Real Property - Mortgages. 2544176 Ontario Inc. v. 2394762 Ontario Inc.
In 2544176 Ontario Inc. v. 2394762 Ontario Inc. (Ont CA, 2022) the Court of Appeal considered the requirements of a real estate sale pursuant to a mortgage power of sale. The sale was made to a 'bona fide purchaser for value without notice' (the 'innocent purchaser') without proper s.22 Mortgages Act (requested) default statement, and the issue was whether other real estate statutory provisions saved this default to preserve the sale [ss.35 and 36 of the Mortgages Act and s.99(1.1) of the Land Titles Act - the 'Safe Harbour Protections']:
 The purchaser appeals. I would allow the appeal because of the protections afforded to the purchaser by ss. 35 and 36 of the Mortgages Act and s. 99(1.1) of the Land Titles Act, R.S.O. 1990, c. L.5 (the “Safe Harbour Protections”). The Safe Harbour Protections provide an innocent purchaser taking property under the power of sale process, with good title, on registration under the Land Titles Act system, so long as the mortgagee makes certain declarations or professes compliance with the power of sale process, leaving any dispute over the power of sale process to be resolved between the mortgagor and the mortgagee.. Martin v. 11037315 Canada Inc.
 The Purchaser bought the Property from the Mortgagees, under their power of sale, without any notice of defects in the power of sale process. It submits that its rights take precedence over those of the Mortgagor who, at the time of the Transfer, had a claim against the Mortgagees for the improper exercise of the power of sale. The Purchaser says that the Safe Harbour Protections, on their face and as a matter of policy, must “trump”, otherwise no purchaser under power of sale – for value and without notice – could ever be assured of good title. Accordingly, the Purchaser submits, the application judge erred in setting aside the Transfer.
 The Mortgagor submits that the application judge correctly decided that its rights, pursuant to the provisions in s. 22 of the Mortgages Act, prevented the Mortgagees from selling the Property. Because the Mortgagees were in breach of s. 22 and their enforcement rights were suspended at the time they completed the Transfer, the Transfer was not valid as against the Mortgagor. The Mortgagor says that the application judge correctly decided the matter because otherwise a mortgagee could avoid the suspension provision in s. 22 simply by ignoring it and selling the subject property to an innocent third party.
 I accept the Purchaser’s submission. Although the Mortgagees’ enforcement rights were suspended at the time of the Transfer, pursuant to s. 22(3) of the Mortgages Act, in my view, the Safe Harbour Protections operate to protect the Purchaser, an innocent purchaser, who registered title to the Property under the Land Titles Act system after receiving both the Compliance Declaration and the Compliance Statements from the Mortgagees.
 It is important to begin by appreciating the principles that underlie the Land Titles Act. These principles were set out in Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244, 141 O.R. (3d) 102, at para. 13:
Before turning to the issues in this appeal, it is helpful to consider the principles that underlie the Land Titles Act and review how the legislation has been interpreted in the jurisprudence. Epstein J. (as she then was) described those principles in Durrani v. Augier (2000), 2000 CanLII 22410 (ON SC), 50 O.R. (3d) 353, at para. 42, referencing Marcia Neave’s article, “Indefeasibility of Title in the Canadian Context” (1976), 26 U.T.L.J. 173: Fraud has always been recognized as an exception to the mirror principle: Stanbarr, at para. 14. That is of no moment in this case because the application judge found that the Purchaser had no notice of any defects in the power of sale process.
The philosophy of a land titles system embodies three principles, namely, the mirror principle, where the register is a perfect mirror of the state of title; the curtain principle, which holds that a purchaser need not investigate the history of past dealings with the land, or search behind the title as depicted on the register; and the insurance principle, where the state guarantees the accuracy of the register and compensates any person who suffers loss as the result of an inaccuracy. These principles form the doctrine of indefeasibility of title and [are] the essence of the land titles system[.]
