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Sep 26, 2022

THE NEW REALITY: PRIVATE MORTGAGE DEFAULTS - POWER OF SALE & FORECLOSURE - Part LXXX of a Series – Is Ontario still a Self-Help Remedy Jurisdiction – part 6

My previous post LXXIX repeated the law (which was reiterated this past August (of 2022) by the Court of Appeal in its Hume decision at 2022 ONCA 575) permitting a mortgagee to take possession of mortgaged property without a court order and without a writ of possession; so long as the mortgagee takes possession peaceably (meaning peacefully).

In the Hume case, the lower court judge was required to define the phrase ‘taking possession peaceably’. Unfortunately, the judge made the fundamental error of defining ‘peaceable possession’ (rather than defining ‘taking possession peaceably’). And in doing so, the judge made the error at law of looking at the meaning of the phrase ‘peaceable possession’ as used in the Criminal Code of Canada.

In the Criminal Code, a person who was in ‘peaceable possession’ of a property could use reasonable force to prevent a third party from trespassing on that property. And in that context, “peaceable possession” referred to possession that was “not seriously challenged by others”. The mistake at law made by this lower court judge in Hume was deciding that the mortgagee did not ‘take possession peaceable’ because the mortgagors in the Hume case challenged the mortgagee’s possession of their property. And therefore, because the mortgagee’s possession was seriously challenged by the mortgagor, the judge ruled that the mortgagee did not 'take possession peaceably' in the mortgage remedy context.

A bit confusing, to be certain. But the error underpinning the mistake becomes clearer when one examines the grammatical manner in which the word ‘peaceable’ is used in the phrase ‘peaceable possession’ and compare its use to the way ‘peaceably’ is used in the phrase ‘taking possession peaceably’. In the former, ‘peaceable’ is an adjective; describing the noun ‘possession’. It is a state of being or existing, while in possession. And not relevant at all to assist in the definition of the phrase ‘taking possession peaceably’; in which ‘peaceably’ is an adjective describing the verb ‘taking possession’, which is an action.

Bottom line is that taking possession ‘peaceably’ is all about the circumstances surrounding the taking of possession. It means that the mortgagee cannot breach the peace when it takes possession. While ‘peaceable possession’ is all about the state of being while in possession, which is irrelevant to the manner in which possession is taken by the mortgagee.

This rationale helps explain why the Court of Appeal confirmed what I have been preaching for the past couple of years in these blogs; that a mortgagee can take possession of mortgaged property following a default, so long as it does not breach the peace (act contrary to the Criminal Code) when taking possession. And neither a court order nor a writ of possession is a requirement in order for the mortgagee to take possession.

The next post will unpack this issue from a practical point of view and attempt to ascertain when a writ of possession might be needed by a mortgagee - by examining more closely what kind of action by the mortgagee would be a breach of the peace and therefore, not be permitted (unless a court order for possession is obtained). Meanwhile, this blog is intended for information purposes only. It is not legal advice and cannot be relied on as such. Nor is it a substitute for hiring your own legal counsel, who will be an essential member of your power of sale and mortgage default team. And lastly, this blog is just my opinion. I reserve the right to change my mind. And I reserve the right to be wrong. Feel free to call me .... 416.662.9550 to discuss.

Be well and stay healthy


P.S. previous posts dealing with self-help remedies in mortgage remedy and power of sale enforcement include Post XXI and Post XXX and Post LXXIII and Posts LXXV, LXXVI and LXXVII and LXXVIII and LXXIX