Legault v Bertram [2011] ONSC 879
So the Mortgagee has gotten a judgement against me for $1M which includes all his legal costs up to judgment. He then issued a notice of sale. After a 6 month sale process he has sold the property for $1M. So I am off the hook.
Wait! The Mortgagee says the total amount owing now is $1.3M because he burned $300,000 in the sale process, legal fees and interest after judgment.
Why should I pay his 6 months post-judgment legal fees when the court only gave him the specified legal fees in the order?
Perell J. citing Juriansz J in Benson v. Gibson [2000] OJ No. 4063(SC):
- … The applicants’ position seems to be that the Chargee cannot claim any costs incidental to the exercise of the power of sale incurred before the judgment was taken out; rather the Chargee should have included all such costs and expenses in the judgment, and having failed to do so, such costs have merged in the judgment.
- Given the non-merger provision, while the Chargee might have included in its action a claim for all costs already incurred in respect of the power of sale, I was not persuaded it was required to do so. After obtaining judgment it would in the ordinary course continue with its power of sale and incur further expenses, which it would charge against the sale proceeds. The judgment does not preclude the Chargee from claiming further expenses incurred in exercising the power of sale, and, in my view, it does not preclude the Chargee claiming expenses already incurred in respect of the power of sale where it has not claimed them in the action
Take-away #1: I have to pay all the mortgagee’s reasonable costs before and after judgment. In this case $300,000.
Takeaway #2: The Mortgages Act (s.43(4))directs an assessment of the Mortgagee’s costs (identical in process to a solicitor’s assessment).
Takeaway #3: the $300,000 amount that I have to pay is principal (Mortgages Act s.27). It means that the mortgage is still alive and I am governed by its terms. Why is that important? Because the mortgage principal is usually more burdensome than a mere $300,000 unsecured debt. The Mortgage debt carries its own special interest rate (usually higher than post-judgment interest of 3%). My guarantors are still on the hook for it.