 However, the application judge effectively held that another exception exists to the mirror principle: namely, when a mortgagee is subject to a suspension of its enforcement rights under s. 22(3) of the Mortgages Act. Respectfully, that is an erroneous interpretation of the legislation.
 As the application judge found, the requirements of ss. 35 and 36 were met through the Compliance Declaration and the Compliance Statements. However, the application judge understood that the effect of ss. 35 and 36 of the Mortgages Act and s. 99(1.1) of the Land Titles Act was to provide “conclusive evidence of compliance” with the legislation. While it is correct that those provisions do afford the Purchaser that protection, they go further: they stipulate that, on registration under the Land Titles Act system, the transfer gave the (innocent) Purchaser “good title” to the Property.
 Moreover, the fact the Mortgagees were subject to a s. 22(3) enforcement suspension does not derogate from the Purchaser’s title.
 Section 22(3) does not give the Mortgagor substantive rights. Section 22(3) provides that, absent reasonable excuse, a mortgagee’s right to enforce the mortgage shall be “suspended” until the mortgagee complies and provides the mortgagor with a default statement. The mortgagee does not lose its substantive rights as a result of s. 22(3); rather, it loses its right to enforce them.
 In this case, it is not the mortgagee who seeks to enforce its rights; it is the Purchaser. The Mortgagor cannot rely on s. 22(3) to invalidate the Purchaser’s title: its recourse is against the Mortgagees for the improper exercise of the power of sale.
 Cameron J. reached this conclusion in Cranberry Cove, at para. 180, saying, “Once the sale of the property under the power of sale is closed, s. 22 is no longer applicable and the mortgagor is left to its remedy in damages against the mortgagee.” This court upheld the decision in Cranberry Cove in a two-paragraph endorsement that expressly referred with approval to the trial judge’s handling of the s. 22 and the s. 36 issues. See also Belende v. Patel, 2009 CanLII 74 (Ont. S.C.), at para. 14, in which the Superior Court states that this court’s decision in Cranberry Cove “held that the s. 36 underlying principle of protecting bona fide purchasers for value should be extended to purchases under s. 22.”
 Further, this court’s decision in 117Ont did not compel the application judge to conclude that s. 22(3) rendered the Transfer to the Purchaser invalid. It is correct that in 117Ont the transactions were reversed, even after the transfer of the subject property had been registered. However, that is because 117Ont had conveyed the property to itself. 117Ont was the assignee of the mortgage. 117Ont was not an innocent purchaser as it had actual notice of the defects in the sale process. Therefore, it was not entitled to the Safe Harbour Protections. Moreover, s. 22(3) operated to preclude 117Ont, the mortgagee, from using the court to enforce its rights.
In Martin v. 11037315 Canada Inc. (Ont CA, 2022) the Court of Appeal canvasses the potential for equitable relief from real estate foreclosure:
 Winter v. Hunking is a recent example of the court exercising its equitable jurisdiction to reopen a foreclosure order based on the particular circumstances of the case. Contrary to the appellants’ submissions, those circumstances are not restricted to situations involving what the appellants describe as a vulnerable mortgagor in need of protection. Rather, as explained in Winter, caselaw has established a number of factors that can be considered in determining whether to exercise the court’s equitable jurisdiction and such jurisdiction may be exercised even after the property has been sold.. Ontario Securities Commission v. Money Gate Mortgage Investment Corporation
 Those factors include:
• whether the set aside motion was made with reasonable promptness; Having regard to these factors, the overarching question is “whether the equities in favour of reopening the foreclosure order outweigh the equities against doing so … taking into account the relative prejudice to the respective parties”: Winter, at para. 14.
• whether there is a reasonable prospect of payment of the mortgage at once or within a short time;
• whether the applicant for the set aside order has been active in endeavouring to raise the money necessary;
• whether the applicant has a substantial interest in the property, or the property has some special intrinsic value to him or her;
• where the property has been sold after foreclosure, whether the rights of the purchaser will be unduly prejudiced : Winter, at para. 13.
