Justice Trotter had serious doubts about the strength of the plaintiff’s claim that alleged an error in price.

Second, he did not accept the plaintiff’s claim of urgency based on their desire to sell the land with clear title, and further stated that any urgency was caused by the plaintiff’s own delay in commencing proceedings. Finally, the central dispute was with the original developer, but because the mortgage had been assigned, the remedy would have an unfair impact on the assignee’s security interest. [42] Similarly, in Fairview Mall , Justice Potts stated as follows at para. 9: It is the applicant’s action in refusing to pay that has caused the inability or delay in receiving a discharge.

These do not seem to me to be appropriate circumstances in which to grant an order discharging the mortgage under sbs.11(3) [now 12(3)] of the Mortgages Act . [43] As outlined above, this case was distinctive in that the applicants only wanted to pay into court $1 million of their $11 million mortgage, the value of their damages claim. However, the principle that the cause of delay cannot be the applicant’s simple refusal to pay the amount due was cited by Justice Epstein (as she then was) in Country Meadow Estates (No 2) Inc v. Citibank Canada , 1994 CarswellOnt 729, [1994] OJ No 1835 .

In that case, the mortgagor failed to accept the bank’s offer to end the mortgage agreement, and later attempted to pay the money into court to have the mortgage released. Application of Judicial Discretion to this Motion [44] Based on the above, the theme of this provision is one of discretion and equity, taking into account all of the surrounding circumstances. [45] The Applicants’ Notice of Application primarily outlines their claims for damages, asking that they be set off against any amounts due pursuant to the mortgage.

While the issues are framed in damages, it is implicit that the amount of the mortgage is also in dispute. This was also explicitly set out in the Applicants’ brief and oral argument as the reason for lack of payment. In my view, the existence of the damage claims weigh in favour of the Respondent’s argument that the payment would essentially operate as a Mareva- style injunction, a purpose that has not been accepted by the Ontario courts. [46] The nature of the dispute is also relevant. In Schrittweiser , the applicants alleged that they owed nothing on the mortgage, and that the agreement was void due to fraud.

They were permitted to pay the amount claimed into court pending adjudication of the case. In Metroview , the applicants were immigrants who did not speak English, creating a barrier to the applicants being able to sell their home. Further, there were allegations of fraudulent misrepresentation, breach of fiduciary duty, and unconscionable transaction. In my view, the special equitable circumstances apparent in these cases are not apparent in the present matter. [47] The presence of undue delay and expense similarly weighs against the Applicants.

The RPA speaks of the undue delay and expense of obtaining a discharge. In Fairview Mall and Country Estates it was held that delay cannot be caused by a simple refusal to pay. Here, it is open to the Applicants to simply pay the Respondents, obtain the discharge, and continue their claim for damages, particularly as they are willing and able to pay that amount into court. [48] Courts have also considered the urgency and necessity of the request. In Fernicola , Justice Trotter rejected that the discharge was urgent simply because the mortgagor wished to sell the lots with clear title (see para. 11).

In this case, it is clear the Appellants have been able to secure alternative financing for their project. While the disputed mortgage continues to be in first position, again, it is open

to the Applicants to obtain a discharge from Moskowitz. [49] Finally, the relative unfairness to the parties is a significant factor. In my view, the prejudice faced by the Applicants should be measured, not based on the prejudice that the registered mortgage is causing, but the prejudice that would exist if they were made to pay the amounts directly to the Respondent. As they are capable of paying that amount into court, there should be no financial prejudice to the Applicants.

As well, there is no evidence to suggest that there would be any difficulty executing any resulting damages or overpayment against the Respondent following judgment. The Applicants would arguably be in the same position whether they paid the money into court or to the Respondent. By way of contrast, the mortgagee faces prejudice in that they are deprived of these funds in the interim, which would not be the case if the Applicants paid them directly.

As well, while the security continues in the funds as they are held by the court, they will have lost an important aspect of the security, which is an incentive to have the payment returned as quickly as possible. [50] In my view the overriding purpose of s. 28(2) of the RPA is to provide a remedy to an equitably disadvantaged mortgagor. The RPA should not be interpreted to provide commercial convenience to a mortgagor at the expense of and contrary to the expectations of the mortgagee.

Accordingly, it is my determination that the circumstances of this case lack a compelling equitable justification to grant this discretionary remedy. [51] In the result, I dismiss the application with costs payable forthwith by the Applicants to the Respondent in the amount of $1,000. Chipman, J.