The Applicants, Chen and Feng, challenged the validity and enforceability of a second and third mortgage on a property owned by a company in which they were shareholders.
The court ruled both mortgages were valid and enforceable.
The second mortgagee did not seek costs, as they had already been fully paid (including legal fees) from the proceeds of the property’s sale under power of sale.
The third mortgagee was successful in the application but did not recover the full amount owed from the sale proceeds.
Under the loan agreement, the third mortgagee was entitled to legal costs on a substantial indemnity basis, citing Everest Finance Corporation v. Jonker, 2023 ONCA 87.
The third mortgagee sought $85,779.60 in legal costs, including:
Its own litigation costs,
The second mortgagee’s legal costs, and
The legal fees for the solicitor who handled the sale.
The court ruled that while the third mortgagee could recover its own legal costs, the other costs were not recoverable as they were losses on the loan, not costs of the application.
The Applicants were ordered to pay the third mortgagee $85,779.60?.