In Ontario Securities Commission v. Money Gate Mortgage Investment Corporation (Ont CA, 2020) the Court of Appeal stated some legal points on mortgages:
 A mortgage that is registered is valid and enforceable according to its nature and intent unless it is a “fraudulent instrument”: Land Titles Act, R.S.O. 1990, c. L.5 (“LTA”), ss. 78 (4) and (4.1).. 2257573 Ontario Inc. v. Furney
 “Fraudulent instrument” is a narrowly defined term. It includes a charge given by a “fraudulent person”, meaning a person who forged the instrument, a fictitious person, or a person who holds oneself out in the instrument to be the owner but knows they are not: LTA, s. 1. The appellant’s argument does not address or explain how its fraud theory, if proven, could satisfy that aspect of the definition of “fraudulent instrument”. The 254 Mortgage was given by 254, the owner of the property charged, not by a non-existent person. It was executed by 254’s sole director. No signature was forged: 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702 (Div. Ct.), at paras. 33-42.
 The definition of “fraudulent instrument” also includes an instrument “that perpetrates a fraud as prescribed with respect to the estate or land affected by the instrument”. Fraud as prescribed is the registration of a cessation of a charge by a fraudulent person: LTA, s. 1; R.R.O. 1990, Reg. 690, s. 63. The appellant does explain how its fraud theory, if proven, could satisfy this aspect of the definition.
In 2257573 Ontario Inc. v. Furney (Ont CA, 2020) the Court of Appeal cites law on the duty of a mortgagee-in-possession to realize the property's value on a sale:
 First, they say the respondent would engage in an improvident sale of the Properties, destroying the appellants’ equity and leaving them with a deficiency in what they owe the respondent and third-party judgment creditors. But in any sale, the respondent as mortgagee has a legal obligation to take reasonable precautions to obtain the true market value of the Properties as of the date of sale: Centurion Farms Ltd. v. Citifinancial Canada Inc., 2013 ONCA 79, at para. 4; Manufacturers Life Co. v. Granada Investments Ltd. (2001), 2001 CanLII 2708 (ON CA), 150 O.A.C. 253 (C.A.), at para. 67, leave to appeal refused,  S.C.C.A. No. 637; Oak Orchard Developments Ltd. v. Iseman,  O.J. No. 361 (H.C.), aff’d  O.J. No. 2394 (C.A.); and Joseph E. Roach, The Canadian Law of Mortgages, 3rd ed. (Toronto: LexisNexis, 2018), at pp. 136-139. Nothing before the court suggests the respondent will breach this legal obligation.. Walia v. 2155982 Ontario Inc.
In Walia v. 2155982 Ontario Inc. (Ont CA, 2020) the Court of Appeal considered an Interest Act provision [s.8] that prohibits the increase of interest rate on *arrears* on prior mortgages, ie. a penalty on default. The lower court, approved by the Court of Appeal, considered but distinguished the case of Krayzel Corp. v. Equitable Trust Co., 2016 SCC 18,  1 S.C.R. 273:
 Generally speaking, s. 8 creates an exception to the rule that lenders and borrowers are free to negotiate and agree on any rate of interest on a loan. The purpose of s. 8 is to prohibit lenders from levying fines, penalties, or rates of interest on any arrears of principal or interest that are secured by mortgage on real property. The prohibited effect is increasing the charge on arrears beyond the rate of interest payable on principal money not in arrears: P.A.R.C.E.L. Inc. v. Acquaviva, 2015 ONCA 331, 126 O.R. (3d) 108, at para. 51. In order to violate s. 8, the mortgage must both: (1) stipulate for a fine, penalty, or rate of interest; and (2) have the prohibited effect: P.A.R.C.E.L., at para. 55, citing Mastercraft Properties Ltd. v. El Ef Investments Inc. (1993), 1993 CanLII 8545 (ON CA), 14 O.R. (3d) 519 (C.A.), at p. 522, leave to appeal refused,  S.C.C.A. No. 463.